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Grand jury to review $200M La. Medicaid contract

Melinda Deslatte, Associated Press

BATON ROUGE, La. (AP) -- The Louisiana attorney general's office said a special grand jury was selected Thursday to look into possible criminal activity involving a $200 million Medicaid contract awarded by Gov. Bobby Jindal's administration.

Assistant Attorney General Butch Wilson told a judge that the grand jury was being empaneled in Baton Rouge as part of an ongoing investigation into the now-canceled contract for Client Network Services Inc., or CNSI.

"We are in a criminal investigation, a grand jury investigation," Wilson told Judge Tim Kelley.

The issue arose during a hearing on CNSI's public records lawsuit, seeking information tied to the contract termination.

The Jindal administration scrapped the 10-year claims processing contract on March 21, after details emerged about a federal subpoena seeking information about the contract award. The state attorney general's office is conducting its own investigation, as well.

Health and Hospitals Secretary Bruce Greenstein, a former CNSI vice president, resigned from his state post a week after the Maryland-based company's contract was terminated.

Greenstein has denied involvement in the contract award, but since his departure as secretary, the Jindal administration has accused Greenstein of inappropriate contact with CNSI throughout the bid process that created an unfair advantage for the firm.

CNSI has sued the Jindal administration, alleging breach of contract and saying it did nothing wrong to win the contract. The company is seeking compensation for all work done, reimbursement for its costs, loss of anticipated profits and unspecified financial damages.

Lewis Unglesby, attorney for CNSI, said the company still doesn't even know what crime the attorney general's office claims to be investigating.

CNSI spokesman Sonny Cranch said in a statement that the Jindal administration appears to have canceled the contract "without any evidence of wrongdoing other than some unsubstantiated suggestion by the Attorney General that there 'might be' an issue."

"Ever since then, the Attorney General has been attempting to find the evidence of wrongdoing to cover their tracks," Cranch said.

In Thursday's hearing, lawyers for the state and CNSI haggled over whether the company could get copies of thousands of pages of documents from Jindal's Division of Administration and Department of Health and Hospitals.

Judge Kelley refused the attorney general's office to issue a stay blocking access to the records request, saying the office didn't meet the legal requirements for such an effort. He granted most of CNSI's request for records.

Wilson and David Caldwell, head of the attorney general's public corruption unit, said they were concerned that giving CNSI the requested documents would damage the investigation, and could jeopardize the confidentiality of informants and lead to witness tampering.

"We already know witnesses have been contacted," Caldwell said.

The judge said receiving hundreds of thousands of pages of public records couldn't damage the criminal investigation because CNSI would have no idea which documents were cherry-picked as part of the investigation.

"I don't see where it invades upon grand jury secrecy or the investigatory process," Kelley said.

Lawmakers raised concerns about the contract two years ago when it was awarded and questioned the health secretary's involvement. But the Jindal administration still proceeded with the deal until the federal subpoena was revealed in a news story.

Greenstein acknowledged under questioning from lawmakers in 2011 that a decision he made in the bid solicitation process made CNSI eligible for the contract. He also met with a top CNSI official within days of taking the health secretary's job.