The interim state health chief warned CNSI on Friday against destruction of any records related to its $185 million-plus contract for Medicaid claims processing scrapped recently by the Jindal administration.

State Department of Health and Hospitals Secretary Kathy Kliebert’s warning came on the same day as a lot of other developments in the case.

Kliebert said Catherine Coggin, the firm’s contract administrator, had advised that records would be disposed of by Tuesday absent written instructions from DHH about their handling.

In a letter to CNSI top lawyer, Kliebert reminded that state law and contract provisions require records retention. She instructed CNSI to provide records to DHH with “a signed attestation that all programs, files and documentation have been returned.”

The state has paid at least $17.2 million to Client Network Services Inc., or CNSI, for work under the contract, according to DHH billing records.

Commissioner of Administration Kristy Nichols canceled the contract March 21 after a published news report that state award of the contract was the subject of a federal investigation. Since then, the state Attorney General’s Office has said it too has been looking into the pact award.

The probe came to light after Nichols’ office released, in response to a public records request, a federal grand jury subpoena seeking records involving CNSI and three other businesses seeking the lucrative contract.

The state health secretary at the time the contract was awarded was Bruce Greenstein, who worked for CNSI as vice president for health care in 2005 and 2006. Greenstein resigned from his state job March 29.

As it canceled the contract, the Jindal administration cited a Louisiana law that states “if the person awarded the contract has acted fraudulent or in bad faith, the contract shall be declared null and void.”

CNSI officials have denied any wrong-doing and said it would appeal the cancelation administratively and through the courts.

In other CNSI related developments Friday:

  • DHH put Jina Hughes, the chief of the agency’s program integrity section, on paid administrative leave pending a review of her role in CNSI contract dealings. According to DHH, Hughes oversees the performance and compliance of health care providers enrolled in the Medicaid program “to ensure proper billing practices and to prevent fraud and abuse by such providers.”

Hughes’ husband, Robert, performs data management and analysis for CNSI, according to state records.

Jina Hughes was involved in the processing of a proposed amendment that would have added $40 million to CNSI’s contract for anti-fraud efforts, according to Division of Administration spokesman Michael DiResto.

Nichols rejected the contract expansion, opting instead to put it out for competitive proposals.

Other business that sought the Medicaid claims work complained that CNSI “lowballed” the cost. The original $185 million contract had already been amended once to add $8.9 million.

  • Nichols announced that Ruth Johnson will serve as special adviser for the Division of Administration overseeing Medicaid Management Information Systems procurement process as the state proceeds to find a new Medicaid claims processing firm. Johnson was recently named the state’s next chief information officer. She previously served as secretary of the state Department of Children and Family Services.
  • Kliebert also agreed to a CNSI requested meeting about the contract termination.

Kathryn T. Harris, the general counsel for the Maryland-based CNSI, had earlier sought a meeting with top DHH officials to negotiate a resolution to the alleged contract problem. Harris had set a Friday deadline for an agreement to talk. Otherwise, she said, CNSI would begin administrative appeals with the state Division of Administration.

The records warning and offer to meet were made in letters Kliebert sent to Harris.

Sonny Cranch, spokesman for CNSI Louisiana, said the letters will be reviewed by the firm’s legal counsel and “an appropriate response” will be determined.

“We hope that when we do meet with DHH (officials) they will be able to shed some light on the specific reason for the contract cancelation which to date CNSI has not received,” Cranch said.

CNSI had been working on a phased-in takeover of Medicaid claims processing from the current contractor, Molina Medicaid Solutions. The complex task was to extend into 2014.

The expenses chalked up to date include billings for conversion plan, general system design, provider enrollment, staff and communications management plans, project management and the like.

The federal government pays 90 percent of costs and the state 10 percent.

Michael DiResto, the spokesman for the Division of Administration, said the federal Centers for Medicare and Medicaid Services, called CMS, received immediate notice of the contract cancelation.

“Discussions are ongoing” with CMS about potential state liability for contract costs to date, DiResto said.