Prior to the hiring of a CNSI employee’s wife to head a Louisiana Medicaid office, state ethics officials found no conflict with the arrangement.

At the time in 2012, the Maryland-based company had been awarded a nearly $200 million contract for Medicaid claims processing, and the state Department of Health and Hospitals wanted to employ Jina Hughes to oversee its Program Integrity office, which deals with anti-fraud efforts.

The Jindal administration cited “potential conflicts of interest” stemming from the situation as one of the reasons for scrapping the contract.

The CNSI contract had come under scrutiny since its award because of then-DHH Secretary Bruce Greenstein’s prior employment by CNSI in 2005 and 2006 and allegations the firm “low-balled” the price to get the work.

Greenstein resigned the Jindal cabinet-level post a week after news broke of a federal grant jury probe into the contract’s award and the administration canceled the contract.

CNSI is fighting the contract cancelation, claiming there is no basis for the state action.

DHH put Hughes on paid administrative leave last month pending a review of her role in CNSI contract dealings. DHH spokeswoman Olivia Watkins said Hughes remains on leave.

State Civil Service records show Hughes suspended with pay from April 5 to April 26 from the job which pays $97,250 a year.

An April 26 letter to CNSI setting out reasons for the contract cancelation mentions “irregularities with respect to the creation and submission”of a proposed $40 million contract amendment involving Medicaid fraud detection efforts. The letter said the irregularities included “the existence of possible conflicts of interest between DHH and CNSI employees”

Jina Hughes was involved in the processing of the proposed amendment, state Division of Administration spokesman Michael DiResto said at the time.

The DOA’s Office of Contractural Review stopped the $40 million contract addition. If the amendment had been approved, the CNSI contract would have come close to being the amount of the second lowest vendor seeking the work.

According to DHH, Hughes oversees the performance and compliance of healthcare providers enrolled in the Medicaid program “to ensure proper billing practices and to prevent fraud and abuse by such providers.”

Hughes’ husband, Robert, was a contract employee of Client Network Services Inc., or CNSI, performing data management and analysis, according to state records.

State ethics administrator Kathleen Allen said the advisory opinion rendered in July 2012 prior to Hughes’ August hiring was based upon the facts as they were presented at the time by DHH.

If circumstances changed, the ethics agency would have to reconsider based on new information, Allen said.

DHH asked ethics whether its Program Integrity Section could hire Jina Hughes while her husband was a contract employee of CNSI. State ethics law prohibits the immediate family member of a public servant from entering into transactions that are under the supervision of the agency of the public servant.

At the time, DHH legal counsel Kimberly Humbles said that the Program Integrity division Hughes would direct and the Louisiana Medicaid program that had the CNSI contract are two separate divisions. Based on that separation, the ethics agency concluded there would be no violation.

In an interview, Larry Iversen, CNSI’s Louisiana senior account executive, denied any impropriety related to the Hugheses.

Iversen said Hughes’ husband was brought in from Indiana for a contract job involving data management and analysis. Robert Hughes worked “completely outside of program integrity,” Iversen said. “He was a tech guy.”

He said Jina Hughes held a similar position in Indiana’s Medicaid program. Records show that she was contracts manager for the Office of Medicaid Policy and Planning’s Compliance Unit.

“There was an open position in the state Department of Health and Hospitals,” said Iversen. “Her relationship with Robert and his position with us was known up-front.” He noted the ethics opinion.