A special state grand jury in Baton Rouge on Tuesday indicted former Jindal administration health chief Bruce Greenstein on nine counts of perjury related to his involvement in the award of a nearly $200 million state government contract.
Greenstein’s alleged untruths about his involvement in how his former employer was chosen occurred during sworn testimony before a state Senate confirmation hearing and before the grand jury. The grand jury returned the charges to 19th Judicial District Judge Louis R. Daniel, of Baton Rouge.
“The grand jury is not closed so we are continuing our investigation into other aspects of the case,” Assistant Attorney General David Caldwell said Tuesday. “These lies are part of the cover-up of the whole process.”
The grand jury term is not up until Nov. 18, Caldwell said.
Greenstein’s lawyer John McLindon said he’s sure that his client did not commit perjury.
“I understand there is some confusion in what he said but it is not perjury,” McLindon said Tuesday. “There’s a big misunderstanding.”
Greenstein, who lives in Seattle and was unavailable for comment, will be arraigned in Baton Rouge within the next 30 days.
The grand jury action came about 18 months after the Jindal administration abruptly canceled the contract with Maryland-based Client Network Services Inc., citing among other things “improper contact” by then state health secretary Greenstein throughout the bid and award process. Greenstein had been a CNSI vice president from 1995 to 1996.
In scrapping the CNSI contract of 2011, the administration pointed to a Louisiana law that states, “if the person awarded the contract has acted fraudulently or in bad faith, the contract shall be declared null and void.”
Greenstein resigned in April 2013, denying any improper involvement. He had been named state health secretary by Gov. Bobby Jindal in July 2010. He was confirmed by the Louisiana Senate the following year.
The contract cancellation came as news broke in March 2013 of a federal grand jury probe. Nothing came from the federal grand jury.
But the state Attorney General’s Office had launched a behind-the-scenes investigation based on whistleblower allegations made to federal officials about problems “dangerously close” to fraud in connection with the contract award. The investigation led to the empaneling of the special grand jury that handed down the indictments.
CNSI has filed a lawsuit alleging wrongful termination of the contract.
“CNSI will not comment at this time on the grand jury’s action,” CNSI Louisiana spokesman Sonny Cranch said. “Our contract was wrongfully terminated and we continue to vigorously pursue our lawsuit against the state of Louisiana.”
One of CNSI’s lawyers, Lewis Unglesby, said: “From everything that CNSI knows about Mr. Greenstein, he is an honorable, honest gentleman who was an excellent public servant.”
“There will be no evidence of misconduct by CNSI and we believe there should not be any against Mr. Greenstein,” he added.
The Greenstein indictment alleges four counts of perjury during a June 17, 2011, appearance before the state Senate and Governmental Affairs Committee, which was considering his confirmation. The counts largely relate to his role in altering the request for proposal that allowed CNSI to bid on the lucrative contract.
The remaining five counts relate to his testimony before a June 3 session of the East Baton Rouge Parish grand jury. Among the allegations is false testimony he gave “about the nature of his voluminous contacts with CNSI official Creighton Carroll” as well as his role in issuing the contract proposal change that benefited CNSI.
“We have to send a message we are not going to put up with this stuff anymore,” Caldwell said. “If people don’t think the process is fair, they are not going to want to do business with us.”
Jindal did not respond to a request for comment. Instead, his press office released a prepared statement from Jindal’s executive counsel Thomas Enright: “We have zero-tolerance for any wrongdoing, which is why we immediately acted to terminate the contract when we learned from the AG that improper behavior might have occurred.” He said the office also asked the inspector general to conduct an independent investigation.
From the beginning, controversy surrounded the 2011 award of the multiyear contract — the largest in state government. Disgruntled CNSI competitors alleged the firm low-balled its price. The Jindal administration rejected bid award protests and sought approval of the contract from the federal Centers for Medicare and Medicaid Services, which was granted.
In a state investigative report released in November 2013, a former CNSI employee alleged that a top company executive exhibited insider knowledge and knew in advance the bid amount needed to win the contract.
While Greenstein acknowledged minor contact with CNSI, documents released under a public records request by The Advocate revealed thousands of pages of mainly text message logs revealing frequent communication between Greenstein and CNSI’s Creighton before, during and after the selection process and subsequent bid award. The records covered a June 2010 to June 2012 time frame and indicated a higher volume of activity around key events in the selection process.
McLindon, Greenstein’s attorney, said his client and Creighton are friends and the vast majority of the communication was of a personal nature.
“He doesn’t equate contact with Creighton as contact with the company,” McLindon said Tuesday.
The public records also included email strings involving Greenstein’s suggested change in the solicitation for proposals that allegedly allowed CNSI to compete for the contract.
The solicitation for proposals had stated that the contractor had to have experience as a fiscal agent or fiscal intermediary for Medicaid or a similar large health care claims processing entity. CNSI did not have that experience.
Greenstein’s suggested change allowed CNSI to hire a subcontractor to perform that function.
“As far as the counts dealing with the award of the contract, Bruce almost had nothing to do with it,” McLindon said. He said Greenstein did not “unilaterally” make the decision to alter the contract. “It might have originated with him but he ran it before members of the DHH team who thought it was a good idea,” he said.
Greenstein previously said the change opened the contract to broader competition.
CNSI officials have said they would have competed anyway, but in the role of a subcontractor, if there had been no change.