Lawsuit over Mo. Medicaid contracts goes to court

JEFFERSON CITY, Mo. -- A company that lost its Medicaid contract with Missouri is suing over the bid award process, alleging that state officials violated competitive bidding laws and changed the rules to favor certain companies, including a major donor to Gov. Jay Nixon.

Molina Healthcare is one of five companies that had a Medicaid contract with Missouri before the state decided to choose only three companies to handle its $1.1 billion Medicaid managed care program. One of the companies chosen was Centene Corp., based in Clayton, which has been a major donor to Nixon, The Kansas City Star reported (http://bit.ly/IyN1OY ).

As part of its lawsuit challenging the contract decision, Molina is asking a judge to delay an open-enrollment period for Medicaid participants that is slated to begin April 19. A hearing on the case is scheduled for Friday in Cole County Circuit Court.

Molina, which held a Medicaid contract in Missouri for 16 years, alleges in its lawsuit that the state is trying to "artificially limit competition" among managed care plans by capping the number of companies given contracts and did not follow the proper procedure for rule changes.

Molina also questioned how it scored poorly in the access to care category of the bid review process, when Centene currently has no network of doctors and hospitals in the state.

"Such results, so completely out of step with history and present practice, are necessarily suspect and merit a close review," Molina said in a letter to the Kansas Office of Administration, which handles purchasing and contracts for the state.

Nixon spokesman Scott Holste referred questions to Wanda Seeney, spokeswoman for the Office of Administration. Seeney said in a statement that the Medicaid bids were awarded "based on quality; the method of performance; organizational experience; and most importantly, access to care." She declined further comment, citing the lawsuit.

Centene officials said in a statement that the company had "the same information as all of the bidders and complied with all requirements" issued by the state.

In the last two years, records show that Centene donated $50,000 to Nixon's campaign, as well as thousands more to other Democratic and Republican legislative and statewide candidates.

Centene also donated $175,000 to the Democratic Governors Association, according to the nonpartisan Center for Responsive Politics. Last week, the Governors Association gave Nixon's re-election campaign $500,000.

Centene also has hired about a dozen lobbyists in Jefferson City, including attorney Chuck Hatfield, who for 10 years was Nixon's chief of staff when he was attorney general. The Missouri Ethics Commission said Hatfield ended his lobbying agreement with Centene in January. However, he is the company's attorney in Molina's lawsuit against the state.

Hatfield, who said Tuesday he has done no lobbying for Centene, called Molina's lawsuit "sour grapes." He said Molina didn't object to the state capping the number of companies that would provide managed care until it didn't win a contract.

Molina's complaint that Centene has no network currently in place is "nonsensical," Hatfield said, since denying a contract on that basis would mean no new company could ever win a contract in the future.

Centene currently handles Medicaid managed care contracts in 14 states. State officials who evaluated the bid on the managed care contract said Centene ranked at the top or near the top of every category.

About 430,000 Medicaid patients are currently enrolled in the state's managed care program. Besides Centene, other companies awarded contracts were Missouri Care Inc., a subsidiary of Aetna Inc.; and Health Care USA, a subsidiary of Coventry Healthcare Inc.

In addition to the lawsuit, state Rep. Jay Barnes, a Jefferson City Republican who leads the House Government Oversight and Accountability Committee, said he is considering holding a hearing on how the contracts were awarded. But Barnes, who is an attorney, said he hasn't decided whether it's appropriate to get involved while a lawsuit is pending.