Insurance Dept. health exchange bid actions questioned

The New Hampshire Insurance Department has disciplined Leslie Ludtke — its health-care policy analyst — for what it calls "behavior issues," but for what Ludtke says was her refusal to go along with bidding procedures that might be illegal.

Ludtke — point person on a key federal health care reform contract rejected in April by the Executive Council — is on paid administrative leave until June 1. She is being represented by Chuck Douglas, an employment law attorney, former congressman and former state Supreme Court justice.

Douglas told NHBR he would be asking the Executive Council for a hearing on the matter.

"It appears very clear that her suspension is in reality for her bringing concerns to the commission about problems following the health care grant contract rejection," Douglas said. "This is someone who has been a lawyer for 30 years, and used to be No. 3 in the Attorney General's Office, with a good legal mind. Her trying to do her job in good conscience does not constitute grounds for discipline."

Calls to Insurance Commissioner Roger Sevigny and Deputy Commissioner Alex Feldvebel were not returned Wednesday afternoon.

The controversy threatens to further damage the $1 million federal grant for which the state is eligible — a grant that would help it set up an insurance exchange under the Patient Protection and Affordable Care Act.

Such an exchange would determine eligibility criteria for health care subsidies and tax breaks under the new law. About two-thirds of that grant would go to the Insurance Department, which would explore whether to set up a state exchange or join a regional one and to see how it would operate and how each decision would affect the existing private health insurance market.

Under federal health care reform, if the state doesn't do its own planning, the federal government might do it for the state. But hard-line opponents of what they call "Obamacare" see the state's refusal to plan for an exchange as another tactic to defeat reform.

The state Legislative Fiscal Committee accepted the federal money, but the Executive Council rejected the awarding of a competitive bid for two-thirds of the grant to Wakely Consulting Group Inc., partly because there were not enough New Hampshire residents employed on the project, and partly because the point person for the company — Jon Kingsdale –was executive director of the Health Insurance Connector Authority, which administered the Massachusetts health care reform legislation passed back in 2006.

When Ludtke heard that the Executive Council might refuse the contract, she voiced her concerns to Sevigny and Feldvebel, according to a May 10 response to her disciplinary action.

"NHID could be accused of improperly using the competitive bidding process to achieve a politically palatable result," she wrote in 10-page letter that she shared with various members of the Insurance Department and was obtained by NHBR. (NHBR did not get the document from Ludtke or her attorney.)

After she gave that advice, Ludtke wrote, she was frozen out of an April 5 meeting, and found the result "profoundly upsetting."

"In 30 years of working in New Hampshire state government, I had never encountered a situation where a presumption of a 'conceptual bias' or non-New Hampshire residency were used as reasons for rejecting a competitively bid contract," she wrote.

AG's opinion

After the contract was rejected on April 5, Ludtke phoned Kingsdale to try to see if the contract could be salvaged by involving more New Hampshire people on the team. In the middle of that call, she was summoned — on an office-wide page — to the commissioner's office, where she was "informed that the Wakely contract would not be approved under any circumstances." She was then was asked if she would work on a no-bid contract to a Utah firm, according to her letter.

Ludtke replied that she was "honestly too upset to formulate any positions on the options for moving forward," but Sevigny and Feldvebel "demanded that I agree to proceed entirely at the direction of the deputy commissioner to achieve the politically dictated result."

However, according to her letter, on April 6, the Attorney General's Office nixed the idea, as well as using New Hampshire residence as a criteria for awarding the contract. After that, Ludtke wrote, she was treated in a "hostile, bullying and intimidating matter."

Ludtke said she still worked to find a way to see if the department could legally move forward, drafting a memo at the commissioner's request to list the options. She said she talked to various state and federal officials to discuss the various obstacles.

For instance, after the contract rejection the state Department of Health and Human Services — which could administer the other third of the $1 million grant for Medicaid planning — was considering giving up on the local planning effort and just letting the federal government take over. It still is.

"The whole situation is fluid," said Lisa Solsky, HHS program specialist on the grant. "We are still trying to figure out what our state strategy is, but failure to act could be a de facto decision to have a federal exchange rather than do it the New Hampshire way."

Ludtke said she was told not to attend a meeting with HHS to discuss the matter. Instead, she was sent a letter suspending her with pay for two weeks. That letter was supplied to NHBR by Douglas.

"You have demonstrated your unwillingness to work towards and support the Department's efforts to address the recent decision of the Governor and Council," Sevigny wrote on May 3. "Your behavior has been completely unacceptable …. You have not made positive contributions toward developing a plan of action, but instead have obstructed collaborative efforts…. Your recommendations for how the Department should proceed with exchange planning was unhelpful and defiant. You offered no constructive suggestions, but instead listed logistical issues that would prevent us from moving forward… As a result, not only is your behavior unacceptable; your work is unacceptable."

Ludtke replied a week later in the aforementioned letter.

"The Commissioner and the Deputy Commissioner demanded in a hostile and belligerent manner that I set aside what I consider important substantive and legal concerns to produce a politically palatable result," she said. "My refusal to compromise my integrity, the integrity of the NHID and the integrity of the state of New Hampshire has been treated as defiance and insubordination and now is being used as grounds for punitive action against me."

Sevigny's response was to extend the suspension another two weeks.

"I strongly disagree with the vast majority of the assertions and representations in your letter," he wrote on May 11, but said he did not have time to respond in detail.

Douglas weighed in on May 13, rejecting Sevigny's claim that Ludtke had been insubordinate.

"In fact, she has tried to do her job within the department while explaining to you and to the deputy commissioner that the Attorney General's office has already made clear that a sole-source contract cannot be issued and that a condition such as a contract recipient being staffed by New Hampshire residents cannot be legally imposed as a condition," Douglas wrote.