Louisiana Record

Monday, September 16, 2019

Settlement reached in lawsuit between Louisiana and CNSI over Medicaid contract

By Kerry Goff | Aug 12, 2016

BATON ROUGE – Client Network Services Inc. (CNSI) has agreed to settle its lawsuit against the state of Louisiana pertaining to a wrongful termination of a contract claim of a $200 million contract. 

CNSI is a business solutions provider with experience in developing and delivering health care management technology. The company was chosen to work with the state under a Medicaid Management Information System (MMIS) contract, an area in which it had previous experience. The contract was awarded to CNSI in 2011. 

According to IT News Online, former Gov. Bobby Jindal's administration canceled the contract two years after it was awarded, alleging that the procurement process was improperly influenced. CNSI filed suit against the state of Louisiana and against Stephen Smith, who was employed by the company and allegedly upset that he received a salary reduction. 

Then, Smith formed a relationship with CNSI's biggest competitor, Molina Medical Solutions, to "undermine" the Louisiana contract, according to a report from Courthouse News Service. Smith allegedly emailed a U.S. government employee investigating the Medicaid contract between the state of Louisiana and CNSI while he was still employed by CSNI.  

The CNSI complaint against Smith also explained that in urging the government to vacate the contract, he made several allegations he knew were false to prevent Louisiana from contracting with CNSI. Soon after, the contract was canceled with CNSI and the state later signed with Molina Medical Solutions.

CNSI president and co-founder Adnan Ahmed released an official statement after the agreement between the two parties had been reached.

“I would like to express my deep appreciation, on behalf of all of us at CNSI, to Gov. Edwards and Attorney General Landry,” he said. “They and their respective staffs have acted with prudence, understanding and transparency. CNSI is committed to ethical business practices and defending that commitment forced us into litigation in Louisiana, but today we are pleased to put the issue to rest and work together toward a lasting positive relationship.”

As agreed upon in the settlement, the state will change the terms of the cancellation from “for cause” to “for convenience” and authorize CNSI to submit its termination claim for work performed up to the date of termination and the costs of winding down the contract.

The lawsuit has been mutually dismissed with prejudice and the parties have agreed to release all their claims, excluding CNSI’s termination for convenience claim.

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State of Louisiana