On March 28, 2013, the U.S. Department of Health and Human Services (HHS) released 837 pages of documents in response to a FOIA lawsuit that PRM filed in federal court late last year. The documents relate to the 2011 renewal of Minnesota’s Medicaid waiver, as well as to correspondence between Minnesota State Senator John Marty, and the Centers for Medicare and Medicaid Services (CMS). CMS is the component of HHS that authorizes the release of federal Medicaid funds to state governments. Minnesota receives these funds under the terms of a waiver that allows deviation from the usual federal Medicaid rules. Such waivers are issued for the purpose of encouraging state experimentation with the delivery of public health care.

Previously, HHS had released two other batches of documents as “interim responses” to PRM’s litigation. These batches included documents which indicated that CMS had added additional program reporting requirements during the run-up to the renewal of Minnesota’s Medicaid waiver. The requirements appear to have been added in response to concerns about public health care program management raised by Minnesota State Senators John Marty and Sean Nienow. Other documents from these batches indicated that Minnesota’s former Medicaid director may have asked CMS personnel to “stop meeting” with this same pair of lawmakers – both of whom had been vocal critics of Minnesota’s management of federal Medicaid funds.

PRM is still evaluating the newest group of documents, but our preliminary review shows that CMS was alerted to program irregularities by not only Senators Marty and Nienow, but also by the Greater Minnesota Health Care Coalition (GMHCC), a consumer advocacy group. Several reports produced by the organization were included in the March 28 document cache provided by HHS. GMHCC released a public report detailing similar concerns in August of 2012.

We will post a more extensive summary of documents from the third HHS cache soon.

Over the course of the past year, Public Record Media (PRM) has chronicled the public controversy over the management of Minnesota’s public health care programs. These programs are paid for with state and federal funds, but are administered by non-profit managed care organizations (MCOs). Reaction to this controversy has spurred a variety of policy initiatives, including the passage of legislation establishing third-party audits for MCOs.

In 2011, Governor Mark Dayton also signed Executive Order 11-06, which directed the Minnesota Department of Commerce (DOC) to review the financial positions of the MCOs that participate in Minnesota’s public health care programs. Such reviews were intended to include examinations of MCO expense allocations, as well as details regarding MCO reserves.

At the end of last year, the DOC completed its initial batch of audits under EO 11-06, which examined MCO activity for fiscal year 2011. The Minnesota Department of Human Services (DHS) commented on DOC’s findings on December 6, 2012.

DHS comments
According to a DHS press release, DHS Commissioner Lucinda Jesson characterized MCO financial management of public programs as “generally sound,” but also identified “several issues … that deserve further attention.” DHS described those issues as follows:

• MCOs did not limit executive salaries before allocating those expenses to public programs;

• MCOs allocated advertising and marketing expenses to public programs, despite contractual restrictions on such activity;

• MCOs retained unnecessarily high reserves;

• MCO administrative expenses were not always documented in sufficient detail;

• One MCO (Blue Plus) inappropriately allocated lobbying expenses to public programs.

In many ways, the issues identified by the Commerce Department (including matters related to reserves, marketing, and administrative expenses) correlate with concerns raised by MCO critics over the past three years. David Feinwachs – former counsel for the Minnesota Hospital Association – went public with his criticism of MCO administrative spending and financial management in 2010. The Greater Minnesota Health Care Coalition also raised related concerns during this same timeframe.

MCO comments
The MCOs examined in the Commerce Department’s audit were allowed to review the department’s findings and to issue their own comments in response. MCO comments are appended to the DOC review of each organization.

In general, the MCOs raised similar issues. Many objected to DOC/DHS comments about executive compensation, noting that no statutory salary caps exist for MCO executives by virtue of their organization’s participation in public program activity. Virtually all of the MCOs defended their documentation of administrative expenses. In addition, Blue Plus contended that its lobbying expenses were properly allocated.

Prior year MCO examinations
Executive Order 11-06 is not the first authority to task the DOC with the examination of MCO activity. Minnesota Statute 62D – which governs the operation of MCOs in Minnesota – allows the Commissioner of Health to contract with the DOC to evaluate whether the MCOs that participate in public programs are in compliance with the rules – financial and otherwise – that govern their operation.

Public Record Media (PRM) currently has a data request pending with the DOC regarding documents relating to MCO administration of public health care programs. Through its request, PRM hopes to gather additional information about state oversight of MCO management of such programs.

Public Record Media (PRM) has prevailed in its motion for attorneys’ fees in its Freedom of Information Act (FOIA) litigation against the U.S. Department of Justice (DOJ). In May of 2012, PRM sued DOJ over access to documents related to the potential use of lethal force by UAV drones within the United States.

In its initial response to PRM’s FOIA request, DOJ’s Office of Legal Counsel (OLC) provided two answers to PRM’s three-part request. First, OLC refused to confirm or deny the existence of records responsive to the first item of the request. Then, OLC further stated that it held documents “responsive to the remaining items” of the request. The two remaining items related to legal opinions regarding the use of lethal force by UAVs outside the United States (item two), and inside the United States (item three). OLC denied access to all responsive documents.

“No records” determination
PRM eventually sued to get access to “item three” documents relating to the possible domestic use of UAV drones. After the initiation of litigation, DOJ stated that it did not, in fact, possess “item three” documents. PRM continued its lawsuit up to the point where DOJ produced a sworn declaration regarding its representation, after which PRM moved to dismiss the suit.

DOJ’s declaration in the case stated that OLC did not – at least as of April, 2012 – possess any legal opinions related to the potential use of lethal force by UAVs within the United States.

Award of fees
Since DOJ waited until after PRM had filed suit before specifically stating that it had no responsive documents, PRM sought to recover its litigation costs.

On January 29, 2013, Chief Magistrate Judge Arthur J. Boylan issued an order on PRM’s motion for fees and costs, and awarded the organization $7,500.00 in attorneys’ fees, plus $350.00 for its filing fee. Fees were awarded due to the fact that PRM’s lawsuit caused DOJ to change its position in response to litigation. According to Judge Boylan’s order,

“In the present case, the Court finds that Plaintiff ‘s claim did in fact cause Defendant to change its position regarding the third-category request, and therefore Plaintiff “substantially prevailed,” making it eligible for an award of attorney’s fees …

The change from an initial, (seemingly) positive identification of documents relating to the government’s use of UAVs within its jurisdiction to the final conclusion that no such documents exist is a substantial change in position. Despite the fact that no documents were produced, the Plaintiff and the public at large can still glean important information from this change – namely, the government does not possess any documents related to the lethal use of UAVs within U.S. jurisdiction.”

Reduction of fee award
In his order, Judge Boylan noted that the fee award requested by PRM would be reduced from the amount sought, due to a lack of sufficient documentation. According to the order,

“Plaintiff is found to be both eligible and entitled to an award of attorney’s fees. However, because Plaintiff provided no documentation to support the hours it claimed to have expended on this case, the Court determines that Plaintiff’s work reasonably required 50 hours of work at its rate of $150 per hour.”

Links to Judge Boylan’s order, as well as PRM’s and DOJ’s briefs can be found here:

Order on Motion for Attorneys’ Fees and Costs

Plaintiff’s motion for Fees and Costs

Defendant’s Memorandum in Opposition to Plaintiff’s Motion for Fees

Plaintiff’s Reply Memorandum in Support of Fees Motion

NOTE – This post has was updated on February 14, 2013 to include links to the order and the case briefs.

On January 22, the U.S. Department of Health and Human Services (HHS) released 229 documents to Public Record Media in response to PRM’s ongoing federal lawsuit. In December of last year, PRM sued HHS for failing to respond to its FOIA request of February 22, 2012.

PRM’s request sought correspondence between Minnesota State Senator John Marty and CMS, the component of HHS responsible for overseeing state Medicaid spending. The request also sought documentation related to the “1115 waiver” that allows federal dollars to be spent on Minnesota’s public health care programs, even though those programs do not entirely conform to federal Medicaid rules.

Managed care controversy
Since 2010, members of the Minnesota Legislature have been asking questions about the operation and oversight of the state’s Medicaid-funded public programs. Minnesota’s public programs are paid for by blocks of state and federal money that are distributed through non-profit Health Maintenance Organizations (HMOs). Under Minnesota’s “managed care” program model, HMOs reimburse medical providers for costs associated with public program enrollees.

In 2010, David Feinwachs – former general counsel for the Minnesota Hospital Association – began raising questions about the amount of money that HMOs were retaining from their public program business, as opposed to paying out for program costs. Minnesota legislators – including State Senator John Marty – began asking questions about managed care oversight and accountability.

Senator Marty request
In 2011, Senator Marty sent letters to the Centers for Medicaid Services (CMS) in which he asked CMS to discontinue the 1115 waiver that allowed Minnesota’s public programs to receive federal Medicaid funds. Senator Marty’s letters expressed concerns that such funds were being wasted, rather than being channeled towards their intended purposes.

In early 2012, PRM obtained some of Senator Marty’s correspondence, and filed a FOIA request with CMS to discover the extent to which Senator Marty’s letters had been discussed within CMS, and whether they had had an impact on determinations about the renewal of Minnesota’s 1115 waiver.

FOIA lawsuit
PRM waited two months for HHS to provide documents, and then filed an administrative appeal in April of 2012. By December of 2012, PRM had received no determination related to its administrative appeal, and filed suit in federal court to compel compliance the FOIA.

Document release
On January 22, 2013, HHS released 229 un-redacted documents to PRM in an “interim response” to PRM’s FOIA request. The release came three days before HHS filed its answer to PRM’s complaint in federal court.

The documents released by HHS contain copies of correspondence between Senator Marty and CMS, as well as pages of records related to the review of Minnesota’s Medicaid waiver. Among these records are multiple reviews of public programs elements, as well as a draft of an “Agreement in Principle” to extend the Medicaid waiver.

In its letter of Jan 22 – as well as in its answer filed on Jan 25 – HHS indicated that additional documents will be forthcoming.

We will post the documents in our archive shortly, and will provide summary information when we have reviewed the records in total.