Mich. High Court revives $659M contract suit
The Michigan Supreme Court has revived a lawsuit from a competing business alleging the state inappropriately favored Blue Cross Blue Shield during competitive bidding over a $659 million Medicaid dental services contract.
The state’s highest court last Friday vacated a ruling by a three-judge Michigan Court of Appeals panel, which in March dismissed a lawsuit filed by MCNA Insurance Company.
The Florida firm, which had also bid on the Healthy Kids Dental contract, has accused the state of "blatant favoritism" by giving Blue Cross the exclusive ability to modify its bid. The state has repeatedly denied any wrongdoing.
In a Friday order, the Michigan Supreme Court said little about the case but told the Court of Appeals to consider the MCNA suit in full on an expedited basis.
Chief Justice Stephen Markman disagreed with colleagues in a dissent, indicating he would have preferred the Supreme Court take up the case on appeal and explore whether MCNA even had proper standing to file the suit as a disappointed bidder.
MCNA attorney Scott Eldridge applauded the Supreme Court for “nullifying” the earlier Court of Appeals dismissal and ordering a thorough review of the company’s allegations.
“Taxpayers and businesses in Michigan deserve a full accounting of this troubling case and we look forward to a full review by the Court of Appeals,” he said in a statement.
The Healthy Kids Dental contract awarded by the state includes $237 million for Blue Cross Blue Shield, $237 million for Delta Dental of Michigan and another $185 million to be allocated based on actual enrollment in the program for children in low-income families.
MCNA had also bid on the work and took the Michigan Department of Technology, Management and Budget to court in January, alleging the process was handled in a way that benefited Blue Cross, a Detroit-based nonprofit with significant "political clout."
The state budget department has denied allegations and "feels strongly that we followed all the proper procurement procedures and fairly awarded the contract," said spokesman Caleb Buhs.
The state will continue to fight the suit and respond to specific claims in court, Buhs said.
The Healthy Kids Dental program is a top priority for Gov. Rick Snyder, whose 2017 budget included extra funding to expand the program statewide. The $659 million contract mostly allocates federal Medicaid funding, with 35 percent coming from the state.
Ingham County Judge William Collette earlier this year ordered the Department of Management, Technology and Budget to submit an affidavit and answer questions about the bid process, prompting an appeal by the state.
Collette appeared sympathetic to MCNA’s arguments, suggesting in a Feb. 21 hearing that state agencies do not actually decide bids, but "the politicians above them do."