Sept. 11, 2013 05:19

A Maryland company can move forward with its wrongful termination lawsuit against Gov. Bobby Jindal's administration for canceling the firm's $200 million Medicaid contract with the state, a judge ruled Tuesday.

BATON ROUGE, La. (AP) - A Maryland company can move forward with its wrongful termination lawsuit against Gov. Bobby Jindal's administration for canceling the firm's $200 million Medicaid contract with the state, a judge ruled Tuesday.

State District Judge Tim Kelley lifted his previous stay order on procedural grounds, saying attorneys for the state didn't follow the proper process for giving him evidence that he used to issue the six-month delay.

The decision means that Client Network Services Inc., or CNSI, can proceed with its lawsuit against the Jindal administration, alleging breach of contract and seeking compensation.

Lawyers for the state say a delay in the civil lawsuit is needed to protect the integrity of a state grand jury investigation into the contract award. Assistant Attorney General David Caldwell said he'll refile the request for a stay, adhering to the process the judge outlined.

"We just need to make sure the procedure is followed," Caldwell said after Kelley's ruling.

The Jindal administration scrapped the 10-year Medicaid claims processing contract with CNSI on March 21, after details emerged about a federal subpoena seeking information about the contract award. The attorney general's office empaneled its own grand jury on May 23 to look into possible criminal activity.

Then-Health and Hospitals Secretary Bruce Greenstein, a former CNSI vice president, resigned a week after the company's contract was terminated.

Greenstein has denied involvement in the contract award, but since his departure as secretary, the Jindal administration has accused Greenstein of inappropriate contact with CNSI throughout the bid process that created an unfair advantage for the firm.

CNSI sued the Jindal administration, saying it did nothing wrong to win the contract.

In July, Kelley agreed to a six-month stay, saying the decision was based on secret investigation information provided by the attorney general's office that was not released to CNSI lawyers or to the public.

CNSI attorney Lewis Unglesby argued Tuesday that the state prosecutors didn't provide proper notice to the company that it would share secret information with the judge and didn't give CNSI time to make its arguments against allowing the information to be used.

"They made a strategic decision to try to influence the court without the opportunity for us to be heard," Unglesby said.

Kelley agreed, though he said the documents provided to him by the attorney general's office were persuasive in the arguments for a stay. The statement seemed to suggest the argument could be successful again, if the attorney general's office refiles its stay request.

Assistant Attorney General Butch Wilson said state investigators were sifting through mountains of evidence and a lengthy list of witnesses. He said giving CNSI documents in response to civil lawsuit filings could jeopardize the confidentiality of informants and lead to witness tampering in the criminal investigation.

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