'Grand conspiracy': Big companies fight over massive state Medicaid contract

The department, and the company that won that contract, argue that the relationship doesn't equal a full-on conflict of interest. They're asking a state tribunal reviewing the contracting process to reject a number of complaints from Aetna Better Health of North Carolina Inc., which is challenging the process in hopes of winning the contract itself.

Those details aren't in dispute, but both DHHS and Blue Cross argued in their latest filings that they're not proof of an unfair process. DHHS said Aetna has alleged "a grand conspiracy" full of "inappropriate and unsubstantiated personal attacks" in a desperate attempt to swing the contract its way.

The department also said Aetna's initial petition challenging the contracts in April didn't include these allegations. The company asked last month to amend that petition, and that's the issue before an administrative law judge now.

"After months of discovery, Aetna has apparently realized the futility of the arguments it has thus far presented to the department and this tribunal," Blue Cross said in its filing late last week. "Now, in a last-ditch, desperate effort, Aetna is seeking to reorient its arguments around exaggerated facts that have been obvious for months."

An Aetna spokesman said the company uncovered new facts during discovery, including documents that should have been turned over in response to an earlier open records request.

Blue Cross acknowledged in its filing that Amanda Van Vleet, who was on the DHHS committee that scored the contract proposals, is dating J.P. Sharp, the company's director of health care strategy and transformation. Sharp, the company said, hasn't had "any direct responsibility for Blue Cross NC's North Carolina Medicaid operations."

Aetna has said Van Vleet and Sharp live together.

Van Vleet disclosed the relationship to at least two DHHS officials before contract bids were evaluated, according to filings. She testified in a deposition that she believed she could still evaluate the contract proposals fairly, and DHHS said there's no evidence Van Vleet pushed the committee to tweak Blue Cross' score by awarding the company points for a client reference that the committee initially rejected.

This reference scoring issue is one of Aetna's main complaints and represents enough points to change the final standings.

"At bottom, there is no evidence whatsoever that Ms. Van Vleet’s relationship had any impact on the (request for proposals) evaluation process," Blue Cross said in its filing. "Instead, Aetna apparently hopes that innuendo and baseless conspiracy-mongering will win the day."

Aetna also questions why Sheila Platts, who was on the evaluation committee, left the department and went to work for Blue Cross. The company mentions "financial issues that were plaguing her" in its amended petition motion, and Blue Cross said that's an allusion to her recent bankruptcy filing.

The department said Aetna is wrong in alleging that Platts went to work for Blue Cross “almost immediately upon completing scoring" with the evaluation committee because more than five months passed in between. Platts said in a deposition that she "merely responded to a public job listing months after the RFP decisions were announced and was hired into a job where she does no work on Medicaid projects," according to Blue Cross' filing.

Aetna has also pointed to Sarah Gregosky, though her name is misspelled in the company's petition, an evaluation committee member who worked for Blue Cross previously. DHHS said she was at Blue Cross North Carolina for about a year and left in October 2016.

Blue Cross called it "unsurprising and unproblematic" that Gregosky worked there.

DHHS said that Jay Ludlam, the department's assistant secretary for Medicaid transformation and one of the DHHS officials Van Vleet reported her relationship to, used to work for Aetna.

Aetna said in a statement Friday that no one disputes errors were made in the contracting process, and that this calls "into question the integrity of the procurement."

"What is in dispute is whether these irregularities were honest and inconsequential, or were they intentional efforts driven by conflicts of interests or other biases to manipulate the scoring to benefit one of the bidders over others," a spokesman said in the statement.