Jason Clayworth

jclayworth@dmreg.com

A company ejected from Iowa’s controversial plan to privatize Medicaid management failed to show the state acted improperly, a judge said in a ruling made public Monday.

WellCare’s lucrative multi-million contract was terminated by Iowa in December following court testimony and records showing company officials — including former state representatives-turned WellCare operatives Christopher Rants and Renee Schulte — engaged in prohibited communications, including an effort to uncover the secret identities of committee members reviewing the bids.

WellCare has denied it broke the rules or created a situation where it had an unfair advantage over competing bids. The company has asked the courts to force Iowa to honor the contract.

But in a ruling issued Monday, Polk County District Court Judge Robert Blink rejected WellCare’s arguments. The Iowa Department of Human Services and Janet Phipps, the director of the Iowa Department of Administrative Services, acted within the scope of their authority to terminate the contract, Blink ruled.

“There is substantial evidence to conclude that WellCare violated the blackout period and to support disqualification,” Blink wrote.

Appeals, which could continue for years, are possible.

But, for now, Blink’s ruling means that Iowa will continue to proceed with plans to privatize the $4.2 billion program with three rather than four private insurance companies.

Those companies: UnitedHealthcare, Amerigroup and AmeriHealth will be paid as much as $504 million in the first year to manage the program used by 560,000 poor or disabled Iowans.

WellCare spokeswoman Crystal Warwell Walker said Monday the company is reviewing the decision as well as its next steps but but offered no further response.

Meridian, a company that was not selected to manage the program, also lost its argument that the entire bidding process was so drastically flawed that Iowa should scrap all the selections and start over. Blink ruled that the state did not abuse its discretion in selecting winning bidders.

Gov. Terry Branstad has pushed for privatization, estimating it will save the state $51.3 million in the first six months. Critics note problems in other states as well as hundreds of millions of dollars in fines or penalties paid by the companies Iowa has hired as evidence that savings — if any — will come at the cost of substandard health services to Iowa’s most vulnerable populations.

Federal officials in December said Iowa was not prepared to make the transition on Jan. 1 as planned by the Branstad administration. Iowa still awaits final approval to launch the program as early as March 1.