Judge dismisses Paramount lawsuit over Medicaid contract [The Blade, Toledo, Ohio]

Nov. 9—COLUMBUS — A Franklin County judge on Tuesday threw out the lawsuit filed by Paramount Advantage, the insurance arm of ProMedica, alleging that the Ohio Department of Medicaid had improperly shut it out of a lucrative managed-care contract.

Paramount will appeal, attorney Shawn Organ said after the ruling. The company has said 600 jobs could be at stake.

Common Pleas Court Judge Julie Lynch denied Paramount's request for an injunction against the state, saying it failed to meet the high hurdle of proving the state intentionally acted on a bias against the company. Paramount was the only current provider not to get a contract.

"Paramount does not win on the merits, and the harm of not being awarded a new contract is not irreparable," Judge Lynch said. "...At most, it is the cost of creating the application. The issuance of the injunction would disrupt the new Medicaid program launching in July of 2022, which is the culmination of years of hard work, and it is designed to improve the health care for 3 million Ohioans,"

Paramount rested its case without calling state Medicaid Director Maureen Corcoran to the stand after the judge had greatly limited what the company's attorneys could ask her. The topics would have been limited to her roles in the final decision-making and the selection of those involved in the application review process.

"Obviously, we disagree with the outcome," Mr. Organ said outside the courthouse. "We believe there was bias."

The company had challenged the department's selection of six competing companies to provide managed-care services for 3 million Medicaid clients as part of a total of $22 billion in five-year contracts. The company had sought contracts to serve Ohioans in the western and northeastern portions of the state.

It contends the rules of the process were changed in midstream to rig it against regional companies in favor of national names with experience in multiple states, despite Paramount's two decades of experience in Ohio. The company was the sole Ohio-only company bidding for a contract.

The company also argued that the application reviewers were biased against it because in 2019 it had pointed out an error in patient assignment algorithms that it contended would have cost the company $100 million.

Mr. Organ told the court it had intended to ask Ms. Corcoran about the 2019 incident and the resulting $66 million the state had to repay Paramount as a result. It wanted to question her about the selection of the consultant company that assisted in the process and the ultimate selection of national companies that had been previously sued or accused of bilking taxpayers.

Medicaid has countered that Paramount was hurt because it did not sufficiently buy into the new direction that Gov. Mike DeWine's administration was pursuing to reverse the state's standing as a poor performer in health outcomes relative to how much it spends. A study ranked it 46th nationally.

Judge Lynch said she found the team of evaluators that scored all of the applications to be credible witnesses. That team, with members consulting with each other, had graded Paramount poorly in a number of application subjects.

"Not one single evaluator testified that they held any bias or ill will towards Paramount," the judge said. "The consensus team's comments illustrate Paramount's failure to focus on critical innovative components of the future program, including the focus on members and individualized care. Paramount's own president, Lori Johnston, testified that 'I don't think they had any intentional bias'."

The case had been closely watched by the winning companies who feared a ruling in Paramount's favor would upend their own contracts.

The appeal would be filed with the Columbus-based 10th District Court of Appeals. In addition to the limits on questioning Ms. Corcoran, Mr. Organ said the appeal would object to Judge Lynch's decision Tuesday not to allow the testimony of an "expert" on bias in decision-making.

Judge Lynch did allow the testimony of an expert witness on statistics.

Willam Notz, professor emeritus in statistics at the Ohio State University, testified that the chances that Paramount would have had so many below-average final scores emerge from the consensus of the evaluation team members would be "surprisingly," "unusually," and "improbably" low.

These overall final scores emerging from an interactive discussion among the evaluators came out below the raw individual scoring on those issues going into the final consensus discussions.

But on cross-examination, Mr. Notz agreed that even if Paramount had scored at the average level on the subjects in question, its application would still have scored below the winning applicants.

First Published November 9, 2021, 10:53am

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