Private Company to Manage State’s Insurance Claims in Louisiana

Louisiana lawmakers have agreed to a $68 million, five-year contract to hire a Mandeville company to run much of the claims processing and management currently handled by the state’s Office of Risk Management.

The risk management office is the state’s self-insurer, with agencies paying premiums for lines of insurance covering items like medical malpractice, worker’s compensation cases, property damage and road hazards.

The privatization contract, sought by Gov. Bobby Jindal’s administration and approved by the Legislature’s joint budget committee, will shift much of the risk management’s workload to F.A. Richard and Associates Inc., phasing in the privatization over several years.

Commissioner of Administration Angele Davis, the governor’s top budget adviser, told lawmakers the contract would save the state $20 million over five years and would improve claims processing.

Opponents questioned the cost savings estimates and expressed concern about the layoff of 85 workers in the risk management office – though Davis said all of those employees were offered work by F.A. Richard and Associates.

The contract will begin July 1. It was awarded through a competitive bid. House members on the budget committee voted 11-6 for contract approval, while senators backed it 5-3.

Topics Claims Louisiana