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Subpoenas issued in Maryland health exchange probe

Federal auditors looking into Maryland's flawed health insurance exchange are subpoenaing documents as part of their probe and have sought information from the lead contractor hired by the state to build the site.

North Dakota-based Noridian Healthcare Solutions, the former prime contractor with a multimillion-dollar deal to design Maryland's online insurance marketplace, received a request for documents related to the project from the inspector general of the U.S. Department of Health and Human Services on July 30, the company's president said Tuesday.

Tom McGraw, Noridian's president and CEO, said the company "is cooperating fully as [the inspector general's] office continues its ongoing review" of the exchange.

Rep. Andy Harris, a Baltimore County Republican who requested the federal review in February, was the first to discuss subpoenas publicly on Tuesday. He described the latest development as a widening of the investigation, and said the subpoenas indicate auditors may be targeting more serious issues than a glitch-prone website.

"The Office of Inspector General has moved this from an audit into a full blown investigation," Harris, a critic of the national law that established the health exchanges, said in a statement. "Those who wasted and abused taxpayer money, including politicians, must be held accountable."

Maryland spent millions on the exchange — much of it federal money — but the site crashed on its first day of operation last fall and suffered technical problems for months. State officials, who have since cut ties with Noridian, are retooling the site this year.

Harris declined to say who he believes received subpoenas or what, specifically, is being requested. Donald White, a spokesman for the U.S. health department's inspector general, would not confirm that any such requests for information had been issued.

Maryland officials have long blamed the troubled rollout on its contractors. Two subcontractors involved with the project — EngagePoint and IBM — did not respond to questions Tuesday about whether they had received subpoenas from the inspector general.

State Republicans immediately attempted to turn the developments into a political liability for Lt. Gov. Anthony G. Brown, the Democratic nominee for governor in this year's election. Harris repeatedly noted Brown's role in overseeing the health care law's implementation, and his comments were followed by critical statements from the Maryland Republican Party and Brown's GOP opponent, Larry Hogan.

"Lieutenant Governor Brown was in charge of the exchange, and it appears fraud may have gone on under his watch," Harris said.

It is not clear whether a subpoena has been targeted at any state employee or elected official. A Brown campaign spokesman flatly denied that the lieutenant governor or any of his top aides had received one.

"It's disappointing that Congressman Harris would mislead the people of Maryland and play political games with a federal investigation," Brown campaign manager Justin Schall said in a statement. "But it is clear that the Republicans will say anything to achieve their extreme right-wing agenda."

Christopher Garrett, a spokesman for the Maryland Health Benefit Exchange, said that his agency had not received any subpoenas and that officials are "in close communication with the inspector general."

Garrett would comment only on the exchange, though, not on other state offices. A spokeswoman for Gov. Martin O'Malley declined to discuss the subpoenas, referring questions to Garrett.

Although Harris and other Republicans repeatedly argued Tuesday that the subpoenas indicate the inspector general is widening the probe, several independent experts warned against reading into the direction of an investigation based on subpoenas that, for now, have been shielded from public view.

They noted that a subpoena does not mean a person or company is being targeted by investigators. Several experts said inspectors general typically have unfettered access to documents created by government employees or current contractors, but a subpoena may be necessary to obtain information from former contractors — Noridian, for example.

Investigators could be looking into a broad range of issues, including whether companies falsely reported their progress or misrepresented the qualifications of their programmers, experts said. The requests for information could also have little to do with the contractors at all.

"What it does show is a suspicion of something more serious," said University of Baltimore law professor Charles Tiefer.

The exchanges were established by President Barack Obama's Affordable Care Act to help people who don't have coverage through work or a government program to compare and purchase private health plans. Although Maryland's site was among the worst-performing in the nation, state officials say more than 400,000 people eventually signed up for coverage.

A significant amount of public funding has been used to develop and repair Maryland's health exchange. Maryland expects to spend $261 million on the exchange by the end of 2015 — more than 80 percent of it federal money. The state is likely to spend additional federal money as part of its effort to re-work the site with software developed by the state of Connecticut.

In Oregon, where the exchange's rollout was similarly flubbed, state officials last week sued the contractor involved, Oracle America, alleging fraud, civil racketeering and other issues. The company said the lawsuit was a "fictional account of the Oregon Healthcare Project" and "a desperate attempt to deflect blame from Cover Oregon and the Governor for their failures to manage a complex IT project."

john.fritze@baltsun.com

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meredith.cohn@baltsun.com

Copyright © 2014, The Baltimore Sun
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