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DentaQuest Sues Procurement Director Over Dropped Medicaid Bid

3 min read

Procurement Director Edward Armstrong must have a feeling of deja vu.

Disclosure provisions in the state’s competitive bidding process have landed him in the hot seat again, this time as a defendant in a lawsuit filed last week by DSM USA Insurance Co. Inc. of Boston, better known as DentaQuest.

The complaint, filed by the McDaniel Richardson & Calhoun law firm in Pulaski County Circuit Court, also names the Office of State Procurement and the Department of Finance & Administration as defendants. It claims Armstrong unfairly disqualified DentaQuest after it finished first among four companies in the bidding for two companies to provide dental HMO services for the Arkansas Medicaid program.

The OSP named DentaQuest and Delta Dental of Arkansas as the anticipated contract winners in December, but that wasn’t the last word.

Armstrong disqualified DentaQuest in February after fourth-place MCNA Insurance Co. protested, claiming that DentaQuest had failed to disclose a resolved Massachusetts lawsuit in its bid documentation. Armstrong also disqualified Liberty Dental Plan, the third-ranking vendor in the bid evaluations, leaving MCNA and Delta Dental as the two companies left to provide the services.

It was Armstrong’s decision in another disclosure matter — whether the advertising firm CJRW should have listed its client Oaklawn Racing & Gaming as a potential conflict of interest in the competition for a $34.5 million marketing contract for the Arkansas Scholarship Lottery last year — that incurred heat from state legislators in January. In that case, Armstrong rejected protests, finding that disclosure was required only of the “successful bidder” in the competition, which wouldn’t apply until after the contract was awarded.

Lawmakers thoroughly questioned that logic in two hearings, but the CJRW contract was eventually approved.

One Upheld, One Denied
In the current case, DentaQuest holds that Armstrong’s decision was improper. First, it says that the one section of the Massachusetts suit making claims against DentaQuest was dropped, and that failing to disclose the non-pending suit should have been waived as an immaterial omission in any case.

It points out that even the agency letting the Arkansas dental contract — the Department of Human Services — “expressed its view that DentaQuest should remain as a contract awardee.”

After being notified of its disqualification, DentaQuest filed its own protests, highlighting several disclosure failures by MCNA, including fines and a corrective action plan resulting from Medicaid lapses in Texas and Louisiana, the complaint said. “Unlike the alleged DentaQuest omission,” the lawsuit said, “MCNA failed to disclose actual sanctions against it that went directly to MCNA’s own performance …”

On March 24, Armstrong denied DentaQuest’s protest but did not address the substance of its objection to MCNA’s disclosure failures. Instead, Denta-Quest’s complaint says he “avoided the issue” by finding that DentaQuest “was untimely in providing this information about MCNA.”

The lawsuit, saying that “OSP never explained, nor justified, its disparate treatment” of two similarly situated bidders, asks that the “OSP decisions granting MCNA’s protest, and denying DentaQuest’s protest, should be reversed” and that DentaQuest be reinstated as a qualified bidder.

Jake Bleed, a spokesman for OSP and the Department of Finance & Administration, responded to questions about the lawsuit in an email: “We do not have a comment,” he said.

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