ILNews

Court rules on privatization, public bidding

Michael W. Hoskins
January 1, 2007
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The Indiana Court of Appeals ruled today that state officials violated the law by not adhering to the public bidding process when privatizing a Fort Wayne development center two years ago.

In Anita Stuller, et al. v. Mitchell Daniels Jr., et al., 02A05-0601-CV-22, the court unanimously reversed and remanded the case to Allen Superior Judge Nancy Boyer with instructions to hold a hearing to determine if a preliminary injunction should be granted.

The 27-page opinion points out that Judge Boyer misinterpreted a state statute governing bidding processes when ruling it didn't apply to an agreement between the state's Family and Social Services Agency and a Pennsylvania-based healthcare company in managing the Fort Wayne State Developmental Center, which housed developmentally disabled adults.

Filed in December 2005 against Gov. Mitch Daniels, Family and Social Services Administration Secretary Mitch Roob, and a third FSSA employee, the suit contends that administration officials ignored a state law requiring bids for a public-private agreement. The complaint stemmed from action earlier that year when Indiana entered a $3 million contract for 18 months with Liberty Healthcare Corp. to manage the center.

An employee, Anita Stuller, and her union, AFSCME Council 62, filed suit to stop the takeover of the facility and require the state to go through a public bidding process before giving control of the center to a private firm. But later that month, Judge Boyer refused to grant the injunction after reading another law authorized the FSSA to use "any procedure it deemed appropriate to acquire Liberty's services."

If that holding stood, the appellate judges wrote that it would practically nullify the provisions of Indiana Code § 5-23-5 in dealing with public-private agreements. Therefore, the trial court's decision "goes against the logic and effect of the facts and circumstances."

"In this sense, every operating agreement may feasibly contain a phrase or particular service which is better served by the unique qualifications of an outside vendor, thereby placing all contracts outside the purview of public-private agreements," Judge Patricia Riley wrote, joined by Judges Michael Barnes and Terry Crone. "Accordingly, based on the evidence before us, we conclude the agreement is properly characterized as a public-private agreement, subject to the mandatory public bidding process."

As the FSSA committed a clear violation of the public bidding procedures, the plaintiffs-appellants suffered irreparable harm per se, according to the court. Touching on whether a preliminary injunction would serve public interest, the court noted the agreement could be as high as $95 million in taxpayer money and used that to reinforce its holding on I.C. 5-23 and the bidding process.

"An abandonment of these requirements would result in a situation where the government is encouraged to grant part of its public duties to private entities without any inquiry from the public," the opinion says. "While we do not object to the government turning to private companies in a desire to minimize costs and to enhance efficiency and flexibility, public oversight is nevertheless statutorily mandated for contracts falling within the realm of I.C. § 5-22."
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  1. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  2. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  3. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  4. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  5. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

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