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. Linda, I sure hope you are not seeking a law license, for such eighteenth century sentiments could result in your denial in some jurisdictions minting attorneys for our tolerant and inclusive profession.

  2. Mazel Tov to the newlyweds. And to those bakers, photographers, printers, clerks, judges and others who will lose careers and social standing for not saluting the New World (Dis)Order, we can all direct our Two Minutes of Hate as Big Brother asks of us. Progress! Onward!

  3. My daughter was taken from my home at the end of June/2014. I said I would sign the safety plan but my husband would not. My husband said he would leave the house so my daughter could stay with me but the case worker said no her mind is made up she is taking my daughter. My daughter went to a friends and then the friend filed a restraining order which she was told by dcs if she did not then they would take my daughter away from her. The restraining order was not in effect until we were to go to court. Eventually it was dropped but for 2 months DCS refused to allow me to have any contact and was using the restraining order as the reason but it was not in effect. This was Dcs violating my rights. Please help me I don't have the money for an attorney. Can anyone take this case Pro Bono?

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  5. The small claims system, based on my recent and current usage of it, is not exactly a shining example of justice prevailing. The system appears slow and clunky and people involved seem uninterested in actually serving justice within a reasonable time frame. Any improvement in accountability and performance would gain a vote from me. Speaking of voting, what do the people know about judges and justice from the bench perspective. I think they have a tendency to "vote" for judges based on party affiliation or name coolness factor (like Stoner, for example!). I don't know what to do in my current situation other than grin and bear it, but my case is an example of things working neither smoothly, effectively nor expeditiously. After this experience I'd pay more to have the higher courts hear the case -- if I had the money. Oh the conundrum.

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