Legislature's Contract With Bancroft DC Law Firm To Sue Governor Walker Over Medicaid Expansion

This post began with me wanting to just post the contract between the Alaska Legislative Council and the Bancroft law firm.  But as I tried to explain the context it got more and more complicated.   I was trying to figure out what the push was all of a sudden to get approval and to skip the Senate's approval.   Eventually it became clear.  And while I don't think I have anything here that hasn't already been published by someone somewhere, I think maybe I've put the pieces together in an easier way to follow it all.  Or maybe it just makes sense to me because I've now spent so much time doing this.

There was a fair amount of sturm und drang over Rep. Craig Johnson ignoring the legal opinion that both the House and the Senate had to vote to approve the appeal.  It makes sense to me now.  I'll say it here, and then the rest puts it all into context with some commentary on how I found my way through this maze.   So here's the skinny as I see it:

There's a 30 day window in which to appeal to the Alaska Supreme Court.  Although the judge's decision is dated March 1, 2016, which would appear to make the deadline March 31, there is something else in the court record called the "Final Judgment" which is dated April 5, 2015.  Thus the magic drop dead date was May 5, 2015 - 30 days later.  

So no matter what the legislature did or did not do, if the appeal wasn't filed in the court by May 5, 2016, there wasn't going to be an appeal.  So, apparently Johnson went and filed the appeal by the deadline in the hopes that the attorneys will be able to win any challenges to his authority to file the appeal without the House and Senate voting to move to Phase 2 of the contract with the DC law firm, Bancroft PLLC.  


Now, here's the post I was working on that led to the conclusion above.

I've posted the full contract below.  You can just scroll down and read it all.  But for those who are a little fuzzy on all this, here is some background.

As briefly as I can:

1. Congress passed the Affordable Care Act in 2010 and President Obama signed it
2. Republicans around the country did everything they could think of to kill the Affordable Care Act, including filing lawsuits saying it was unconstitutional.
3. The first challenge to make it to the Supreme Court was decided in 2012 and it upheld the Affordable Care Act.  An attorney - Paul Clement - for the law firm of Bancroft PLLC represented The National Federation of Independent Business, et al
4. The second challenge to make it to the Supreme Court was decided in 2015.  Again the Affordable Care Act was upheld.
5. About this time expansion of Medicaid in Alaska as called for by the Affordable Care Act was not making its way to the governor's office in Juneau.  So the governor expanded Medicaid administratively.
6. When the legislature is out of session, the Legislative Council does necessary business  on behalf of the whole legislature.  The Council voted to sue the governor over his decision to expand Medicaid.  And they asked the court to block the expansion until after the case was heard.
7. The court rejected blocking it and the Alaska Supreme Court did too.
8. The Legislative Council's suit  lost in the Alaska Superior Court in March 2016.
9. The Alaska Legislature is currently in overtime, having been unable to complete their work in the 90 day session.  The Legislative Council has some specific duties, but most importantly, acts in lieu of the State Legislature when it is out of session. But not when it is in session.
10. The House of Representatives has approved extending the contract and told Bancroft to file an appeal.  (Well, I thought this was true when I wrote this, but it appears that neither body voted to approve going to the contracts Phase 2 (which will be explained below))
11. The Democrats are pointing to a letter from the Legislature's legal counsel to Senator Gary Stevens, saying that when the Legislature is in session, decisions to take legal action require approval of both houses of the Legislature.  The decision to move ahead was only approved by the House.  (And apparently not even that, though I admit I'm confused on this.) An attorney I talked to about this speculated there was a deadline for the appeal and so they wanted to go ahead and file it before that deadline passed.  If they didn't they couldn't keep harassing the governor on the state level and the ACA on the federal level, and the Bancroft PLLC would forego the Phase 2 $150,000 and the continuing guerrilla warfare against ACA.  But I checked.  The Alaska Courts website says you have 15-30 days to file an appeal (depending on the type of case.).  The case was decided on March 1.  So even if it were working days and not calendar days, it's been over 60 days now, surely that's more than 30 working days.  But as we all know, reading the law with just a little bit of knowledge can be dangerous.  Obviously they're still planning to appeal.  So either there are provisions that allow extensions of that time, I've misread it, or they've already filed the appeal.  But if that were the case, it would be on the record.  You can see why so few reporters really dig in to get all the details of the story.  One thing just leads to another.  I'm tired and I'm not going to try to figure out how to look up if there has been an appeal filed already.  Someone else can do that.  [I'm leaving this all in so you can see all the false paths I explored before finding the right one.]

Well, I couldn't just abandon it at that point.  I have looked up cases before so I poked around on the Alaska Court System webpages for searching cases.  It's much easier than it used to be, though I did come up with different things in different searches.  

It was, in fact, about deadlines.  The case was filed May 5.  It says the case was settled April 5.  But the judge's ruling is signed March 1, 2016. 

But on the appeal it says the final judgment date is April 5, 2016.  The red on the upper left marks the appeal filing date - May 5, 2015.  The red in the middle on the right shows the trial court judgment date as April 5, 2016.  This is really so as the court judgment document above shows.  

Click to enlarge and focus these images originally from Alaska Court System

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But further poking around shows that even though the decision was made on March 1, 2016, there is another date - April 5, 2016, that's labeled "Order:  Final Judgment Case Motion #22."  The information below is from this court system page.  Just keep scrolling down when you get there.  But here I've distilled the key dates and put them into this table:

03/01/2016	Case Dismissed. Case Closed
03/10/2016	Motion for Entry of Final Judgment Attorney: Borghesan, Dario (1005015) Filing Party: Walker, Bill; Davidson, Valerie Case Motion #22
03/23/2016	Non-Opposition to Defendants' Motion for Entry of Final Judgment Attorney: McKeever, Timothy A. (7611146) Case Motion #22: Motion for Entry of Final Judgment
04/05/2016	Order: Final Judgment Case Motion #22: Motion for Entry of Final Judgment
05/05/2016	Appeal Filed in the Supreme Court Case No: S-16309

So there it is.  Johnson was going on the advice that it is better to ask forgiveness than ask permission.  There just wasn't time to get permission.

Below is the whole contract so people can see it for themselves.  My layperson's eye doesn't see anything too unusual.   It's really the whole idea of spending $400,000 to try this Hail Mary lawsuit, that's at issue, more than details of the contract.  But since it's been bandied about, we ought to be able to read the whole thing.   I've noted a few highlights.  There's some seemingly weird language like the clause on Human Trafficking, but I figure that's boiler plate that has to be in every state contract.

Maybe others with more legal experience or knowledge of the players will point out things I overlooked.

Highlight 1:  This is a two phase contract.  Each phase is a flat fee.  By starting the appeal, it looks like the second clause begins and the company gets the final $150,000 payment. From the contract (see whole contract at end of post):

1. "Phase 1 - the flat fee for consultation, advice, and handling the court action until a final judgment or other resolution of the court action in Superior Court will be $250,000; the Committee will pay the Contractor $100,000 when this Contract is entered into, and $150,000 when services in the Superior Court are completely rendered. If the Project Direction elects to not proceed to the Supeme Court, then Phase 2 does not apply and the services and payments re complete.
2. Phase 2 - the flat fee for handling any appeal to the alaska Supreme Court (and subsequent Superior Court action if sent back to Superior Court) will be $150,000; the Committee will pay the Contractor $75,000 when the Contractor files the first brief and $75,000 upon final resolution."

So, it seems that the House's move to appeal, automatically gets us to Phase 2 - $75,000 for the first brief - the appeal I assume - and then another $75,000 when it's all done.  Chump change for the Majority it seems.   $150,000 would pay for two starting teachers in the Anchorage School District, their benefits, and still leave something on the table.    This can only benefit the law firm.  It's hardly likely to win.  And if they win, then Alaskan general health will lose.   So I can only guess that key legislators were leaned on to help this law firm pick up another $150,000 on top of the $250,000 they got for Phase I.

Think this through.  $400,000. [I'd note here that the Independent/Democratic Coalition has put out a press release saying that $300,000 has already been spent with $150,000 left to go for a total of $450,000.  Maybe something changed since the contract, but the contract is pretty clearly for $400,000 total.]  If we pay the attorneys $400 per hour, that's 1000 hours.  If we assume attorneys work 50 hour weeks, that's 20 weeks, about five months, full time.  Much, if not most, of the work would be done by para legals who get paid way less that $400 per hour.  And most of the legal research Bancroft has already done in prep for their other Obamacare challenges.

Note:  I first posted about this law firm and its role in representing 26 states that fought Obamacare to the Supreme Court August 19, 2015 when the lawsuit was originally announced.  Then I posted again a couple of weeks later when the Legislature lost their lawsuit.  And I'd note that Paul Clement, the attorney who lost the 2012 case at the US Supreme Court is listed as one of the attorneys in the Alaska case that lost in Superior Court.

Sorry for getting sidetracked there, but those two old posts give a lot more relevant background on the firm.

Highlight 2:  Contract goes from August 18, 2015 until "completion of the legal services required by Clause 1, or August 1, 2017."


Highlight 3:  Interest rate for late payment (after 90 days) is 1.5% per MONTH which comes out to an annual interest rate of 18 - 19% depending on whether it's compounded or not.  Credit Union 1 offers 0.30% on a premium savings account with $100,000 or more in it.  They offer rates between 4 and 7% for boat and vessel loans up to $250,000.  Is that a fair comparison?  After all, this is for a late payment after 90 days, so the first three months are interest free.  And the state should be good for the money, right?  Well, that used to be true.


Highlight 4:  The Project Director and Vice Project Director

"The Project Director and Vice Project Director are the persons appointed by the Presiding Officers of the Alaska State Senate and the Alaska State House of Representatives  The Project Director under the Contract is Chad Hutchison, for the Alaska State Senate.  Mr Hutchison is is [sic] authorized to oversee and direct the activities of the Contractor under this contract and shall, unless otherwise stated in this paragraph, approve all billings from the Contractor.  The Vice Project Director under this Contract is Mark Higgins for the Alaska State House of Representatives. Mr. Higgins is authorized to oversee the activities of the Contractor under this contract. .  ."

A quick internet search doesn't tell us too much about these men.

Chad Hutchison, according to a brief description under an opinion piece in the Juneau Empire, is a Fairbanks attorney and staffer for Sen. Coghill.  The opinion piece argues passionately for this lawsuit and I found it, on the whole, using logic and reason to make his points.  We can argue about his assumptions and I didn't fact check it, but it's not the kind of empty explanations we've been hearing from Juneau's finest.  Apparently there's another Chad Hutchinson who's Director Fairbanks Pipeline Training Center Trust and a longtime member of the Operating Engineers Union.

Mark Higgins is a staffer for the House Majority.  He's served as a political consultant and as a lobbyist for the Kenai Peninsula Borough.  Higgins was the subject of concern back in 2009 when Rep. Craig Johnson wanted to hire him to finish a 'long overdue report' on fisheries for a task force with which Higgins' wife, Debra, was involved, if I can untangle the story, as an aide to Rep. Johnson.   Senators Stedman, Harris, and Coghill had problems with the appointment because of the apparent conflict.  Johnson said he couldn't find anyone else with Higgins unique qualifications - his ability to write, his background in fisheries, and his knowledge of the law.  Johnson is quoted,

"If I thought there was a better person out there I would have certainly tried to get that person," he said.

That's about as clear as most politicians are going to get.  He didn't think there was anyone with better qualifications.  Which suggests he didn't look. Seems to me there are lots of Alaskans who know about fisheries, the law, and can write.   Reading between the lines of that article, I'd say Johnson  had this overdue report and they were getting some pressure to get it done and someone in the office said something like, Mark could do that.  But when you read between the lines even with some knowledge of how organizations work and a good imagination you can end up anywhere from close to way off.


Anyway.  Here's the contract.  I know, by now, anyone who didn't just skip everything and come directly here, is already asleep.  But if you're still awake and ready to tackle the contract, go get yourself a chocolate chip cookie as a reward.  Or a bowl of strawberries if you prefer.  Maybe with some vanilla ice cream.

Alaska - Bancroft Lawsuit Contract