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ABC for Health filed a notice of claim with the state attorney general's office Thursday against top Walker administration officials, the first step in a potential lawsuit over the administration's decision to terminate a contract that would have given the public interest law firm $238,000 to help consumers navigate health care reform.

The money was part of a $637,114 grant issued to Wisconsin through the national health reform law. Insurance Commissioner Ted Nickel returned the grant to the feds in February, calling it "largely duplicative and unnecessary" and "a waste of taxpayer's money." The Walker administration has joined a multi-state lawsuit seeking to declare the federal law unconstitutional.

ABC's notice claims Insurance Commissioner Ted Nickel, his deputy Dan Schwartzer, Health Secretary Dennis Smith, his deputy Kitty Rhoades, and Gov. Walker's deputy chief of Staff Eric Schutt "wrongfully terminated" the firm's November 27 contract with OCI. The firm will seek damages equal to the $238,000 grant, a quarter of its estimated budget this year.

ABC's executive director Bobby Peterson claims the administration's decision to revoke the grant is an effort to "drive the stake through federal health care reform" and to weaken the ability of consumers to have a voice in how the federal reforms are implemented in Wisconsin. He also says administration officials, several of whom were health insurance executives before joining the Walker team, view advocacy organizations like his as pesky threats.

Finally, Peterson claims the termination of the grant could be retaliation for critical remarks he made about Walker in a November Capital Times story. "He is overreaching and misreading the election results," Peterson said in my post. "The Republicans were swept into office, but this is not a Republican love fest. He is poking the angry bear. He will just arouse another base, and it won't be the Tea Party, it will be people concerned about health care coverage."

Peterson says other advocacy and consumer groups are now afraid to speak out for fear they could lose funding, too. "It's already having a chilling effect," he says.

At a health conference several weeks ago, Smith said the grant was yanked because there were other less expensive ways to provide similar services to consumers, the same assertion made by Nickel in his February press release about the revocation of the grant. "We believe that saving taxpayers, whether they are federal or state taxpayers, from unnecessary spending is in everyone's best interest." Nickel said.

But Peterson says that his staff had worked closely with the Doyle administration and the former insurance commissioner to avoid such duplication.

Documents acquired by ABC through an open records request suggest that the Walker administration had decided to terminate the grant days before they even bothered to review a progress report from ABC. "It was fait accompli," Peterson says. "This is a political decision guided by industry insiders."

Nickel had worked for nearly 18 years with Church Mutual Insurance Company in Merrill as Director of Governmental and Regulatory Affairs before Walker made him the state's Insurance Commissioner. Nickel had also served as chair on the Board of Directors of the Wisconsin Insurance Alliance and on the board of directors of the Wisconsin Insurance Security Fund.

Schwartzer, a lobbyist with the Wisconsin Association of Health Underwriters, worked in the industry for 28 years before his current appointment as Nickel's deputy.

Walker deputy chief of staff Schutt is a former executive with UnitedHealth Group.

A press release about his appointment as Insurance Commissioner notes that Nickel's experience as an insurance industry executive makes him "well suited to understand the pressures facing companies." In the release, Nickel spoke about how he saw his new post: "Compliance with insurance regulations is a complex task for companies," he said. "Governor Walker wants to ensure that these regulations protect consumers while not overburdening companies."

Peterson says that the decision to terminate ABC's contract suggests that OCI cares more about the not-overburdening-companies part of this balancing act than protecting consumers.

In one of the memos obtained by Peterson's group, OCI argues for terminating ABC's contract because "alternative resources" are available to assist consumers having trouble with Medicaid programs and private insurance, including OCI staff and web sites. "Good luck getting a state web site to help coach you through an insurance or Medicaid appeal," Peterson says.