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Using Qui Tam Lawsuits To Expose Mistreatment And Fraud By Prison Contactors

Date Published
Apr 22, 2013

The Pew Center on the States has estimated that 1 in 100 Americans is in prison. Thousands more immigrants are in civil detention. That means big business for private security contractors, as federal and state governments increasingly rely on private prison companies to detain those accused or convicted of crimes. And the federal government also uses an extensive network of privately-run detention facilities for immigration enforcement purposes. Frequent complaints regarding the treatment of detainees at privately-run facilities raise serious questions about potential violations of detainees’ civil liberties, and may also give rise to claims under the federal False Claims Act or its state counterparts.

As late as 1980, no privately-run prisons existed in the United States. Today, over 100,000 prisoners are held in such facilities and privately-run immigration detention facilities, the latter largely located in Florida and along the southern border with Mexico. Contracts for operation of detention centers uniformly require private companies to maintain minimum detainee treatment standards outlined in federal and state regulations. For example, in the immigration detention context, Immigration and Customs Enforcement (“ICE”) maintains “Detention Standards” that require, inter alia, adequate food, medical care (including mental health and dental care), recreation opportunities, sanitation, clothing, and personal hygiene items. Of course, all Constitutional requirements are also in effect at privately run but publicly funded detention centers. To the extent companies mistreat prisoners or detainees, provide substandard medical care, or even provide substandard food (or not enough of it), those companies may be defrauding Federal, state or local governments.

Unfortunately, numerous studies and news reports indicate that these abuses may not be uncommon. The two largest and most influential prison companies in the United States are the GEO Group (formerly part of Wackenhut) and Corrections Corporation of America (“CCA”). Numerous complaints against both have been made public in recent years. GEO, which contracts with 13 states, the Federal Bureau of Prison, the U.S. Marshals Service, and ICE, has been the subject of governmental enforcement action at least once. In March, 2012, the U.S. Department of Justice (“DOJ”) announced, after a comprehensive investigation, that a Mississippi facility run by GEO had systematically violated the constitutional rights of detained youths. According to DOJ, evidence revealed “systematic, egregious and dangerous practices” at the facility. GEO immediately withdrew from its contract. While no civil litigation has been publicly disclosed, it is likely that such violations breached the contract GEO had with the State of Mississippi.

CCA has had trouble too. In 2005 the Florida Attorney General’s Medicaid Fraud Control Unit issued a report outlining wrongdoing committed by CCA at facilities it ran in Citrus and Bay Counties, Florida. According to the report, CCA submitted claims to the State of Florida Medicaid program–even though the terms of CCA’s contract required CCA itself to pay detainees’ medical costs, and even though Medicaid is not available as a payment source for outpatient medical services provided to inmates in Florida. The state alleged that CCA employees had instructed outside providers, “both verbally and in writing, to bill Medicaid for inmate care before submitting a bill to CCA.” CCA agreed to a $300,000 settlement with the state to settle litigation under the Florida False Claims Act.

Even at non-privatized prisons and detention centers, many functions essential to the facility’s operation may be privatized. Over the past decade, Federal, state, and local governments have turned to private companies in an effort to cut the cost of feeding, housing, transporting, and treating detainees. This, too, creates an opportunity for fraud. For example, a whistleblower brought a qui tam case under New Jersey’s false claims statute, alleging that from 1996 through 2005, a company called AllCare, which furnished dental services to inmates of New Jersey’s prisons, submitted false claims for payment. State ex rel. Hayling v. Corr. Med. Services, Inc., 28 A.3d 1246, 1249 (N.J. App. Div. 2011). While that case was dismissed due to a statute of limitations obstacle, it may be indicative of similar misconduct at other facilities. In another example, a 2012 class action lawsuit on behalf of female prisoners incarcerated in a Virginia prison alleged that a health services contractor at the prison, Armor Correctional Health Services Inc., had failed to provide constitutionally adequate medical care. The lawsuit described health care conditions so inadequate that the plaintiffs had suffered prolonged physical pain and the risk of premature death. The allegations, if true, could also amount to contractual violations and fraud against the state of Virginia.

In the prison food services realm, the most prominent company contracting with prisons and detention facilities is Philadelphia-based Aramark Correctional Services. Aramark provides food and commissary services at over 600 detention facilities nationwide, and, according to its website, serves over 1,000,000 meals a day. Complaints from prisoners at Aramark facilities regarding food quality have abounded in recent years. Aramark was accused of billing the Florida Department of Corrections for meals that were never prepared or eaten and failing to pass on the cost savings for serving less expensive food items to inmates, according to an analysis conducted by Florida’s inspector general. Aramark announced under pressure in September 2008 that it was withdrawing from its contract with the Florida Department of Corrections. Even before the contract’s termination, Aramark had been fined over $241,000 in 2008 alone for foodservice contract violations, including insufficient staffing.

In sum, the improper operation of privately-run prisons and detention centers by contractors, and the provision of substandard services at both private and public prisons, can endanger detainees and may defraud Federal, state and local governments. The federal False Claims Act and state whistleblower statutes are important tools in the fight against substandard detainee treatment and misuse of taxpayer funds. Individuals with knowledge for this type of misconduct-including current or former employees of the contractors-could bring qui tam whistleblower lawsuits, which would expose and stop the wrongdoing. By so doing, these whistleblowers also could receive the substantial monetary awards available under federal and state statutes.

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