The private prison industry takes in over $5 billion per year in revenue. Companies
like Corrections Corporation of America and the GEO Group (formerly Wackenhut
Corrections) employ thousands of people across the United States. Other vendors
provide specific services to government correctional facilities such as food
preparation and inmate healthcare.
The Justice Department says that as of 2013, there were 133,000 county, state and
federal prisoners housed in private prisons. Hundreds of thousands more rely on
private healthcare vendors.
Because private prisons and medical services vendors need to earn a profit, there is
constant friction between returning a healthy profit for investors and providing
adequate care to the inmate population. That friction is often most visible when
dealing with inmate healthcare needs.
As America’s population ages and healthcare grows more costly each year, the
question becomes who should bear the cost of care. Depending on the service and
the contract, that responsibility may belong to the government or the vendors. One
thing is certain, however. Inmate healthcare isn’t reimbursable by Medicaid.
If a private prison vendor falsely certifies that it is providing adequate healthcare or
if the vendor improperly bills Medicaid, there may be a violation of the False Claims
Act. That law allows whistleblowers to collect an award for reporting fraud
involving government dollars. Many states have a similar statute for fraud involving
There haven’t been many cases filed yet but the violations are common.
As an example, a prison healthcare vendor that bills a state corrections department
for 1000 hours of physician time but only provides 500 hours of nurse practitioner
time is guilty of fraud. If the state has a False Claims Act, the employee, guard or
even inmate reporting the violation may be eligible for an award of up to 30% of
whatever the government collects. With triple damages and penalties of up to
$11,000 per each false invoice submitted, awards can add up quickly.
Another example is the private prison operator who takes an inmate outside the
facility for specialized treatment and then attempts to coerce the provider to bill
Several years ago industry giant Corrections Corporation of America was
investigated by the Florida Attorney General’s Medicaid Fraud Control Unit. The
investigation found that “CCA routinely directed or otherwise caused outside
medical providers to bill Medicaid for [care] in violation of Florida and federal law.”
The Attorney General also found that CCA often required inmates or their families to
provide medications for pre-existing illnesses. Family members often complied and
used the inmate’s Medicaid benefits to pay for those prescriptions.
We suspect that the quality of the medical care delivered in many facilities is often
substandard in terms of what the provider’s contract requires. Although there is
sometimes a code of silence both within the inmate community and among guards,
we know that similar substandard care issues abound in nursing homes. Why would
prison healthcare be any better?
To qualify for a whistleblower award, one must have original source (inside)
information about a vendor or company committing fraud. To qualify for an award,
there must be a government program or funds involved. By there very nature,
private prisons and healthcare relies on contract payments from the government.
To obtain an award, you must file a sealed lawsuit in court detailing the fraud and
your source of knowledge. Complaints remain secret while being investigated by the
government. There are also anti-retaliation provisions available to address
employees who are fired or demoted because they stood up and reported fraud.
Lest you think the rewards aren’t real, the U.S. Department of Justice paid out over
$635 million of awards last year. How do we know? Our whistleblower clients
received over $100 million of that money.
About the author: Brian Mahany is a whistleblower lawyer and author. He operates
a nationwide whistleblower and Medicare fraud practice based in Milwaukee.
Earlier in his career, he served as a state certified corrections officer with the
Somerset County (Maine) Sheriff’s Department. Brian welcomes questions,
comments and referrals. All inquiries are protected by the attorney client privilege.
Contact him at (414) 223-0464 or by email at http://mahanyertl.com.
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