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$40.1 Million Verdict Against CSC in Texas Prisoner's Medical Neglect Death

by John E. Dannenberg

A Tarrant County, Texas jury awarded $35 million for negligence in the death of a boot camp prisoner, plus $5.1 million in punitive damages, against Florida-based Correctional Services Corp. (CSC) and their nurse Knyvett Reyes. The August 27, 2003 $40.1 million verdict was the largest known award in a convicted prisoner's death, the largest known damage award against a private prison company and the biggest prison or jail verdict against an entity that arguably can pay it.

Eighteen year old Bryan Alexander, who had no prior criminal record, was convicted of drunken driving. Hoping that serving his sentence in a prison boot camp would set him straight, young Bryan opted for Florida-based Correctional Services Corporation's regimented, low-security, 370 bed for-profit boot camp in Mansfield, Texas, rather than just doing jail time.

While in CSC's custody, Bryan complained to CSC Nurse Knyvett Reyes of feeling weak and being ill. Reyes thought he was faking illness, even after observing Bryan coughing up blood for three days. Only then taken to John Peter Smith hospital in Fort Worth, where he was immediately placed in intensive care, was he diagnosed with a rare penicillin-resistant form of pneumonia. Bryan died two days later on January 9, 2000.

Bryan's parents sued CSC, which carried $35 million in insurance. However, the insurance company sued CSC claiming it was not obligated to pay because Nurse Reyes was convicted in 2002 of negligent homicide - a conviction still on appeal. The jury fixed liability at 60% against CSC and 40% against Reyes, but under Texas law, punitive damages in such a case are limited to $750,000 for CSC and $100,000 for Reyes. Attorneys for CSC and Reyes are expected to appeal Alexander's verdict.

The Alexanders' attorney, Bill Lane, told the jury "Unfortunately for Bryan, you are 2 ½ years too late. But you are not too late to send a message to this private corporation that we will not accept the lowest bidder or that the bottom line is worth more than a human life." CSC was paid $2.9 million per year to run the now defunct Mansfield camp, which was closed for other improprieties six months after Bryan's death. Ft. Worth accountant L. Andrew McCartney estimated that CSC was worth $50.8 million, based upon recent Securities and Exchange Commission filings. Between 1995 and 1999, CSC had consistently lost money - first turning a profit in 2000. In the third quarter of 2002, however, CSC closed seven facilities that lost $600,000. Their stock dropped 15.1 % the day the verdict was announced.

On December 2, 2003, visiting U.S. District Judge Roger Towery upheld the jury's verdict and ordered CSC to pay $38 million. The court set actual damages at $37.4 million and reduced punitive damages to the statutory limit of $750,000. CSC announced on December 5 that it will file its notice of appeal by December 16; however, it must post a $25 million bond by December 28 in order to forestall Alexander's family from collecting pending appeal. Interest will continue to accrue at $5,250 per day from the date judgment was entered in September.

CSC's survival appears tenuous. Their insurance carrier, Northland Insurance Co., is seeking a court declaration that its $10 million policy does not cover the judgment. CSC counters that Northland muffed their opportunity to settle out of court for less than $10 million. CSC also has $25 million in insurance with AIG. CSC's stock was down to $2.27 on December 4. See: Alexander v. Correctional Services Corporation, Tarrant County Superior Court, Case Number 236-187481-01.

Attempting to put the best spin possible on this turn of events, on January 6, 2004, CSC issued a press release that its insurance carriers had posted a $25 million bond to allow it to appeal in the case. Lest investors be leery of the company being put up for auction to satisfy the judgment, CSC claims that it has $35 million in insurance coverage to pay the judgment or a settlement if one becomes necessary. It discreetly omits mention of the fact that its insurance carriers are attempting to avoid payment of any judgments in the case.

CSC has a long record of profit-motivated malfeasance plus sexual harassment actions (e.g., $49,000 September, 2003 jury verdict in Ocala, Florida. federal district court, wherein CSC employee Diane Wilbur sued for being fired for refusing sex with her bosses), prison uprisings due to "poorly paid, ill-trained guards," keeping prisoners past their release dates to make more money, brutality against mentally ill prisoners, destroying records on useofforce to avoid prosecution, falsifying documents to avoid losing a $31.3 million Florida contract, and being fined $300,000 by the New York State Lobbying Commission for bribing state legislators [who may in turn be indicted for stealing travel reimbursement funds]. On September, 10, 2003, two federal prisoners escaped from CSC's 391 bed Frio County [Texas] Detention Center.

A riot on January 2, 2003 by 96 Arizona prisoners housed at Newton County Corrections Center (a CSC prison in Texas now housing 600 Arizona prisoners) resulted in busing delays for additional prisoners - costing Arizona taxpayers $415,939. Although busing resumed in February, prisoners there continued to rebel, protest peacefully, demonstrate in groups, go on hunger strikes and even escape to protest their inability to get visits from their families in Arizona. The Arizona Governor's special assistant for corrections said "That [contract in Newton County] has been a financial disaster ... and the governor has definite concerns about privatization." See: PLN, Sept. '02, p 1 Boot Camp or Boot Hill; PLN, Aug. '02, p.1 CSC: Merchant of Misery and Misfortune; PLN, Sept. '03, p.13 CSC: More Misery and Misfortune.

Sources: Los Angeles Times, American Friends Service Committee, Associated Press, CSC Press Release, Ft. Worth Star Telegram, Ocala Chronicle. Source: Sarasota Herald Tribune, Kobs & Haney, attorneys for Alexander.

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Related legal case

Alexander v. Correctional Services Corporation