by David Reutter
PLN subscribers often read reports about the effects of privatized prisoner health care and the spread of privatization to prison and jail systems throughout the nation. These real-life stories of prisoner deaths, maimings and suffering occur even when the corrections agency has a contract that describes the services to be performed and, often, ways to determine performance standards and impose penalties for failure to meet those standards. In the face of grossly deficient health care despite such oversight, one is led to ask: Who is overseeing the provision of privatized prison medical services?
That question was recently answered as it relates to the contract between the New Jersey Department of Corrections (NJDOC) and Correctional Medical Services (CMS) for prison dental care. The New Jersey Office of Inspector General (OIG) found that the NJDOC's Assistant Commissioner of Administration (ACA) was responsible for overseeing CMS's compliance with its contract.
The OIG found that despite the ACA's knowledge that CMS had missed contract deadlines for provision of services, the NJDOC did not impose penalties on the company. In other words, no one took any remedial action.
The NJDOC contracted with CMS on February 1, 1996 to take over the state?s operation of health care delivery to prisoners. Three extensions to that contract ensued, with the contract expiring on March 31, 2005. To supply dental services, CMS contracted with Correctional Dental Associates (CDA), which was formed by a senior staff dentist and chief of dental services at the New Jersey State Prison in anticipation of privatization of the state?s prison dental care.
During the original contract period the NJDOC experienced an escalation in cost above the contracted amount over an extended period of time, and a concurrent deterioration in its relationship with CMS. When a new contract bid was advertised, the NJDOC's Commissioner insisted on including Objective Performance Indicators (OPI?s) in the contract, which would provide for the assessment of liquidated damages against the contractor for failure to comply with certain threshold requirements. The intent was for the NJDOC to have a mechanism to control the vendor's performance.
Two bids were submitted, and CMS was awarded the contract over Prison Health Services. The new contract, valued at a not-to-exceed $168 million over two years, went into effect April 1, 2005. The OIG's investigation did not consider the quality of the medical or dental care provided by CMS. It was concerned only with whether CMS was meeting its contractual obligations.
Under the contract, CMS was to provide nine separate types of dental services within specified time frames. Two of the requirements, related to providing intake screenings within 72 hours, were associated with liquidated damages for failure to comply. The other requirements, known as Continuing Quality Indicators, did not have associated liquidated damages but were also considered performance indicators. Those requirements set time frames for comprehensive dental X-rays, restorations, extractions, specialty care (such as oral surgery), initial cleaning, dentures and biennial dental cleanings.
Rather than have CMS subcontract with CDA, the NJDOC elected to save $2.8 million by having CMS take full responsibility for and directly provide dental services. A due diligence review was not performed to determine whether CMS had the resources and ability to provide direct dental services.
The initial compliance audit was done by the New Jersey Treasury's Contract Compliance and Audit Unit, which requested the OIG investigation after it concluded the NJDOC was not monitoring CMS for contract compliance. The OIG found that the NJDOC's statewide Dental Director was using a case-by-case basis to monitor the quality of dental services rather than CMS's compliance with the contract to provide services within the required time frames.
From April 1, 2005 to October 30, 2005, the NJDOC had no system that was of "value for monitoring or tracking CMS contract compliance," the OIG found. The NJDOC was relying upon its electronic medical record database (EMR), which could provide a patient-by-patient basis to determine if treatment was timely but was useless in determining overall contractual compliance.
Seven months after the contract went into effect, and fourteen months after the NJDOC began developing monitoring programs, the first OPI report was generated on October 30, 2005. Thereafter, weekly reports were generated. The OIG, however, found those reports "were of limited value in monitoring CMS's compliance with contract requirements for dental services."
The OPI reports only tracked the two indicators associated with liquidated damages while ignoring the other seven performance indicators. This allowed CMS to make improvements only in those areas that had fiscal consequences. Meanwhile, the company ignored correcting areas that formed the bulk of its contractual requirements. Indeed, CMS never dipped below 71 percent compliance in areas associated with liquidated damages. Yet for the requirement of initial dental cleaning, which was not associated with monetary penalties, it regularly performed in the lower percentile, ranging from 0 to 25 percent. The company only performed above that range twice on a monthly basis.
A major problem with the EMR was that data was entered by CMS, and such data was acknowledged to be only 80 percent accurate. In addition, once a prisoner was released, information in the EMR was moved to another area not reflected in the OPI reports. Thus, on a weekly basis, CMS's compliance for treatment of 270 prisoners was not included in the reports. On an annual basis this amounted to over 14,000 prisoners, which was more than half of the NJDOC's prison population of 26,000.
Using the NJDOC and CMS data, which included handwritten records, the OIG made its own determination of the company?s compliance with its contractual obligations. The OIG concluded that "CMS had consistently failed to comply with some contract requirements."
The ACA admitted he was aware of these failures. He stated that he never imposed liquidated damages because they were discretionary in his opinion; however, he never sought a legal interpretation of the contract.
The ACA thought he was to impose damages for circumstances of "persistent non-improvement." He explained to the OIG that "since CMS has been very responsive and collaborative in making changes where the need [was] identified, which have resulted in improvements to CMS's overall performance, no liquidated damages have been assessed."
This explanation, the OIG found, "was and only could be based on impressions and recollections of the (NJ)DOC employees involved because accurate automated or documented data demonstrating CMS's performance was not available." For the 17 months of the contract that was examined, CMS should have been assessed between $850,000 to $1 million in liquidated damages. While the OIG did not investigate liquidated damages for the company's medical services beyond dental services, the documentation it reviewed indicated that CMS should have been assessed between $1.7 and $2.5 million in penalties for not meeting medical care obligations.
Finally, the OIG found that the NJDOC had overpaid CMS $132,245 for oral surgeons; such services were not supposed to be billed separately by the company under the terms of the contract. The OIG report made several recommendations related to monitoring the contract, imposing liquidated damages and recovering overpayments. Terminating the contract with CMS was one suggestion.
There is no indication the ACA received kickbacks or engaged in other illegalities while monitoring the CMS contract, so we can only surmise that his failure to enforce the contractual provisions was either old fashioned cronyism, incompetence or plain indifference to prisoners receiving the timely dental care for which the NJDOC had contracted and paid for. Either way, it's a story that continues to repeat itself in the age of privatization of prison services. CMS is still under contract with the state to provide medical care to New Jersey prisoners.
The OIG's report, entitled "Department of Corrections Inmate Dental Services Report" (Oct. 15, 2007), is available on PLN's website.
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