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CMS Contract Woes Persist in New Jersey, Arizona and Delaware

by David M. Reutter

Deficiencies in medical care and failure to comply with contractual obligations have resulted in the termination of two contracts for Correctional Medical Services (CMS). The contracts were worth a total of $95 million annually.

Regular PLN readers will not be surprised at the reasons behind the contract terminations. What is unusual is that the contracts were canceled, as prison officials normally tolerate CMS’s substandard performance in order to save money; also, using a private contractor allows them to deflect blame for inept medical care.

In March 2008, New Jersey Governor Jon Corzine terminated CMS’s contract to provide medical, dental and pharmaceutical services to the state’s prisoners. The contract had an annual value of $85 million. CMS has provided health care to New Jersey prisoners since 1996.

The New Jersey State Inspector issued a report in October 2007 that was highly critical of CMS, finding the company had overcharged the state and failed to comply with its contractual obligations. The state auditor issued a report with similar findings.

CMS officials seemed shocked that the contract was going to be terminated, especially in the midst of a four-year contract term. “The state has been extremely satisfied with our work and has never given us an indication that they would prefer to make a change in contractors,” remarked CMS spokesman Ken Fields. Then again, perhaps the state felt its actions would speak louder than words.

Terminating CMS’s contract was the end of a “failed experiment,” said Patricia Perlmutter, an attorney who reached a settlement on behalf of mentally ill New Jersey prisoners in 1999. “For years, they delivered very poor service to the prisoners in the state. There certainly was improvement over time. The number of complaints we would receive did diminish the last year of [the] contract term. But overall, they didn’t deliver what they promised.”

CMS was advised it would have to provide medical services until October 2008, while the University of Medicine and Dentistry of New Jersey (UMDNJ) gradually takes over health care for the 27,600 state prisoners held in DOC facilities and 14,000 in county jails.
It is expected that state payrolls will increase as UMDNJ hires some of CMS’s employees, adds more workers, and pays them fringe benefits.

CMS was critical of the fact that UMDNJ was awarded the contract in a no-bid process.
State officials said competitive bidding was not necessary because the contract was arranged through an interagency compact. Critics also charged that UMDNJ, which recently instituted reforms after a federal investigation found it had lost more than $400 million in fraudulent and wasteful spending, cannot provide the savings obtainable from a private contractor. Yet such savings often come at the cost of adequate care.

Just a few months after CMS was told it would lose its New Jersey contract, Arizona’s Pima County jail gave the company the boot, too. County officials said CMS had consistently failed to fulfill basic contractual obligations – including staffing levels and providing care in a timely manner – since it took over prisoner medical services in 2002.

“Our feeling is they have not met our requirements for quality care at the jail,” said Dr. Fred Miller, Pima County’s chief medical officer.

Because CMS failed to meet staffing requirements, the company did not collect $1.3 million of its latest two-year contract, which was valued at $18.5 million. In the last 26 months, CMS had five administrators and four corporate liaisons for Pima County. This lack of stable leadership has been a recurring theme for the company.

CMS’s psychiatric care at the Pima County jail was singled out for criticism by court officials; in one case, a nurse practitioner was allowed to conduct a psychological evaluation of a murder suspect. The quality of such evaluations was addressed by Pima County Superior Court Judge Nanette Warner at a bench conference. “I have huge issues with the quality of staff, the quality of care. It has been a frustration for the court,” she said. “Their whole goal is how not to do any work.”

CMS, of course, disagreed with Judge Warner’s assessment. The company “has well-established policies and procedures that are based on years of experience working in hundreds of facilities,” stated CMS spokesman Ken Fields. “That experience is brought to every community we serve, including Pima County.”

PLN readers will recall that CMS’s policies, procedures and experience resulted in the company’s health care services in Delaware being placed under supervision by the U.S. Department of Justice. [See: PLN, Nov. 2008, p.10]. None of the qualities expressed by Fields about CMS’s medical care helped Delaware prisoner Duane Williams. In fact, he was killed by the company’s incompetence.

In 2006, a CMS nurse administered insulin shots to Williams and fourteen other prisoners using the same contaminated syringe. [See: PLN, Nov. 2008, p.28]. Four days before his death on March 12, 2008, Williams spoke to a reporter from the News Journal. He said he had felt pain in his abdomen for over four months, but wasn’t taken seriously until a prison guard noticed Williams’ eyes were turning yellow. The guard demanded that he be seen by a nurse or doctor, or be taken to a hospital.

By then it was too late. Williams’ death, at age 32, left his wife a widow and his 10-year-old daughter without a father. Sadly, his preventable death was just one of several among Delaware prisoners who have suffered and died in the name of increased profits for CMS. [See: PLN, Dec. 2005, p.1].

“Without a doubt the prison system killed him,” stated Harry Williams. “My brother wasn’t a drinker or a drug addict. They killed him. They waited too long.” The suspected cause of Williams’ death was acute hepatitis.

With a track record of inept care resulting in deaths and injuries, one wonders how private companies such as CMS procure and retain contracts. The recent award of a contract to Correctional Health Services (CHS) reveals the kick-back economics that make such contracts possible.

On April 16, 2008, New Jersey’s Bergan County Freeholder Board awarded the contract for health care at the county jail to CHS without public bidding. The year-long contract is worth $690,200, and the political connections are revealing.

CHS is run by Geoff Perselay, a former Administrator for Hudson County, New Jersey. In 2007, CHS donated $1,300 to the campaign of Bergan County Sheriff Leo McGuire. Since 2003 the company also has given at least $8,000 to the Bergan County Democratic Organization. The members of the Freeholder Board are all Democrats.

Political connections may get CHS contracts, but that doesn’t always mean the company can keep them. In January 2008, a state Superior Court judge found a contract with CHS to provide services at New Jersey’s Essex County Jail was “arbitrarily and capriciously” awarded in lieu of a vendor that bid $4.2 million less for the same job. The court terminated the contract.

Following the cancellation of CMS’s contract with New Jersey, the company filed a protest letter in April 2008 that challenged the termination and claimed UMDNJ would cost the state an additional $50 million to provide health care for state prisoners. The company was represented by John Paul Doyle, a former majority leader in the state’s Assembly, but to no avail. The contract termination was upheld.

While such political and contractual high jinks continue, the fact remains that prisoners such as Duane Williams are literally dying due to a lack of adequate, routine care for the sake of enriching for-profit contractors. And even in cases where prison and jail health care contracts are canceled, all too often another for-profit medical service provider simply takes the place of the outgoing contractor. For example, after losing its contract with Pima County, CMS was replaced with another private company, ConMed Healthcare Management.

Problems continue with CMS’s prisoner health care contract in Delaware, where Governor Jack Markell has expressed dissatisfaction with CMS and DOC director Carl Danberg has stated he has been looking for other medical care providers. However, due to budget problems, Danberg reluctantly signed a one-year contract extension with CMS on January 16, 2009. “I am not pleased with this,” he said. “It is a position that I do not want to be in.”

A third semi-annual report on CMS’s medical services, required by a settlement between the U.S. Dept. of Justice and the Delaware DOC, was released in July 2008. It found “continuing problems with care, including poor supervision of medical personnel, inadequate staffing, long waits for inmates seeking care and inappropriate care,” according to an article in the News Journal.

In January 2009 a fourth report was issued by the monitor overseeing the state’s settlement with the Dept. of Justice. This most recent report found some improvements, but also cited on-going problems with CMS that included a “lack of stable and effective leadership.”

“I have addressed my displeasure at the pace of progress directly to the CEO of CMS ... in very clear and uncertain terms,” stated Danberg. When the company’s $39 million annual contract with the State of Delaware ends in 2010 and goes up for renewal, CMS may find it has lost yet another contract.

Sources: Star-Ledger, Gannett State Bureau, The News Journal, Arizona Daily Star,,

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