Prison Health Care Contract Amendment Could Lead To Financial Windfall For Corizon
Arizona contracts out prison health care services to a private company called Corizon Health.
The Arizona Department of Corrections awarded Corizon a five year contract in March of 2013. The company gets a per diem for each inmate held in Arizona prisons, amounting to more than $140 million a year.
But Corizon hasn’t been keeping up their end of the bargain. After amending the contract to only require 90 percent staffing levels, the company can’t meet that benchmark.
The state fines Corizon every month based on the failure to meet performance measures, but until recently that fine was capped at $90,000 a month.
Now ADC and Corizon have come to an agreement for another amendment. Starting in November, the state will lift the cap on fines, exposing Corizon to potentially millions of dollars in sanctions each month.
Attorneys for ADC discussed the amendment at a status update in the Parsons v Ryan prison health care settlement on Tuesday.
ADC Assistant Director Richard Pratt said Corizon was failing 268-278 performance measures each month at all Arizona prisons combined. Under the new arrangement, each failure would be sanctioned $5,000, which means the total bill Corizon could face each month might be more than $1 million.
Daniel Struck is serving as outside counsel for ADC in the settlement. He said the amendment would give the state a bigger stick in enforcing health care performance measures.
"We view it as very positive movement toward getting Corizon, our contractor, to comply with the contract as promised," Struck said.
But the amendment includes incentives as well. "In addition," Struck said, "the Department agreed to provide some carrots to Corizon with respect to positive performance."
For each month that Corizon meets 90 percent attainment of the performance measures outlined in the settlement, the company would earn a cash bonus. But the 90 percent attainment would be calculated statewide. If some performance measures lapsed, but overall compliance was still 90 percent, Corizon would still get paid.
Judge David Duncan is overseeing the settlement. He said if Corizon maintained current performance levels they stood to earn the full $3.5 million in incentives.
Corene Kendrick is an attorney for the inmate plaintiff class in the settlement. She said while lifting the cap on fines was a good move, offering financial incentives goes too far.
“They are paying them to do what they had already contracted to do," Kendrick said of the state's potential financial award to Corizon.
Struck said the state would gladly pay the extra $3.5 million "and not seek any penalties if Corizon could just comply with the contract - that's the goal."
The amendment was signed Sept. 7 and will remain in effect until the end of Corizon's contract in June of 2018. The state is currently accepting bids for the next five year contract.
EDITOR'S NOTE: This story has been updated to correct the spelling of Daniel Struck's name.