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CCA and Medicare Fraud



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

state funds.

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


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