Tens of thousands of inmates nationwide are housed in privately run prisons. The operators of those facilities; Corrections Corporation of America, the GEO Group and Management and Training Corporation, are all for profit entities. Like most for profit businesses, the private prison industry needs to turn a profit to keep investors happy. Sometimes that leads to cutting corners, over billing or inadequate staffing.
Each of the above scenarios are ideal for whistleblowers in those states that have enacted a false claims act law. Those states include: California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee and Virginia. Whistleblowers in those states can often receive up to 30% of whatever the state collects from those who are committing fraud.
Recently the nations’s largest private prison provider, Corrections Corporation of America (CCA), paid Idaho $1 million to settle charges that it understaffed the Idaho Correctional Center. That case was started by both inmates and staff who complained of unsafe conditions caused by improper staffing.
Idaho does not have a false claims statute and thus none of the inmates or guards complaining are eligible for rewards. Not all violations by private prison contractors rise to the level of false claims violations either.
Viable false claims charges occur when a for profit company over bills or charges for a service not provided. We often see these type claims in Medicare fraud cases. Often a nursing home will receive federal Medicare money based on providing certain staffing levels. In an effort to increase profits, the nursing home will understaff yet tell the government it is meeting required and promised staffing levels. The private prison industry isn’t much different.
To bring a false claims act in those states that allow it, a whistleblower must have “original source” information of a fraud involving a government funded project. In most states, the whistleblower files a lawsuit under seal (meaning secret) naming the contractor or company that is committing the fraud. The state is then given a time period to investigate. Ultimately, the state can intervene and take over the case on the whistleblower’s behalf, decide that there is no fraud or allow the whistleblower to continue the lawsuit in the state’s name.
The federal False Claims Act provides a similar remedy for claims involving federal funds. If a private prison facility houses federal inmates or immigration detainees, it may be the subject of a federal whistleblower case no matter where the facility is located.
According to news reports, Idaho is planning on taking over the prison in June when CCA’s contract expires. Apparently no other vendor expressed interest in running the facility. Nationally, however, the private prison industry continues to enjoy boom times.
As long as companies become more interested in their bottom lines, we suspect no shortage of false claims cases.
If you think you have knowledge of a fraud involving a privately run prison, CCA, GEO Group or the Management and Training Corporation, contact an experienced whistleblower attorney. Having the right lawyer often means the difference between receiving a big check (up to 30% of what the government collects) or having the government lose interest.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). Our whistleblower lawyers have handled some of the largest cases in the United States including the $2.4 billion case against Allied Home Mortgage.
(Whistleblower photo courtesy of Dave Winer – scriptingnews)