Florida prisons chief Julie Jones is considering hiring temp agencies to fill in the gap after Corizon Health officials decided to walk away from the largest prison health-care contract in the country.
Officials from Tennessee-based Corizon put Jones on notice Monday they intend to leave Florida --- and a five year, $1.2 billion contract --- as of May 31 because the agreement is "too constraining."
And, even though the company is fleeing the state years ahead of schedule, Corizon hasn't done anything that would keep it from participating in the forthcoming invitation to negotiate, or ITN, for a new contract, Jones told The News Service of Florida on Tuesday.
"What they have done in exercising a legal element in their existing contract, that does not preclude them from trying to re-bid on parts of the new ITN. It just depends on how they score out against other vendors," she said.
The possibility that the private provider --- which cares for about three-fourths of the state's 100,000 inmates --- could be in the running for another deal left top Republican lawmakers who oversee prisons incredulous.
"If you drop out on a contract, and you're telling me that you're not man enough to honor the contract that you entered into and now you want the state of Florida to turn around and allow you to bid again? No. Personally, for me, that dog don't run," said Senate Criminal Justice Chairman Greg Evers, R-Baker.
Corizon, which hasn't ruled out responding to the ITN, should be barred from participating, said House Criminal Justice Chairman Carlos Trujillo, R-Miami.
"Absolutely. We had a contractual agreement with them and they chose to opt out and move in a different direction. Given their quality outcomes, I just don't think they're a good partner for the state," Trujillo, R-Miami, said.
The ITN, which is a relatively common contracting method in state government, is expected to be released before the end of the month, but new contracts won't go into effect until mid-2017, according to Jones. That will leave the Department of Corrections with a gap in providing health services after Corizon leaves.
Jones intends to use health-care companies that provide temporary services for hospitals and other parts of the health-care industry to bridge the gap. The department will "have a third party gather up as many of the current Corizon employees as possible," she said.
"So it's important, not only for me to get a seamless supply of adequate health care for these inmates, but it's also important to me to make sure that we keep all of these folks employed,'' Jones said. "Because they used to be our employees prior to Corizon coming."
Corizon has been under fire from lawmakers and attorneys representing inmates who accuse the company of routinely providing inadequate care since taking over services in most of the prisons in the central and northern portions of the state two years ago.
Lawyers for Florida inmates in September filed a class-action lawsuit against the Department of Corrections and Corizon, alleging that the state agency and the company were denying hernia operations to save money.
Less than four months before Gov. Rick Scott was re-elected in 2014, former Corrections Secretary Michael Crews quietly agreed to pay Corizon and another prison health-care firm, Wexford Health Sources, an additional $3.2 million to stay on the job for another year. Scott had pushed for privatization of the prison health-care services.
Two months after he inked the contract amendments, Crews threatened to stop payments to Corizon, saying the company failed to follow through after audits revealed shortcomings in multiple areas, including medical care, nursing and staffing.
The corrections department has fined Corizon nearly $70,000 in liquidated damages so far this year, according to agency spokesman McKinley Lewis.
What could have ultimately been the final straw for Corizon was whether the company's payments should be adjusted annually according to changes in the Consumer Price Index. While its contract made allowances for such hikes, any increases would have to be approved by the Legislature, which has been inconsistent in authorizing partial increases for Corizon and never approved a full Consumer Price Index hike --- as much as 4 percent --- since the contract went into effect.
The failure to get the increase was "distressing" to Corizon, Jones said.
"Their concern was that their escalating costs for personnel and for drugs was increasing and they were not being compensated for it," she said. "Now, that's on them. I told them from day one that you agreed to this and there was no agreement that you were going to get CPI. But a significant driving force in terminating the contract with Florida was no CPI."
Jones said Corizon executives initially told her they were losing at least $1 million per month on the contract.
"I told them weeks ago that going forward, if they were going to continue with us, that I would go and ask (the Legislature) for the money to cover their costs, basically," she said. "I asked them how much are you losing. The original figure they gave me was $1 million. But in the meeting yesterday afternoon, they said it was much more than that a month and that's why they finally just threw in the towel. They didn't want to wait to see if the Legislature was going to give them the extra funding. It was a business decision, pure and simple."
Jones described her relationship with Corizon executives, who met with her on a weekly basis, as "collegial," and spoke of the company's decision to exit the state without animosity.
Jones said she met in her office on Monday with Corizon executives, who told her of their intent to terminate the contract early. The company's board of directors made the decision to pull out of Florida during a meeting less than two weeks ago.
She acknowledged that its contract with Florida may not have reaped the benefits Corizon anticipated.
"I do believe that they were losing money. Now, how much money, I have no way of knowing. And level of profit … I don't know how much profit they've made on this contract and I don't know what their expectations were," she said. "But a private company like this, they have investors. I think those were the people that were making those decisions."
A spokeswoman for Corizon would not respond directly to questions about the company's finances or if it was losing money on the deal.
"We just made a decision to exercise the 180 days clause that's allowed in the contract," spokeswoman Martha Harbin said Tuesday.
Critics of the current system say that it is time for the state to resume providing health care for inmates.
"I think privatization in this particular area has just been a disaster. I think it will continue to be a disaster as long as they attempt to contract with private companies like Corizon," said Florida Justice Institute Executive Director Randall Berg, who is representing inmates on the class-action lawsuit related to hernia care.
It's not the first time Florida has been left holding the bag.
In 2006, Prison Health Services --- which later merged with a company that became Corizon --- gave the state 90 days notice that it was quitting a contract for inmate health care less than eight month after the job started. The company said it was terminating the contract because of unexpected costs after the state refused to increase its payments, according to a legislative analysis written in 2010.
Florida lawmakers outsourced health care for inmates throughout the state in 2011 as part of the language in the state budget. Lawsuits kept the privatization switch on hold until 2013, when Corizon took over health care for the majority of the state's prisoners. Wexford is being paid about $240 million to handle the rest of the inmates.
A month after taking over the helm of the Department of Corrections in January, Jones announced that she would re-bid prison health contracts with Wexford and Corizon through the procurement process known as an invitation to negotiate. Through that process, the department indicated it wanted to address issues such as staffing, mental-health services and the use of electronic health records.
Jones said Tuesday she is uncertain whether she will grant a contract to a single provider or parcel out the services.
"We are going to allow vendors to bid on a part of the state or a service or the entire state. That's the beauty of the ITN process. It really puts the vendor in the driver's seat as to what their specialty is, rather than having a company come in and try to backfill on something that is so big and then not be able to accommodate all of the services, which is pretty much what happened with Corizon," Jones said. "We're going to look very carefully at these vendors and see what their capabilities are and make sure that they don't stretch beyond their capabilities."
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