Prison healthcare provider sues
A contractor running inmate healthcare pilot programs alleges that the court-appointed receiver overseeing California’s troubled $1.2-billion prison health system has refused to pay the company $2.6 million and threatened to blackball it.
In a motion filed in U.S. District Court here Tuesday, Medical Development International asked Judge Thelton Henderson to help the company collect the unpaid bills and allow it to continue providing services to the California Department of Corrections and Rehabilitation.
As a result of a 2001 class-action lawsuit alleging substandard prison healthcare, the judge took control of the prison system. A year ago, he named Bob Sillen, the longtime top health official in Santa Clara County, as receiver and ordered him to lift healthcare for the state’s 168,000 inmates to “constitutionally adequate” standards.
Since last year, Florida-based Medical Development International has provided outpatient medical services, billing and scheduling for inmates at state prisons in Lancaster and Tehachapi. The company said it has made great strides in reducing the backlog of medical appointments and reducing inmate grievances, but the arrangement has become controversial.
In the latest episode, Medical Development International filed a motion alleging that the receiver was undermining its work by refusing to pay for services while they hashed out a contractual dispute.
In a declaration, company vice president Theodore Willich said that Sillen suspended payments in January on grounds that the company was not properly licensed to provide physician services.
Recounting a Feb. 16 meeting, Willich said Sillen acknowledged hearing that the company was doing a good job but said the contract was illegal and that the company may need a medical license.
After the company’s lawyer told the receiver it might withdraw from the project if it did not receive payment for its work, Willich said Sillen threatened to “make sure MDI never worked in California again” if it quit.
Rachel Kagan, spokeswoman for the receiver, said they had no immediate comment on the motion because they had not seen it.
She said the contract dispute “is not a new problem, or a problem of our making. This is another mess that CDCR got itself into.”
Dr. Peter Farber-Szekrenyi, head of corrections healthcare services, enlisted Medical Development International last year for the pilot program, but he later resigned after clashing with Sillen over the contract.
Medical Development International, which has worked to improve healthcare at the Federal Bureau of Prisons, launched the pilot program at the two Southern California state prisons in September.
The company said it cleared a backlog of over 500 inmate medical appointments, reduced grievances from 350 a month to fewer than 120 and saved the state more than $3 million in claims payments.
Seth Unger, press secretary for the state corrections department, declined to comment on the dispute, saying that the medical care staff is under the receiver’s supervision. Asked about the allegedly unpaid bills, which are accumulating at approximately $700,000 a month, he said, “We pay bills at the direction of the receiver.”
Medical Development International entered into agreements with doctors and hospitals for treatment of inmates, and it coordinated the medical care with prison staff.
The company said the receiver’s actions have forced the firm to cut back its services in the pilot program.
In its court filing, it included an e-mail from a Tehachapi prison staff member indicating that reduced services could affect inmates scheduled for cancer scans and surgeries, including a heart operation.
“If all these appointments are canceled,” the message said, “it will put [the prison] way out of compliance” with the judge’s orders.
The class-action case was filed by the Prison Law Office, a nonprofit prisoner rights group. Executive director Don Specter said, “CDCR has a great problem in many of their prisons with prisoners having to wait many months for specialists, and this contract was providing services.”
Specter said the receiver could have asked the judge to waive any licensing requirements affecting the contract. “It appears MDI was providing a valuable service, and I don’t understand why you would reject that service when the system is in crisis,” he said.
The receiver’s spokeswoman declined to comment.
