Prison agency cancels contract with firm co-owned by senator’s husband

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The state prison agency has canceled a $17 million contract with a firm co-owned by the husband of state Sen. Mimi Walters (R-Laguna Niguel), citing the failure of the company to fully pay medical workers it provided to serve inmates.

The decision follows a report by The Times in June that at least a dozen subcontractors — including dentists and pharmacists — hired by two of David Walters’ firms, said they were owed $120,000 in back payments. David Walters is a co-owner of Drug Consultants Inc., a firm that has contracts with the state to provide medical workers for the California Department of Corrections and Rehabilitation.

The healthcare office of the prison system said in a letter Wednesday to Drug Consultants Inc. executives that it ‘has received multiple reports that DCI has failed to pay non-disputed claims to registry nursing personnel utilized by DCI to perform services at California Department of Corrections and Rehabilitation…’

The problem is ‘interfering with the delivery of services,’ said the letter from Renee Carroll, manager of the contract management section for the medical agency overseeing the prisons.

Carroll wrote that the ‘continued pattern’ of nonpayment to workers, the ‘failure to provide requested financial documents’ and ‘recent notification of downsizing of its office’ taken together ‘indicate an unstable financial condition,’ which justified the termination of the contract.

Walters and her husband could not be reached for comment Wednesday. The senator reported in her most recent economic interest statement, for 2011, that DCI is a wholly owned subsidiary of Monarch Staffing Inc., in which David Walters has a 40% interest. She reported that DCI received revenue of at least $950,000 last year from 19 state prisons including San Quentin and California Rehabilitation Center Norco.

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--Patrick McGreevy in Sacramento