Florida's private prison industry corporation, Prison Rehabilitation Industries and a Diversified Enterprises (PRIDE), has sued its spinoff company to recover some of the millions spent to prop up that company. The lawsuit comes after over a year of scrutiny into PRIDE's corporate structure. See: PLN, January 2005, cover.

PRIDE was created in 1981 by the Florida Legislature to operate the state's prison industries, which were losing money. PRIDE is supposed to be a nonprofit, but began setting up for profit corporations, which were operated and staffed by members of PRIDE's board.

One of those entities was Industries Training Corp. (ITC), which handled payroll and other services for PRIDE. The state's lawsuit comes after ITC sold its employment placement service, Labor Line, to a North Carolina company that recently incorporated in Florida.

The lawsuit illuminates the corporate nepotism that existed, charging R. Michael Smith, ITC's chief financial officer, of breaching his fiduciary duty to PRIDE by helping ITC spend PRIDE's money when he was serving as chief financial officer of both companies.

Smith placed himself in direct conflict of interest that prevented him from promoting the best business and financial interests of PRIDE," the lawsuit charges. The new PRIDE board installed ...

by David M. Reutter

"Step on a man's foot once, and a polite apology will do. Do it twice, and a profuse apology is in order. Do it thrice, and you have left the land of apology and entered the arena of self-defense." That saying is the beginning of U.S. ...

by David M. Reutter

A Michigan federal district court has held that the use of in-cell restraints for punitive reasons constitutes torture. In reaching that conclusion, the Court reopened its previous judgment concerning mental health claims and issued a preliminary injunction.

The Court's ruling comes in the Hadix case, a longstanding prison conditions suit dating back to 1980 that involves several prisons operated by the Michigan Department of Corrections (MDOC). In January 2001, the Court terminated enforcement of the mental health provisions of an earlier consent decree. The case has generated dozens of rulings and published opinions.

After the August 6, 2006 death of Timothy Souders, whom the Court identified only as T.S., the Plaintiffs moved to reopen the terminated decree provisions, arguing that Souders'death and the deaths of other prisoners were attributable to delays or malfeasance in the provision of mental health care. [See related article in this issue of PLN, Michigan Prisons: Another Failure in Privatized Prisoner Health Care].

The first two sentences of the Court's order, written by U.S. District Judge Richard A. Enslen, set a somber tone: Say a prayer for T.S. and the others who have passed. Any earthly help comes far too late for ...

by Matthew T. Clarke

On May 16, 2006, a New York federal district court magistrate recommended awarding $143,774.55 in attorney fees and costs to the attorneys who represented a prisoner in a civil rights action.

Byron Lake was a prisoner in the Schenectady County (New York) Jail. Due to overcrowding, ...

A federal court in Missouri held in a class action lawsuit that a prison policy barring elective abortions was unconstitutional and invalid.

The Missouri Department of Corrections (DOC) and its medical provider, Correctional Medical Services (CMS), routinely transported women prisoners to abortion clinics at the prisoners? requests prior to July ...

by John E. Dannenberg

A unanimous U.S. Supreme Court held on January 22, 2007 that when a prisoner files an action governed by the Prison Litigation Reform Act (PLRA), the question of whether he properly exhausted administrative remedies before filing suit is an affirmative defense; the prisoner does not have the burden to plead or demonstrate such exhaustion. To the extent that the Sixth Circuit crafted a rule imposing an exhaustion burden on three Michigan prisoners, the appellate court was reversed.

Saginaw Correctional Facility prisoner Lorenzo Jones was injured in a prison vehicle accident in 2000 and could only do limited work thereafter. When assigned hard labor he performed the job only under protest of his disabilities, and suffered aggravations to his prior injury. After exhausting his Michigan Department of Corrections (MDOC) institutional grievances, he filed suit in federal court under 42 U.S.C. § 1983. But the magistrate recommended dismissal because while Jones had sued six defendants, only two had been expressly named in his grievances. In other words, administrative exhaustion was deemed incomplete because Jones hadn't identified all eventual defendants in his grievances. The Sixth Circuit affirmed in an unpublished opinion, using the "total exhaustion rule" to dismiss Jones' ...

According to a May 12, 2006 Securities and Exchange Commission filing, Farallon Capital Management LLC, a hedge fund that handles part of Yale University's $12 billion endowment, has sold all of its shares in Corrections Corporation of America (CCA), the nation's largest private prison operator. Farallon, which controls approximately $10 billion in financial assets, dumped around $90 million in CCA stock over the preceding year; about $1.5 million of that stock was attributed to Yale's investments.

The sell-off of private prison shares by one of the country's top universities followed a year-long period of organizing and campaigning by Yale's Graduate Employees and Students Organization (GESO). GESO argued that investing the school's funds (including student tuition payments) in a private prison company was a moral issue due to CCA's history of inhumane treatment of prisoners, an over-reliance on mass incarceration, and the disproportionate imprisonment of minorities. Students and teachers at eight other colleges, including Duke University and the University of Michigan, also called on Farallon to divest its CCA holdings.

GESO's anti-CCA campaign included protest rallies on December 1, 2005 and March 27, 2006 that drew hundreds of supporters. PLN editor Paul Wright, associate editor Alex Friedmann and office assistant Sam ...

The Tennessee Department of Corrections (TDOC) is investigating whether a romance between a prison contract oversight official and a prison contractor involved any impropriety.

TDOC purchasing director Nola Butler disclosed her romantic relationship with prison commissary contractor Martin Jennen, president of American Commissary Supply-US, to TDOC Assistant Commissioner Catherine Posey in August or September 2005. Posey told then-Acting TDOC Commissioner Gayle Ray.

Despite the revelation about a possible conflict of interest, Jennen?s company was awarded a contract to provide the TDOC?s prison commissaries with, among other items, peanut butter, tuna fish and toothpaste. Butler was not directly involved in awarding the contract, which was done by the General Services Department (GSD). However, Butler was TDOC?s liaison to GSD and had oversight responsibilities over the contract. GSD was not informed of the relationship.

A Tennessee newspaper learned of the relationship and made an inquiry. Six days later, on July 31, 2006, the TDOC?s contract with American Commissary Supply-US was cancelled. GSD spokeswoman Lola Potter stated that the contract was terminated due to TDOC officials? complaints regarding poor performance by the company. She said that a March 20, 2006 warning letter indicated that the termination process was initiated prior to the newspaper?s ...

by John E. Dannenberg

On September 20, 2006, Tennessee-based Prison Health Services (PHS), a for-profit prison medical care contractor [see: PLN, Nov. 2006, pp.
1-10], exercised an escape clause just ten months into its ten-year $645 million contract to provide medical services to 25% of Florida?s prison population. The company claimed it was losing money on the contract to supply health care to 18,000 prisoners in south Florida facilities.

When the Florida Department of Corrections (FDOC) rebid the contract on October 20, 2006, PHS won again ? but now with a bid for $707 million.
Low-bidder Wexford Health Services protested the contract award, citing its bid of $689 million and FDOC?s recently-announced $696,000 fine against PHS for performance deficiencies during the company?s initial contract period.

PHS spokeswoman Martha Harbin blamed the company?s higher second bid on faulty data provided by the state during the 2005 bidding process. PHS?s bid had provided for 95 hospitalization days per month per 1,000 prisoners, which was fully five times what FDOC had projected in its request for bids. PHS?s actual experience during the initial ten months of the contract, however, was 200 hospitalization days per month ? over double its own estimate.

At the ...

Pharmaceutical drug distributors have found a future and a fortune in our nation?s prison system. Record rates of incarceration equal record profits for drug companies.

One enterprising pharmacist has made herself a major player in the drug distribution industry. With an idea that literally was created at her kitchen table Ellen Yankellow and two fellow pharmacists founded Correct Rx, a pharmacy that specializes in prison and geriatric supplies.

Yankellow did not start out to be a major drug distributor. In 1992 she was recruited by Rombro Health Services of Baltimore. Rombro was eventually sold to a company which in turn was involved in a series of mergers. When the dust eventually settled, in 2003, Yankellow found herself unemployed.

?All I knew was that I was out of work, and I was too young to retire,? she said. ?And all I knew how to do was this.?

Yankellow and her two partners Jill Molofsky and Jim Tristani got a loan, a line of credit and got busy. Their success was immediate. Gross profit grew 140 percent during the first two years. Correct Rx began with 14 employees. It now employs 85. After 3 years the company is almost entirely debt free. ...