Trial set to begin in dispute over $1.4 billion Missouri prison health care contract

As both sides of a dispute over Missouri’s $1.4 billion prison health care contract prepare to face off in court Wednesday, the current provider is being accused of bad faith in its lawsuit seeking to hold on to the contract.

Long-term contractor Corizon Health is accusing the winning bidder, Centurion Health, of failing to disclose it lost a contract in Tennessee under a cloud of suspicion. But Missouri Attorney General Eric Schmitt’s office, which is defending the state, wrote in a brief filed last week that Corizon didn’t notify the state it lost a bid to continue as the Michigan contractor.

That gives it “unclean hands” in this case, wrote Craig Jacobs, assistant attorney general.

“Just as plaintiff has alleged that Centurion failed to notify the defendants that it lost a contract with Tennessee, plaintiff similarly failed to notify the defendants in its (Best and Final Offer) that it had lost a contract in the state of Michigan since the submission of its original proposal to the RFP,” assistant attorney general Craig Jacobs wrote.

Unclean hands is a legal term meaning a party engaged in conduct that disqualifies it from suing.

Cole County Circuit Judge Daniel Green will preside over the trial that starts Wednesday. It is scheduled for three days but the attorneys anticipate it will be finished Thursday afternoon. In a September hearing, Green said he would rule by Monday.

Corizon is seeking to protect the Corrections Department contract it has held since the state privatized prisoner health care 30 years ago. Unless Green blocks it, the new contract, originally scheduled to begin July 1, is set to begin on Nov. 14.

Centurion’s attorney Chuck Hatfield also accuses Corizon of having unclean hands, but for a different reason. He filed a brief noting that the state turned down Corizon’s demand for more money to treat prisoners with COVID-19.

“Plaintiffs attempted to pressure the state into amending its contract for additional funds and was unsuccessful,” Hatfield wrote. “To then challenge the state’s right to refuse to amend plaintiff’s contract and jeopardize intervenor’s contract is not acting in good faith.”

Corizon is suing the state Division of Purchasing, which handles the evaluation and award of most state contracts. Centurion intervened in the case to protect its interests in the lawsuit.

Corizon’s record as the state’s prison health care provider is mixed. It is the largest for-profit prison health care provider in the country, and has been sued numerous times by inmates alleging substandard care in Missouri and other states where it operates.

It has struggled to maintain its contracts in recent years. In addition to the Tennessee and Michigan contracts, Corizon lost the Kansas Department of Corrections contract to Centurion in April 2020.

The trial will focus on two issues: whether Centurion should have been disqualified for submitting false information in its proposal and whether it engaged in misconduct during the bidding process.

Corizon, represented by attorney Jennifer Griffin, on Monday dismissed two of its claims – that bid scoring was biased against Corizon because of a “strained relationship” with the Department of Corrections and that Centurion wasn’t penalized enough for having the highest-cost proposal.

Corizon, which received the second-lowest score of the five companies that submitted proposals, wants Green to order the Purchasing Division to start over, with Centurion disqualified.

“We believe that the procurement process was unlawful because Centurion provided significant false and misleading information as part of the (Request for Proposals) process,” Corizon spokesman Charles Seigel wrote in an email. “That information was relied upon by the state of Missouri in making an award to Centurion.  We believe as a matter of law that the award to Centurion should be cancelled and a new RFP issued.”

Corizon first laid out its objections to Centurion’s award in a protest filed in late June, a month after the contract was awarded. In addition to questioning how the bids were scored, the protest focused heavily on the Tennessee contract.

In that case, Centurion won the contract to provide behavioral health services in Tennessee prisons. Corizon, which was the loser in that bid process as well, sued and uncovered communication between key officials of the Tennessee prison system and top executives at Centurion.

Wesley Landers, the chief financial officer for the Tennessee Department of Corrections, had ongoing communication with Centurion senior executives, providing confidential information including drafts of the bidding documents. In the middle of the bidding process, Centurion hired Landers as a vice president. But it fired him, and one of his principal contacts in the company, Jeffrey Wells, in February, because of the revelations in Tennessee.

In May, Tennessee announced it would rebid the contract because of the insider dealing.

Wells is named in the Missouri bid as the corporation’s team member with primary responsibility for the Missouri contract. Corizon argues that Centurion knew it had fired Wells when the best and final offer document was submitted and knew it was about to produce documents in the lawsuit that would likely cost it the Tennessee contract.

“Intervenor made a conscious choice to conceal its misconduct from Tennessee and Missouri, and to name a wrongdoer in its proposal as the member of its corporate leadership team with primary responsibility for performing the Missouri contract,” Griffin wrote in the lawsuit.

In response to the state’s argument that Corizon made similar omissions in its final document, Griffin said the two situations are not comparable. While the Tennessee contract was tainted by misconduct, she wrote, Corizon’s submissions “accurately stated that it had the Michigan contract.”

Corizon’s contract with Michigan ended Sept. 30. However, that state made its decision March 3, two weeks before final bid documents were submitted in Missouri.

Centurion’s argument that Corizon should be barred from suing because it demanded additional money under the current contract has nothing to do with its objections to the award of the new contract, Griffin wrote.