Fight erupts over plan to stop outsourcing prison health care in Virginia
$90 million contract at center of lobbying blitz
A picture of the assisted living ward at Deerfield Correctional Center that the Virginia Department of Corrections shared with lawmakers in 2019. The prison, which houses some of the state’s most medically fragile inmates, has seen a major COVID-19 outbreak. (Virginia Department of Corrections)
When the head of Virginia’s prison system announced to staff members this summer that he planned to end the practice of outsourcing medical care to a private contractor, his memo to employees suggested the decision was final.
Armor Health, the Florida-based company that suddenly faced the prospect of losing its $90-million contract to staff prisons with doctors and nurses, had other ideas.
Records show the company embarked on a monthslong campaign to override Department of Corrections Director Harold Clarke, at times flaunting the sway the company believes it holds with lawmakers.
“(Armor CEO Otto Campo) does not believe this battle is over by any stretch!” wrote Matthew Berg, an executive with the company, in an email last month to a DOC official. The email informed the department that Armor had “been assured by both governor candidates that they also do not support the actions of VADOC and will proceed to intervene after the election.”
The dispute, which has raised eyebrows in Richmond, offers an unusually candid window into the intersection between politics and high-dollar government contracts.
Armor provides medical care to prisoners in about half of the state’s 40 prisons, with state-employed staff providing care in the other half. The state has traditionally turned to outsourcing to provide medical care in harder-to-staff rural institutions and those with more intensive medical needs, such as infirmaries, but as health care costs have continued to rise, audits have suggested state officials reconsider the arrangement.
Publicly, the Department of Corrections had spoken favorably of Armor, calling the relationship a “long and productive partnership” even in the memo announcing plans to end the contract. But internal DOC documents suggest the decision to de-privatize followed frustration with understaffing, escalating contract costs and years of litigation over the quality of medical care provided at Fluvanna Correctional Center for Women, which was the site of dozens of inmate deaths.
The department also assessed nearly $4 million in fines against Armor last fiscal year for failing to adequately staff facilities.
“(Fluvanna) and the COVID pandemic have shown us that ultimately the state will be held responsible for the quality of inmate medical care,” a DOC committee wrote in a report recommending de-privatization. “As a result of cost-saving pressures from the private company, the state has had to step in and either take over or provide additional services at the state’s expense.”
As an example, the report cites the state’s decision to take over health care at Fluvanna and, more recently, provide COVID-19 testing at Armor-managed facilities. “In fact, we believe it would have been more efficient if we had run the facilities ourselves to start with as we faced these challenges.”
A spokeswoman for the Department of Corrections, Lisa Kinney, says the department does not anticipate the change would cost the state any additional money.
Armor, meanwhile, has argued that DOC lacks the expertise to take over inmate health care, suggesting the plans would significantly increase costs. Over the summer, the company refused to meet with DOC officials to discuss what was intended to be a gradual transition away from Armor over one to two years. Instead, the company embarked on a lobbying campaign directed at the General Assembly, Gov. Ralph Northam’s administration and the campaigns of Democrat Terry McAuliffe and Republican Glenn Youngkin.
In an August letter, Campo said the earliest he was willing to meet was in December. “As you are no doubt aware there appears to be a great deal of concern and uncertainty about the financial viability of DOC’s decision to bring in-house Virginia’s correctional health care,” he wrote.
In September, a DOC director, Dean Ricks, wrote the company urging Campo to reconsider his refusal to meet.
“Your refusal to cooperate is making it more difficult for us to ensure that inmates are being appropriately treated,” Ricks wrote. “Our goal has always been to provide constitutionally mandated health care to the inmates in our custody, but your actions are making this increasingly difficult.”
The next month, DOC officials informed Armor that it was terminating the company’s contract, telling House and Senate budget leaders that “the relationship and correspondence with the vendor has degraded significantly.” Campo fired back calling the decision reckless and “consistent with a well-documented pattern of mismanagement.”
The state has already replaced Armor with another prison health care vendor, VitalCore Health Strategies, and corrections officials say the terms of the contract are nearly identical to Armor’s, though they concede they agreed to pay $500,000 in startup costs and forgo penalties for understaffing during the transition.
Armor calls it “a sweetheart deal” in a protest the company’s lawyers filed with the state. The filing seeks to overturn the emergency contract, contending that it was not a proper emergency procurement because DOC created the emergency circumstances itself when it fired Armor. It also argues that there can’t be an emergency because Armor is ready and available to continue working in DOC facilities.
As for the fines for understaffing, which the company announced earlier this year it would cease paying, Armor has said the pandemic made staffing more difficult, noting DOC has faced its own staffing shortages.
In a statement through the company’s lobbying firm, McGuireWoods, Campo argued a review comparing Armor’s performance to state-managed prison infirmaries would show Armor is “the best provider.”
“Armor believes this decision should not be made by an outgoing administration and has requested multiple times it be made by the incoming administration,” Campo wrote. “We believe that a fair and independent analysis and review should be performed and any recommendation be reviewed accordingly.”
The company has found at least one high-profile ally in Del. Luke Torian, D-Prince William, who will lose his position as House Appropriations chairman under the new GOP majority. Torian has questioned DOC’s plans in two letters to Northam’s administration. The most recent, sent last week, echoes Armor’s calls for delay.
“I respectfully request that DOC suspend its current activities regarding correctional health care until a comprehensive review is undertaken and provided to the General Assembly and the incoming administration,” wrote Torian, who declined multiple requests for comment.
The letter came after Armor donated $25,000 to the Virginia Legislative Black Caucus, to which Torian is the largest single donor.
Campo said in a statement there is nothing unusual about its donations to the Black Caucus or its decision to approach the gubernatorial campaigns of McAuliffe and Youngkin.
Of the donation, he said, “Armor has a long history of supporting political groups and individuals that seek efficiency and effectiveness in government.”
And on the gubernatorial candidates, he reiterated that “both expressed concern about the decision DOC was attempting to make” and believes either administration “would intervene to assess this decision further.”
Gov.-elect Youngkin’s press office did not respond to an email seeking comment, but a spokesman for McAuliffe, Jake Rubenstein, called the company’s description of the meeting in its email to DOC false. He said that the campaign was made aware of Armor’s email during the campaign and approached the company’s lobbyist to make clear that there was no agreement to overrule Clarke, who has served under three governors, including McAuliffe.
Rubenstein said any promise by a candidate to intervene in the issue would have been completely inappropriate.
Gov. Ralph Northam’s administration has also expressed concern about the company’s tactics. Secretary of Public Safety Brian Moran called the company’s decision to involve the two gubernatorial campaigns distressing.
“The provision of adequate health care for our inmates should not be politicized,” he said. “From our point of view, this is about inmate health care — quality and affordable health care.”
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