Last May, when a bill was introduced in the Tennessee legislature to privatize the state's entire corrections system, the private prison industry achieved a major coup by winning the support of the American Federation of State, County and Municipal Employees, a 1.3 million-member union that agreed to represent former state prison workers retained under private contract. CCA, the prison contractor behind the proposed legislation, boasted about its "labor friendly" relationship with the AFSCME. Now, however, CCA will have to find something else to brag about.

In October 1997, the president of the AFSCME, Gerald W. McEntee, stated in a bluntly worded letter to state lawmakers that the union will not represent private prison employees in Tennessee or anywhere else. McEntee indicated that the AFSCME's about-face on the privatization issue was due to concerns that correctional officers cannot maintain their professional image in private, for-profit prisons. He also cited the widely-publicized videotaped beating of prisoners at the privately-managed Brazoria County Jail as an example of the "stark" differences between public and private correctional facilities. "In the end," said McEntee, "we were not able to reconcile private prisons with our determination to uphold the professionalism of the correctional officer ...

Afederal district court in New Jersey has upheld the claims of a statewide class of mentally ill prisoners against defendants' motions to dismiss and for summary judgment. The defendants are: officials of the New Jersey Department of Corrections; Correctional Medical Services, Inc. ("CMS"), a private corporation providing prison health care; and Correctional Behavioral Solutions of New Jersey, Inc. ("CBS"), a private corporation providing prisoner mental health services under a subcontract with CMS. The prisoners allege in their complaint that they receive constitutionally inadequate mental health care, and that they are disciplined for acting out the symptoms of their poorly treated mental illnesses, in violation of their right to due process. The prisoners also allege that the defendants have failed to reasonably accommodate their mental disabilities as required by the Americans with Disabilities Act ("ADA"), and that CMS and CBS have violated the terms of their privatization contracts with each other and the State. See D.M., et al. v. Fauver, et al., Civ. No. 96-1840 (AET) (Nov. 10, 1997 D.N.J.).

The case began with the complaints of individual prisoners received by the Inmate Advocacy Law Clinic of Seton Hall Law School. Prisoners with serious mental illnesses were being ...

The court of appeals for the eighth circuit held that a district court erred when it dismissed a prisoner's suit over delays in dental care. The appeals court also held that untimely service of the suit by the marshalls service was not a basis for dismissal and that genuine issues of fact precluded summary judgment.

Edward Moore, a Missouri state prisoner, repeatedly sought dental care for a toothache from Correctional Medical Services (CMS), a private company with whom the Missouri DOC had contracted out its medical services. After six months of futile attempts to secure medical care, Moore filed suit claiming violation of his eighth amendment rights. Eventually Moore received treatment by having his, by now, badly infected tooth removed. The district court granted summary judgment to the defendants. The court of appeals affirmed in part, reversed in part and remanded for further proceedings.

The court held that the district court erred when it dismissed several defendants under Fed.R.Civ.P. 4(m), claiming Moore had failed to complete waiver of service forms. The appeals court noted that 28 U.S.C. § 1915(d) requires that officers of the court, i.e., the marshalls service, issue and serve ...

Afederal district court in Florida held that genuine issues of fact existed as to whether a jail psychologist and the private corporation that employed him had acted with deliberate indifference to a pretrial detainee's health needs, obviating summary judgment on the basis of qualified immunity. The court further held that the county sheriff had a non-delegable duty to provide care, precluding his entitlement to qualified immunity.

In November 1993, Mark Douglas was booked into the Collier County jail awaiting trial. As a result of the jail's initial screening process the jail psychologist, Jeff Schultz, an employee of Correctional Medical Service (CMS), a private corporation under contract to the county sheriff, placed Douglas on "strict suicide precaution." Three days later, however, Schultz removed Douglas from the suicide watch and placed him in a general population cell.

Although Schultz was titled and employed by CMS as a clinical psychologist, he possessed only a master's degree in psychology, plus he was unlicensed. At no time was Douglas examined by or even referred to a psychologist or other licensed mental health professional. Expert deposition testimony revealed that Schultz was unqualified to diagnose Douglas, and he should have been referred to someone ...

The court of appeals for the eleventh circuit held that private companies performing traditional government functions are liable under 42 U.S.C. § 1983 but enjoy the protection of Monell v. Dept. Of Social Services of New York , 436 U.S. 658, 98 S.Ct. 2018 (1978). Junior Buckner was a pretrial detainee in the Clayton county (GA) jail when he developed a psychological condition called "conversion reaction" that made him unable to walk. The jail contracted with a private company, Prison Health Services (PHS), to provide medical care. While PHS "treated" Buckner they did not diagnose his condition and it became permanent.

Buckner filed suit claiming that the county, sheriff and PHS were deliberately indifferent to his psychiatric medical needs. The district court granted the defendants summary judgment holding that under Monell a plaintiff must show the municipality itself injured the plaintiff by having a policy or practice which caused the plaintiff's injury. The court held Buckner had not shown the existence of any such injurious policy by either the county or PHS.

The court of appeals affirmed. This ruling is significant for anyone suing county or city governments over constitutional violations and, more importantly, any private companies ...

According to a study by the Office of Juvenile Justice and Delinquency Prevention (OJJDP), from 1991 to 1995 the population of youthful offenders held in privately-operated facilities grew 10% to an estimated 35,600. The juvenile justice system has become enormously profitable as youths are channeled from the schoolhouse to the jailhouse in ever-increasing numbers. In 1997 Equitable Securities Research released a report entitled "At-Risk Youth: A Growth Industry," which indicates there are 10,000 to 15,000 private juvenile justice service providers; publicly traded juvenile corrections companies made $75 million in net profit in 1996 alone. An estimated $3 billion is spent each year on services for juvenile offenders at the federal, state and local levels, and up to $50 billion is spent annually on programs for at-risk youth.

Private-sector companies that primarily provide adult corrections services are jumping on the "jails for juveniles" bandwagon: The Corrections Corp. of America (CCA) and Wackenhut operate seven juvenile facilities each, and the Corrections Services Corp. operates six. In May 1997, Cornell Corrections, another adult prison contractor, announced its interest in acquiring the privately-held Abraxas Group, a leader in juvenile supervision services that provides residential, educational and treatment programs to over 1 ...

The district court for the middle district of Florida held that the sheriff, the county and a private corporation operating the county jail were liable for detaining an arrestee for 30 days without a probable cause hearing. The court also held that monetary damages were the proper remedy and that the private operator was not entitled to qualified immunity.

On September 18, 1992, Thomas Blumel was arrested by a Florida sheriff's deputy for allegedly violating a restraining order obtained by his estranged wife as an adjunct to a divorce action. Blumel was booked into the county jail, which was operated by the Corrections Corporation of America (CCA) under contract with the county.

The day after his arrest Blumel was brought before a county judge for a "first appearance," which is normally intended as a probable cause hearing. However, the judge in this instance was not the same judge who issued the restraining order, so he could not rule on the contempt. Blumel was neither released nor offered bail because his arrest was a warrantless arrest.

A month after Blumel was arrested the judge who issued the restraining order finally held a hearing on the matter. As a result the ...

The New Mexico state DOC contends that Corrections Corporation of America has overcharged the state by nearly $2 million since the CCA-operated Women's Correctional Facility at Grants N.M. opened some eight years ago. State officials also say that CCA is not living up to a deal struck in the 1997 legislative session to lower costs at the Grants prison.

CCA bills the state $95 a day for most of the women it imprisons at the Grants facility, about double what the state pays to house overflow New Mexico male prisoners in Texas rent-a-jails.

"Frankly, it's absurd," NM DOC chief Rob Perry said of the CCA rate.

But CCA denies there have been any overcharges in the past, and corporate PR flack Susan Hart said the company "did not agree to any sort of price decrease" for the 1997 fiscal year.

CCA claims the higher rate it charges at the Grants prison is due to extra services needed by female prisoners and a high debt service on the prison. CCA says that $22 per prisoner per day is assessed to service the debt.

"We are continuing discussions with both the corrections department and the legislative finance committee and ...

Wall Street recently celebrated an initial public offering (IPO) and welcomed the addition of a spanking new growth-oriented corporation: CCA Prison Realty Trust.

This Nashville-based corporation is a spin-off of the world's largest private prison corporation -- another Wall Street darling, Corrections Corporation of America -- whose stock is one of the top performers on the NYSE (doubling in value in just the first six months of 1997). CCA Prison Realty Trust is the nation's first real estate investment trust (REIT) that will focus solely on buying prisons.

As reported by Gregg Wirth in Left Business Observer, CCA Prison Realty sold 18.5 million shares in its IPO, 1.5 million more than originally planned, at a price of $21 a share, a dollar above initial projections, so hot was Wall Street for a piece of the imprisonment action. The deal was underwritten by investment bank J.C. Bradford & Company, also based in Nashville, and a fleet of co-managing firms, including heavyweights Lehman Brothers and PainWebber.

In a research paper, Equitable Securities (yet another Nashville firm), estimated that the U.S. prison population will reach 3.5 million over the next ten years, more than double the 1995 warm-body count of 1.6 million prisoners. In an SEC filing in advance of the IPO, Equitable Securities wrote: "As a result of the number of crimes committed each year and the corresponding number of arrests, incarceration costs generally grow faster than any other part of a government's budget. In an attempt to address these pressures, government agencies responsible for the operation of correctional and detention facilities are increasingly privatizing such facilities."

The malodorous language of corporate profiteering on the commodification of the imprisoned is bad enough. But as Wirth points out in LBO, the real stench of this IPO rises from the revelation that CCA Prison Realty will make its first incestuous purchase of nine prisons from its parent corporation, Corrections Corporation of America, for $308.1 million. Unsurprisingly, many of the top executives of CCA are also running CCA Prison Realty. Doctor R. Crants, CEO of CCA, is also chairman of CCA Prison Realty. While some Wall Street analysts pointed out this apparent conflict of interest, that didn't deter eager investors from scooping up the shares.

CCA Prison Realty will hand over $308.1 million -- cash to its parent and then lease the nine prisons back to CCA. With the $80 million left over, CCA Prison Realty will be shopping for more prisons -- most likely from CCA, which has five new prisons under construction.

And CCA, flush with over $300 million in cash, will be looking to boldly expand the frontiers of prison privatization, no doubt lobbying state and federal lawmakers for tougher crime bills and longer sentences in the process.

Left Business Observer (ISSN 1042-0134), the principal source for this article, is available for $22/yr ($55/yr for institutional/high income) from: LBO; 250 W 85 Street; New York, NY 10024-3217. Doug Henwood's book, Wall Street, can be ordered by calling 1-800-233-4830, or by visiting a bookstore.

By Julia Lutsky 

GAO Reports Available


Federal and State Prisons: "Inmate Populations, Costs and Projection Models," November 1996, GAO/GGD-97-15

Private and Public Prisons: "Studies Comparing Operational Costs and/or Quality of Service," August 1996, GAO/GGD-96-158

Reflecting both the relatively recent "get tough on crime" and the age-old theme of corporate profit there are two new GAO reports, one written as if in response to questions raised by the other. Approximately 1.1 million people were incarcerated in 1995. Assuming the sentencing policies in effect in 1994, there will be 1.4 million in prisons by the year 2000. This estimate is based on the average annual increase of 8.5 percent experienced between 1980 and 1995, the period covered by the report on federal and state prisons. If all states opted to use truth-in-sentencing laws which require prisoners to serve 85 percent of their sentences however, the number of prisoners could reach 1.6 million. Other estimates predict as many as 2 million by 2002.

All of this comes at a not inconsiderable cost to the taxpayer. In 1980, $3.1 billion was spent on prisons. In 1994 that sum had increased to $17.7 billion. By the ...