Centene prison-health subsidiary overcomes claims in Missouri

The company providing health care to Missouri prisoners failed to prove a competitor misled state purchasing officers to win the $1.4 billion contract, Cole County Circuit Judge Daniel Green ruled Thursday.

Corizon Health, which has been the state’s vendor for prisoner medical needs since 1992, accused the state Purchasing Division of giving the contract to Centurion Health despite problems with its bid that should have disqualified it.

Centurion’s owner, St. Louis-based Centene, landed in hot water in Ohio this year when Attorney General Dave Yost in March accused its Medicaid managed-care subsidiary of tens of millions of dollars in fraud. Centene in June agreed to pay Ohio $88 million to settle the claims — and it set aside $1 billion more to settle similar claims in other states.

Despite the claims, the Ohio Department of Medicaid in August decided to award Centene subsidiary Buckeye Health Plan a huge contract anyway.

In Missouri, Judge Green did not agree with the case against awarding Centene’s prison-health subsidiary that state’s business. He issued his ruling after Corizon finished its case and without a formal presentation from assistant attorney general Craig Jacobs, who represented the state, or attorney Chuck Hatfield, who represented Centurion. Green asked the attorneys to file a statement of facts that he can use to write a formal opinion, which he said would come next week.

By the time any appeal can be heard, Centene’s Centurion will be providing health care for the Department of Corrections.

Centurion’s proposal was chosen as the best of five bids submitted for the contract, which could last up to seven years. Corizon protested the award in mid-June, about two weeks before the contract was scheduled to begin. 

The start of the contract has been delayed while the court case was pending and is now set to begin Nov. 15.

In the protest, and the lawsuit, Corizon focused on whether Centurion could deliver the experienced managers it promised after firing a key member of its corporate team and whether failing to tell the state about the firing was misconduct that should void the award.

“They have not established the misrepresentations they claim were made,” Jacobs said to Green as he asked for the verdict.

Under the Missouri contract, Centurion will be paid $1.4 billion to care for the state’s approximately 23,000 inmates if the contract runs for the full seven year term. The challenge from Corizon arose from material uncovered in Tennessee, where Centurion also bested Corizon for a behavioral health services contract in that state’s prisons. 

Corizon sued Centurion in federal court in Tennessee and found emails from Wesley Landers, the chief financial officer for the Tennessee Department of Corrections, to Jeff Wells, a vice president of Centurion, providing internal documents about the contract.

Centurion  later hired Landers, but after the communication came to light, the company fired both Landers and Wells.

Tennessee announced in May that it would seek new bids for the contract.

Scott King, general counsel for Corizon, said the company will wait until it sees Green’s written judgment before deciding whether to appeal.

“We felt we put on a very good case,” King said. “ We felt we showed a great deal of corruption in the process in Tennessee, which led to false and misleading submissions. Unfortunately it appears you can do that in the state of Missouri and it really doesn;’t matter. It is very concerning to us.”

During testimony Thursday afternoon, Karen Boeger, director of the purchasing division, said that everything Centurion submitted in its proposal was true when it was received. If there are changes in the corporate team, she said, there is a process for substituting key personnel. 

“People do get fired,” Boeger said. “People do leave. People do die.” 

Failure to replace key personnel could be a breach of contract, she said, but there are often changes in who handles the state’s business at its vendors.

“The problem is if there is no substitution,” she said. “They would be in breach of what they committed to me.”

Many of Corizon’s arguments focused on the final document presented to the state, known as a best and final offer. The decision to fire Wells, and the problems that led Tennessee to rebid that state’s contract, should have been disclosed, the company said.

Boeger, in her testimony, said the best and final offer document is intended to answer specific questions from purchasing officers. It is not intended as a way to resubmit the entire proposal, she said.

The key to the case, Hatfield said, is that state purchasing rules allow substitution of personnel.

“In this case, Centurion made a proposal to use a person, absolutely intended to do it, it was absolutely true,” Hatfield said. “Later, he’s no longer with the company. This is not an unusual situation. Frankly it is kind of a usual situation.”

Ohio Capital Journal reporter Marty Schladen contributed to this story.