FACT SHEET
Date:

ELAINE M. HOWLE
State Auditor

April 19, 2007

Report:

2006-501

The California State Auditor released the following report today:

California Department of Corrections and Rehabilitation
It Needs to Improve Its Processes for Contracting and Paying Medical Service Providers
as Well as for Complying With the Political Reform Act and Verifying the
Credentials of Contract Medical Service Providers
BACKGROUND
Approximately 172,000 adult inmates in the State’s prisons rely on the California Department of Corrections and Rehabilitation
(Corrections) to provide adequate and timely medical care when needed. A court-appointed receiver is currently managing
Corrections’ health care delivery system as a result of a lawsuit alleging that the medical services provided to California inmates
were “deliberately indifferent” to their medical needs in violation of their constitutional rights.

KEY FINDINGS
Three years ago we reported deficiencies in Corrections’ contracting and payment processes. In this report, we identified many of
the same issues. We reviewed 21 medical registry services contracts for fiscal year 2005–06 and found that Corrections:
•

Did not properly award half of the competitively bid contracts.

•

Awarded two competitive contracts without justifying its inability to receive three bids and awarded two noncompetively bid
contracts, with a maximum award amount of $80 million, without proper justification.

•

Allowed contractors to commence work under four contracts prior to receiving final approval.

•

Did not always include contract terms that would better protect the State’s interest.

We further reported that Corrections:
•

Did not adequately monitor some of the medical service invoices of its registry contractors and prisons did not comply with
procedures and contract terms related to invoicing.

•

Does not verify the credentials of all providers who treat inmate patients and unnecessarily spends time on other
credentialing activities.

•

Lacks adequate controls to ensure designated employees file the required financial disclosure statements on time. Of 124
statements we reviewed, 78 were filed after the deadline—21 of which were filed almost one year late. Further, 14
employees did not file statements. Additionally, we referred a former contract pharmacist-in-charge to the Fair Political
Practices Commission for further inquiry and possible enforcement action, and referred some potential conflicts of interest
to our Investigations Division for further analysis.

RECOMMENDATIONS
We made numerous recommendations to Corrections in this report, including the following:
•

Comply with contracting laws and regulations, policies and procedures, and contract terms and conditions to protect the
State’s interests and ensure appropriate medical services at the most competitive prices.

•

Ensure that medical service contracts contain terms that, at a minimum, call for the standard of care required to protect the
constitutional rights of inmates.

•

Track whether its designated employees, including consultants, file their financial disclosure statements timely and identify
potential conflicts of interests.

•

Verify the credentials of contracted providers.

Contact:

ELAINE M. HOWLE

Telephone:

(916) 445-0255

Internet:

www.bsa.ca.gov

Bureau of State Audits 555 Capitol Mall, Suite 300 Sacramento, California 95814

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