Many states are obviously facing tight budgets. When that happens, it is common to look at many different possibilities for saving revenue. One idea that has been trendy in the last few years is to "privatize" various government services. The theory is that for-profit businesses are more efficient than traditional government agencies and that the "profit motive" under which companies operate will help them deliver the same services better, faster, and cheaper.
Bringing for-profit corporations into the delivery of traditionally governmental services creates interesting legal arguments when things go wrong and people are injured. For example, are these businesses subject to the same state or federal statutes regarding when and how government actors are entitled to certain immunities? Does the state need to be sued along with the private corporation? Why did the governmental contract with the company in the first place? Who was really in control? Obviously, these types of partnerships between public and private entities can create quite a bit of extra legal work to try and untangle.
Let me share with you what I believe to be a cautionary tale about where privatization of government services went terribly wrong. Recently, a juvenile court judge in Pennsylvania was indicted for cutting a shady deal with a private for-profit youth detention facility to send far more young people to the detention center than deserved it. The judge received kickbacks from the company.
Private prisons and youth detention centers are paid by government entities like state and county governments to house inmates. The more inmates they house, the more money they make. So, how can an entrepreneurial private prison company acquire more inmates? Well, in Luzerne County, Pennsylvania, they bribed Judge Ciavarella, who had run for office on a tough-on-crime platform, to throw the book at juvenile offenders. In 2002, then Luzerne County, PA Judge Conahan shut down the state juvenile detention center and used money from the county budget to fund a lease for the private facilities. While this raised eyebrows, it was still approved.
The scheme worked like this: Robert Mericle, a builder and close friend of Ciavarella, and Robert Powell, an attorney who co-owned two youth detention facilities paid the judge "finder's fees" or kickbacks for sentencing juveniles to those facilities. Both Judges Conahan and Ciavarella have pleaded guilty to various fraud and racketeering charges. They have been named as defendants in a civil lawsuit as well. Powell turned state's witness for the FBI.
From 2003 to 2007, Luzerne County would pay Powell's company $30 million dollars to house juveniles. It could have built its own facility for less than 1/3 of that - $9 million. The National Center for Juvenile Justice lists Pennsylvania as the state with the second most private detention centers (behind Florida).
The Philadelphia-based Juvenile Law Center had first raised flags about Judge Ciaravella in 1999, when a 13-year-old boy was detained without being read his rights and appeared in court without a lawyer. ASupreme Court decision in 1967 clarified that children have a constitutional right to counsel, however, about half of the children that Judge Ciavarella sentenced did not have representation. It's not clear from the record that Judge Ciavarella advised the youths or their parents of the potential risks of not having representation as is required.
The judge sent juveniles as young as 10 to the detention center for weeks or months for crimes as varied as setting up a MySpace page mocking a principal, trespassing in a vacant building, a simple assault resulting in a black eye, or pocketing change from unlocked vehicles A 17-year-old boy with no previous record spent six months in a detention center for possession of drug paraphernalia, but never recovered and, ultimately committed suicide.
The sentences handed down by Judge Ciaravella were out of line with recommendations by probation officers and out of line with the sentences handed down by other judges. He sent 25% of his juvenile defendants to detention centers from 2002-2006 compared with a state rate of 10%. He also routinely refused and ignored requests for leniency from prosecutors and probation officers.
This was a perfect storm of a for-profit enterprise colliding and colluding with a profiteer who was willing to walk over the constitutional rights of minors for money. "The juvenile system, by design, is intended to be a less punitive system than the adult system, and yet here were scores of children with very minor infractions having their lives ruined," according to Marsha Levick, a lawyer with the Juvenile Law Center. "There was a culture of intimidation surrounding this judge and no one was willing to speak up about the sentences he was handing down
Of course, not every privatized service will result in the nightmare scenario we've just described. This catastrophe occurred not just because of a greedy businessman, but because of a greedy government official. However, there are plenty of examples of both.
The legal process will likely take years to resolve. Both criminal charges and civil lawsuits have been filed. Those involved will spend a lot of time in jail for their crimes. The business, the governmental entities who contracted with the business, and the culpable individuals will be sued in state and federal court for everything from personal injury/tort claims, to fraud, to civil rights violations, to class actions for overcharges in fees and expenses incurred by these poor families.
Meanwhile, Judge Ciaravella now sits convicted of crimes with possible maximum sentences totaling 157 years in prison (for which he might serve 15 ½ years), stripped of his bench and his robe, required to pay back nearly $1 million, and a defendant in a class action suit. A judge sworn to uphold the law and serve justice instead upheld vengeance and served greed. I wonder if he ever counted the cost in anything other than dollars.
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