Philadelphia nails firm for lying about women-owned contractor

A company that provides prison health services has agreed to pay Philadelphia $1.85 million after investigators concluded the firm had lied about hiring a women-owned business to meet city diversity goals.

Prison Health Services has long treated city inmates and seemed to be complying with Philadelphia’s goals for using minority and women-owned business. Inspector General Amy Kurland says the company told the city it partnered with a women-owned business based in Indiana called JHK Inc.”They said that company was going to provide all the pharmaceutical services,” Kurland said at a news conference Wednesday. “In reality, that company did nothing except give its name to Prison Health Services so that Prison Health Services could get the city contract.”In fact, Prison Health Services was getting pharmaceuticals from a non-minority firm associated with its parent company, paying the phantom subcontractor a fee for using its name. Kurland says when confronted by her investigators, the company cooperated and changed its practices. It agreed to pay the cash settlement and change its practices, but admitted no wrongdoing.

Kurland was asked why the firm will still be allowed to compete for city business.

“In our view the settlement is both punitive and it’s corrective,” Kurland said. “And in my view when a company institutes corrective procedures such as in this case, that company is actually less of a risk to the city than a company that has not put these type of measures in place.”

UPDATE: Late Wednesday, Corizen issued a written statement which said in part that “PHS received what it believed to be the appropriate City officials’ permission to handle the pharmacy subcontract arrangement the way it did.  PHS would not have proceeded with the subcontract arrangement if we had known that we needed additional approvals.  As soon as the Company learned it was non-compliant, it immediately changed subcontractors.”

The city’s minority participation program, which dates back to the early 1980’s, has long been dogged with suspicions that companies avoid meeting diversity goals through subterfuge.

Some are said to use “front” companies that pretend to be genuine minority businesses, but are really majority-owned. Others find “pass-through” minority firms that do little or no work and get fees for letting prime contractors use their names on city bids.

In the settlement agreement between Prison Health Services (now called Corizon Health), it’s acknowledged that “certain employees” of the city’s prison system approved the company’s arrangement with the non-working Indiana firm.

Mayor Michael Nutter’s chief of staff, Everett Gillison, said one of those employees has retired and another has been “re-trained” on city policies.