Prison healthcare provider sues Tennessee for nixing contract award

A Pennsylvania-based prison healthcare company is suing the state over its process for bidding on contracts. (Photo by Andy Sacks/Getty Images)

A Pennsylvania-based prison healthcare company is suing the state claiming Tennessee officials refused to award it a contract without explanation, a move that risks “destroying” the state’s competitive bidding process.

Wexford Health Sources filed the lawsuit in Davidson County Chancery Court in May, saying the state declined to give it a contract valued at roughly $100 million for health care and behavioral health services in Tennessee prisons even though it scored higher than two other companies in the bidding process. 

The lawsuit targets the Department of Correction, Commissioner Frank Strada, the state’s Central Procurement Office and its director, Mike Perry.

Wexford says in the filing the state was prepared to award it the contract for inmate health care and behavioral services until Centurion, which holds the contract, challenged the decision in February. The state then notified Wexford it would send out new requests for proposals without offering a reason, as required by law, the filing says.

The state’s primary defenses are that Wexford has no standing to file suit and that the court lacks jurisdiction over the subject matter. An August hearing is scheduled to consider a state request to dismiss the lawsuit.

The state’s filing also says the plaintiff’s challenge fails because it contests “a lawful and discretionary decision” before the contract was awarded.

In contrast, Wexford’s challenge says state law obligates public contracting officials to “fairly and honestly” consider bids. Otherwise, competitive bidding “will be undermined” and vendors will be “discouraged” from submitting bids.

It also says Tennessee law recognizes “that rejecting all bids and canceling a solicitation ‘should be the exception in government procurement rather than the rule.’” 

Wexford’s filing further says the state “stands on the precipice of destroying any semblance of competition in the award of the contract.”

Wexford’s primary argument is that it was graded higher than Centurion and YesCare (formerly Corizon) in the state’s bidding process. Yet just before it was to receive the contract, Centurion protested the award and the Department of Correction called for another set of bids.

The March decision marked the second time in recent years the state opted to stick with Centurion and take new bids after the other two companies were to be awarded the contracts. The first time state officials were set to award the contract to YesCare, but reneged on that in 2024, then reversed course on the Wexford contract award this March.

The state’s Fiscal Review Committee extended Centurion’s contract in May because of the litigation.

Corizon, which held Tennessee’s inmate behavioral health contracts from 2012 to 2020, filed an antitrust lawsuit against the Department of Correction five years ago saying the state skewed the bidding process to help Centurion win the contract. That case was settled with prejudice in January 2022.

Documents from that lawsuit led the U.S. Department of Justice to charge two men, former Tennessee Department of Correction Deputy Commissioner Wes Landers and Centurion executive Jeffrey Wells, with bid-rigging in connection with the prison system contract. 

Landers took a job with Centurion after the contract bidding. The company fired both men before the lawsuit settlement, and Landers was found dead in September 2024.

House Speaker Cameron Sexton pushed for Centene’s Rhythm Health, formerly connected with Centurion, to win a TennCare contract for managed care services after it failed to succeed in bidding in 2021. Sexton sponsored a bill that would have required TennCare to add a fourth contractor, but it failed to pass.