Rauner firm has stake in state deal awarded by Quinn

Written By Better Government Association Posted: 04/17/2014, 12:58am

Bruce Rauner, the Republican challenger for governor, stands to profit from a lucrative state contract awarded last year by the administration of his opponent on the November ballot, Gov. Pat Quinn, records show.

Rauner formerly headed GTCR LLC, a Chicago private equity firm in which he still holds a stake as an investor.

Since December 2012, GTCR has owned Correctional Healthcare Cos., which got a five-year contract with a five-year renewal option from the Illinois Department of Juvenile Justice in February 2013 to provide medical, dental and mental health evaluations and treatment for the approximately 900 inmates, ages 13 to 20, of six state-run youth detention centers in the Chicago area and downstate.

The state deal is worth as much as $99.3 million.

Grant Klinzman, a Quinn spokesman, says the Democratic governor wasn’t involved in awarding the contract and didn’t know of Rauner’s ties to Correctional Healthcare.

Rauner campaign spokesman Mike Schrimpf notes that the Winnetka Republican retired as managing director of GTCR in October 2012 — two months before the firm acquired Correctional Healthcare and four months before the state contract was awarded. Schrimpf says Rauner didn’t work on the Correctional Healthcare acquisition and wasn’t aware the company has a state contract.

“GTCR invested in Correctional Healthcare after Bruce resigned from GTCR,” Schrimpf says.

The venture capitalist continues to hold a stake in GTCR and related investment funds, according to a financial disclosure statement he filed with the state in November.

That would put him in the position, if elected in November, of overseeing a state contract he and his business partners stand to profit from.

Rauner has no plans to divest himself of these holdings, according to Schrimpf, who notes, “Bruce already pledged to put all of his assets in a blind trust if elected governor to avoid any conflicts of interest or perceived conflicts of interest.”

Schrimpf would not say how much Rauner stands to gain from GTCR’s investment in Correctional Healthcare.

Philip Canfield, GTCR’s managing director, didn’t return messages seeking comment.

Correctional Healthcare and one of its affiliates have held state contracts since 2000, records show.

The for-profit company employs medical professionals who treat an average of 70,000 inmates a day at more than 250 correctional facilities around the United States.

In Illinois, the company has drawn criticism in connection with a federal lawsuit filed in 2012 by the American Civil Liberties Union of Illinois against the state Department of Juvenile Justice, accusing the state agency of inadequately treating detainees with mental health conditions.

Correctional Healthcare wasn’t named in the lawsuit, even though it provides some of that care, because the ACLU views the state as “ultimately responsible” for what goes on in the prisons, according to ACLU spokesman Ed Yohnka.

But Dr. Louis Kraus, a court-appointed expert in the ACLU case, says he found that Correctional Healthcare “is not meeting the needs of the kids.” Kraus, a professor of child and adolescent psychiatry at Rush University Medical Center, says he found some Correctional Healthcare employees lacked the training and certification needed to treat juveniles with serious mental health and psychiatric problems.

Kraus filed a report on the youth prisons’ mental health care as part of a consent decree between the ACLU and the state. A federal judge recently approved a plan that outlines steps to improve conditions.

An unrelated court case, which was settled in November 2012 for undisclosed terms, accused Correctional Healthcare of being “deliberately indifferent” to the medical needs of an unnamed Illinois youth prisoner. That lawsuit was filed in May 2011 in federal court in Chicago against Correctional Healthcare, an affiliate of the company and a Correctional Healthcare physician the lawsuit said didn’t send the detainee to a hospital until more than 14 hours after the boy first complained of severe testicular pain. As a result, one of the boy’s testicles had to be surgically removed, according to the suit.

A Correctional Healthcare spokesman declined to comment on the case but, in a written statement, said: “We are proud of the healthcare services that we provide to the youths at the IDJJ facilities and are continuously evaluating our services and looking for ways to improve upon them. Our primary goal is to provide high-quality, cost-effective health-care services to the individuals we serve.”

Schrimpf says the problems occurred before GTCR bought Correctional Healthcare.

“It happened on Pat Quinn’s watch,” says Schrimpf. “The prison system is a mess, and Bruce isn’t in charge of it.”

Andrew Schroedter is an investigator for the Better Government Association.

Editor’s note: The Rauner Family Foundation has been a major BGA donor in the past, and Rauner sat on a BGA advisory committee, but the financial and advisory relationships ended when he began his campaign for governor.

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