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Business News – High Payphone Costs Rock the Big House

Posted: 09/2000

Business News

High Payphone Costs Rock the Big House
By Kim Sunderland

Class action lawsuits filed in seven states allege that high prison payphone and collect calling rates are robbing blind the people prisoners are calling.

In a classic story reminiscent of “robbing Peter to pay Paul,” attorneys contend the higher rates are fueled partly by deals made among telecommunications providers and state or county governments. The telecom carriers counter that the rates are needed to cover extra costs required at prisons.

The suits have been filed in Illinois, Indiana, New Hampshire, New Mexico, New York, Ohio and Wisconsin. The plaintiffs include prisoners’ families, friends, attorneys, civil rights groups, etc.

Specifically, the incarcerated in this suit are people locked up in U.S. prisons and jails the Corrections Corp. of America
(CCA, www.correctionscorp.com) owns and operates. It is named in the suit, along with telecom carriers, as a defendant. Among the carriers named are Evercom Inc.
(www.evercom.net), WorldCom Inc. (www.wcom.com), Pioneer Telephone Cooperative
(www.pioneertelephonecoop.com), AT&T Corp.
(www.att.com) and Global Telecommunications Inc.
(www.globaltele.com). Other carriers have been named in other states as well.

Corrections Corp. is a private firm that runs 82 prisons and jails in 26 states. With nearly 73,000 people in its prisons and jails, the company is the fourth largest correctional system in the country.

“Each class is so numerous that joinder is impracticable,” according to one of the lawsuits filed in the U.S. District Court in Washington, D.C. “Furthermore, every individual in CCA prisons has numerous family, friends and/or legal counsel that seek or may seek telephone contact with the individual. As a result, the number of people affected by the issues in this action number in the hundreds of thousands, far too numerous to join in one suit.”

The plaintiffs seek to enjoin, have the practice declared illegal and recoup unspecified damages “resulting from conspiracies between CCA and defendant telephone companies,” according to the lawsuit.

The suit alleges that CCA entered into a series of exclusive agreements with the named telephone companies to provide inmate phone service at its prisons and jails. Under the terms, the plaintiffs are unable to choose which carrier to use when communicating with CCA prisoners.

“If they want to talk by phone, they must use the single telephone service the defendants provide,” the lawsuit says. “As a result, the defendants can manipulate the plaintiffs to earn higher profits and prevent plaintiffs from using the telephone services of their choice.”

Attorneys say that such deals include local governments as well. And these arrangements between the phone companies and the governments give the local governments as much as a 60 percent cut of phone revenues in exchange for the company getting exclusive rights to all calls the inmates initiate. The rates can reach as much as $3.95 for an initial long-distance connection, plus 69 cents per minute thereafter–such is the case in Indiana.

The carriers justify the rates as being necessary to pay for the security measures they need to have at the prisons. This includes prisoner ID numbers, pre-approved call lists and monitoring of the calls, all of which must be collect.

Stephen G. Seliger of Seliger, Elkin & Dolan in Chicago disagrees. Seliger is involved in four of the class action lawsuits.

He calls the inflated rates “gouging and profiteering,” and a form of legalized kickbacks.

For example, Seliger says that in Nebraska, commissions aren’t accepted on prison calls, and long-distance rates run as low as 19 cents per minute. CCA declined comment.

As for other states, such contracts have become a significant source of revenue, sources say. For instance, Indiana took in $6.3 million in 1999 from all state payphones, most of them in prisons. New York made $25 million; California, $24 million; and Illinois, $12 million.

The lawsuit also addresses the carrier’s claim. It says, “This prohibition on choice cannot be justified by additional security features needed in prison; indeed, many non-CCA prisons use high security telephone systems at ordinary profit margins. Moreover, many bill-payer plaintiffs have pre-existing contracts for telephone services with different carriers, but the defendants prohibit use of alternative contracts for telephone service in CCA facilities.”

In short, the attorneys representing the plaintiffs say the defendants are using their position of power over prisoners to take advantage of bill-paying plaintiffs over whom they have no legal power. They are using their control over a “captive” audience to unjustly enrich themselves.

The attorneys say these “unconscionable arrangements” violate the First, Fifth and Fourteenth Amendments to the U.S. Constitution.


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