Federal prison employee settles kickback charges for $50,000

by Ben Vernia | May 6th, 2018

On May 4, the Department of Justice announced that a Bureau of Prisons employee in Texas had agreed to pay $50,000 to settle civil Anti-Kickback Act allegations that he accepted payments from a prison health contractor (who had settled its own liability for the scheme in 2017). According to DOJ’s press release:

Cary Hudson, a former financial administrator for the U.S. Bureau of Prisons (BOP) in Carswell, Texas, has agreed to pay the United States $50,000 to resolve allegations that he violated the Anti-Kickback Act by accepting improper payments from Mansfield, Texas-based Integrated Medical Solutions Inc. (IMS) in exchange for his assistance in obtaining BOP contracts.  In May 2017, IMS and its former president, Jerry Heftler, agreed to pay more than $2.4 million to resolve their civil liability arising from the alleged scheme.

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The settlement announced yesterday resolves allegations that Hudson, while serving as a BOP financial administrator, accepted payments from IMS in exchange for providing favorable treatment in connection with BOP contracts to manage healthcare networks that provided medical care to federal inmates.  Hudson’s assistance to IMS allegedly included the provision of certain confidential, non-public information that gave IMS an unfair competitive advantage in the bidding process.  The government also alleged that, after IMS obtained the contracts with BOP, Hudson improperly assisted IMS in its performance of the contracts while simultaneously serving as a BOP financial administrator.

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In October 2014, Hudson pleaded guilty to a felony violation of 18 U.S.C. § 1001 for failing to disclose the payments he received from IMS as part of his annual obligation as a federal government employee to report any potential conflicts of interests.

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