Corrections Department Questioned Over $500K in Payments to Company Linked to Health Spokesperson

The Department of Corrections and Rehabilitation (DCR) paid $114,100 to Health Strategy Consulting for professional services via purchase orders without formalizing a contract, according to a report by the Office of the Inspector General (OIG). Using purchase orders to obtain professional services is uncommon in government contracting.

In total, the DCR disbursed nearly $500,000 to the company — owned by communications professional Ramón Alejandro Pabón García, now spokesperson for Health Secretary Víctor Ramos — without evidence of work performed, according to a February investigation by the Centro de Periodismo Investigativo (CPI). Since 2008, Pabón García and his companies have accumulated more than $5 million in contracts with several agencies and municipalities.

Health Strategy Consulting served as a liaison between the DCR and healthcare providers in the island’s prisons and was also responsible for evaluating whether those providers met their contractual obligations.

Inspector General Ivelisse Torres Rivera said hiring professional services through purchase orders is not standard government practice. “All matters related to professional service contracts should be handled through the mechanism provided by law,” she told the CPI.

Act 237 of 2004 requires that professional services be documented in written contracts. The DCR’s own Contract Processing Standards and Procedures also state that “services or goods will not be accepted without prior contract issuance.”

In response to the findings, the DCR said the services were requested via purchase orders “while the contract was being renewed,” according to the audit report.

While the OIG acknowledges that, as an exception, current law allows agencies to issue purchase orders for professional services, it emphasized that “government agencies are expected to be vigilant in granting such orders” and reiterated that contracts are the appropriate mechanism.

The report, published Tuesday, states that the DCR issued 10 purchase orders in 2020 and 2021 for these services. In five of the payments, required tax withholdings were not applied, allowing the contractor to receive $4,410 that should have gone to the Department of Treasury.

Services paid for via purchase orders included report evaluations, managing COVID-19 cases in prisons, and administrative tasks. According to the OIG, billed activities also included “hospital management,” “sending communications about early primary voting for inmates,” “24/7 on-call availability to address issues in the medical area,” and “monitoring, analysis, and notifications in a chat about public interest news from the DCR.”

DCR Secretary Francisco Antonio Quiñones Rivera said in a written statement that the agency is analyzing next steps following the OIG’s findings, which also include reviewing invoices from current correctional health provider Physician Correctional. The OIG ordered the DCR to recover more than $2 million overpaid to the company.

Contract Irregularities

Between 2017 and 2022, beyond the purchase orders, the DCR awarded Health Strategy Consulting five contracts totaling $416,000 to act as a liaison and oversee compliance between the agency and health service providers in prisons.

Dr. Luis Clas Fernández, now the director of the Department of Health for the Municipality of San Juan, led Health Strategy Consulting until January 2021, when Pabón García took over.

Pabón García also owns Tácticas & Inc., a communications firm with contracts from the General Services Administration, the Health Insurance Administration, the Economic Development Bank, the Department of Health, and the municipalities of Canóvanas and Maunabo.

The CPI contacted Clas Fernández and Pabón García for comment on the report’s findings but received no response at the time of publication.

As part of its review, the OIG examined the two most recent contracts awarded by the DCR to Health Strategy Consulting, signed in December 2020 and September 2021 by Clas Fernández and Pabón García, respectively.

The OIG found that 80% of the 88 hours billed and paid in December 2020 were not properly contracted or authorized. Health Strategy Consulting billed 22 hours between December 1 and 6 — even though the contract began on December 7. The DCR paid $2,200 for those hours, despite retroactive contracting being prohibited under Act 33 of 2015. Act 237 of 2004 also establishes that service contracts must be prospective, a principle reaffirmed by the Supreme Court in 2014.

The agency also paid $4,800 for 48 hours billed between December 7 and 31, 2020, which “could not be related to the contracted services,” according to the OIG. At the time, the DCR Secretary was Eduardo Rivera Juanatey.

Regarding the 2021 contract, the OIG found that the DCR paid $100,000 for 10 invoices that listed hours in lump sums and included services not covered by the contract. Due to a lack of invoice detail, it could not determine how many billed services were unauthorized.

Former DCR Secretary Ana Escobar Pabón signed that contract.

In February, CPI reported that the DCR paid $483,460 to Health Strategy Consulting between 2018 and 2022 — $67,460 more than contractually authorized — and that it could not produce evidence of services rendered.

As part of a lawsuit, the DCR certified to the CPI that it had “no report from Health Strategy [Consulting]” in its records.

Pabón García, in a written statement to the CPI in February, said he prepared the compliance reports and presented them to the Joint Oversight Committee — a body composed of DCR and Physician Correctional representatives responsible for monitoring provider compliance.

During the period when purchase order payments were made, company representatives participated in oversight meetings as a medical liaison officer — a role that, according to the OIG, must be filled by a licensed physician designated by the DCR.

In 2023, the DCR also contracted UTICORP for $450,000 to evaluate Physician Correctional’s performance. The OIG reported that UTICORP was paid for services not included in its contract and noted that the selection process suggested “possible favoritism or special treatment.”

Jorge Galva Rodríguez, legal advisor to UTICORP, denied any irregularities in the contracting process and maintained that all services were provided as requested.

“All the services provided to the DCR were explicitly requested by the DCR and provided in full,” he said in a phone interview.

Excess Payments to Physician Correctional

The OIG found that the DCR overpaid more than $2 million to Physician Correctional, the company managing prison health services. Originally contracted in 2018, the agreement was renewed in 2023.

The first contract, valid from October 2018 to September 2023, was for $54 million, but the DCR paid $56.8 million. The OIG ordered the recovery of the overpaid amount.

A review of 174 invoices found they were vague and repeated the same information, contrary to contract requirements. The agency paid them without verifying the authenticity or quality of the services, the report concluded.

Despite a decline in the prison population to under 9,000 during the contract period, payments were not adjusted proportionally, as required.

The DCR continued paying the maximum authorized amount, with no record of negotiations or contract amendments reflecting the reduced prison population.

The Office of Management and Budget (OGP, in Spanish) authorized the first contract only for fiscal year 2018–2019, even though it remained in effect through 2023. Under current regulations, any government contract exceeding $10,000 in a fiscal year must be approved by the OGP, the OIG noted.

In September 2024, CPI reported that the current contract — worth nearly $73.8 million and valid through 2028 — is based on a correctional population of 6,500 or more. The current daily average is 7,318. However, the contract does not specify the cost per inmate or the service rates.

The OIG emphasized that although the contract establishes a 6,500-inmate threshold, it includes automatic biennial increases in Physician Correctional’s compensation — without a clear justification.

The investigation also found that the DCR contracted Physician Correctional to provide mental health services for juvenile facilities without issuing a public request for proposals.

Gov. Jenniffer González had previously announced her administration would cancel the contract with Physician Correctional, but it remains in effect.

In an April budget hearing in the House of Representatives, DCR Secretary Quiñones Rivera said the agency is still in the “internal discussion” stage regarding the contract’s future.

This translation was generated with the assistance of AI and thoroughly reviewed by our editorial team to ensure accuracy and clarity.