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October 21, 2011

"Rajaratnam's kidney transplant could cost taxpayers $300,000"

The title of this post is the headline of this new CNNMoney story.  Here are the details:

Taxpayers could be bankrolling a kidney transplant for wealthy white-collar convict Raj Rajaratnam, who was recently sentenced to 11 years in federal prison for insider trading. The cost could exceed $300,000 if he's able to secure a kidney early in his sentence, including the price of the transplant and a decade's worth of post-operative therapy.

At Rajaratnam's sentencing on Oct. 13 in New York, federal Judge Richard Holwell described the former hedge fund manager as a diabetic with "imminent kidney failure" who needs a transplant. The judge also said he will ask the Federal Bureau of Prisons to place Rajaratnam in the Butner Federal Correctional Complex in North Carolina, which has a medical facility.  Incidentally, Butner is home to Ponzi schemer Bernard Madoff, who is serving a 150-year sentence.

All federal prisons have some level of medical care, according to Federal Bureau of Prisons spokesman Edmond Ross, but some prisons specialize in it.  Butner is one of six federal prisons that are considered medical centers, meaning that their mission is to deliver more enhanced medical care than what would normally be expected from a prison hospital.

Rajaratnam will probably get sent to Federal Medical Center Devens in Massachusetts, not Butner, because Devens specializes in kidney treatment, including dialysis, according to Ross....   But none of the hospitals in the prison system conduct transplants, said Ross. That work would be outsourced to a non-prison hospital....

[The costs all] fall on the taxpayers. Not that the former hedge fund manager and Galleon Group founder has a choice. Rajaratnam does not have the option of paying for his own treatment once his sentence begins on Nov. 28.

"No, he cannot pay for it himself," said Alan Ellis, an attorney, prison consultant and author of the Federal Prison Guidebook.  "No way. There's no such thing as rich man's medicine versus poor man's medicine in the Bureau of Prisons."

Ross would not say how much the bureau specifically spends on health care, but the U.S. Government Accountability Office estimates that the cost is growing, in tandem with the aging prison population.   "I don't know what the 2012 health care costs are going to be, but it wouldn't surprise me if it's approaching a billion dollars," said David Maurer, director of the Homeland Security and Justice Team of the GAO, which analyzes the federal prison budget.

October 21, 2011 at 04:36 PM | Permalink


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This is not all that hard. Since his report date is already more than a month away, he could get the transplant before then. If he doesn't, extend the date any reasonable amount of time until he does.

One thing this points out is the need for Congress to change sentencing law to require convicts to pay the costs of their incarceration to the maximum extent they are able -- an obligation that would continue for the duration of their imprisonment.

Posted by: Bill Otis | Oct 21, 2011 4:57:00 PM

Tell him good luck with getting the proper treatment at Devens. A client of mine just died there -after the BOP docs decided he only needed dialysis 3 times a week instead of the 4 times a week he'd been receiving it on the outside. And after he'd been removed from the number one spot he'd finally risen to on the waiting list for a kidney, which list he'd been on for years. He was removed b/c the organ donation system puts you on hold while you're in prison. If you're lucky enough to survive your prison term, you get your place in line back. (So, Bill, it's not like the rich guy can just waltz in and get a kidney before he goes off to prison. It generally takes years of being on a waiting list.)

Oh yeah - why was my guy sent to prison? For technical violations of his conditions of supervised release (i.e., no new criminal conduct). His guideline range was 3 - 9 months for the supervised release violation, but the District of Colorado judge who sentenced him gave him the statutory max - 2 years. (Knowing full well that the client was not likely to survive that long without a kidney transplant). He made it ll months at Devens before his kidneys gave out a couple of weeks ago, and he died.

Posted by: afpd | Oct 21, 2011 5:53:22 PM

Bill, there is already on the books (though I don't have the citation handy) a statute whereby the Government can require an inmate who has the financial means to pay the costs of his own incarceration. I have only ever seen it used once, concerning a wealthy Mafia inmate. This statute is little known and is rarely used, but would seem to be imminently applicable to a billionaire inmate. Presumably his costs of confinement might also include his medical care. You ought to be able to find the statute on LEXIS or WESTLAW.

Posted by: Jim Gormley | Oct 21, 2011 7:25:16 PM

And I would say that just like on the outside if someone can't afford to pay for such treatment themselves or find charity willing to foot the bill they shouldn't get it. Organ transplants are far into the heroic measures of life extension and taxpayers should not be on the hook for such care. Death happens to everyone, eventually. Kidney failure is just one (admittedly painful) route to the grave.

I'm a little more ambivalent on the dialysis, however, and am not sure what the answer should be there.

Posted by: Soronel Haetir | Oct 21, 2011 9:20:33 PM

AFPD, that's a travesty. There are a few other words I'd insert between "a" and "travesty" if this weren't a public web site.

Bill, USSG 5E1.2(d)(7) already instructs judges to "the expected costs to the government of any term of probation, or term of imprisonment and term of supervised release imposed" in setting a fine. Given that the maximum guideline fines are no longer mandatory, this would presumably give sentencing judges the discretion to assess defendants of means for the cost of any foreseeable medical care that they will need while in prison.

Posted by: Jonathan Edelstein | Oct 21, 2011 9:21:26 PM


Where is the Texas SO registry data from a previous post. Until you provide it, you may not post a comment here!

Posted by: albeed | Oct 21, 2011 11:00:13 PM

Jonathan --

I was assuming, and am still assuming, that in this case the sentence has already been handed down, so it would be irregular for the judge to impose a 5E1.2(d)(7) condition now. If what I am suggesting can already be done, as you and Jim Gormley say, all the better. If the inmate-pays statute most often isn't used, as Mr. Gormlery reports, it certainly should be. On the other hand, to be fair to the courts, you don't find that many convicts who either need a transplant or can afford one.

Still, in the age of parsimony, when any costs can fairly and legally be shifted from the taxpayer to the inmate, I'm all for it. As between the two, the inmate is the source of the problem, so if he has the means to fix it, or help fix it, it's only right to look first to him.

Thank you for the information. It's been a few years since I did a sentencing, and even when I was hopping around in the EDVA, I didn't have too many billionaire defendants.

Posted by: Bill Otis | Oct 21, 2011 11:02:30 PM

Under 123D, and any utilitarian regime, he should go home, instead of punishing the tax payer, and pointlessly keeping him in a cage. If the prosecution cannot show any advantage to keeping him in a cage, it should be legal malpractice to demand prison time, like a doctor practicing quackery. If the professional does not stop its quackery, the license needs to be pulled.

The self-immunity of the prosecutor and judge are an abomination, and corruption crime against humanity, given their total incompetence. I don't like name calling, but I am angry as a taxpayer and owner of the law.

If we were not acting in retribution, a religiously based, Iraqi tribal culture idea from the Bible, and unlawful in this secular nation, this is what the sentence should look like to be useful.

As a chronic renal failure patient, he is already treated at taxpayer expense under Medicare.

However, he should be supervised by a peer who knows where all the corner cutting can take place, not by a know nothing, lazy, worthless government lawyer. He should be made to work hard at his skill to repay all damages and costs to his victims, to the government, to the IRS.

In this alternative sentence, there is a massive net gain to the owners of the law, the full deterrence of the defendant (legal under procedural due process rights), and deterrence of others contemplating cheating the same way (not legal under procedural due process). Now, there is massive self-defeating decisions except for one group, rent seeking government workers, from prison guards to doctors. I would call them losers and thieves, but they are having their total wipe out victory over the taxpayer and owners of the law. It is the rest of us that are the losers and idiots for allowing such a victory lawyer rent seeking.

Posted by: Supremacy Claus | Oct 22, 2011 10:05:48 AM

Did I miss something? Isn't the first step in white-collar prosecutions to do everything conceivable to impoverish even rich defendants...hopefully (from the POV of prosecutors) to include even the resources defendants might otherwise have used to retain effective counsel?

So the taxpayers are stuck with the cost of keeping an inmate alive. Good. It's the only thing that might give pause to those like Bill who relish mindlessly long incarcerations as the solution to nearly every problem.

You're a real humanitarian, Soronel. Everyone dies. If he can't pay for medical care, let him die. So what's the big deal? Touching, Soronel, truly touching.

Posted by: John K | Oct 22, 2011 10:16:22 AM

John K --

"So the taxpayers are stuck with the cost of keeping an inmate alive. Good. It's the only thing that might give pause to those like Bill who relish mindlessly long incarcerations as the solution to nearly every problem."

Actually, incarceration is the solution to only one quite discrete problem, that being crime. Why you think I regard it as "the solution to nearly every problem" is a mystery. Care to give me a clue?

By far the major problem we have now is impending national bankruptcy brought about by the spending and borrowing addiction we use to prop up our humongous welfare state.

I don't know what will put an end to that addiction, but I doubt it will be prison. If you can quote the post where I said prison would help on that front, please do.

If you could, in addition, propose some way to end the addiction (not FEED it, END it), that would be a major contribution.

Posted by: Bill Otis | Oct 22, 2011 10:33:17 AM


It is not my responsibility that Texas DPS has not responded to my query. If I don't get anything by Monday I'm going to try a different address and see if I have any better luck. And I'm only going to do that much because I do think it's an interesting question that knowing the answer to would be worthwhile.

John K.,

I've never claimed to be a humanitarian, or even particularly likable. Given my preferences Mr. Rajaratnam would have received a death sentence anyway.

I would limit covered medical care to contagious illness picked up while in prison or injury caused by other inmates or unjustified injury by staff, but exclude injury by accident and justified injury by staff from what taxpayers should need to cover. Basically if it's a condition of the inmate rather than the prison system I would say it should not be covered. Which I suppose answers the dialysis question (it shouldn't be paid for by taxpayers), so thanks for making me think that through.

Posted by: Soronel Haetir | Oct 22, 2011 11:02:04 AM

That a person with means could make the taxpayer foot the bill is a disgrace.

This type of waste is rampant in the prison system. In NY, as long as an inmate started the process prior to incarceration (I believes this includes even going to a doctor for a consultation), the state picks up the tab for sex change "treatments."

Posted by: TarlsQtr | Oct 22, 2011 11:11:47 AM

That a person of means could accept social security benfits from the government is also a disgrace, yet somehow they do.

Posted by: JS | Oct 22, 2011 2:56:53 PM

For many defendants, forfeiture and restitution orders will cause any and all assets owned by the defendant to be immediately seized---leaving them impoverished and unable to pay for anything, much less their incarceration or medical care. Furthermore, the forfeiture judgment will follow them for the rest of their lives (should they be "lucky" enough to get a sentence that will allow them to ever have a life outside of prison)--leaving them forever indebted to the Government. Recent white collar defendants (not Raj) have been saddled to effectively LWOP sentences and impossible to fulfill judgments to the Government.

Posted by: folly | Oct 22, 2011 7:48:21 PM


The rich pay into a fund that is promised to be returned to them upon their imminent old age.

No one pays into a fund that is promised to be returned to them upon their imminent incarceration.

Posted by: TarlsQtr | Oct 22, 2011 8:11:45 PM


Perhaps they should avoid committing crimes then.

Do you claim that the impossible to fulfill restitution orders are for amounts in excess of the harm actually caused? Reading opinions (mostly from appeals courts) I have the definite feeling that in most cases the restitution orders understate the amount of harm, settling on the easily and thoroughly proven while leaving less tangible harms completely unaccounted for.

Posted by: Soronel Haetir | Oct 22, 2011 8:22:33 PM

I should have added that the one exception to the mostly understating damages I've noticed is in the context of the Amy crusade. Although I think the 5th circuit is going to come out on the short end of that one and then even that will revert to the mean.

Posted by: Soronel Haetir | Oct 22, 2011 11:05:12 PM

Soronel --

"Perhaps they should avoid committing crimes then."

Man, are you ever going to get an earful for that one. It's the one thing that's absolutely verbotten to say on this blog. The idea that criminals are in any way responsible for the hardships they encouter as a result of sentencing is, well, NAZI.

Posted by: Bill Otis | Oct 23, 2011 9:52:48 AM

Have his fine be calculated to include his medical costs. The fine goes into the general pool of money, so where is the beef?

Posted by: Mark | Oct 23, 2011 11:20:22 AM


I agree with your assessment of course, but I suppose Bill, Tarls, etc. would say that that's what my client gets for failing to comply with the technical conditions of his supervised release. (Oh - one more relevant fact: the judge had previously made a fact-finding that my client had become cognitively impaired by the effects of years on dialysis. Which in my view - but not the judge's - impaired his ability to comply.)

Posted by: afpd | Oct 23, 2011 12:37:22 PM

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