'Sovereign immunity' (states are liable only for what they choose to allow themselves to be liable for), waivers for private prisoners, and probably some sort of 'reasonable precaution' clause in liability legislation would be where I would start looking for the reason why not.

I would file on civil rights grounds, that incarceration where rape is known to be highly likely amounts to cruel and unusual punishment.

If life in prison for a first-time nonviolent drug offense was not considered cruel and unusual, what luck would you have?

However, that would fall into the trap mentioned in the article: that it's not unusual.

Rape is an unusual form of punishment in that the courts never ask for it to be applied.

Unusual doesn't mean "uncommon" in the context of the constitution.

* for private prisons

Seriously, there is no accountability ZERO. If there is any industry, aside from government, that need disruption, it is prison.

Let's take that.

What a prison startup would look like?

Heh - I didnt mean it like that - unfortunately with Prison, you have to attack it from the political side.

Not necessarily.

What if you could make inmates on the outside somehow useful? That would reduce prison population, &c

Take a look http://news.ycombinator.com/item?id=3696940

Well, your parents' garage might get pretty crowded.