Labour MP Kelvin Davis has used a snap debate in Parliament to raise questions about the death of a prisoner transferred from Serco's Mt Eden Prison.
He also questioned why injured prisoners were being transferred from Mt Eden to other prisons.
The Speaker of the House allowed an urgent debate following allegations of a fight club at the prison.
Serco was put under investigation by the Department of Corrections and the Ombudsman, after footage emerged last week on social media showing inmates fighting, smoking cannabis and drinking alcohol.
In Parliament, Labour's Kelvin Davis alleged a man was transferred from Mt Eden Prison with severe injuries and subsequently died of a ruptured lung.
"There's allegations Mr Speaker, that prisoners have been transported out of Mt Eden Correctional Facility to other facilities, such as Ngawha, such as Manawatu, such as Whanganui, who have severe injuries.
"Now why would anybody transfer anybody with severe injuries?
"Now let me tell you the story about one prisoner, Prisoner Evans, who arrived at Ngawha, the prison up in Northland there, with a punctured lung.
"He was in such bad shape that almost immediately the guards at Ngawha transferred him to Whangarei Hospital where he subsequently passed away."
Mr Davis told Parliament it wasn't a punctured lung, it was a ruptured lung.
"If you ask any doctor or nurse... how do you get a rupture they will tell you it often occurs in something like a high speed car crash.
"And I'm told on good authority that there is a practice in Mt Eden Correctional Facility that is called 'dropping' - where prisoners, new prisoners usually who walk into Mt Eden, are sized up by gangs, they're bashed up and they're dropped off the balconies on to the concrete below for good measure."
He also raised the case of a man transferred to Whanganui Prison in May last year, whom he said had two broken legs.
Mr Davis questioned why these prisoners were being transferred.
"I want to know which prison, Mt Eden or Ngawha, was that injury recorded in, because I suspect that prisoners with injuries are transported out of the Serco-run correctional facility so that the statistics don't reflect on Serco."
Corrections Minister Sam Lotu-Iiga dismissed Mr Davis's claims.
"Unsubstantiated allegations, with no evidence, no affidavits - absolutely no evidence to suggest what he's saying is true," he said.
During the debate, former Corrections Minister Ann Tolley also accused Labour of presenting false information, insinuations and allegations.
"So let's put the facts on the table.
"These are bad people - that's why they are in prison because they are bad people.
"And the first role of Corrections is to keep the community safe from them - okay?
"These are not unusual for there to be incidents of violence in our prisons."
Corrections said it could confirm that a prisoner died in hospital in Northland in June and at the time the department passed its condolences onto his family and friends.
It said the prisoner underwent a standard health check on arrival at Northland Region Corrections Facility which didn't reveal any concerns.
"However, he became seriously unwell soon after and was immediately transferred to hospital where, unfortunately, he has died.
"The death of a prisoner while in Corrections custody is of great concern to the department. We cannot go into details around this death ahead of a coronial inquest.
"An inspectorate review will also be conducted, along with a clinical health review."