Wellpath Declares Bankruptcy
On November 11, 2024, Wellpath Holdings, Inc., and its affiliated corporate entities filed for bankruptcy protection in United States Bankruptcy Court for the Southern District of Texas. Wellpath is a private, for-profit medical and mental health care provider at approximately 420 detention facilities in 39 states; as PLN readers know, the company is also often sued for providing substandard and even fatal care to prisoner-patients. [See, e.g.: PLN, July 2024, p.53.]
Wellpath’s filing cites “escalating operating and labor costs, a transitory increase in professional liability insurance expenses, and underperformance on several significant contracts” as the primary reasons for seeking bankruptcy protection. The company asked the bankruptcy court for protection while it restructures its debt so it may remain in business.
In the way a typical bankruptcy case unfolds, creditors form a committee and provide the court an estimate of the bankrupt company’s outstanding obligations. The court then orders the company to set aside funds to partially settle some—or more often, just a part—of these obligations and then enters an order discharging the unpaid balance. Any litigation pending against the company is typically stayed pending final resolution of the bankruptcy proceeding.
So how does this impact prisoners with cases involving Wellpath? To begin with, any pending case in which Wellpath is a defendant that has not been reduced to judgement will likely be stayed until the bankruptcy proceeding is final.
For example, the family of Maurice Monk, a prisoner who died in California’s Alameda County Jail, sued various county officials and Wellpath for his wrongful death, allegedly from medical neglect. The county settled its share of the case for $7 million dollars, as PLN reported. [See: PLN, June 2024, p.44.] But that did not resolve the estate’s claims against Wellpath. After it filed bankruptcy, Wellpath sought to stay proceedings in the Monk case, but the estate’s attorneys objected. The bankruptcy court has not yet resolved the dispute. See: Est. of Monk v. Cty. of Alameda, USDC (N.D. Cal.), Case No. 3:22-cv-04037.
Monk’s estate is represented by counsel so therefore better positioned than many prisoners with claims or judgments against Wellpath because those attorneys have the ability to participate in the bankruptcy proceeding trying to protect the estate’s interests. But what about prisoners who represented themselves and obtained as yet unpaid judgements against Wellpath? They have no way of participating in any creditors committee to secure at least a portion of the money Wellpath owes them. As has been seen when other private correctional medical contractors file bankruptcy, such prisoners are often left out of the process entirely and their claims go unpaid.
PLN will continue to monitor proceedings and update developments as they become available. Any pro se litigants with claims or judgments against the company are advised to pay close attention to the case and seek legal representation if possible. See: In re Wellpath Holdings, Inc., USBC (S.D. Tex.), Case No. 24-90533.
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