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Texas Bankruptcy Court Rejects Proposed Settlement of Prisoner Claims Against Corizon Health

On April 11, 2024, a Texas bankruptcy court rejected a proposed $54 million settlement that would have paid just a fraction of the hundreds of millions of dollars owed to prisoners who won judgments or secured settlement agreements from Corizon Health. Citing concerns about timely access to court documents for incarcerated claimants—many proceeding pro se—Judge Christopher M. Lopez of the U.S. Bankruptcy Court for the Southern District of Texas chastised lawyers at both tables before his bench for not knowing whether affected prisoners were “even aware that there is a settlement.”

As PLN reported, Corizon Health executed a “Texas two-step”: It first spun off its profitable ongoing prison and jail healthcare contracts into a new firm called YesCare, and it then shunted its liabilities onto a separate company called Tehum Care Services, Inc., which promptly filed for bankruptcy protection. The ploy almost worked, too, before an inappropriate relationship was revealed between the settlement mediator and a lawyer working for Corizon Health. [See: PLN, Jan. 2024, p.29.]

One Arizona prisoner claimant who objected to the proposed settlement, Anant Kumar Tripati, 69, sent copies of prison mail logs showing that there was no way he could have attended at least two hearings in the case because notices didn’t arrive until just one or two days before they were scheduled. He was not alone, noted Corene Kendrick, deputy director of the American Civil Liberties Union’s National Prison Project; she said that because prisoners have limited internet access, they are heavily reliant on the highly unreliable U.S. Postal Service, as well as a prison mail room run by guards who have little disincentive to slow-walk mail delivery to prisoners they deem too litigious.

“If they don’t have information or can’t access it or be informed about it, they can’t really do anything to protect their interests,” agreed Paul Wright, founder and Executive Director of PLN’s publisher, the nonprofit Human Rights Defense Center.

The Corizon Health/Tehum Care Services bankruptcy is not the first use of the “Texas Two-Step,” but it is the first in which most claimants are incarcerated, putting them at a severe disadvantage in a notoriously complex legal proceeding. The volume of documents produced so far is staggering; Judge Lopez’s most recent order was entry number 1,506 on the case docket. So other prison and jail healthcare providers are no doubt watching to see if the strategy succeeds in avoiding a significant share of the liability for providing negligent care.

Success in this case would provide “a blueprint for other contractors to do the same thing,” agreed attorney Jackie Aranda Osorno of legal advocacy nonprofit Public Justice. Pointing to lucrative new contracts that YesCare has secured in Maryland and Kentucky, she added “that pro se creditors are not being driven just by a desire to seek justice for themselves, but also to hold Corizon accountable more generally.” See: In re Tehum Care Svcs., Inc., USBC (S.D. Tex.), Case No. 23-90086.

Former Maryland Prisoner’s $770,000 Judgment in Jeopardy

One of those seeking dismissal of the bankruptcy is David Hall, 30, who won a judgment against Corizon Health in a Maryland court for a permanent wrist injury resulting from negligent medical care he received from a company doctor at Anne Arundel County’s Ordnance Road Correctional Center in July 2016.

Corizon Health Dr. Luis Rivera-Ramirez “diagnosed Hall with a fractured wrist, gave him an Ace bandage, and told him that his wrist would ‘self-heal,’” as the Appellate Court of Maryland later recalled. That didn’t happen. After his release, Hall endured surgery that was too late to correct the problem, leaving him with just 70% of his wrist’s upward range of motion and 10% of its downward range. He sued, eventually securing a $3 million jury award in October 2021, “which was reduced to $770,000 pursuant to the statutory limits,” the Court noted, pointing to Md. Code Ann., Courts and Judicial Proceedings § 3-2A-09(b)(1).

Before the jury got the case, Hall had waived money damages for the injury itself and said he wanted to be compensated only for his associated pain and suffering—to which his medical bills were irrelevant. In closing statements, his attorney then asked the jury for $100 for every day that Hall would live with limited wrist mobility for the remainder of his life. Corizon Health objected to any suggested per diem without letting jurors see the bills, but that objection was overruled. The company then appealed.

On February 14, 2023, the Appellate Court said that the trial court’s decision “will not be disturbed on appeal absent a clear abuse of discretion,” citing Sidbury v. State, 414 Md. 180 (2010). Dismissing Corizon Health’s objections, it noted that Maryland allows per diem arguments, pointing to Giant Food Inc. v. Satterfield, 90 Md. App. 660, (1992). The Court also said it was “unaware of any support for the proposition that Hall’s per diem argument was beyond the ‘great leeway’ afforded to parties in their closing remarks,” quoting Cagle v. State, 462 Md. 67 (2018). Furthermore, the Court had previously found “no relevance in the submission of a bill for services submitted by a physician to the severity of appellant’s pain and suffering” in Wright v. Hixon, 42 Md. App. 448 (1979).

Corizon Health also argued that the jury should have received a cautionary instruction that the per diem request was not probative. But the Court rejected that argument, too, noting that it “made clear in Giant Food that a court may provide, on its initiative, a cautionary instruction,” but only “when the trial judge ‘deems it appropriate.’” Accordingly, the judgment was affirmed, though the case was remanded for the trial court to correctly record that it was entered against Dr. Rivera-Ramirez and not Corizon Health; the Court called that a “clerical error.” Hall was represented by attorneys with Orshan Legal Group in Pikesville, including Yosef Orshan and Chris Vasiliades. See: Rivera-Ramirez v. Hall, 2023 Md. App. LEXIS 124.

Hall said that Tehum Care Services’ proposed settlement would have left him with just about $5,000, which “is not even going to cover my medical bills.” A cooperating Texas attorney working on his case recently forwarded an offer from a firm there to buy the debt for $3,550 in cash. Orshan marveled that the bankruptcy attorney “actually considered that good news”—an indication of just how dim the prospects look for Hall and other claimants to recover what they’re owed.

“If they approve a settlement, they are forcing people to take whatever they give them, and that is not right,” Hall said.


Additional Sources: Baltimore Banner, Bloomberg Law

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Related legal cases

In re Tehum Care Svcs., Inc.

Rivera-Ramirez v. Hall