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Health care provider for Ventura County jails files for bankruptcy protection


Health care provider for Ventura County jails files for bankruptcy protection

Wellpath, the private company that provides health care in Ventura County jails and hundreds of other prisons and jails nationwide, has filed for bankruptcy protection while it reorganizes its finances.

Its operations in Ventura County and elsewhere will be unaffected, the company said, though it's possible a bankruptcy could slow down some of the lawsuits filed against Wellpath by people who say they or their loved ones received inadequate health care in jail.

Wellpath is owned by the private equity firm H.I.G. Capital and is among the biggest providers of health care for jail and prison inmates in the United States, with more than 15,000 employees in 37 states. On Monday, Wellpath and its subsidiaries filed in Houston, Texas for a Chapter 11 bankruptcy, the category reserved for businesses that need to reorganize rather than liquidate.

Wellpath issued a statement that said it has already secured $522 million in "debtor in possession financing," which are loans for businesses currently in Chapter 11. The company said it plans to sell its residential treatment division and reorganize its correctional health care businesses with investments from its current lenders, reducing its debt by about $550 million.

The company said it will continue to pay all of its employees, vendors and suppliers in full during its bankruptcy.

Tim Ragan, a captain with the Ventura County Sheriff's Office, said Wellpath's bankruptcy shouldn't affect its relationship with the county.

"We have been in communication with their upper management and we have been reassured there will be no impact to our operations in Ventura County," he said. "We've known they've had some financial things going on, and they've been open and honest with us about that."

Wellpath has yet to file detailed financial information with the bankruptcy court, such as its exact assets and liabilities. Its initial bankruptcy petition says that its assets and debts both fall between $1 billion and $10 billion.

In the company's statement announcing its bankruptcy, CEO Ben Slocum attributed Wellpath's financial troubles to "a number of challenges initially brought on by the COVID-19 pandemic," including higher costs for labor and equipment, along with "additional macroeconomic headwinds," such as inflation and higher interest rates.

The company's statement did not mention legal costs as a contributor to the bankruptcy, but Wellpath has paid out millions in verdicts and settlements, often stemming from the deaths of people under its care. Under the Eighth Amendment to the U.S. Constitution, which prohibits cruel and unusual punishment, jail and prison inmates in the United States are guaranteed adequate health care.

According to a filing in one lawsuit brought by the family of someone who died in Ventura County Jail in 2022, Wellpath was sued more than 1,400 times in federal courts between 2013 and 2023.

The Star reported in February that between 2021 and 2023, three separate federal lawsuits over deaths in Ventura County jails were settled for a combined $5.7 million, with Wellpath picking up most of the tab. Two other federal lawsuits are still pending against Wellpath and the county.

Another wrongful death lawsuit was settled in August with the county agreeing to pay $600,000. Wellpath's contribution in that settlement remains unknown. Under California law, settlements paid by government agencies are public records, but those paid by private companies are not.

The effect of Wellpath's bankruptcy on any pending lawsuits is unclear. Typically, when a person or company files for bankruptcy, it freezes any lawsuits or attempts to collect on debts. But judges could allow the suits to move forward, and at any rate, Wellpath's bankruptcy could be short-lived, since it was filed with a reorganization plan already in place.

The county of Ventura has contracted with Wellpath to provide health care to jail inmates since 1987. The county now pays the company about $18 million per year to provide medical services in the jails and another $2 million for medical services in the county's juvenile justice facility.

In interviews with The Star in February, county officials said they were satisfied with the services provided by Wellpath and with the company's commitment to improving the care it provides.

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