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      How Texas’s bankruptcy courts are used to shield a prison healthcare provider

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      When late last year the largest provider of healthcare to inmates in jails and prisons in the US found itself facing an avalanche of medical malpractice lawsuits, its path forward was seemingly obvious.By filing for Chapter 11 bankruptcy in Texas’s increasingly popular bankruptcy courts, Wellpath Holdings could restructure itself, in the process staying the 1,500 lawsuits it had been facing and limiting its exposure to more than $100m in potential liabilities.Last month, a bankruptcy judge for the southern district of Texas in Houston extended those stays to give Wellpath additional time to propose how it might exit bankruptcy and continue operating.But critics say that the move is a cynical attempt to avoid paying out to the families of people devastated by the company’s actions in a state increasingly seen as a safe haven for big corporations looking to avoid paying out to people and families their actions have harmed.Among the cases stayed for Wellpath was one brought by Teesha Graham of Albuquerque. Her father Frankie died in 2022 after spending almost a week slumped in his San Juan county jail cell, covered in vomit and excrement as medical staff and prison guards refused his requests for help, an inmate in the jail told the Guardian.Also stayed was a claim brought by Nicole Poppell of Colorado Springs. Her daughter Savannah died aged 24 just three days after she was booked into El Paso county jail in Colorado. Incessant vomiting caused by opiate withdrawal tore her esophagus and she bled to death in her cell.“Now they’re filing bankruptcy the chances are I could get next to nothing but really I don’t even give a shit about the money,” said Nicole. “I just want to be heard.”Poppell and Graham are just two grieving family members wanting the bankruptcy court to consider their claims against Wellpath but as “unsecured creditors”, they are at the bottom of the hierarchy when it comes to who gets paid from the limited funds that remain.Last week they enjoyed a small victory as Wellpath dropped its request that the court approve some $5m in bonuses for 12 of its executives. “I’ll never understand it,” said Graham.Attorneys representing claimants against Wellpath say its bankruptcy was a long time coming, and part of a cynical strategy that would see it minimize costs with reduced staff and improper insurance coverage. Malpractice lawsuits would inevitably accumulate but using the Texas courts it could largely shed itself of those liabilities and exit from it all relatively unscathed.“These companies keep their costs as low as possible and then rely on the bankruptcy courts in Houston to bail them out once they hit a critical mass of lawsuits,” said Adam Flores, a New Mexico attorney representing Graham.Wellpath is a for-profit business headquartered in Nashville, Tennessee, and owned by the private equity firm HIG Capital. It operates in jails and prisons across almost 40 states and is responsible for the care of hundreds of thousands of inmates.Although bankruptcy is governed by federal code, jurisdictions will enforce it with varying lenience, and typically if a company has enough assets in a given state they can make use of its courts.In recent years, the southern district of Texas has become a go-to bankruptcy venue, displacing the southern district of New York as the second most popular in the country behind Delaware.“The southern district of Texas really blew up four or five years ago,” said RJ Shannon, a bankruptcy attorney in Houston who is representing almost 100 claimants in the Wellpath case. “It’s a debtor-friendly court, so it’s where all the big cases will be filed.”Last year, the southern district of Texas saw 31 filings for bankruptcy by companies with assets greater than $100m, whereas the southern district of New York saw just 11, according to figures from Bankruptcy Data.Wellpath’s filing in November made it the second prison contractor to have used the court’s Houston division in just two years after the prison healthcare firm Corizon filed for Chapter 11 in early 2023. The maneuver it attempted has been referred to as “the Texas Two-Step” and sees a company split itself into two, placing valuable assets in one and its liabilities in the other.Although Wellpath is pursuing a simpler and more traditional Chapter 11 restructuring, its critics say the move is intended to have precisely the same effect.“I think the reason Wellpath filed here [in Texas] is that they saw Corizon do it and they saw good things came of it,” said Shannon. He said that not only was the Houston court friendly to debtors, it was also “user-friendly”, meaning proceedings can take place fast.Anna Holland Edwards, a civil rights attorney in Denver who has brought a handful of cases against Wellpath over her career, said she saw its bankruptcy coming from a mile away. In early November her office asked a state court to issue sanctions on the company ahead of its expected bankruptcy.Holland Edwards and other critics of Wellpath paint its use of Chapter 11 as a “business model” – both inevitable and symptomatic of the increasing extent to which America’s corporate assets have come under the ownership of private equity funds.They argue that Wellpath, under private equity ownership, borrowed money to buy up regional facilities across the country and then underbid rivals and county services in order to win taxpayer-funded government contracts. Underbidding meant cost-cutting.“If they don’t have enough money, maybe instead of having 10 nurses working in jail they’d only get five,” said Shannon.According to Graham, it was a lack of staff in San Juan county jail that led to her father’s death: “They feel like they can send two people in there to care for over 500 humans?”Another cost-cutting measure that may have brought Wellpath to its knees was its purchase of liability insurance policies that appeared to meet state and local government requirements but failed to establish any “true risk transfer”. As revealed in the ongoing bankruptcy proceedings, these policies only pay out if Wellpath covers a share of the damages, otherwise, no insurance kicks in.And so tight were Wellpath’s purse strings that at the time of its bankruptcy it had left about 15 EMS providers in Michigan with more than $6m worth of unpaid bills, according to the Michigan Association of Ambulance Services.Where the chips will now land remains uncertain, according to Shannon. As it stands, the ball is in Wellpath’s court, as it prepares to issue a revised plan for how it will restructure and emerge out of Chapter 11 operational.A recent ruling by the bankruptcy judge Alfredo R Perez of the southern district of Texas extended the stay on the pending lawsuits until at least 30 April.In the meantime, unsecured creditors will fight to have as much money as possible set aside for their settlements. In many cases, especially those involving personal injury, once the stays are lifted plaintiffs’ right to seek damages will be restored, but the pool of funds from which to collect will be limited.For Wellpath, the plan after Chapter 11 is to continue business as usual, and with Trump in office, there has never been a better climate for it to emerge from bankruptcy, according to Andy McNulty, another civil rights attorney based in Colorado.“We saw when Donald Trump was elected that private prison company stocks soared to all-time highs so there’s no reason to believe that if Wellpath is allowed to continue operating it will not continue to profit off the suffering of inmates across the country,” he said.A spokesperson for Wellpath said in a statement to the Guardian that it had filed for Chapter 11 in order to “strengthen our financial foundation without compromising our ability to deliver high-quality patient care”.“We remain committed to providing vital healthcare services to underserved populations and are confident this process will allow us to continue to do so for years to come,” they added.The company declined to say why it chose to file in the southern district of Texas or to answer questions about its liability insurance.Savannah’s mother Nicole said she wanted to see Wellpath dissolved for good. “For three days she was in there and she was begging for help, she was crying for help, and she was alone,” she said. “I want these people shut down.” More

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      Woman Will Plead Guilty in Scheme to Defraud Presleys and Sell Graceland

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      Prosecutors had accused the woman of creating fraudulent loan documents and forging Lisa Marie Presley’s signature.A Missouri woman agreed to plead guilty to mail fraud on Tuesday for her role in orchestrating what the authorities described as a scheme to defraud Elvis Presley’s heirs by claiming ownership of Graceland, his Memphis home, and threatening to sell it in a foreclosure auction.The woman, Lisa Jeanine Findley, of Kimberling City, Mo., will have a count of aggravated identity theft dismissed as part of the plea agreement, which was filed in United States District Court for the Western District of Tennessee.The mail fraud count carries a maximum sentence of 20 years in prison, but prosecutors said they would recommend a sentence of less than five years. A spokeswoman for the Justice Department did not immediately respond to a request for comment. A public defender listed in court documents for Ms. Findley also did not respond.The case involving Ms. Findley burst into the public eye in May, when lawyers for the actress Riley Keough, the granddaughter of Mr. Presley, went to court to stop what they said was a monthslong, fraudulent scheme to sell Graceland, which is now a lucrative tourist attraction that draws 600,000 visitors a year.Court papers revealed that the attempt had been made by a company known as Naussany Investments & Private Lending LLC, but exactly who was behind that company remained a mystery for many months. Naussany Investments had claimed in court papers that Mr. Presley’s daughter, Lisa Marie Presley, who died in 2023, had borrowed $3.8 million from the company and put Graceland up as collateral.The company subsequently scheduled a sale of Graceland. But a Tennessee judge blocked the sale and the state’s attorney general said his office would look into the situation after no one showed up in court to represent the company.Eventually, federal officials came forward and claimed that the whole situation had been part of an elaborate fraud.In an affidavit filed in August in support of an arrest warrant, Christopher Townsend, an F.B.I. agent, wrote that Findley used “a series of aliases, email addresses and fake documents” to engage “in a scheme to defraud Elvis Presley’s family for millions of dollars by threatening to foreclose on the ‘Graceland’ estate.”Mr. Townsend said in the 30-page affidavit that Ms. Findley had created fraudulent loan documents and unlawfully used Ms. Presley’s name and signature as part of her scheme.The affidavit also said that Ms. Findley published a fraudulent “Notice of Foreclosure Sale” in The Commercial Appeal, a Memphis newspaper, executed false affidavits that were sent to the Shelby County Register’s Office, and communicated with the news media through fake identities. More

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      How did transgender children in the US become so politicized? | Moira Donegan

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      The politicization of transgender children in the US is one of the most astounding coups of propaganda and organized animus in recent history. Rarely has so much attention and rage been directed at such a minuscule number of people, and more rarely, still, have those people been the most vulnerable and blameless among us: kids and teens.The first state to pass a ban on transition-related care for minors was Arkansas, in April 2021; less than four years later, more than half of states have such a ban on the books. In 2016, North Carolina lost an estimated $3.76bn in revenue following boycotts after they passed a law banning trans people, including transgender students, from using appropriate restrooms in public facilities; now, 14 states have such bathroom bans on the books, and the boycotts have receded.These changes in public attitudes towards trans youth – from a broad if imperfect sentiment of tolerance to a widespread and politically weaponized attitude of hostility toward a small minority of kids – did not emerge by accident. It was the product of a deliberate, conscious effort to radicalize large swaths of the United States, and significant chunks of state policy, into a hostility towards a few children.That effort seems set to bear fruit now, at the US supreme court, in US v Skrmetti, a lawsuit brought by the ACLU and the Biden Department of Justice challenging Tennessee’s HB1, a sweeping ban on transition-related care for minors that was passed in 2023. The law prohibits any puberty blockers or hormones from being prescribed for the purposes of gender transition, but it does not prohibit these medications from being prescribed for any non-transition-related purpose. A minor can be prescribed puberty blockers, for instance, if their doctor believes they are experiencing early onset, or “precocious”, puberty; they cannot be prescribed puberty blockers to delay the onset of a puberty that may change their bodies in ways they do not desire for gender identity-related reasons.That means, too, that a child assigned male at birth could access, say, testosterone treatment, but a child assigned female at birth could not. In oral arguments on Wednesday, solicitor general Elizabeth Prelogar and Chase Strangio of the ACLU – the first trans attorney to argue before the supreme court – explained that this was a straightforward case of sex discrimination, and hence needed to be subjected to a heightened standard of judicial review under the 14th amendment’s equal protection clause.It will not be. A majority of the court’s conservatives seemed poised to uphold the ban on transgender healthcare, though for a variety of different reasons. Brett Kavanaugh made his usual mealy-mouthed paean to states’ rights, an argument he always makes in questions of federally guaranteed equality provisions, but not before extolling the hypothetical suffering of teenagers who may access gender-affirming care but then later come to regret it. (One wonders if there are any choices from his own adolescence that Brett Kavanaugh has come to regret.) Clarence Thomas and chief justice John Roberts, meanwhile, both advanced the idea that the physiological differences between male and female bodies could moot the equal protection clause’s reach, giving states broad leeway to regulate medicine in ways that would uphold gender hierarchy.For his part, Samuel Alito also seemed interested in the idea that states might have a right to effect gender discrimination via their regulation of medicine. He repeatedly cited the 1974 case Geduldig v Aiello, in which the supreme court ruled that states could discriminate on the basis of pregnancy, and that pregnancy discrimination was not sex discrimination – because even though only female people become pregnant, not all of them are pregnant all of the time. (At the time, Congress found the outcome in Geduldig so egregious that it passed a law clarifying that pregnancy discrimination does count as sex discrimination for the purposes of federal civil rights law, and the precedent was largely mooted, but Alito’s controlling opinion in Dobbs has revived it.)But Alito, true to form, did not confine his opining to the notion that discrimination against trans people does not count as sex-based discrimination: he went on to suggest that trans people are not quite real, peppering Strangio, in a scene that seemed intended to humiliate the trans attorney, with questions about whether trans identity was truly an “immutable” characteristic. For his part, Strangio responded with a dignity and respect that Alito’s line of questioning did not merit.It was not the only low moment. James Matthew Rice, the Tennessee solicitor general who defended the ban in court, repeatedly compared gender affirming care with suicide, as well as to lobotomies and eugenics. During his time, justices Ketanji Brown Jackson and Sonia Sotomayor, with occasional assists from Elena Kagan, tried to chase Rice down on the inconsistencies in his own argument.Tennessee claimed, after all, that the law did not discriminate on the basis of patients’ sex, but rather on the basis of the purpose of their treatment; when the liberal justices pointed out that this was a distinction without a difference, because the purpose of the treatment was dependent on the patients’ sex, Rice simply repeated his assertion that there was a difference, there, somewhere. Jackson, in particular, worked to get Rice to explain his position for some time. He declined to.To call the Tennessee ban sex-neutral is laughable, almost insulting. The statute itself makes gender conformity its explicit justification in its text, saying that it aims to prohibit “sex inconsistent treatment”, or anything that “might encourage minors to become disdainful of their sex”. The law has long included sex role stereotyping within the purview of sex discrimination; Tennessee has sought to enforce sex roles, and sexed embodiment, with the force of the state. There is no good faith reading of the law that would allow it to withstand the scrutiny that the 14th amendment requires. But luckily for Tennessee, this is not a good faith court.

      Moira Donegan is a Guardian US columnist More

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      in Elections

      Here’s What Led to Tennessee’s Ban on Gender-Affirming Care

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      Vanderbilt University Medical Center’s announcement of a new transgender clinic in 2018 did little to draw attention to its practice. The four-paragraph news release amounted to a location, hours and the names of two senior staff members.The spotlight came four years later, when Matt Walsh, a conservative political commentator at The Daily Wire in Nashville, published a series of posts and videos about the clinic. Those posts said that a staff member there had privately characterized gender-affirming medication and surgery as “moneymakers,” and used caustic terms to describe the center’s treatments.The medical center, which is separate from Vanderbilt University, pushed back. In a statement at the time, the center said that the clinic’s mission was to serve a “high-risk population for mental and physical health issues” who “have been consistently underserved by the U.S. health system.”The medical center said that it had not provided care to children younger than 18 without the consent of a parent, and that it would not force any employee who disagreed with the care because of personal or religious beliefs to provide it.Conservatives called for an investigation into the clinic, and Republican leaders spoke at a rally Mr. Walsh organized in Nashville in October 2022 in opposition to gender-affirming care for children. When Tennessee legislators convened in January 2023, lawmakers designated a proposed ban on gender-affirming care as Senate Bill 1. The bill passed over objections from transgender people and most Democrats. More

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      in Elections

      Which States Have Passed Bans on Treatment for Transgender Minors?

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      The challenge to a Tennessee law before the Supreme Court this week traces its roots to the spring of 2021, when Arkansas became the first state to pass a law prohibiting gender-transition treatments for minors. Alabama followed in 2022. Tennessee’s was part of a coordinated deluge: Of 28 states where Republicans control the legislature, 24 now restrict doctors from providing puberty blockers, hormone therapies or surgery to transgender minors. Two more, New Hampshire and Arizona, ban only surgeries.Why the flood? In exploring the motivation behind Florida’s ban, one federal district judge, Robert Hinkle, concluded that some of the state’s lawmakers acted on “old-fashioned discriminatory animus.” But Republican lawmakers in many states have said that they are seeking to shield adolescents from a path that has become more common, with consequences they are too young to fully comprehend. Republican strategists, for their part, have said that elevating the issue was a winning strategy leading up to the 2024 election.United States v. Skrmetti, the challenge to Tennessee’s ban, is one of 18 filed over the last three years, with mixed results. The highest courts in two states, Texas and Nebraska, have upheld their restrictions. By contrast, two federal district judges — Judge Hinkle in Florida and Judge James M. Moody Jr. in Arkansas — struck down bans in those states. But their decisions are being appealed, and preliminary injunctions on enforcement of the bans in Alabama and Indiana, each issued by a federal district judge, were reversed by separate appeals courts. Eleven other cases are in various stages of litigation.How the Supreme Court rules on Skrmetti will almost surely affect how lower courts handle the challenges to similar statutes in states across the country. But the outcome may not be universal.“If Tennessee wins, the states will say ‘Skrmetti controls,’ and vice versa,” said Jim Campbell, chief counsel for the Alliance Defending Freedom, a conservative legal advocacy group that is helping to defend Idaho’s ban on transition treatments for minors. “And then the other side, the losing side, will say, ‘No, it’s actually different, and here’s why.’” More

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      Tax Preparers Charged in Scheme to Defraud Covid Relief of $65 Million

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      The preparers filed for pandemic-related tax credits on behalf of ineligible clients and then netted hefty filing fees, officials said.Two Mississippi tax preparers used multiple schemes to defraud $65 million from programs that had been designed to help businesses stay afloat during the coronavirus pandemic, federal prosecutors said this week.The preparers, Renata Walton, 44, and Nicole Jones, 36, both of Olive Branch, Miss., were indicted on more than 50 counts of wire fraud, money laundering, preparing false tax returns and obstruction of justice, the U.S. Attorney’s Office for the Western District of Tennessee said on Wednesday.They both pleaded not guilty and were each released on $100,000 bond, court documents show.Ms. Walton owned R&B Tax Express in Moscow, Tenn., where she and Ms. Jones prepared tax returns.Federal prosecutors said that the two women contacted small-business clients and asked if they were interested in pandemic-related grant money, according to court records. The women would then file for pandemic-related tax credits on behalf of the clients even though they were ineligible for those funds, officials said.The money came mostly from the Employee Retention Credit and the Sick and Family Leave Credit programs, court documents show.The Employee Retention Credit program offered companies thousands of dollars per employee if they could show that the pandemic was hurting their businesses, but that they were continuing to pay workers. Sick and Family Leave Credit offered tax breaks to employers who voluntarily gave their workers paid sick and family leave if they needed to take time off because of the pandemic.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Tennessee man involved in Capitol riot guilty of plot to kill federal agents

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      A Tennessee man who was arrested for his involvement in the January 6 Capitol riot in 2021 was convicted on Wednesday of planning to kill federal investigators.Edward Kelley, 35, was found guilty in Knoxville of conspiracy to murder federal employees, solicitation to commit a crime of violence, and influencing a federal official by threat, the US attorney’s office said in a news release.Kelley, of Maryville, was one of hundreds of rioters arrested on charges of illegally entering the US Capitol. While awaiting trial, Kelley developed a plan to kill law enforcement, including FBI agents, prosecutors said. He faces up to life in prison at sentencing in May.Kelley developed a “kill list” of FBI agents and others who participated in the investigation, according to prosecutors. He distributed the list, along with videos containing images of FBI employees, to another person as part of his “mission”. Court records show that a witness provided the list of 37 names to a police department in Tennessee.A cooperating defendant who has pleaded guilty in the conspiracy testified that he and Kelley planned attacks on the FBI’s Knoxville office using car bombs and incendiary devices attached to drones. They strategized about assassinating FBI employees in their homes and in public places such as movie theaters, prosecutors said.Kelley was recorded saying “every hit has to hurt”, according to evidence presented at trial. More

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      Two Militia Founders Are Convicted of Plot to Kill Federal Agents

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      “We were going out huntin’,” one of the men said in a video before a planned trip to the Mexico border, where they intended to shoot at immigrants and officials who might stop them, prosecutors said.Two founders of a militia group who were plotting a trip to the U.S.-Mexico border to shoot at immigrants and the authorities who might try to stop them were convicted on Thursday by a federal jury in Missouri of attempting to murder federal agents, prosecutors said.A jury in Jefferson City, Mo., convicted the men, Jonathan S. O’Dell, 34, of Warsaw, Mo., and Bryan C. Perry, 39, of Clarksville, Tenn., of multiple felony counts.Most of the counts were linked to the men shooting at F.B.I. agents who arrived with a search warrant at Mr. O’Dell’s home. Among other charges, Mr. O’Dell and Mr. Perry were also convicted of conspiracy to murder officers and employees of the United States government, prosecutors said.They each face a minimum of 10 years in prison and up to a life sentence. Under federal statutes, neither would be eligible for parole. Lawyers for the men could not be immediately reached for comment on Saturday.Beginning in the summer of 2022, Mr. O’Dell and Mr. Perry tried to recruit others to join what they called the 2nd American Militia, prosecutors said.In September 2022, Mr. Perry posted a video on TikTok in which he said that the U.S. Border Patrol was committing treason by allowing illegal immigrants to enter the United States.In that same video, he said that the penalty for treason was death, court records show. In another video, he said that he was “ready to go to war against this government.”By late September, the two men stepped up their plans. They continued to recruit, acquired paramilitary gear and practiced shooting at targets, according to officials.Mr. Perry posted a video on TikTok in which he said “we’re out to shoot to kill,” and added that “our group is gonna go protect this country.” In early October, he posted another video. In that one he said that “we were going out huntin’,” and that his militia would go to the border on Oct. 8.But on Oct. 7, F.B.I. agents arrived at Mr. O’Dell’s home in an armored vehicle and identified themselves through a loudspeaker. The agents were met with gunfire, officials said, and several rounds hit the vehicle.The agents did not return fire and eventually Mr. O’Dell surrendered, officials said. Mr. Perry was also arrested at the home, but only after he brawled with agents and injured one, according to court documents.Agents found six guns and 23 magazines filled with ammunition inside Mr. O’Dell’s home, officials said. The F.B.I. recovered about 1,800 rounds of other ammunition, two sets of body armor, two gas masks, two ballistic helmets and zip ties. Agents also discovered multiple containers of liquids that would explode upon mixing. More