A $75 million inmate settlement has been reached in inadequate medical care case.
A Texas bankruptcy judge has signed off on a $75 million settlement involving an affiliate of prison healthcare provider YesCare. The deal gives inmates and their families the choice to either accept financial compensation or take legal action over allegations of inadequate medical care. This resolution is a major shift from where the case started two years ago, when it faced fierce opposition and legal hurdles.
Half of the settlement will be used to pay personal injury and wrongful death claims. What sets this deal apart from typical bankruptcy agreements is that it gives claimants a true choice. They are not locked into a process that forces them to accept restrictions or legal barriers. If they want to go to court instead of taking the settlement, they can do so without extra obstacles.
Eric Goodman, an attorney representing claimants, pointed out that only a small number of people (just twelve) decided to opt out. The majority preferred to receive a payout and move on. Those who take the settlement still have the option to sue other parties, including government agencies responsible for prison operations.
YesCare, previously known as Corizon Health, used a controversial restructuring method called the “Texas two-step.” This tactic allowed the company to split in two. One part, YesCare, kept its contracts and business operations. The other, Tehum Care Services, took on the company’s legal liabilities and then declared bankruptcy. Initially, Tehum tried to use its bankruptcy filing to prevent lawsuits against YesCare and the company’s private equity owners.
The move sparked outrage among inmates, former inmates, and families who had lost loved ones due to alleged poor medical care. Lawmakers also weighed in, calling the strategy a misuse of bankruptcy laws. The original proposal from Tehum would have set aside just $8 million for prisoner healthcare claims, but after the judge rejected that deal, attorneys for claimants negotiated a better offer. The revised plan raised that amount to at least $25 million.
The final settlement includes $50 million in cash payments from YesCare and its affiliates. Additional benefits, such as tax credits, bring the total settlement amount to around $75 million. Other creditors, including hospitals that had provided medical services and lenders who were owed money, also supported the deal.
The case ran into a serious complication in late 2023 when its initial mediator, former judge David Jones, resigned. It was later revealed that he had a personal relationship with an attorney involved in the case, which created ethical concerns. Despite this setback, negotiations continued, leading to the final agreement that was approved by the court.
This case, filed in the U.S. Bankruptcy Court for the Southern District of Texas, has drawn national attention for its implications on corporate restructuring and prison healthcare. With the settlement now finalized, many affected families will receive compensation, while others have the opportunity to take their cases to court. The outcome could have lasting effects on how companies handle legal liabilities, especially when lives are at stake inside the nation’s correctional facilities.
Sources:
Prison health company wins approval for $75 million bankruptcy deal
Corizon Health Bankruptcy Delayed by Revelation of Attorney’s Affair With Mediator
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