Corizon Health Inc. isn’t the first company to use the controversial bankruptcy strategy known as the Texas Two-Step to deal with its legal troubles. But it is the first to impose that maneuver on prisoners, a population that faces more hurdles than other types of litigants in reaching lawyers, experts, and court filings needed to pursue a case.
If successful, the case could embolden other troubled prison medical providers to also use the strategy to handle their financial problems.
Hundreds of incarcerated people held personal injury claims against Corizon when it spun off its liabilities into Tehum Care Services Inc. and filed for bankruptcy in 2023. This maneuver to put liabilities in a separate unit, then file for bankruptcy to spur a global settlement, was pioneered in Texas and is now called the Texas Two-Step.
Now, those inmates or former inmates, many without legal representation, must wait for Tehum’s next decision as to how it plans to resolve their claims—a fraught task for any claimant, especially one behind bars.
“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,” said Paul Wright, the founder of the Human Rights Defense Center, a nonprofit advocating for incarcerated people’s civil rights.
A judge last week rejected Tehum’s proposed $54 million settlement of current and former prisoners’ medical malpractice claims, highlighting incarcerated people’s lack of timely and reliable access to court papers.
Judge Christopher M. Lopez of the US Bankruptcy Court for the Southern District of Texas admonished the company and a committee representing tort claimants for not confirming whether any incarcerated people were “even aware that there is a settlement.”
Tehum declined to comment for this story. Tehum still has the chance to use bankruptcy to resolve litigation because Lopez denied some tort claimants’ request to toss the case entirely.
Read More: North Carolina Judges Are Shaping ‘Two-Step’ Bankruptcy Future
Self-Representation
Approval of the settlement would have negated claimants’ rights to sue for more damages in state courts.
“If they approve a settlement, they are forcing people to take whatever they give them, and that is not right,” said 30-year-old David Hall, a formerly incarcerated tort claimant. Hall injured his wrist for life due to what he says was poor care behind bars in 2016. He had been in a Maryland jail for less than a year for felony marijuana possession and a misdemeanor firearm charge.
Hall wants Tehum’s bankruptcy dismissed so he and other tort claimants can pursue their individual lawsuits. But Tehum has argued that pro se prisoners—or those representing themselves—would be at a severe disadvantage without the settlement because navigating the state court system is just as complicated as dealing with the bankruptcy process.
Jackie Aranda Osorno, a senior attorney at Public Justice, a legal advocacy nonprofit, said many pro se claimants are against the settlement, and “they know better than the lawyers do what the realities of litigating individual cases are.”
“That doesn’t necessarily mean that a discriminatory and coercive plan should be approved, only because the alternative is that the civil court system is imperfect,” she added.
Finding Experts
Wright, of the Human Rights Defense Center, said prisoners litigating in state courts must hire medical experts who can speak to their injury to be able to recover damages. But many of the tort claimants in Tehum’s bankruptcy can’t afford a lawyer—let alone experts, he said.
Hall, the Tehum tort claimant, was fortunate to get an outside orthopedist to review his X-rays the Maryland jail took about two months after his injury in 2016. The doctor saw his injury was a severe fracture—not a slight one the jail had told him would “self-heal,” Hall said. Hall also found a medical expert to testify at trial to confirm that he should have received prompt care.
Without that expert, Hall’s chances of legal recovery would have been minimal, his lawyer at the time Chris Vasiliades of the Orshan Legal Group said.
Hall won $770,000 from Corizon, and a Maryland appeals court affirmed the judgment in February 2023—the day after Corizon filed for bankruptcy. His claim is now among hundreds tied up in the bankruptcy.
Getting Information
Prisoners’ disadvantage in legal settings is compounded by the complexity and speed of Tehum’s bankruptcy, Public Justice’s Aranda Osorno said.
Prisoners must rely on the imperfect US mail system, and on a mail room controlled by prison officers, to find out about lawsuits, said Corene Kendrick, deputy director of the National Prison Project at the American Civil Liberties Union.
Prisoners may receive filings weeks late—if they get them at all.
In Tehum’s case, claimant Arvant Kumar Tripati filed prison mail logs last year that argued he received notice of two Tehum hearings just one to two days before they happened, making attendance impossible.
He is among several self-represented incarcerated claimants who wrote to the court, with some saying they have little knowledge of the case and asking the court to send them filings in prison.
Prison Health-Care Trouble
Tehum isn’t the only prison health-care provider facing hundreds of tort claims alleging poor medical care.
Armor Health Management LLC, another large prison health-care provider, asked a Florida state court in October for permission to assign its assets to an estate to be liquidated. Armor has about $153 million in debt from wrongful death and medical malpractice claims, as well as other claims to employees and attorneys.
“If you’re dealing with services where there are claims of systemic issues and harm, there is always a risk that new parties can be harmed,” said Samir Parikh, a professor at Lewis & Clark Law School.
YesCare Corp., a Tehum affiliate that would also be freed from litigation in the bankruptcy, got its contract to provide health-care in the Maryland prison system extended last month through the end of 2024, despite the Tehum bankruptcy. YesCare was also awarded a three-year contract with the Lousiville Department of Corrections last month.
“It’s clear 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,” Aranda Osorno of Public Justice said.
If successful, Tehum’s case could provide “a blueprint for other contractors to do the same thing,” she said.
