The U.S. Department of Justice's bankruptcy watchdog on Friday asked a judge to dismiss the bankruptcy of a prison healthcare contractor, saying that the company appeared unable to reach a viable settlement of prisoners' lawsuits accusing it of providing substandard care at detention facilities nationwide, Reuters reported. The DOJ's office of the U.S. Trustee said that Tehum Care, a subsidiary of prison health provider Corizon, now known as YesCare, should not remain in bankruptcy if it insists on pursuing a "coercive" and legally flawed settlement that would eliminate prisoners' lawsuits against Corizon and its owners. The company's proposed bankruptcy deal is not a true settlement, because it could end prisoners' lawsuits against their wishes, U.S. Trustee Kevin Epstein wrote in a filing in Houston, Texas, bankruptcy court. "Considering that after a year of spending considerable resources in this Chapter 11 case, the debtor is still unable to propose a confirmable plan, the U.S. Trustee supports dismissal," Epstein wrote. Tehum and YesCare have been criticized by prisoners, their families and U.S. lawmakers for pursuing a strategy known as the "Texas two-step," which involves placing a shell company into bankruptcy to stop lawsuits against a better-funded parent company. The companies' predecessor, Corizon Health, used a Texas statute to split itself into two companies, YesCare and Tehum, shortly before the bankruptcy was filed in February 2023. YesCare inherited Corizon's assets and its go-forward business, while Tehum was stuck with the liability from about 200 lawsuits accusing Corizon of providing prisoners with substandard medical care that led to injury and death at 50 detention facilities in 27 U.S. states.
