U.S. Senator Elizabeth Warren is demanding action from the Justice Department to stop prison healthcare provider Corizon Health from using bankruptcy to avoid accountability for allegations of “alarming” neglect and malpractice.
In a letter sent Thursday to the Department’s bankruptcy watchdog, Warren accused Corizon of misusing Chapter 11 to block lawsuits from approximately 200 prisoners, ex-prisoners and families who are seeking justice for wrongful deaths and medical negligence they say occurred at Corizon-run facilities.
Corizon created an affiliate, Tehum Care, that filed for bankruptcy in Houston last February. The case halted the pending litigation against Corizon, which operates in 27 states and has faced scores of malpractice and wrongful death claims over deficient inmate medical care.
Warren said Corizon’s bankruptcy maneuver aims to deny victims their day in court and urged the Justice Department’s U.S. Trustee Program to join the bankruptcy creditors in seeking a dismissal of the case.
“Corizon is misusing the bankruptcy system to evade accountability and block the company’s victims and their families from obtaining justice,” the Massachusetts Senator wrote.
Corizon has defended the bankruptcy as a means to reach a global resolution that would equitably pay out creditors from the affiliate’s limited assets. But Warren said the tactic wrongly prevents claimants from continuing their lawsuits and establishing Corizon’s liability.
The controversial legal strategy, nicknamed the “Texas two-step,” has been attempted by other big corporations to halt mass tort lawsuits. It involves transferring liabilities to a newly created affiliate that then declares bankruptcy.
Johnson & Johnson and 3M both filed two-step bankruptcies to stop thousands of lawsuits linking their products to asbestos exposure and cancer. Those cases were dismissed on grounds they abused the bankruptcy system, but the companies could try again.
Georgia-Pacific is also employing the two-step approach to halt asbestos claims against it. The strategy has faced Congressional hearings and legislation aimed at closing the loophole.
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Warren’s letter represents mounting political pressure against Corizon, one of the nation’s largest for-profit correctional healthcare providers. Last year, a group of Senators called for more oversight of the company’s bankruptcy and urged the Supreme Court to review the Georgia-Pacific case.
The privately held firm holds contracts with over 500 prisons and jails. It has paid out millions in lawsuit settlements over allegations of deficient care, including nearly $9 million in the past two years alone.
Corizon denies systematic failures in its services. But critics say the company boosts profits by keeping staffing and care at dangerously low levels. Prisoner advocates argue its bankruptcy aims to deny justice for grieving families.
The U.S. Trustee, part of the Justice Department, has yet to publicly respond. It supported dismissing the Johnson & Johnson and 3M bankruptcy cases but does not comment on pending litigation.
Corizon also declined to comment. The bankruptcy creditors committee, representing plaintiffs in the stalled lawsuits, has asked the court to throw out the case for abusing Chapter 11 protections.