Summary:
CHS TX filed for Chapter 11 bankruptcy in Florida
Federal jury awarded $307.5 million to Kohchise Jackson
Jackson alleges colostomy reversal denied as cost-cutting
A prison healthcare contractor, hit with a $307.5 million verdict by a federal jury in Detroit in April, has filed for bankruptcy, casting doubt on whether a former Michigan inmate will ever collect on the massive award.
CHS TX, Inc., doing business as YesCare, notified the U.S. District Court in Detroit May 11 that the company and its affiliates had filed for Chapter 11 bankruptcy, on May 8 in Florida, records show.
CHS TX was born out of the 2023 bankruptcy of former Michigan prison health care contractor Corizon Health, Inc. and assumed certain Corizon liabilities, becoming the main defendant in a federal lawsuit brought against Corizon in 2019 by former Michigan Department of Corrections inmate Kohchise Jackson. Now, CHS TX has followed Corizon's lead and also sought bankruptcy protection.
On April 2, a federal jury awarded Jackson a $307.5 million judgment against CHS TX and $100,000 in punitive damages against Dr. Keith Papendick, who was Corizon's "director of utilization management" while Jackson was in prison from 2017 to 2019.
Jackson alleged Corizon refused to reverse his colostomy, as a cost-cutting measure, leaving him to suffer with a leaky and stinky plastic bag attached to his side during his time in prison on assault and weapons charges.
Jackson was by far the largest unsecured creditor in a list of the 30 largest unsecured creditors, with claims totaling $407.5 million, that the company filed with the bankruptcy court.
"He's disappointed," Ann Arbor attorney Ian Cross, one of the lead attorneys on the case, said of Jackson. "He's been waiting a long time," but "Mr. Jackson is in it for the long haul, as are we."
It's too early to say what the bankruptcy means for collecting on the verdict, because CHS TX has not yet filed a list of assets and it's not yet known how much value there is and where the money has gone, Cross said.
In many cases after a significant jury verdict, defendants will negotiate a smaller settlement in lieu of an appeal. But the bankruptcy filing results in an automatic halt to the case until the bankruptcy is resolved.
Records show that since the bankruptcy filing, several counties around the U.S. that had jail health care contracts with CHS TX and affiliates have moved to terminate those contracts.
It's possible CHS TX will have no underlying assets, but even if that's the case, attorneys are exploring options that could involve related companies and/or owners, Cross said.
On April 29, Cross filed a federal lawsuit on behalf of Jackson and another plaintiff against former Corizon official Isaac Lefkowitz of New York City and other former Corizon officials and investors, alleging violations of the Racketeering Influenced and Corrupt Organizations Act. The suit alleges the defendants remove cash and other assets from companies in advance of bankruptcies and prevent creditors from recovering assets.
An answer to the lawsuit had not been filed as of May 20.
Lefkowitz was subpoenaed to testify during Jackson's civil lawsuit that began March 24 in federal court in Detroit. He refused to answer questions when he was called to the witness stand, citing his Fifth Amendment rights against self-incrimination, court records show.
Adam Masin, a New York attorney representing CHS TX, told jurors Lefkowitz had nothing to do with Jackson's lawsuit because he didn't become a Corizon official until 2021, long after Jackson was released from prison and the same year the MDOC's five-year, $716 million contract with Corizon ended. Lefkowitz was also not a director of CHS TX as of April 2 and had no role with the company at that time, Masin told jurors.