The state of Maryland has about a month to decide whether it will continue to do business with YesCare Corp., a correctional health care provider that has drawn a flurry of lawsuits from currently and formerly incarcerated people over alleged malpractice.

Meanwhile, a cascading series of events over the last week in a related Texas bankruptcy case has thrown the viability of YesCare into question.

An atypical coalition including civil rights organizations, formerly incarcerated people, a progressive bloc of U.S. senators, the Arizona prison system and now the U.S. Department of Justice is pushing a judge in Houston to toss out the bankruptcy case of Tehum Care Services — an offshoot of the correctional health care giant formerly known as Corizon Health.

Much of the opposition stems from a sense that those who are owed money by Corizon have been ripped off by what’s known as the “Texas two-step” bankruptcy scheme. Corizon, which was facing numerous lawsuits and unpaid debts, relocated from Tennessee to Texas shortly before completing a “divisional merger,” allowing it to split into two entities: one of them, Tehum, saddled with debts and liabilities; the other, YesCare, carrying on business as usual with the remaining contracts, including Maryland’s.

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If the groups are successful in swaying the judge, a dismissal of the case could have serious implications for YesCare. Consequential hearings on the matter are expected to take place Friday.

A recently formed committee representing incarcerated and formerly incarcerated people seeking compensation in the Tehum case has accused the executives behind the company, including its director Isaac Lefkowitz, of creating the entity solely so it could be used as a shield from legal liabilities in a “bad faith bankruptcy” that would protect YesCare’s ongoing business with states including Maryland and Alabama.

“Mr. Lefkowitz and his accomplices — the very beneficial owners of this scheme — want to pursue contracts like the one reached with Alabama — through YesCare — without paying for the harm YesCare (by its predecessors) caused to human beings across the country,” the committee wrote in a recent filing.

The group of claimants said that “various non-debtors face liability for the claims against the debtor,” including YesCare, Lefkowitz and others.

“There is no evidence that their assets are insufficient to pay the claims in full,” they wrote.

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In an email response to questions from The Baltimore Banner, a spokesperson for YesCare asserted that the claim that it could face liabilities carried over from Tehum was an “unsupported allegation ... which YesCare vigorously disputes as false” and maintained that “Tehum is not affiliated with YesCare in any capacity.”

“The bankruptcy of Tehum Care Services has had no bearing on the operations of YesCare in Maryland or any of the clients we serve nationwide,” the spokesperson, who did not provide a name, said. “Furthermore, we foresee no future implications for our business operations, irrespective of the outcome of the Tehum bankruptcy case.”

An investigation released by Business Insider last year meticulously laid out the connections between YesCare and the company formerly known as Corizon. The YesCare spokesperson did not respond when asked about those connections.

The Maryland Department of Public Safety and Correctional Services said it is monitoring YesCare’s performance “to ensure that it is providing adequate healthcare in accordance with the contract,” which runs through the end of March.

“The department is diligently working to award a new contract but will maintain continuity of care through all available methods as the procurement process progresses,” spokesperson Mark Vernarelli said.

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The department’s legal team, Vernarelli added, is “carefully monitoring” the “YesCare situation” and providing “continual oversight.”

The Arizona prison system, which previously contracted with Corizon and could be found ultimately responsible for some of its unpaid bills, is supporting efforts to throw out the bankruptcy suit, saying it would adversely affect the state.

Melissa Jacoby, a law professor at the University of North Carolina at Chapel Hill, said it remains to be seen if the bankruptcy case is dismissed, and, even if it is, it would likely be appealed, pushing the potential ramifications out well into the future.

A dismissal, however, would not mean it would be easy for people “to actually recover against a company that would go to these lengths to shield assets from people who have been hurt,“ Jacoby said. “Actual recovery from a judgment without the cooperation of the debtor can be difficult.”

David Hall, who won a $770,000 jury award over the botched treatment of a wrist fracture while he was incarcerated in Anne Arundel County but has been unable to collect due to the bankruptcy, supports the case being thrown out, according to his legal team.

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Their thought process is that, because Hall has a judgment against the company, he should be given a higher priority than other personal injury claimants without them.

“Mr. Hall was lumped in with all of the other unsecured personal injury claimants, and there was no indication that his claim would have been given a higher priority,” said Chris Vasiliades of Orshan Legal Group.

Robert Gordon, a University of Maryland Francis King Carey School of Law professor and former federal bankruptcy judge, told The Banner he agrees with U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, and others who have characterized the moves by Tehum executives as an abuse of the bankruptcy code.

“This has been a long-standing issue,” Gordon said.

Texas’ law allowing divisional mergers, Gordon added, allows companies to “get away with serious wrongdoing by the wave of a magic wand.”

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That law then complements the bankruptcy “venue statute,” which allows corporations to file their cases in any court they want “merely by creating a subsidy entity in that state, but more specifically in that federal district,” he said. Essentially, it amounts to “judge shopping.”

Prominent bankruptcy judge David Jones, who was presiding over the Tehum case, resigned in October after it was revealed by Business Insider that he was in an undisclosed romantic relationship with attorney Elizabeth Freeman, who had worked as his law clerk and as a partner at a law firm that had cases before his court. Freeman represented YesCare in Tehum’s settlement talks.

Whatever the outcome of the bankruptcy case, the obligation to provide constitutionally sound health care to incarcerated people ultimately lies with the state of Maryland, said Daniel Hatcher, a University of Baltimore Law School professor and author of “Injustice Inc.”

“I am concerned with the private actors,” Hatcher said. “I’m even more concerned with the government actors that are letting it happen.”

Ben Conarck is a criminal justice reporter for The Baltimore Banner. Previously, he covered healthcare and investigations for the Miami Herald and criminal justice for the Florida Times-Union.

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