Luzerne County’s prison inmate medical services provider — Wellpath LLC — has filed for bankruptcy, raising questions about the potential impact on the county.
The provider must supply a range of medical and mental health services and personnel, including prescription and nonprescription drugs and emergency ambulance transport, officials have said.
A Wellpath spokesperson said last week the company “expects its operations to continue as usual throughout the court-supervised sale process, ensuring uninterrupted delivery of localized, high-quality, compassionate patient care.”
County Manager Romilda Crocamo said the administration has been closely monitoring the situation.
“There has been no disruption of services. It’s not affecting services,” Crocamo said. “As with any contract, if there are issues, I will advise council.”
The bankruptcy could impact the resolution of pending litigation.
While the county and Wellpath recently jointly settled litigation threatened in federal court over two 2023 female inmate suicide deaths, there are currently seven other pending legal actions in the county naming Wellpath as a defendant.
Wellpath said a critical element of Chapter 11 protection under U.S. law is the “automatic stay,” which freezes any ongoing litigation against the company as of Nov. 11, 2024, the bankruptcy filing date.
“This means that all ongoing litigation may now be addressed through the Chapter 11 process while Wellpath works in parallel with stakeholders to strengthen its financial structure,” said the spokesperson, Christina Iglesias.
Crocamo said she cannot comment on pending litigation.
According to a Wellpath statement about the bankruptcy, which was filed in Texas, the company has agreed to a reorganization and transactions that are expected to reduce the debt of its correctional health care business by approximately $550 million.
It cited challenges initially prompted by the COVID-19 pandemic — including unexpected labor investments and costs for equipment, testing and vaccines — that were later magnified by inflation and rising interest rates.
“Despite the circumstances, we continued to put patient care first and made significant investments to ensure our patients received the highest level of care,” company chief executive officer Ben Slocum said in the statement.
The company’s board and management concluded a court-supervised process was the “best path forward to strengthen our financial foundation and stabilize Wellpath for the long-term” so it can continue delivering “essential services to vulnerable populations.”
“We look forward to emerging from this process under new ownership and being better equipped for sustainable growth,” Slocum said.
Wellpath provides medical and mental health care services in more than 400 facilities across the country, including prisons and state hospitals.
County history
The county switched to an outside provider a decade ago because the administration determined partial outsourcing would be more cost-efficient for the county’s Water Street prison and nearby minimum offenders building on Reichard Street in Wilkes-Barre.
With one brief exception, Wellpath has handled the service since March 2015. Wellpath was originally named Correct Care Solutions.
In November 2019, council had agreed to the administration’s recommendation to hire Wexford Health Sources, but it brought back Wellpath in April 2020 after Wexford exercised its option to terminate, as allowed in its contract, if either party determined it was in their “best interest.”
Most recently, council unanimously voted in November 2023 to continue retaining Wellpath, which was the only company that submitted a proposal to perform the work.
That contract was $4.4 million for 2024, $4.7 million for 2025 and $4.9 million for 2026, which included costs for a medication-assisted treatment program for inmates with substance use disorder, officials said at that time.
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