Former Alabama Corrections healthcare provider says it can’t pay pre-bankruptcy wages

The former healthcare provider for the Alabama Department of Corrections told employees on Monday that it did not have the cash to pay them for hours worked before the company filed for bankruptcy in May.

David Goldwasser, chief restructuring officer for Tennessee-based YesCare, wrote in a memo to employees that the company is working to pay employees for work done after May 8, when it filed for bankruptcy. But the memo “does not have sufficient liquidity at this time” to pay wages earned before that date.

The memo said it is paying post-May 8 wages through collections on “outstanding receivables.” It said payments prior to that date rely on the courts.

“We are actively working on those collections so that we can make disbursements — including payment of outstanding wages — as funds become available,” Goldwasser wrote in the memo. “Because the company is in Chapter 11, it can only spend cash as authorized by the bankruptcy court under an approved budget. We are working within that process and subject to the bankruptcy rules to pay outstanding post-petition wages as quickly as possible.”

A message seeking comment was left with the Alabama Department of Corrections on Tuesday.

The company will pay employees for hours worked before the bankruptcy filing on May 8 only if they continued to work for YesCare after the company filed for bankruptcy.

To receive their unpaid wages, employees can file a claim in the bankruptcy cases, but a deadline has not been set and no information has been made public about how the claims will be handled, according to Goldwasser’s memo.

The Alabama Department of Corrections in April terminated a five-year healthcare services contract worth about $1 billion with YesCare because of a “failure to meet its contractual obligations.”

YesCare has been a party to several lawsuits since assuming responsibility for providing healthcare services within ADOC facilities.

Several employees reported in April that their paychecks were delayed, which prompted Corrections to sign an emergency agreement with NaphCare, a firm based in Birmingham. Employees were eventually paid a few days later. However, YesCare was unable to pay their employees for a second time in June after the bankruptcy filing and employees have yet to receive that paycheck.