Wellpath exits bankruptcy, HIG to pay millions in settlement for inadequate medical care in detention facilities
July 11, 2025
HIG Capital’s prison medical care provider Wellpath filed for bankruptcy in late 2024 amid mounting legal and financial woes. At the time of the filing, Wellpath was $644 million in debt and faced more than 1,500 lawsuits accusing the company of providing poor medical care. In April, the company agreed to pay $15.5 million to junior creditors, including vendors and people directly impacted by Wellpath’s practices. The creditors’ committee acknowledged the settlement as a “meaningful recovery,” and recommended that the group approve Wellpath’s bankruptcy plan.
The settlement cleared the path for the company to exit Chapter 11 bankruptcy, with HIG retaining a majority stake and creditors owning 33.3%. H.I.G. Capital created Wellpath in 2018 by consolidating Correct Care Solutions (CCS), which the firm acquired in 2018, and Correctional Medical Group Companies (CMGC), acquired in 2013.
Advocacy organizations Worth Rises and Public Justice submitted an amicus brief[1] in support of those with lawsuits against the company, citing issues with staffing, restricted access to specialized care, and failure to pay subcontractors. The brief, which heavily cited PESP work, argued that “without changes to its business practices, Wellpath will continue to accrue significant tort liability. Confirmation of a plan that does not hold Wellpath accountable for the harm it has inflicted will also encourage competitors to misuse the bankruptcy system to wipe their slates clean. The quality of private correctional health care nationwide will only deteriorate.” Though the settlement is certainly a step in the right direction, the company will continue under H.I.G. ownership without drastic changes to its business model. This is likely to leave the issues named in the amicus brief unaddressed.
Prior to the settlement, Texas courts allowed Wellpath to spin off its behavioral health assets to a lender group, relieving the company from $375 million of debt. According to a lawyer representing one of the plaintiffs with malpractice claims against Wellpath, “these companies keep their costs as low as possible and then rely on the bankruptcy courts in Houston to bail them out once they hit a critical mass of lawsuits.” YesCare (formerly known as Corizon Health), another private equity-backed prison medical provider, also found relief in the Texas court system during its 2023 bankruptcy.
As it emerges from bankruptcy, Wellpath continues to face challenges from city officials and community members. Commissioners in Lackawanna County, Pennsylvania recently hired a firm to audit Wellpath’s finances and service provision while under contract with the county from 2021 to 2024. Last year, local officials for Lackawanna County decided not to renew the county’s contract with Wellpath and claim that the company overcharged the county by nearly $1 million. In at least one of the lawsuits against Wellpath, someone formerly incarcerated at the Lackawanna County Jail alleged inadequate medical care. The court ordered this case, like many others, to be stayed[2] while Wellpath was in bankruptcy proceedings.
At an April hearing, the Michigan House Appropriations Committee heard testimony from several groups impacted by Wellpath practices in the state. The Michigan Health & Hospital Association (MHA) testified on behalf of hospitals that are awaiting payment from Wellpath. According to MHA, Wellpath owes more than $35 million to hospitals that provided medical care to incarcerated people from 2022 to 2024, including one hospital missing wages for 25% of its nursing staff. In lieu of payment from Wellpath, the MHA is requesting state appropriations to cover the costs.
In Alameda County, California, advocates with the Interfaith Coalition for Justice in our Jails (ICJJ) are pushing the county to terminate its contract with Wellpath after audits revealed persistent medical care issues. Three years ago, Maurice Monk died in the Santa Rita jail, remaining in his cell for three days before staff realized he had passed from complications of cardiovascular disease. The county settled a lawsuit with Monk’s family, but eleven Santa Rita staff members and seven county sheriff’s deputies face ongoing criminal charges for his death. ICJJ advocates noted that 11 men have died in Santa Rita since Monk’s death, and that “every report card on Wellpath’s care at Santa Rita has come back with devastatingly low marks.” According to the group, Wellpath has contracts with 34 of 56 California county jails.
This is not H.I.G. Capital’s first healthcare company with service and financial performance issues – in addition to being named as a defendant in Wellpath cases, the firm faced lawsuits related to former portfolio company Community Intervention Services Inc. In Massachusetts, the Office of the Attorney General alleged that H.I.G. knew about fraudulent Medicaid claims submitted by CIS, which provided mental health services through the South Bay Medical Health Center. The company paid $4 million to settle the False Claims Act violations in 2018 and declared bankruptcyin 2021. In October 2021, H.I.G. Capital paid a historic $19.95 million settlement related to the allegations but admitted no wrongdoing.
H.I.G.’s fund performance has suffered. H.I.G. Advantage Buyout Fund, L.P., the fund that owns Wellpath, ranks in the 4th quartile of performance compared to its peers, according to data provider Pitchbook.[3]
Given H.I.G.’s track record with reputational, regulatory, and litigation risks, limited partners should consider limiting future investment with H.I.G. Capital.
[3] Data as of 4Q2024. Accessed May 22, 2025. https://my.pitchbook.com/profile/16030-72F/fund/profile#general-info
