Connections declares bankruptcy amid fraud allegations
One of Delaware’s largest addiction and behavioral health service providers quietly filed for Chapter 11 bankruptcy on Monday, less than two weeks after the federal government slapped Connections community support programs with lawsuits claiming the he nonprofit defrauded the government of more than $ 4.5 million.
The bankruptcy filing comes less than two weeks after U.S. Attorney David Weiss filed two lawsuits against Connections, claiming the nonprofit had made false statements to receive some $ 4.5 million in abusive payments and had not adequately documented his distribution of narcotics.
Connections’ finances are such that once the organization pays its administrative expenses, it will have no more money to pay the thousands of unsecured creditors to whom it owes money, according to the bankruptcy filing. The nonprofit noted that it owed between 10,001 and 25,000 creditors, with its top 30 creditors owing nearly $ 30 million collectively.
Filing for bankruptcy also appoints a restructuring agent, bankruptcy adviser, investment banker and claims and notification agent, and gives them the power to sell the association. These entities are respectively EisenAmper LLC, Chipman Brown Cicero & Cole LLP, SSG Advisors and Omni Agent Solutions.
“The board of directors composed of four volunteer members, the current management and I take
seriously (Connections ‘) mission to’ ensure everyone has 24/7 access to quality health care and treatment for drug addiction and mental health disorders, while helping them to recover. throughout their lives, providing them with supportive services that will enable them to return to a stable and productive lifestyle, ”said selected restructuring director Robert Katz in an affidavit. “The irony is that this commitment led to this filing in Chapter 11.”
THE CASE AGAINST:Federal government sues Delaware nonprofit Connections for misrepresentation and inadequate record keeping
ORIGINS OF THE COSTUME:Delaware couple’s whistleblower lawsuit led to successful federal lawsuit against Connections
Katz, of EisenAmper, said in the affidavit in support of the bankruptcy filing that he and the company began working with the nonprofit in March 2020 to help “with cash flow projections, analyzing variances and recommending improvements to the organization’s cost structure “.
Connections further sought advice from the company in February of this year to assist with the nonprofit organization’s billing practices, Katz said.
He said the culmination of unsustainable lawsuits, federal allegations, the loss of a $ 60 million state contract to provide behavioral and physical health in state prisons and “insufficient billing and collections and insufficient “have forced Connections to file for bankruptcy.
According to Katz’s affidavit, the nonprofit was further burdened by expenses and the COVID-19 pandemic.
Connections is looking to sell most of its assets to ensure continuity of service to the more than 10,000 Delaware receiving treatment through the association.
In a “day one petition” filed Tuesday, representatives from Connections indicated that all or part of the nonprofit could be sold to Pennsylvania-based Inperium Inc. or another company, if it presented a higher offer.
Connections’ financial problems are not new; some of the major creditors – such as the Bayhealth and ChristianaCare health systems – have sued in recent years to recover millions of dollars.
WRONG DOCUMENTS:Prison contractor falsified records to cover up inadequate drug treatment, sources say
CRISIS CONDUCTED:As Connections emerges from Delaware jails, lawsuits and unpaid debts loom for caregiver
Since the federal lawsuits were announced, Connections has not returned calls or emails seeking comment and clarification on what employees are doing to ensure the irregularities do not continue. The nonprofit again declined to comment on Tuesday.
Connections is also seeking to seal some of its creditors’ contact information, particularly employee records, the nonprofit says if made public it could cause privacy concerns or be used to “research survivors of domestic violence or stalking who have otherwise taken steps to conceal their whereabouts, “according to one of three” day one petitions “filed on April 19.
Former Connections employees played a key role in uncovering the association’s irregularities. The lawsuits brought by Weiss, which were supported by the Delaware Department of Justice, stemmed from a whistleblower complaint. Other employees came forward in 2019, as detailed in a Delaware Online / News Journal investigation.
As is generally the case in bankruptcy proceedings, Connections has filed petitions to ensure continued insurance coverage; utilities are not closed for non-payment; employees are paid; and sellers can be paid with the cash available, but the impact this could have on the latest allegations of government fraud is unclear.
A spokesperson for Weiss’s office was investigating the matter on Tuesday, but could not comment. The state’s Justice Department declined to comment.
Lawyers for clients suing Connections as well as suppliers owed thousands, and in some cases millions, of dollars have expressed concern over the bankruptcy, making it difficult to recover funds. But the nonprofit’s request to maintain insurance coverage could help cover all payments associated with malpractice lawsuits.
Contact Amanda Fries at 302-598-5507 or firstname.lastname@example.org. Follow @mandy_fries on Twitter.