Fighting to claw back huge losses from $4.6 million in unpaid debts owed by a for-profit prison health care company, the University of Maryland Medical System says the state corrections department should be made to foot the bill.

In a lawsuit filed Tuesday, UMMS argued that it is entitled to protections in Maryland procurement law as a “subcontractor” for YesCare, a private-equity owned health care company that provided care in state-run correctional facilities before it was terminated by the state last year.

For years, UMMS treated hundreds of incarcerated patients from state-run prisons and jails without issue.

But when YesCare assumed the health care contract for state-run prisons and jails in 2023, things quickly went downhill. YesCare was spun off from a company formerly known as Corizon Health, which abruptly restructured itself in a controversial “Texas two-step” bankruptcy.

That involved rebranding the company and splintering into two different entities: YesCare, which kept the lucrative health care contracts, and Tehum Care Services, which inherited tens of millions of dollars in debt.

The bankruptcy left scores of current and formerly incarcerated people, as well as medical providers, holding the bag with debts owed by YesCare, drawing the condemnation of advocacy groups and progressive U.S. senators.

Now, one of those providers, the University of Maryland Medical System, is asking a judge to hold the state corrections department liable for the money it‘s owed by YesCare. It wants the judge to force the corrections department to reimburse the hospital system from funds for payments it is currently withholding from YesCare.

The medical system, which treats incarcerated patients for emergencies or complex conditions that can’t be treated in prisons or jails, argued that it was unlikely to recuperate the money it is owed from YesCare. It emphasized that nine months have passed since YesCare was terminated from its state contract and the company has so far “failed to pay.”

“Further, YesCare and its predecessor have a track record of avoiding creditors,” the filing said, adding that the company faces a “plethora of lawsuits.”

YesCare did not respond to a request for comment.

A UMMS spokesman said in a statement that the nearly $4.6 million represents “services provided since May 2022 for which we have not been paid, despite multiple promises and agreements and an acknowledgment that UMMS is owed this compensation.”

“UMMS has suffered a significant loss of revenue over this three-year period and has incurred substantial additional costs and expenses as we have worked in a cooperative and understanding manner in pursuit of outstanding fees,” said Michael Schwartzberg, senior director of media relations. “At this time, our only recourse is to seek a judicial determination to protect prompt payment rights.”

The Maryland Department of Public Safety and Correctional Services did not immediately respond to a question about the lawsuit.

Under state law, subcontractors under a state procurement contract are entitled to certain protections known as “prompt payment” regulations.

According to the UMMS lawsuit, the Maryland Department of Public Safety and Correctional Services “created a list of entities that are entitled to payment from the funds DPSCS withheld from YesCare, and DPSCS has begun to make payments to certain entities from those funds.”

But the corrections department has “wrongfully excluded” UMMS hospitals from that list because it determined that the hospital system is not a subcontractor.

In the lawsuit, UMMS argues it provided medical services to hundreds of incarcerated patients as a “subcontractor or supplier” of YesCare and is therefore entitled to the prompt payment protections.

The hospital system’s argument revolves around “authorization letters” generated when YesCare transported patients to UMMS hospitals.

The letters served as YesCare’s referrals of the patients for treatment and “the operative contract” between YesCare and UMMS hospitals, the lawsuit argues.

The lawsuit says the corrections department “refused to” treat UMMS as a subcontractor because it did not have a “master services agreement” with YesCare.

In a letter sent to Maryland state senators earlier this month, corrections secretary Carolyn Scruggs shared the department’s view on the dispute, saying UMMS “does not meet the legal standard of being a contractor (defined by regulation) and thus the prompt pay requirements of the contract do not apply.”

Scruggs said the department therefore does “not have the legal authority to make those payments on behalf of YesCare and would risk litigation and potential additional payments by the state.”

According to the letter, the department has paid out about $2.8 million to YesCare subcontractors.

The $4.6 million lawsuit comes a few months after lawmakers grilled state corrections officials over their management of prison and jail health care contracts following a scathing audit that found the state provided little oversight to its for-profit medical vendors.

Baltimore Banner reporter Pamela Wood contributed to this report.