State of Michigan files suit against Wellpath, LLC and Grand Prairie Health Services for breach of contract

The state of Michigan files suit against two Tennessee inmate healthcare providers for unpaid payments to third-party subcontractors. Recently the state of Michigan filed suit against Grand Prairie Healthcare and Wellpath Healthcare for breach of contract, in pursuit of damages to third-party subcontractor EMS agencies that total 35 million dollars. On Friday the Michigan Department of Corrections issued the statement.

“The state entered into a contract with Grand Prairie Healthcare Services, P.C. and made full payments for services – which included those performed by Grand Prairie, Wellpath, and their subcontractors – fulfilling the state’s contract obligations. As of April 22nd, 2024 the entities owe subcontractors an estimated 35 million dollars for services rendered during the time of the contract. Grand Prairie and Wellpath have failed to provide updated outstanding payment data, despite numerous requests by the state. The state has filed a formal complaint against Grand Prairie and Wellpath and is currently seeking damages.”

In 2021 Michigan entered into a contract with Grand Prairie Health Services (GPHS) for healthcare services provided to prisons over five years. GPHS’s bid for the state’s contract was billed as a joint venture with Wellpath Healthcare, stating, “in coordination with Wellpath, LLC as its management service organization.”

The agreement required GPHS to pay subtracted EMS agencies within 45 days, which the state says it failed to do numerous times and became worse as time went on. In February 2024 GPHS and the state entered into an assignment agreement with VitalCore Physicians Group to take over the MDOC contract. Since May 2024 VitalCore has been responsible for the medical services provided to inmates.  By the end of Grand Prairie and Wellpath’s contract with the state, it owed third-party agencies 35 million dollars.

Due to GPHS and Wellpath’s refusal to pay subcontractors third-party agencies have increased rates with the state by 150 percent, and others have threatened to end services. The agencies have said the state must provide a guarantee of payment from the company, VitalCore, that the state chose to contract with. GPHS’ refusal to pay third-party subcontractors has also caused some prisoners to receive medical bills and collection notices that the providers did not pay.

In August the Michigan Association of Ambulance Services (MAAS) notified the public in a release stating during 2023 and 2024 Wellpath required the assistance of 15 EMS providers and did not reimburse the responding agencies for their lifesaving work. MAAS also called on the state to reimburse agencies the missing 6 million dollars, despite the state having paid the same amount to GPHS and Wellpath for that purpose.  

The state on several occasions has requested medical service data for regular audits. However, Grand Prairie and Wellpath have refused to provide the state with the necessary HIPAA compliant 837 files.

The state’s lawsuit against GPHS and Wellpath names current Grand Prairie President and former executive of Correct Care, Dr. Dean Rieger as the state’s main contact for the contract. Grand Prairie Health Services is an Indiana corporation with its principal place of business in Nashville, Tennessee. Its address is the same as that of Wellpath Healthcare, LLC. Wellpath is a Delaware limited liability corporation that was formed in 2018 out of the corporate merger between Correct Care Solutions and Correctional Medical Group Companies. Wellpath is the largest provider of health services to prisons in the United States. Wellpath is owned by H.I.G Capital, a private equity firm.

The state has filed its suit in the Ingham County Court. Requesting the court to issue a ruling that the defendants breached the contract and failed to make payments to third-party medical service providers, and compensate the state for consequential damages resulting from GPHS and Wellpath’s failure to comply with its obligations. As well as provide the state with HIPAA Compliant 837 files. The state asks the court to disregard Grand Prairie’s existence, to hold Wellpath responsible for all debts and liabilities.

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Last week the Michigan Association of Ambulance Services issued a second warning to state leaders that the missed payments from Wellpath to EMS agencies risks the ability of providers to serve communities. In the eastern Upper Peninsula Kinross EMS is owed 500,000 dollars by Wellpath for services provided to three prisons in the third party subcontractor’s range. Kinross provides services to three of the state’s 31 prisons, and employs 39 first responders covering a 640 square mile range. Kinross EMS is one of 15 EMS agencies owed payments by Wellpath, LLC for services provided to inmates across the state of Michigan.