Back in court: St. Luke’s sues private Idaho prison health contractor — again
For the second time in less than a decade, St. Luke’s Health System has filed a lawsuit against the Idaho Department of Correction’s health care contractor, which has been enmeshed in controversy for years.
This time the Boise-based hospital system’s suit stems from what it says was a fraudulent bankruptcy scheme to avoid paying prison health care providers what they were owed. St. Luke’s is seeking $31 million for costs it says the company neglected to pay.
Idaho’s largest health care system is one of several across the country suing Tehum Care Services, formerly Corizon Health, over a 2023 bankruptcy that plaintiffs say became a ploy to get out of paying its creditors. The St. Luke’s lawsuit, filed in early June, alleges that the company used a controversial corporate restructuring maneuver to dump millions of dollars in liabilities to a shell company and shield profitable assets in another.
This action, St. Luke’s alleged, was used to “hinder, delay or defraud” those health systems and other companies that Tehum owes from previous settlements — including the $31.3 million owed to St. Luke’s from a lawsuit that originated in 2018.
Corizon had numerous liability claims across the country
IDOC’s health care system has been privatized for more than 20 years, and Corizon was its longtime provider. The company also worked with several other states’ prison systems.
In 2021, IDOC rejected renewing its 10-year-plus contract with Corizon for another year as allegations of medical negligence nationwide amassed. Several other corrections agencies allowed their contracts to expire from 2016 to 2021.
In a 2017 Idaho case, a man sued Corizon Health for medical negligence, stating that he swallowed a razor blade so staff would take him to the hospital to treat a flesh-eating infection in his leg. The case was eventually dismissed.
It was in 2018 that both St. Luke’s and Saint Alphonsus Health System brought forth lawsuits against Corizon, alleging that it underpaid the hospitals for medical care provided to prisoners.
According to St. Luke’s original agreement with Corizon in 2011, the company would pay the health system to provide services to incarcerated people at a rate of 76 percent of the billed charges. The complaint in that lawsuit was that Corizon at times refused to pay St. Luke’s for services or delayed those payments. Three years into the agreement, Corizon then informed St. Luke’s that it would reimburse for services at the “substantially lower” Medicaid rate, according to the suit.
St. Luke’s asserted that Corizon must pay the amount originally agreed to, and requested $12.6 million in underpaid medical bills in that suit. In the Saint Alphonsus lawsuit, the hospital system claimed it was owed $14 million for medical care to inmates, and sought $5 million in interest.
When Corizon, which at that time was renamed Tehum, filed for bankruptcy in 2023, St. Luke’s was named as one of the unsecured creditors, with $31 million owed from the lawsuit settlement, which included interest and other costs. Saint Al’s was also named as an unsecured creditor, but the total amount owed was not determined, according to the records in the bankruptcy case.
The Texas Two-Step and a new name
The St. Luke’s lawsuit, along with another filed by two of the company’s bankruptcy trustees, alleges that Corizon’s executives did what’s colloquially called a “Texas Two-Step.” While legal in a few states, it is a controversial corporate restructuring tactic meant to protect a company’s assets from litigation.
In the move, a company will restructure, dividing itself into two or more distinct entities, and then transfer valuable assets to one entity, leaving the other with substantial liabilities. The liability-bearing company then can file for bankruptcy, and the other company is free from the burden.
Corizon underwent a divisional merger in May 2022 in the face of numerous liabilities amounting to more than $185 million. The company in lawsuits is accused of then transferring nearly all valuable assets to newly formed entities, including YesCare.
Corizon was left with a significant amount of liabilities and very little capital to absolve them. Then came Corizon’s name change to Tehum, which translates to “abyss” in Hebrew, and less than a year later, in February 2023, the company filed for bankruptcy in Texas.
The legal complaint from St. Luke’s stated that the company’s merger and bankruptcy was a “sham” meant to “perpetuate a fraudulent scheme” that ended in bankruptcy.
Tehum’s bankruptcy case was settled in 2024, amounting in $75 million to be distributed to the company’s creditors over a 30-month payment period. The Wall Street Journal reported that the company paid about $16 million but stopped making payments in February 2025, which terminated the settlement and opened the door to further litigation.
Company executive denies St. Luke’s claims
According to the St. Luke’s complaint, Corizon’s former director and YesCare’s current director, Isaac Leftkowitz, oversaw the transferring of almost all of Corizon’s assets, including contracts, employees and funds, to YesCare, which continued on with business as a for-profit private correctional health care contractor.
YesCare eventually filed for bankruptcy itself in May of this year.
St. Luke’s alleged that this move left Corizon (Tehum) undercapitalized and without the ability to pay its creditors or provide adequate services.
“Corizon was left insolvent, with unreasonably small capital to continue its business, and without the means to pay debts it expected to incur because of the divisional merger,” according to the new lawsuit.
The new St. Luke’s complaint said that Leftkowitz and a private equity firm, Perigrove 1018, took control of Corizon and its associated companies in 2021. It alleges that since then, he and other leadership have been siphoning money from the company, ultimately leaving it insolvent.
The complaint states that between 2021 and November 2022, Lefkowitz moved nearly $25 million from Corizon’s existing bank accounts to different accounts, which the company’s financial officers had no access to. The documents also show that Lefkowitz transferred an addition $5.5 million to a consulting firm he’s connected to for a contract in which no services were actually provided, according to the suit.
The company’s leadership sought a third-party “fairness opinion” on the restructuring and bankruptcy to go forward with the plan, which deemed it fair. The lawsuit alleges that is because Leftkowitz provided the third party with forged financial documents, including bank records that showed $22.3 million in cash maintained in the Corizon Signature Account — but that money had been transferred months prior to accounts no one at Corizon had access to.
The complaint further alleges that the third-party advisory company failed to conduct due diligence to confirm the accuracy of the information provided.
Lefkowitz hasn’t filed a response to St. Luke’s complaint, but he responded to a complaint in another case brought against him by two creditor trustees in Tehum’s bankruptcy. According to Lefkowitz’s response in that case, he denied allegations that Corizon was a “mere instrumentality” for the benefit of himself and other insiders.
He also denied siphoning money from Corizon bank accounts to outside accounts, and said he did not forge financial documents.
Lefkowitz acknowledged the previous claims of underpayments made by St. Luke’s by stating that because he lacks the information “sufficient to form a belief as to the truth” of St. Luke’s allegations, he denies them. He stated the same for the Saint Alphonsus allegations, along with two other health care systems’ claims regarding lack of payments.
Saint Alphonsus filed a complaint against Tehum over the Texas Two Step maneuver in early February 2023, alleging that the company owed it $2 million. The lawsuit was halted when the company filed for bankruptcy just over a week later.
There are no court records showing any new case filed by Saint Alphonsus against Tehum.
