Defendant in Paragon's class-action lawsuit files for bankruptcy protection

jwarren@herald-leader.comSeptember 4, 2013 

A business named as one of the defendants in a federal class-action lawsuit in Lexington has filed for federal bankruptcy protection.

The petition was filed Tuesday in U.S. Bankruptcy Court in Lexington by Resources in Healthcare Management.

The company said in the filing that it has estimated assets of up to $50,000 and estimated liabilities of $1 million to $10 million.

Resources in Healthcare Management estimated it has between 200 and 999 creditors. The petition, which includes nearly 100 pages of creditors' names, was signed by Lu Anne Wallace.

Wallace and Resources in Healthcare Management are among the corporate and individual defendants named in the federal class-action suit in U.S. District Court in Lexington.

The federal class-action lawsuit was filed last month by employees who allege that the firms caused the company health insurance plan to lapse by failing to pay premiums. Employees also allege that the defendants withdrew retirement contributions from their paychecks, but didn't deposit the money in their 401(k) accounts.

Other defendants in the class-action include Paragon Family Practice, Horizon Healthcare Center LLC, Madison Primary Care LLC and Ann Giles.

Wallace has testified in federal court that she borrowed $154,000 to have Humana reinstate the employees' health plan. However, the lawsuit is continuing.

Last Friday, U.S. District Judge Karen Caldwell ordered the defendants make their financial records available for examination by the employees' attorneys, as well providing records from the employees 401(k) plans.

Caldwell also gave the defendants until Wednesday to create an escrow account and place in it all funds deducted from employee paychecks to be contributed to the company health plan.

Jennie Arnold, an attorney for the plaintiffs, said Wednesday afternoon that she had received no confirmation that the escrow account had been opened as the court had ordered.

But Jeffrey Darling, one of the attorneys for the defendants, said in an interview later Wednesday that he understood the fund had been established.

Meanwhile, a number of Paragon employees who have quit or been laid off say they haven't received checks for back pay.

Shelly Dray said she was laid off from Paragon's call center on Alexandria Drive on Aug. 19. Dray said the company asked her and another worker to stay on. But Dray said she couldn't stay without being paid.

Dray said Wednesday that she hasn't received a paycheck.

Another former Paragon call center worker, Angela Strode, said she now has creditors calling her because she's behind on her bills.

"I was laid off Aug. 19, but the last paycheck I got was July 19," Strode said Wednesday. "They day we were laid off they told us we would be getting our checks the next day. But we still haven't received anything."

Strode said she and other employees were told last spring that Paragon was being sold.

"They claimed they were letting us go because the new company that was supposed to be buying them or merging with them wasn't going to need a call center," she said. Strode said she no longer thinks anyone is buying the company.

Jim Warren (859) 231-3255.

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