KY joins lawsuit accusing its prison health care provider of fraud
Several state agencies, including the one that manages Kentucky prisons, have joined a lawsuit accusing the state’s prison health care provider of having fraudulent insurance coverage.
The Kentucky Finance and Administration Cabinet, Justice and Public Safety Cabinet and Department of Corrections, are intervening in a state lawsuit to ask a judge to add more defendants in the suit filed against the state’s embattled jail health care provider, Wellpath.
The lawsuit, originally filed Oct. 10, 2025, in Franklin Circuit Court by Britney Jones, 38, accused Kentucky Attorney General Russell Coleman, Department of Corrections Commissioner Cookie Crews and other state employees of allowing Wellpath to have insurance policies that could not pay out for settlements.
This lawsuit is one of two filed by Jones, whose brother died in Wellpath’s care while in the Eastern Kentucky Correctional Complex, her lawsuit states.
Jones originally sued Wellpath after her brother’s death. But when the company suddenly declared bankruptcy and said they could not pay, her attorney said he looked closer and realized required insurance coverage to pay settlements did not exist.
Jones argues the state neglected its duty to not only provide adequate health care, but also to know whether their insurance coverage to pay out settlements was legitimate.
And on Tuesday, the state agencies asked a judge to include new defendants — insurance entities and their brokers — to determine everyone’s responsibility in the case, according to new court filings.
By filing this motion to include new defendants, the state is asking that the judge “pierce the corporate veil” to determine whether Wellpath — which remains the health care provider for Kentucky’s 14 state prisons — is offering fraudulent health care coverage.
“The question of whether the (certificate of insurance) provided was intended as legally valid and enforceable coverage or sham coverage is highly relevant to this matter and potentially actionable as fraud upon the Commonwealth,” the state wrote in their filing.
Jones’ lawyer, Greg Belzley, said Tuesday the state’s intervention was overdue.
“It’s about time,” Belzley told the Herald-Leader. “No Kentucky contractor should be permitted to bank tens of millions of taxpayer dollars, and then turn around and stiff the Kentuckians it hurts.”
The background of the case
Jones’ brother, Chad Lake Raymond, died at Eastern Kentucky Correctional Complex from endocarditis, an infection of the heart’s valves, after his condition worsened over 11 days. Her previous lawsuit, filed in 2022, accuses Wellpath of medical negligence and wrongful death.
But just as that lawsuit was about to be settled, according to court documents, it came to an abrupt halt when Wellpath declared bankruptcy.
The bankruptcy filing not only interrupted Jones’ suit, but left hundreds of others who claimed they were wronged or neglected in prison by Wellpath in the lurch. The Tennessee-based health care company, which insures prisons across the U.S. against health-related lawsuits, faced 571 pending lawsuits nationwide as of October 2025, including 22 in Kentucky.
Some of those suits accuse the company of fraud, prompting questions about whether Wellpath is even capable of paying out lawsuits.
The sheriff’s office in Cobb County, Ga., near Atlanta, claims in a lawsuit filed Feb. 18 that Wellpath lied about the type of coverage they offered. When county corrections officials were sued for medical negligence, Wellpath failed to pay up, the suit alleges.
In Kentucky, in addition to providing medical coverage for inmates, Wellpath was on the hook if a prison had to pay out a settlement related to medical negligence. Wellpath was required to have insurance of its own to cover those payouts in case it filed for bankruptcy.
KY entities want to ‘pierce the corporate veil’
The Kentucky Department of Corrections has contracted with the company, formerly Correct Care Solutions, since 2014.
For the current fiscal year, the state paid $72 million to “New Wellpath LLC,” the version of Wellpath that emerged from bankruptcy proceedings to continue providing health care services to Kentucky prisoners.
When Wellpath signed a contract to provide health care for prison inmates in Kentucky, it assured the state it had third-party insurance to pay out claims of negligence and wrongful death. But James Seitz, the company’s director of insurance, wrote in bankruptcy filings that Wellpath’s insurance was merely a “fronting policy” and did not appear to provide actual coverage against lawsuits.
Seitz wrote that the fronting policies were submitted solely to gain contracts and imposed “no risk or liability on any third party.”
Fronting policies — which don’t require proof that a company can pay out settlements but instead assure the policyholder the company will be able to pay out if it comes to that — meet requirements set by state lawmakers that prisons have coverage from a licensed insurer, Seitz wrote.
In their motion, the state wants to add the providers New Wellpath LLC and Wellpath Holdings as defendants. In addition, the state wants to include ProAssurance Specialty Insurance Company and Zurich American — alleged insurers on Wellpath’s certificates.
The state said in their motion that, depending on how the facts develop, the court could determine whether Wellpath restructured through bankruptcy to avoid responsiblity and continue to make money off state contracts.
A hearing is scheduled for March 25.
This story was originally published March 25, 2026 at 8:48 AM.
