Univita Health Files for Chapter 7 Bankruptcy Protection

Univita Health Files for Chapter 7 Bankruptcy Protection

On Aug. 30, Univita Homecare Solutions LLC, a major provider of home-based care management in the U.S., announced that it had filed for Chapter 7 bankruptcy protection, according to the Orlando Sun Sentinel. In court papers, the company stated that its decision was based on the fact that its HMO contracts were terminated in Florida in July.

Univita Health and 11 of its subsidiaries filed for Chapter 7 bankruptcy protection after massive layoffs, according to the South Florida Business Journal. After it gained control of the Medicaid market in Florida last September as the state transferred Medicaid beneficiaries to managed care, Univita Health was unable to service its clients. As a result, the state terminated all of its HMO contracts. The company was then unable to secure additional funding to maintain operations and cash flows, thus sending Univita Health into insolvency. Further, Univita Health halted services immediately for over two million patients in Florida.

Following the contract terminations, Univita Health and its three related companies went through massive layoffs, letting go of 1,002 workers in July and August. Although the company has since closed down operations, Univita Health now faces a class-action lawsuit in accordance with the U.S. Worker Adjustment and Retraining Notification Act from hundreds of former employees who claim they were terminated without notice in July. The plaintiffs in the lawsuit are seeking to recoup lost wages and benefits stemming from the abrupt layoffs. Compounding the potential damages from this class-action suit is the fact that there are further lawsuits pending against the company from hundreds of other former employees in upwards of $1 million in non-priority claims.

All told, the company listed total assets and liabilities both between $50 million to $100 million. In bankruptcy documents, these liabilities include $20 million in secured debts owed to Genstar Capital Partners.

Univita Health officials claimed that the company does not have sufficient cash flow to continue its operations. Therefore, it closed down all its operations and plans to liquidate its remaining assets as part of its bankruptcy agreement. The company will also be provided relief from its 10,000 to 25,000 creditors nationwide by filing for Chapter 7 bankruptcy protection.