Federal judge holds off on dismissing formerly bankrupt medical contractor from Jeffco jail death lawsuit

A federal judge declined on Monday to dismiss the formerly bankrupt medical contractor from a lawsuit over a detainee's death in Jefferson County jail, but indicated she would do so if the plaintiffs' attorneys go through the process to ensure they can collect damages for any successful claims.

The surviving son and mother of Abby Angelo are suing Jefferson County, its sheriff, and multiple employees of Wellpath, LLC for Angelo's death in custody in June 2021. Angelo died of a heart infection nine days after her arrest, and the plaintiffs allege that the defendants violated her constitutional rights and acted negligently by failing to provide proper medical care.

Wellpath itself is also named as a "nominal defendant," and the plaintiffs' attorneys intend to collect damages from Jeffco or from Wellpath's insurer based on the company's alleged actions.

In March, Wellpath moved to dismiss itself from the case, citing a Texas judge's plan of reorganization in the company's bankruptcy proceedings. Under the plan, debtors' claims against Wellpath were discharged, and a liquidating trust assumed liability for personal injury and wrongful death claims.

U.S. Bankruptcy Court Judge Alfredo R. Pérez clarified that the plan "does not permit any party to proceed" against Wellpath even as a nominal defendant. Instead, a party must substitute the liquidating trust, which will distribute portions of Wellpath's assets in response to claims. Only if Wellpath's inclusion is necessary "to seek or maintain insurance coverage for their claim" can a plaintiff move to proceed against Wellpath.

The attorneys for Angelo's son and mother opposed the dismissal, arguing that Wellpath's bankruptcy "has delayed this case (by) years." Further, maintaining Wellpath as a nominal defendant would ensure that the plaintiffs could collect damages from Wellpath's insurance if they prevail. Also, they could collect from Jefferson County under the theory that Sheriff Reggie Marinelli was ultimately responsible for Wellpath's allegedly unconstitutional policies.

"Here, Plaintiffs must prove their claims of Wellpath's unconstitutional policies in order to collect against the County," wrote the attorneys. "Because the County remains liable for Wellpath's debt, Wellpath is properly named as a nominal defendant."

At an Aug. 17 hearing before U.S. District Court Judge Charlotte N. Sweeney, she pointed out that the bankruptcy judge's order envisioned "an explicit permission to proceed" against Wellpath.

Attorney David Gartenberg applauds for U.S. District Court Judge Charlotte N. Sweeney at a legal event in Denver on July 21, 2023. (Michael Karlik, Colorado Politics)Attorney David Gartenberg applauds for U.S. District Court Judge Charlotte N. Sweeney at a legal event in Denver on July 21, 2023. (Michael Karlik, Colorado Politics)

"The bankruptcy court has seemed to, at least, imply, if not state, that this is some kind of stamp of approval that needs to be obtained from the bankruptcy court, even though it's in this court," said Sweeney. "It strikes me that inclusion of Wellpath would be necessary to, at least from Wellpath's point of view, bind that insurance company. What that insurance company thinks about this … nobody seems to know."

She added that she did not feel comfortable dismissing Wellpath until hearing from the bankruptcy judge in Texas.

Virginia Hill Butler, an attorney for the plaintiffs, said she was concerned about substituting the liquidating trust for Wellpath in the event that Jefferson County believes that it cannot be held liable for any constitutional violations by Wellpath if the company is not a named defendant.

An attorney for Jeffco clarified that the county is not taking the position that Wellpath must be a party to the case.

After hearing from the attorneys about how the bankruptcy judge has been handling issues related to Wellpath's insurance coverage, Sweeney agreed to add the liquidating trust as a defendant and to hold off on dismissing Wellpath itself.

She also mentioned that the parties have a hearing next month before Chief U.S. Magistrate Judge Scott T. Varholak, who is handling the case alongside her, regarding the plaintiffs' allegations of a potential conflict of interest in having the same defense counsel represent Wellpath and individual Wellpath employees. Wellpath's counsel has disputed that there is a conflict, but they noted they are in "the process of discussing and securing waivers of a potential conflict of interest with the Nursing Defendants."

"I highly defer to the magistrate judges" on such issues, Sweeney cautioned. "Just know that there's not much point in objecting to his order, whatever it is."

The case is Estate of Angelo et al. v. Board of County Commissioners et al.