Bankruptcy Hits Home with Seven Counties Services Inc.

Bankruptcy closes business - Spalding & SpaldingMolly Burchett’s report “Bankruptcy Filing By Mental Health Agency A Loser For Kentucky” shows that bankruptcy can strike both businesses and individuals and depicts a tricky situation the state and public are now facing.

Rather than paying the Kentucky Employee Retirement System, Seven Counties Services Inc. (one of the state’s largest mental health agencies) will file bankruptcy, according to the article. This creates a series of problems. Most obviously, the state will lose money to the Kentucky Employee Retirement System. Seven Counties Services Inc. had been open for 35 years and serves over 30,000 individuals with a range of issues, including alcohol and drug abuse and developmental disabilities.1

Individuals may have to seek care elsewhere and could see a break in treatment, which can be quite detrimental. In addition, individuals may have to seek care from facilities a good distance away, as much of Kentucky is labeled a “mental health professional shortage area.” In fact, nearly 40% of Kentuckians lack access to proper mental health professionals.1

However, Seven Counties Services Inc. says it can’t afford to pay the Kentucky Employee Retirement System. Dr. Tony Zipple, president of the company, said, “The only two paths this can go is we could stay in KERS (Kentucky Employee Retirement System) until we have given them our last nickel, which is a year (or) a year-and-a-half from now… (and) we close the doors and go out of business and KERS gets no more money because we’re out of business.”1

It may seem like the company is filing for Chapter 11 simply to avoid paying into the state’s retirement system. However, in an article on by Emily Mieure, Dr. Tony Zipple said it isn’t that the company doesn’t want to pay – it’s that they can’t. He stated, “Senate Bill 2 which was just passed in pension reform has in it an assumption that starting July 1st, 2014…that we will start paying more than 40 percent of wage equivalent for pension contribution and there’s just not a health care company in the country that could survive doing that.”2

This is one news story where everyone—the state, the company, and the public—come out losers.



About Wallace Spalding

Wallace Spalding has concentrated in Bankruptcy Law for over 25 years–helping people relieve the burden of debt and getting the results they deserve. He has been recognized as one of Louisville’s Top Lawyers in Louisville magazine in 2008, 2009, 2011, and 2012. Wallace Spalding's Google+ Profile

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