A U.S. Bankruptcy Court judge agreed to drop an involuntary Chapter 7 bankruptcy action against Possibilities Counseling on Wednesday, clearing the way for two law firms to pursue the defunct Auburn mental health agency in a class-action lawsuit on behalf of 550 social workers.
Attorney Greg Hansel of Preti, Flaherty, Beliveau & Pachios said the suit had been on hold while the bankruptcy action, brought by some Possibilities Counseling creditors, had been in place.
Possibilities Counseling, headed by Wendy Bergeron and headquartered on Center Street, drew the state’s attention last August when most of its staff quit. Shortly after that, the agency stopped paying the hundreds of therapists and case managers who worked as independent contractors. Possibilities had served as a billing go-between, submitting claims to MaineCare and other insurers on the social workers’ behalf and channeling money back to them.
After receiving a conditional license and a list of issues to address from the Maine Department of Health and Human Services, Bergeron told the state she was going out of the mental health business on Oct. 31.
Hansel estimated that the 550 people are owed more than $1 million. He said Preti Flaherty had agreed to work with the firm Taylor, McCormack & Frame, which had also been pursuing a class-action suit.
When Possibilities Counseling and Affiliate Funding, a local company that had provided bridge-loan funding to Bergeron when MaineCare payments lagged, both asked for the Chapter 7 status to be dropped, and none of the creditors objected, Hansel said U.S. Bankruptcy Court Judge James Haines Jr. agreed to dismiss it.
lawyers for Possibilities and Affiliate Funding, owned by Emile Clavet and Kevin Dean, did not return a call for comment Wednesday.
Hansel said he planned to ask for a hearing in front of the Maine Supreme Judicial Court’s Business and Consumer docket to pick the case back up and “appoint a referee and preserve funds so they’re not dissipated or incorrectly distributed.”
The two firms are suing Possibilities, Bergeron, Affiliate, Clavet, Dean and Foster Care Billing LLC on the social workers’ behalf.
“Possibilities and Affiliate are trying to dispense with the independent referee,” Hansel said. They want the social workers to trust them, but the trust is gone. Our main goal is to get the class members paid in full and accurately as soon as possible.”
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