Drug Rehab Workers Seek Back Pay

A top executive at a for-profit drug rehab company sought to reassure hundreds of employees — including more than 160 in New Haven — who hadn’t been paid in weeks.

They needed to hear from someone in charge, especially after the company’s CEO had just died by suicide, leading to the sudden closure of addiction treatment centers in Connecticut, Pennsylvania, and Florida.

So he wrote everyone an email.

When will employees be paid? ​“We hope to have a definitive answer toward week’s end,” the executive, Retreat Behavioral Health Chief Administrative Officer Scott Korogodsky, wrote on June 23.

What are the chances these employees would keep their jobs?

Retreat is committed to continuing the late CEO’s mission ​“to provide quality substance abuse care and mental health services to all our communities.”

Three days after sending that email, Korogodsky took his own life. The clinics and treatment centers stayed shut.

Now Retreat’s workers are turning to the courts to try to recoup lost pay.

Those are some of the details contained in a proposed class action lawsuit that was filed on June 27 in federal court in the West Palm Beach Division of the Southern District of Florida.

The legal action comes in the wake of Retreat’s sudden shuttering in late June of its addiction and mental health treatment centers across three states, including an 80-bed in-patient facility at 915 Ella T. Grasso Blvd. and an outpatient clinic at 1 Long Wharf Dr.

Those abrupt closures coincided with the suicides of two corporate executives in five days; the stiffing of hundreds of employees on their latest biweekly paychecks; the mass transfer of patients out of Retreat’s care; and growing corporate financial woes in Connecticut, Pennsylvania, and Florida. Recent filings in a $17 million foreclosure case in Palm Beach County, meanwhile, reveal in even greater detail the state of Retreat’s fiscal distress (see more below).

The 15-page proposed class action complaint lists as plaintiffs two of Retreat’s Florida employees, Mia Williams and Brittany Calvert, ​“on their own behalf and on behalf of those similarly situated.” While no New Haven employees are named as plaintiffs, the lawsuit seeks the court’s permission to recognize a class of Retreat employees that could include over 750 people across Florida, Pennsylvania, and Connecticut.

The named defendants in the case include the Florida-based companies Retreat Behavioral Health LLC and NR Florida Associates LLC, as well as Retreat Chief Regulatory Officer Christy Gariano, Retreat Chief Financial Officer Alexander Hoinsky, the estate of the late Retreat CEO Peter Schorr, and the estate of the late Retreat Chief Administrative Officer Scott Korogodsky.

The lawsuit hinges on two primary legal claims.

First, that Retreat violated the federal Fair Labor Standards Act, Florida’s state constitution, and Connecticut state law by failing to pay its employees a minimum wage and earned overtime compensation between June 3 and when they were all effectively laid off when the company closed its doors on June 21.

Second, that the company violated the federal Worker Adjustment and Retraining Notification Act (WARN) by failing to provide its employees with at least 60 days advance notice of their termination.

The plaintiffs seek to compel Retreat to pay them for their unpaid wages and overtime compensation, among other financial damages stemming from the company’s closure.

The lawsuit was filed by Florida-based attorneys Michelle Erin Nadeau, Ryan Barack, and Michael Pancier.

“We will zealously litigate the cases to recover the money due to our clients and the other employees who were fired without any notice and without being paid the money they are due,” Barack told the Independent in an email comment for this story.

Corporate representatives from Retreat could not be reached for comment by the publication time of this story.

Late Pay. Late Pay. No Pay. Collapse.

In laying a foundation for the plaintiffs’ legal claims against Retreat, the lawsuit details a timeline of late — and then missed — payments, and corresponding corporate communications, in the runup to the collapse of the company in late June.

The lawsuit claims that Retreat paid its employees late, on May 25, for the May 6 to May 19 pay period. It states that Retreat again paid its employees late, on June 10, for the subsequent May 20 to June 2 pay period.

Finally, Retreat failed to pay its employees at all for the June 3 to June 16 pay period.

On June 21, the day that last paycheck was due, ​“Plaintiffs and other employees were informed that the Chief Executive Officer, Peter Schorr, died by suicide” and that all the patients in the West Palm Beach facility were to be transitioned out of Retreat’s care ​“immediately.”

On June 23, the complaint continues, Retreat employees received an email from the company’s chief administrative officer, Scott Korogodsky, stating that Retreat was ​“experiencing financial difficulties” and that the company ​“did not yet have an answer regarding the distribution of payroll funds.”

That email from Korogodsky also provided several explanations to other ​“unanswered questions,” including:

- When will we be paid monies due from payroll date of Friday, June 21, 2024?

o We hope to have a definitive answer toward week’s end.

- Can employees file for Unemployment Compensation?

o We are awaiting attorney guidance on UC (Unemployment Compensation). At this time, no facility has been given / granted authority to furlough employees.

o If you are currently employed, you may not apply for benefits.

- What are employee’s chances of continued employment?

o RBH Management is committed to continuing Peter’s mission to provide quality substance abuse care and mental health services to all our communities.

o Every employee may need to review their own circumstances and do what is best for their personal and family situation.

- Do I still have healthcare benefits?

o Management has consulted with our broker. UHC is working with our broker and RBH for continued coverage.

The next day, on June 24, Korogodsky sent a follow-up email to staff. He said that Retreat did ​“not have positive updates,” and that patients were being discharged and transferred at all locations and levels of care, and that Retreat was ​“closing services.

“This email stated that employees would receive ​‘appropriate letters regarding employment’ and that last weeks’ payroll was a ​‘top priority.’ ”

Two days later, Korogodsky also died by suicide.

Receiver Appointed In PA, Requested In FLA

A recent filing in a Palm Beach County circuit court foreclosure case, meanwhile, shines an even brighter light on just how much financial distress Retreat was and is in.

That case involves a $17.2 million balance that Retreat affiliate companies owe on an original $21 million mortgage to a firm called Lapis Advisers LP.

On Monday, Lapis filed an emergency motion to appoint a receiver — someone to run the company for the duration of the foreclosure case — for Retreat’s remaining assets and operations in Florida in order to provide some stability for the chaos-beset company. The goal: to give Retreat’s Florida company’s many creditors, including its hundreds of unpaid employees, a chance to recover what they’re due.

Retreat’s Florida company’s ​“financial distress and operational chaos, however, long preceded the deaths of Mr. Schorr and Mr. Korogodsky,” the motion states.

According to Monday’s legal filing, Retreat’s affiliates in Florida and Pennsylvania have already defaulted on, and are obligated to Lapis under, three loans totaling around $25 million. Retreat affiliates also owe more than $800,000 in back taxes to Palm Beach County.

In early May, Lapis had a writ of garnishment served on Fulton Bank, thereby freezing the deposit accounts — containing roughly $3 million — that Retreat’s Pennsylvania and Florida affiliates used to fund those companies’ operations.

And in late June, soon after the deaths of Schorr and Korogodsky, a Pennsylvania state court appointed an experienced hospital executive named James Young as receiver over all of Retreat’s Pennsylvania company’s assets and business operations.

During the June 27 Pennsylvania state court hearing on Lapis’s request for the appointment of a receiver, meanwhile, Lapis examined David Silberstein, the manager of Coal Capital LLC and a key funder and co-owner of Retreat.

“Mr. Silberstein testified that as a result of Mr. Schorr and Mr. Korogodsky’s death, there were no ongoing day to day operations at NRFL [Retreat’s Florida affiliate], with all patients being discharged or relocated to other facilities,” Monday’s motion states. ​“While Coal Capital objected to the appointment of a receiver, Mr. Silberstein further testified that there was no available revenue to fund operations, and that his business, Coal Capital, would not provide any financial support to NRPA [Retreat’s Pennsylvania affiliate]. Upon information and belief, Coal Capital also refuses to financially support NRFL.”

Monday’s motion continues: ​“Exacerbated by the recent death of Mr. Schorr and Mr. Korogodsky, and particularly in light of the imminent risk to the Retreat entities’ assets and remaining business of the Retreat entities, Lapis was left with no choice but to file the instant Motion to protect the remaining value of business and for a receiver over the Retreat entities to attempt to salvage some aspects of the business for the benefit of the creditors left in the wake of recent events.”

The Palm Beach County circuit court has scheduled a scheduling conference in the foreclosure case for Wednesday morning in order to discuss when a hearing should take place on Lapis’s emergency motion to appoint a receiver.

• Retreat Owes City $230K & Climbing; Deeper Financial Chaos Revealed

• 2nd Drug Rehab Exec Dies; Employees, Patients Left Scrambling For Answers

• Drug Rehab Center Closes 2nd Site

• Drug Rehab Center Shuts Down