PENELTON v. WELLPATH, LLC et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
TERRE HAUTE DIVISION
KEVIN PENELTON, 	)
)
Plaintiff, 	)
)
v. 	) 	No. 2:25-cv-00229-JRO-MJD
)
WELLPATH, LLC, 	)
)
Defendant. 	)
ORDER GRANTING MOTION TO DISMISS
Plaintiff 	Kevin 	Penelton 	is 	currently 	incarcerated 	at 	Wabash 	Valley
Correctional Facility. Penelton filed this lawsuit on May 9, 2025, alleging that
Defendant Wellpath, LLC ("Wellpath"), the medical provider for Marion County
Adult Detention Center ("ADC"), violated his constitutional rights by depriving
him of adequate medical care after he was attacked by other inmates on January
6, 2023. Wellpath now moves to dismiss Penelton's claims, arguing that all
claims have been discharged in bankruptcy, dkt. 43. Finding that the discharge
of claims in In re Wellpath Holdings, Inc., et al., Case No. 4:24-bk-90533 (Bankr.
S.D. Tex.) precludes Penelton's claims against Wellpath in this Court, Wellpath's
motion to dismiss, dkt. [43], is GRANTED and Penelton's claims are DISMISSED
without prejudice.
I. BACKGROUND
On November 11, 2024, Wellpath Holdings, Inc., and certain affiliated
companies 	filed 	a 	Voluntary 	Petition 	for 	Relief 	under 	Chapter 	11 	of 	the
Bankruptcy Code in the United States Bankruptcy Court for the Southern
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District of Texas. In Re: Wellpath Holdings, Case No. 24-90533. On May 1, 2025,
the Bankruptcy Judge entered his findings of fact and conclusions of law, and
an 	order 	(1) 	confirming 	the 	First 	Amended 	Joint 	Chapter 	11 	Plan 	of
Reorganization of Wellpath Holdings, Inc., and certain of its debtor affiliates ("the
Plan"); and, (2) approving the disclosure statement on a final basis. See dkt.
44-2. On June 4, 2025, the Bankruptcy Court entered the Stay Order, holding
that the Plan became effective on May 9, 2025, and providing guidance on the
impact of the Plan's discharge and injunction on stayed pre-petition actions
against Wellpath. See dkt. 44-3. Under the Plan, all claims arising before
November 11, 2024, against Wellpath are discharged. Dkt. 44-2 at 128–29; dkt.
44-3 ¶ 3. Therefore, holders of claims that were discharged are enjoined from
"commencing or continuing in any manner" those claims. Dkt. 44-2 at 134.
Penelton filed this lawsuit on May 9, 2025. After initially dismissing
Penelton's 	complaint 	without 	prejudice, 	on 	October 	23, 	2025, 	the 	Court's
screening order allowed Penelton's amended complaint to proceed with Eighth
or 	Fourteenth 	Amendment 	claims 	for 	deprivation 	of 	medical 	care 	against
Wellpath and Wellpath's employee Dr. Marcel Rohana. Dkt. 29. Counsel for
Defendant filed a notice of suggestion of death for Dr. Rohana, and the Court
dismissed Dr. Rohana as a Defendant. Dkt. 37. Therefore, the only Defendant in
this action is Wellpath.
The operative complaint alleges that on January 6, 2023, Penelton was
attacked by two inmates at the ADC. Dkt. 19 at 4. After a delay, Penelton was
sent to the hospital where he was advised that he would need surgery to repair
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his biceps tendon. Id. Upon returning to the ADC, however, Wellpath employees
refused to provide Penelton with prescribed pain medication. Id. Dr. Rohana
scheduled surgery but later cancelled it after Wellpath refused to approve it. Id.
Penelton was transferred to the custody of the Indiana Department of Correction
in May 2023, where he is under the care of another medical provider. See id. at
4. In June 2023, an orthopedist informed Penelton that because Wellpath
cancelled the surgery, he would have to repair his bicep tendon with the tendon
of a cadaver. Id. at 5. As a result of the delay in medical care, Penelton's condition
has worsened, and he suffers from permanent disability and pain. Id. at 3.
II. LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the
complaint, not its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910
F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion, the complaint
must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The Court may take judicial notice of the
Bankruptcy Court's orders, as well as filings in the bankruptcy action, without
converting the motion to dismiss into one for summary judgment. Parungao v.
Cmty. Health Sys., Inc., 858 F.3d 452, 457 (7th Cir. 2017) ("Courts may take
judicial notice of court filings and other matters of public record when the
accuracy of those documents reasonably cannot be questioned.").
Under 11 U.S.C. § 1141, "the provisions of a confirmed plan bind the
debtor . . . and any creditor" and "discharges the debtor from any debt that arose
before the date of such confirmation." (a), (d)(1)(A); Harrington v. Purdue Pharma
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L. P., 603 U.S. 204, 214–15 (2024). Claims that have been discharged by a
confirmed bankruptcy plan can be dismissed for failure to state a claim. See,
e.g., Abercrombie v. Jack Cooper Transp. Co., Inc., No. 1:19-cv-503, 2020 WL
3841270, 	at 	*1 	(N.D. 	Ind. 	July 	8, 	2020) 	("Clearly, 	Plaintiff's 	claims 	were
discharged in the bankruptcy, as further explained below, such that he fails to
state a claim upon which any relief may be granted."); Morgan v. Wellpath, No.
23-cv-972, 2025 WL 2480416, at * 3 (E.D. Wis. Aug. 28, 2025) (granting
Wellpath's motion to dismiss because claims were discharged in bankruptcy).
III. DISCUSSION
Wellpath argues that Penelton's claims must be dismissed because they
were discharged in the bankruptcy proceedings. Penelton makes two arguments
in opposition. First, he argues that he is proceeding against Wellpath to recover
insurance proceeds, not to recover directly from Wellpath. Dkt. 45 at 3–5.
Second, Penelton argues that his claim arose after the petition date of November
11, 2024, and is therefore not covered by the Plan. Dkt. 52. The Court discusses
each argument below.
A. 	Penelton May Not Proceed Against Wellpath in this Court to Recover
Insurance Proceeds
Upon discharge of debt in a bankruptcy proceeding, Section 524 of the
Bankruptcy Code prohibits creditors from recovering any discharged debt "as a
personal liability of the debtor." 11 U.S.C. § 524(a)(2). Penelton is correct that a
creditor may attempt to collect from another entity, such as an insurer, as one
judge in another lawsuit involving the Wellpath bankruptcy has noted. See
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Kalchert v. Adamek, No. 24-12637, 2026 WL 483638, *1 (E.D. Mich. Feb. 20,
2026). But as Wellpath points out, the Plan governs how such a collection may
occur. See also id. (discussing impact of Wellpath's Plan on the plaintiff's Section
1983 claims).
On January 26, 2026, the Bankruptcy Court issued an order clarifying
whether claimants can maintain a pending civil action against Wellpath to
recover proceeds from a third-party insurer. Dkt. 48-1. The Bankruptcy Court
stated in relevant part that:
• 	Holders 	of 	unsecured 	personal 	injury 	claims 	"may
proceed in the appropriate civil court and litigate such
claim with the [Trust] included as a nominal defendant
. . . . As a nominal defendant, the Trust is not required
to file answers, participate in discovery or hearings, or
take an active role in any such litigation . . . ." Id. at 2.
(internal quotation marks and emphasis omitted).
• 	Holders of unsecured personal injury claims may not
proceed 	against 	Wellpath 	as 	a 	nominal 	defendant.
"Pursuant to the Plan, the Court will permit parties to
proceed with prepetition claims (i.e., before November
11, 2024) against [Wellpath] only where such inclusion
is necessary for the party to seek or maintain insurance
coverage for their claim." To do so, claimants must
provide sufficient evidence to the Bankruptcy Court
that "(a) insurance coverage exists for such claims and
(b) either (i) there is no applicable SIR [self-insured
retention] or (ii) such claim will exceed the applicable
SIR." Id.
• 	Holders of unsecured personal injury claims who have
filed claims against Wellpath and "(a) no insurance
coverage exists for such a claim or (b) (i) there is an
applicable SIR and (ii) such claim will not exceed the
applicable SIR," must substitute the Liquidating Trust
as a nominal defendant in that litigation. Id. at 3–4.
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Wellpath filed a declaration from James Seitz, Wellpath's Director of
Insurance, stating that Wellpath's SIR during the relevant time was $15 million
dollars. Dkt. 48-2.
In sum, Penelton can sue Wellpath directly for the purpose of reaching
insurance proceeds only if the insurance exists and covers the claim and if
Penelton's claim exceeds the SIR of $15 million dollars. Penelton would have to
file such a claim in the Bankruptcy Court for the Southern District of Texas.
Alternatively, and more realistically for Penelton, the Plan lays out two
options. First, Penelton may file a motion under Federal Rule of Civil Procedure
25(c) to substitute the Liquidating Trust as a "nominal defendant" in this Court
subject to the conditions laid out in the Plan (i.e., the Liquidating Trust is not
required to answer the complaint or actively participate in the litigation). See dkt.
48-2. Second, Penelton may pursue his claims through the Plan's alternative
dispute resolution process in the Bankruptcy Court for the Southern District of
Texas. Penelton has not pursued either option to date.
B. 	Penelton's Claim Arose Before Wellpath's Petition
Penelton's surreply argues that his claim did not arise before the November
11, 2024, petition because he did not realize that the delay in surgery caused
permanent damage until March 2025. Dkt. 52 at 3. The Seventh Circuit applies
the "conduct test" to determine when a claim arises pre-petition or post-petition
under the Bankruptcy Code. St. Catherine Hosp. of Ind., LLC v. Ind. Fam. & Soc.
Servs. Admin., 800 F.3d 312, 315–16 (7th Cir. 2015). Under the conduct test,
"the date of a claim is determined by the date of the conduct giving rise to the
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claim." Id. at 315. Penelton's argument has some support because St. Catherine
explained that "there are exceptions to this rule—mostly notably, where the
claimant is the victim of pre-petition tortious conduct, but does not realize he or
she has been a victim until some harm manifests after the bankruptcy." Id. at
318.
Here, however, Penelton's claim that he did not realize he had been injured
by Wellpath's conduct until March 2025 is implausible. His complaint clearly
states that he was injured by Wellpath's refusal to schedule the necessary
surgery after his hospitalization in January 2023; and he alleges that as early as
June 2023, an orthopedist told him that the delayed surgery made it so that his
natural tendon could not heal on its own, and a surgeon would have to use a
tendon from a cadaver. Dkt. 19 at 4–5. This is quite different from a case such
as Gabay v. Lyondell Chem. Co., No. 25 C 8237, 2026 WL 1026250, at *1 (N.D.
Ill. Apr. 15, 2026), where the court found that the plaintiff's claim arose post-
petition because, even though he was exposed to chemicals in the 1990s, he did
not realize he was injured until he was diagnosed with a disease caused by the
chemicals until 2024.
Accordingly, based on the allegations in the complaint, Penelton's claims
against Wellpath arose before the bankruptcy petition on November 11, 2024,
and they are covered by the Plan. Penelton must pursue his claims according to
the tenets of the Plan as outlined in Section III.A.
IV. CONCLUSION
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For 	the 	above 	reasons, 	Wellpath's 	motion 	to 	dismiss, 	dkt. 	[43], 	is
GRANTED. 	Penelton's 	claims 	against 	Wellpath 	are 	DISMISSED 	without
prejudice 	to 	his 	right 	to 	seek 	any 	appropriate 	relief 	in 	the 	United 	States
Bankruptcy 	Court 	for 	the 	Southern 	District 	of 	Texas 	or 	to 	substitute 	the
Liquidating Trust as a nominal defendant here.
If 	Penelton 	wishes 	to 	substitute 	the 	Liquidating 	Trust 	for 	Defendant
Wellpath as a nominal defendant, he should file a Motion to Substitute pursuant
to Federal Rule of Civil Procedure 25(c) no later than November 13, 2026. Upon
the granting of the motion, or if no motion is filed by the deadline, the Court will
direct the Clerk of the Court to terminate Wellpath as a Defendant to this action.
SO ORDERED.
Date: 	10/16/2026
Distribution:
KEVIN PENELTON
946100
WABASH VALLEY - CF
Wabash Valley Correctional Facility
Electronic Service Participant – Court Only
Bryan Findley
CASSIDAY SCHADE LLP
bfindley@cassiday.com
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