Nearly two months after People's Community Health Centers shut the doors to five low-income health clinics in Baltimore city and Anne Arundel County, a federal agency confirmed it is no longer providing critical grant money to the nonprofit group.
People's had received $2.4 million a year from the Health Services Resources Administration to treat uninsured patients — its largest source of revenue.
That loss comes as the organization faces a new federal tax lien nearly that doubled the amount it owes the Internal Revenue Service and mounting claims from employees seeking back pay.
Yet Andrew Sindler, attorney for People's, said Monday the nonprofit hopes to pay off or settle its debts and has "some new opportunities in the works to revive the organization" under a new name and with new investors, though he declined to offer details.
Founded in 1970, People's Community Health Centers operated clinics for low-income patients. Financial problems snowballed this spring, culminating with the initial IRS lien and the suspension of an Anne Arundel County grant that would have supported a planned sixth clinic.
At the time of its closing in June, People's employed 100 workers and provided health care to thousands of low-income people. The organization still exists as a legal entity, and its financial problems have continued.
This month, the IRS filed a lien for $438,274.58 in unpaid taxes on top of an earlier lien filed in May for $463,925.62.
Neither lien has been satisfied according to Baltimore City Circuit Court records, but Sindler said People's is chipping away at its debt. He said the IRS has been paid some of the tax money, and People's is working to negotiate a payment plan for the remainder or have some of the debt forgiven.
The IRS does not comment on issues with specific taxpayers.
People's also is the subject of 33 complaints at the state's Department of Labor, Licensing and Regulation over alleged violations of wage and hour laws. Details of those complaints are not available because they are confidential, according to state labor officials.
At least one former employee filed a lawsuit against People's for his pay. Social worker Jason Zick of Windsor Mill alleged he wasn't paid for most of May and June, despite e-mailed promises from People's officials that employees would be paid. He said he was last paid May 20, and that check only covered half of the amount he was owed that pay period.
Zick filed a claim in Baltimore City District Court seeking $10,089.66 in back pay — he was in court Monday for a preliminary hearing, though a People's representative did not show up. The case will be scheduled for a trial.
People's also faces lawsuits from creditors including a community bank, a landscaper and Baltimore city — which said it's owed $18,000 in back rent on a clinic People's operated in Govans.
A trial on the city claim is scheduled for Friday in Circuit Court. In pre-trial filings, Sindler claims the space was never used and the lease was signed by a former CEO without proper approval.
Sindler said Monday that "plans are in progress" for settling the other lawsuits and claims from former employees.
"They remain our number one priority, getting paid and caught up when the funds are available," he said.
He could not say how many creditors People's has or how much money is owed. He also said there's no timetable for paying back employees.
Dr. Carlos Zigel, an internist in private practice in Brooklyn and Glen Burnie who is chairman of the People's board of directors, said the organization is working through its financial problems.
"We're working to resolve all of those issues," he said. "We're hoping all of that can get done and we can come back to life."
What's not clear is where the money will come from and neither Zigel nor Sindler would say.
Elizabeth Senerchia, a spokeswoman for the Health Services Resources Administration, said it is no longer giving money to People's.
Senerchia said HRSA is conducting a competition to assign grant money to other health centers to ensure that low-income residents in the city and Anne Arundel County have clinics where they can receive medical care. The new grant award will be announced in December, Senerchia said.
Other federally-funded clinics have expanded services to help former People's patients. Chase Brexton Health Services opened a clinic in temporary space in Glen Burnie, while Family Health Centers in Brooklyn is offering transportation help to former People's patients.
In addition to the federal grant, People's also received money from patients with Medicaid or private insurance.
Even though People's has no federal money coming in and no revenue from patients, Sindler said it has "incoming sources of funds from different outside payers" including entities that owe the organization money.
Zigel said People's board and a handful of employees are crafting a plan to revive People's as a new organization that would still be focused on providing health care in poor communities.
Officials with the Maryland Department of Health and Mental Hygiene said Monday they were not aware of People's efforts to come back, and declined to comment.
Zigel doesn't think the organization will have trouble securing new funding sources or with regulatory agencies because, he said, patient care was always top-notch.
"There was never a question of the quality of care that People's delivered," he said.