Former employees of Merrymeeting Behavioral Health Services say they still haven’t been paid for work they did before the Brunswick-based agency closed abruptly last month, and an attorney said Friday that he will file a petition for Chapter 7 bankruptcy for the agency in federal court.

The bankruptcy filing would liquidate all of the agency’s assets and provide for a court-guided closure, with the court deciding which creditors would be paid, and how much.

Merrymeeting Behavioral Health in Brunswick, which closed April 1, plans a bankruptcy filing that would liquidate all of the agency’s assets. WCSH photo

“There are some assets, so employees should get something from the bankruptcy process, but it will be modest,” said Merrymeeting’s attorney, David Perkins, in a brief email statement to the Portland Press Herald. Perkins did not answer any further questions, and the agency’s executive director, Jim Talbott, could not be reached for comment. A phone number listed under Talbott’s name has been disconnected.

Two former Merrymeeting employees said that they were owed a week’s pay that was due April 22, and that they knew other former employees who didn’t get their final paychecks.

The agency provided home health services to people with mental illness, including help with daily living activities, such as doing laundry, shopping for groceries, socializing and taking medications.

About 170 employees lost their jobs when Merrymeeting abruptly closed on April 1, and they may be able to obtain their lost pay through the Wage Assurance Fund, administered by the Department of Labor.

“This is a fund that’s for situations when an employer suddenly skips town or closes quickly,” said Julie Rabinowitz, a department spokeswoman. Rabinowitz said she was not speaking specifically about Merrymeeting, and she could not confirm or deny whether the department was conducting an investigation of the mental health services agency.

Rabinowitz said former employees can tap into the $200,000 wage fund to help recover lost wages.

“We make every effort to reimburse the full amount up to two weeks of income,” she said.

But Rabinowitz said the process takes time because the Labor Department has to investigate the situation, so former Merrymeeting employees should expect to wait a few weeks before receiving their claim, if one is due.

Rabinowitz said it is illegal for a company to fail to pay employees for work performed, but whether the state will pursue a company in court depends on a cost-benefit analysis of whether the court costs to try to recover funds is higher than the money that would be recovered from the company. Merrymeeting was a privately held, for-profit company.

“If it was a sandwich shop with two employees, for instance, it wouldn’t be worth going to court,” Rabinowitz said.

She said job fairs and other labor department efforts to connect former Merrymeeting employees to employment have borne fruit, with 73 former Merrymeeting workers attending an April 11 job fair sponsored by the labor department.

Merrymeeting in late March had blamed its impending closure on changes being implemented by the Maine Department of Health and Human Services to Section 17, a part of the MaineCare program which provides community support services to the mentally ill, including help with daily living activities.

Under the changes, which had yet to go into effect when Merrymeeting announced its closure, only patients with schizophrenia or schizo-affective disorders would automatically qualify for services under Section 17. DHHS will allow certain exceptions, including recent hospitalization or if a patient’s doctor provides evidence that the patient needs the services.

But DHHS officials and former employees expressed skepticism that the Section 17 changes resulted in Merrymeeting’s closure, because the changes had yet to go into effect and had not yet had any financial impact on social service agencies. The former employees suspect there’s other underlying reasons for the bankruptcy.

In an April 2 email to employees, Talbott, Merrymeeting’s former executive director, blamed the sudden closure on a “media frenzy” that caused the agency’s bank to freeze its accounts.

Meanwhile, former employees said they were suffering from the lost wages, and are owed hundreds of dollars from Merrymeeting. In addition, they said their health insurance was canceled on April 1, but the premiums were still deducted from the April 8 paychecks.

Lois Dersham of Brunswick, a former Merrymeeting employee, said she tried to use her health insurance card to pick up her diabetes medication, only to have it rejected at the pharmacy. The pills, without insurance picking up most of the tab, would cost her $600 a month, so for now she’s going without her medication.

“This is devastating,” Dersham said. She said she also fell ill and was hospitalized with influenza in mid-April, before she knew her insurance had been canceled. She’s just starting to receive costly bills from the hospital.

Dersham said she’s owed about $400 from her last paycheck, and is having a difficult time coming up with money for rent, while she waits for unemployment checks to arrive. She said she’s seeking work but hasn’t found another job yet.

Mary Beth Freeman, another former Merrymeeting employee, said she was able to get a job with a different agency, but she’s owed several hundred dollars from Merrymeeting, and it’s causing her some temporary financial problems.

“I hope (Talbott) is going to have to deal with the repercussions,” Freeman said. “This has caused considerable hardship for the clients and for the employees.”

Former Merrymeeting employees who want to seek reimbursement from the Wage Assurance Fund for lost wages, should call the Department of Labor at 623-7900.

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