Employees at NEON, a nonprofit health provider, did not get their paychecks Friday, ratcheting up concern about the future of the organization that has served patients with low- or no-cost medical care for decades. 

A day earlier, a federal judge appointed a receiver over NEON, which owes at least $8.6 million to one lender. The receiver would ultimately take the reins of managing NEON but has not done so yet as the specifics of his duties are still being worked out in the courts. 

At least four employees told Signal Cleveland their pay didn’t appear in their bank accounts through the normal direct deposit on Friday. After a flurry of emails to staff with promises they would be paid, some employees said paper checks were passed out late Monday. 

Northeast Ohio Neighborhood Health Services employs about 208 people, according to its most recent public tax filing. That includes doctors, nurses and mental health staff. 

The judge said in an order on Nov. 13 that a receiver was needed because NEON had failed to pay back a multimillion dollar loan. Receivers often have wide latitude over the future of the organizations they oversee. In this case, the judge hasn’t yet outlined those specific responsibilities. 

On Monday afternoon, lawyers for NEON asked the U.S. District Court in Cleveland to halt the decision and give the nonprofit until Christmas Eve to finalize new financing for the money it owes and continue to provide vital services to the community.  

Between the payroll issue and the newly granted receivership, staff at NEON’s clinics are growing increasingly concerned about both the future of the organization and their finances. 

“We shouldn’t be left in limbo not knowing what’s going on – and this is affecting our pay,” said Antoine Rembert, who provides security for NEON. “This is very crazy.” 

Since last Friday, NEON managers have sent emails instructing employees to keep working as normal. Staff members shared some of those messages with Signal Cleveland.

“To clarify uncertainty among my staff, I am directing you to do the work you were hired to perform,” Dr. Anita Watson, the organization’s medical director, wrote to providers and nursing staff. “…Do not complain or ‘inform’ patients about the issue of the day. They are here to receive care and empathy and not to be your sounding board.”

Signal Cleveland reached out to multiple administrative staff at NEON, including Watson, and the CEO, Willie Austin, but did not receive a response. A reporter went to NEON’s administrative headquarters Monday and spoke, through an intercom, with Karen Redrick, who was listed on a company directory as part of administration alongside Austin. Redrick said she could not provide any information about the payroll issue or the receivership. 

The story will be updated with any other comments. 

NEON employees get promises of paychecks 

Friday morning, Chief Financial Officer Liang Chen emailed the staff to say that payroll was delayed. Later that day, Chen told staff that NEON would be issuing paper checks to meet payroll obligations “today by 5 p.m.” 

But workers didn’t get checks Friday. 

On Saturday afternoon, Redrick emailed all NEON staff “on behalf of Mr. Austin,” the organization’s CEO. She told staff payroll checks would be disbursed Monday and apologized for any inconvenience.  

The email also said that it had come to her attention that certain employees were spreading inaccurate information about the current status of the organization.  

“We are asking all employees to refrain from spreading gossip from whatever source,” Redrick wrote. “…Please know that you will be informed of any changes that affect your employment directly from management.” 

Emails poured in from staff in response on a reply-all chain: When will checks be distributed Monday? Is this going to continue to happen? Be up front with us. Do you care about your employees? 

On Monday morning, Watson sent an email to providers and the nursing team telling them to keep caring for patients. She instructed them to avoid sending patients to another health care practice or facility “as if NEON will not be open tomorrow.” 

Three employees told Signal Cleveland that checks arrived late in the day on Monday. By then, the financial strain had started to weigh heavy on employees. Two employees, who requested anonymity, said the issue caused their bank accounts to be in the negative. One of them said she had to forward her landlord the emails from NEON’s leadership to explain why she hadn’t paid rent. Rembert, who works security, said he had to dip into savings to make things work and keep providing for his family. 

“It’s terrible because I have to do things for my kids,” Rembert said. “And I tell people, when it comes to my kids — don’t let it come to my kids, if that makes sense.”

Lender asked judge to put NEON in receivership 

In May, a New Jersey-based private equity real estate company said NEON had defaulted on a loan. The company, All Pro Capital, asked the judge to put the health centers in the hands of a third party that could help recover the money it was owed. 

NEON did not deny that it defaulted on the loan but has told the court that it had tried to negotiate in good faith with the company and was hit with “onerous” fines and fees. NEON also wrote in court filings that medical services provided to thousands of Cleveland patients would be at risk if the court let a third party take over. 

Last week, U.S. District Court Judge Christopher Boyko wrote in a court order that the money NEON owed All Pro – and several other lenders – outweighed the nonprofit’s concern about the community losing health services. Boyko appointed a receiver, John Lane.

But the judge has not yet given Lane a full outline of his authority as a receiver.  

In a filing Monday, NEON asked the court to delay receivership and said it was “close” to securing funds to repay All Pro Capital. The company wrote that it needs roughly 30 business days – until Dec. 24 – to finalize financing.

A receiver could also disrupt support it provides to the community, the organization wrote. Specifically, NEON supported the community throughout the federal government shutdown and the suspension of SNAP benefits by passing out free food at its East Side Market, the filing said. Putting a receiver in place “threatens to further derail this recovery from the shutdown, and inserts the risk that the Receiver shutdown the program,” NEON wrote in a filing.

This story was updated to correct the spelling of Mr. Lane’s first name.