As with the tattered American flag at its doorway, Hospice Direct and its sister hospice, Serenity, have seen better days.

For nurses Karen Shirley and Helene Lindsey, it has been almost two and a half months since they were paid.

"The last day we have been paid for is Nov. 30, 2009," said Shirley, a former registered nurse for Serenity Hospice.

Shirley is one of a handful of employees, or now former employees, who told Newscenter 11 that in recent months they have used their own money to buy medicine for patients.

"I have spent approximately $3,000 out of my pocket for patients' medicines," said Shirley.

According to Shirley, she was asked by company officials to buy the needed medications with her own money. So far, she says the company has reimbursed her about $2,000 for that.

However Attorney Terris Harris, who represents Serenity Hospice and Hospice Direct, says he has his doubts about the claims.

"I doubt that seriously. I would question any employee who has worked for Mrs. (Linda) Knight who has spent their personal money and Mrs. Knight hasn't paid them back," Harris said.

Shirley maintains it's true and that, because workers were not being repaid or even paid for their work for that matter, they could not afford to drive to work let alone travel distances to care for patients.

"I have put gas on credit cards, meals on credit cards. I have bought lunch for home health aids who couldn't afford to eat because they had no money," said Shirley.

"I did not quit. They did not fire me. I said I would stay there until the doors closed and they just about have," said Lindsey, a former certified nurse assistant for Serenity Hospice.

Attorney Harris says the paychecks are being delayed because of a Hospice Beneficiary Cap, or HBC. He said it entitles individuals enrolled in a hospice to roughly $20,000 from Medicare. That money is given to the hospice provider.

Harris says the problems started when the terminally ill patients began living longer than expected. With the $20,000 already spent, he says Medicare continued paying the hospices for the patients. But once the patients died, Medicare demanded the extra money back.

Because of this, he says both Hospice Direct and Serenity Hospice have filed for bankruptcy.

"The circumstances just came as a result of the Beneficiary Cap," said Harris. "Everything has been done to my knowledge above board."

Once Medicare reimburses the hospices and a bankruptcy judge approves the disbursements for former workers, Harris says those workers will be paid. At this time, it's unknown when this will happen.