Tulare hospital dodges bullet in bankruptcy case
“It is not ‘reasonable’ or ‘moderate’ to delay filing a claim for a liquidated amount when the required information from the district has been provided in a timely manner,” the judge said in his ruling. “It is also not ‘fair or appropriate’ to delay two years after the claim deadline before seeking to modify a claim from ‘undetermined’ to $ 5.5 million.”
Sandra Ormonde, CEO of the health district, said creditors approved $ 5 million in installments and testified that each would be repaid between 19.2% and 30.3% of what is owed in the process. Chapter 9 bankruptcy. If DHCS’s late claim had been accepted, claims from other creditors would have been forced to take 20% less, causing them to fall below the minimum agreed upon upon repayment.
“The ruling means that the DCHS claim will not dilute what other creditors who filed their claims on time will receive under the plan,” Ormonde said.
The decision also means that the district will owe nothing to DHCS. TLHD bankruptcy attorney Riley Walter of Wanger Jones Helsley in Fresno opposed the request because he missed the deadline to file an amount to be included in the repayment plan. According to court documents, DHCS filed its claim for an unspecified amount on April 6, 2018, two days before the claims deadline, but waited another 13 months to submit its actual amount of $ 5.6 million in May. 2019. TLHD objected to the amount in July 2019. and the creditors approved the repayment plan on August 16, 2019.
“DHCS could have amended its claim before the legal deadline for government claims,” Jones wrote in a statement last week. “DHCS has not done so, instead waiting for confirmation of the Chapter 9 plan and the expiration of its effective date before filing its motion for leave to vary. “
Sheila Mendiola, branch manager of payments and supplier policy for DHCS, said the state agency had audited 13 years of records with the district dating back to when TLHD began participating in the program during 2002-2003 fiscal year. As part of the California reimbursement plan, DHCS must reconcile TLHD cost reports with audited cost reports on an annual basis. After reconciliation, any overpayments or underpayments should be reflected annually in DHCS’s additional payment to the district. Mendiola said DHCS could not meet the deadline as final reconciliations for all those years were still pending. The judge pointed out that TLHD filed annual documents in a timely manner with DHCS and that any delays were caused by the state agency. DHCS admitted in court that they “encountered difficulties” during this sixteen-year period due to: “difficulties to extract [outpatient fee-for service] MMIS expenses and revenues; “” Downsizing; And “inefficiencies with workflow logistics, some of which have lasted for years.”
“These problems are ultimately not the responsibility of the District or its creditors,” said the court.
Ormonde said the approved $ 5 million will be paid to 190 creditors over a five-year period starting in 2025. Only a handful of outstanding claims remain. In anticipation of these payments, the district stabilized its finances by selling assets, restructuring debt and taking out income bonds to repay its loan to the town of Tulare and other long-term debts. Ormonde said the longer-term bonds offered a more manageable payment at a lower interest rate to ensure cash flow for the district. Payments on both bonds began in March and will be made over 23 years.