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Health Care Committee Meeting Minutes

2008 Annual Spring Meeting

The Health Care Committee educational session at ABI’s 26^th Annual Spring Meeting was a great success. A lively and well-informed panel discussed the issues arising out of the disposition of health care entities both inside and outside of bankruptcy. Bringing their own extensive health care-related experience to bear on the issues were panelists Paul Rundell, senior director of the Healthcare Industry Group of Alvarez & Marsal (and the panel moderator); Elizabeth J. Austin,chair of the Bankruptcy Section of Pullman & Comley, LLC; Gerald H. Gline of the Bankruptcy Section of Cole Schotz Meisel Forman & Leonard PA and Peter Hartheimer, senior vice president of ClearBid Capital. Committee Co-chair Suzanne Koenig of SAK Management Services, LLC, also addressed the issues because of her extensive experience as the owner and operator of nursing homes and patient care ombudsmen in bankruptcy cases. The panel’s discussion was greatly enriched by the comments and questions of the attendees, attorneys and nonattorneys, who shared their experiences in the disposition of health care entities.

Perhaps the most important issue addressed, however, was the role of state and local governments and the local community in the disposition of health care entities. The panel discussion and the attendees’ questions demonstrated that governmental control over and involvement in the disposition of health care-related assets could be a significant obstacle to the efficient disposition of health care entities, particularly hospitals. Governmental interest, it was agreed, was not necessarily consistent with maximizing the value of the health care entity or its assets. Hence, any proposal for the disposition of a health care entity or asset must take into account the role of governmental agencies (particularly in providing necessary licenses or approvals) in the disposition process. It was noted, however, that governmental agencies that want to keep a health care entity in operation can often provide substantial assistance to the disposition process.

The panel discussion closed with a request from the attendees for ideas for topics for future panels, discussions or call-in sessions. It was noted that the committee need not wait until the next regional or national meeting to have such a panel, discussion or session. Please contact either Committee Co-chairs Suzanne Koenig (skoenig@SAKmgmt.com) and Leslie Berkhoff (lberkhoff@moritthock.com), Listserve Moderator Bobby Guy (bobby.guy@wallerlaw.com), or Education Director Joe Gitto (jgitto@nixonpeabody.com) with any ideas for panel discussions or sessions. The committee also welcomes contributions to this newsletter. Please contact David Crapo at dcrapo@gibbonslaw.com with any ideas you might have for articles.

After six years, William W. Kannel of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC in Boston has rotated off of the position of co-chair.  We greatly appreciate the Bill’s efforts as co-chair and look forward to his continued involvement in the Committee. 

2007 Winter Leadership Conference

2006 Winter Leadership Conference

On Friday December 1, 2006, the Healthcare Committee hosted a program at the ABI Leadership Conference in Scottsdale, Arizona, entitled: Valuation of a Healthcare Business in a Sale Through Bankruptcy Under Section 363: What Exactly is That Healthcare Business Worth and Why? The distinguished panel consisted of: Tim Hughes, Cain Brothers, New York, NY; Bob Dickinson, BDC Advisors, LLC, San Francisco, CA; Joe Solari, Houlihan Lokey Howard & Zukin, Chicago, IL; and Maryann Wolf, The Ricardo Group, Inc., Las Vegas, NV; Sam Maizel, Pachulski Stang Ziehl Young Jones & Weintraub, LLP, Los Angeles, CA served as moderator for the panel. The program started with Joe Solari doing a quick overview of various methods professionals to use value entities generally. Each panelist then discussed valuation issues for a specific segment of the healthcare industry: Tim -- technology and visiting nurse/home healthcare entities; Bob -- hospitals; Joe -- skilled nursing facilities and other long term care facilities; and Maryann -- medical groups and other physician provider organizations. Finally, each of the panelists responded to a question of whether bankruptcy caused a diminution of value for healthcare entities, and if so, how does one counter that effect. The program was well attended, and there were, as always, excellent questions and comments from the audience.

2006 Annual Spring Meeting

The Health Care Insolvency Committee jointly sponsored a program with the Court Administration Committee at the 2006 Annual Spring Meeting in Washington, D.C.  The program was titled: "The Patient Care Ombudsman: Who Are They and What Are They Going To Do Your Health Care Business Bankruptcy." Bill Kannel from Mintz Levin in Boston served as the program chair.  He reminded the attendees that the ABI recently published the Second Edition of the ABI Health Care Insolvency Manual. The program's panel included:  Sam Maizel, Pachulski Stang Ziehl Young Jones & Weintraub, LLP, Los Angeles as moderator; along with Nancy  Peterman, Greenberg Trauig, Chicago; and Suzanne Koenig, SAK Management, Inc., in Chicago.   Nancy, who was instrumental in drafting the ombudsman legislation, described the historical evolution of the ombudsman provision.  She explained, among other things, that she and Keith Shapiro, then Chair of the new ABI Health Care Insolvency Committee, were asked in 1997 by Senator Grassley to assist in drafting legislation to deal with a perception that the bankruptcy courts were not adequately addressing the issues.  This perception was based in part on problems which had arisen from the Raseda Care Center case from the Central District of California.  Sam then described the obligations and duties of the ombudsman under the current Bankruptcy Rules and Code provisions.  Suzanne then described the various ways in which an ombudsman could contribute to a chapter 11 case of a healthcare business.  Sam concluded the program by describing some of the issues which had arisen already in the few cases in which an ombudsman had been appointed.  About 20-25 persons attended the program, and the audience participation was vigorous.  The handouts included three articles on the ombudsman (including two from the ABI Journal), Bankruptcy Code section 333 (requiring the appointment of a patient care ombudsman), and copies of various pleadings related to patient care ombudsman from two cases in which ombudsman had already been appointed. 

2004 Winter Leadership Conference

The Health Care Insolvency Committee held a program at the Winter Leadership Conference in Scottsdale Arizona on December 3, 2004, entitled The Liquidation of a Health Care Entity: A Comparison of the Options. The program’s panel consisted of Tony Schnelling, from Bridge Associates’ New York office; Frank Stevens from Navigant Consulting’s Los Angeles office; and Iain Briggs, from Cambio Health Solutions’ Brentwood Tennessee office. The Committee Co-Chairs Sam Maizel, from Pachulski, Stang, Ziehl, Young, Jones, & Weintraub’s Los Angeles office and Bill Kannel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo’s Boston office served as moderators. The program discussed and compared alternatives for liquidating a healthcare entity under state and federal laws, including an informal liquidation; a bankruptcy filing either under chapter 7 or through a liquidating chapter 11 case; an assignment for the benefit of creditors; a receivership; and a conservatorship. Approximately 28 people attended the program, and the interaction among the panel members, and between the panel and the audience, was spirited. Tony Schnelling discussed the pros and cons of closing a healthcare factility through either chapter 7 of the Bankruptcy Code or a simple informal (no proceeding) liquidation. He noted that because the healthcare industry is so heavily regulated, the option of an informal bankruptcy is perhaps less attractive than in other industries. The utility of a chapter 7 case was questioned by some because healthcare entities holding patients are usually unable to close quickly and, therefore, a chapter 7 trustee would be forced to operate the facility without the experience required to do so postpetition. Iain Briggs gave an overview of the option of an assignment for the benefit of creditors. Finally, Frank Stevens gave some interesting insights into the differences between receiverships and conservatorships in California.

2000 Annual Spring Meeting

The meeting began with a panel discussion entitled “The Ongoing Struggles of the Healthcare Industry—Hospitals and HMOs.” The panelists were William D. Harkins (BBK & Associates Ltd.), Jean R. Robertson (Hahn Loeser & Parks LLP) and Linda G. Worton (Greenberg Traurig). The discussion began with an overview of the healthcare industry, with an emphasis on the financial difficulties being encountered by hospitals and HMOs. The panelists then discussed various HMO insolvencies and hospital bankruptcy cases, including HIP Health Plan of New Jersey, Mission: Health, Inc. and AHERF.

Bill Kannel (Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC) updated the Committee on the status of the Second Edition of the Healthcare Insolvency Manual. He is assisted in this project by Sam Alberts (Akin, Gump, Strauss, Hauer & Feld, L.L.P.) and Sam Maizel (Pachulski, Stang, Ziehl, Young & Jones P.C.). The Second Edition of the Health Care Insolvency Manual should be completed prior to the ABI 2000 Winter Leadership Conference. Various members of the Health Care Insolvency Committee are writing and editing the manual. Anyone interested in working on this project should contact either Nancy Peterman or Bill Kannel.

The committee will hold its next meeting during the ABI Winter Leadership Conference.

1999 Winter Leadership Conference

The Health Care Committee meeting began with a panel discussion entitled, “The Financial Woes of Health Care Institutions,” presented by Trish Hennelley (Weiser Consulting, New York), Mark Francis (Houlihan Lokey Howard & Zukin, Chicago) and Neil Luria (General Counsel to BMJ Medical Management, Boca Raton, Fla.). The discussion began with an overview by Mr. Francis of the various sectors of the health care industry and the financial difficulties being encountered by each of these sectors. The panelists then discussed the lessons learned from the various health care cases in which they have been involved—Mr. Francis discussed the AHERF chapter 11 case, Ms. Hennelley discussed the FPA Medical Management Inc. chapter 11 case and Mr. Luria discussed the BMJ Medical Management chapter 11 case pending in Delaware. Alex Moglia (Alex D. Moglia & Associates Inc., Schaumburg, Ill.) addressed the committee to discuss an upcoming seminar on insolvency issues confronting HMOs, which will be held in April 2000 in conjunction with ABI’s Annual Spring Meeting in Washington.

Nancy Peterman (Greenberg Traurig, Chicago) discussed the upcoming spring edition of the ABI Law Review, focusing on health care insolvency issues, to be published in March 2000. She encouraged the committee members to become involved in preparing articles for this publication. Anyone interested in either preparing an article and/or working with a team of individuals to prepare articles are encouraged to contact either Ms. Peterman or Deborah Fish (Allard & Fish PC, Detroit); both are coordinating the writing for this publication. Bill Kannel (Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC, Boston) presented a draft of the table of contents for the update/supplement to the Health Care Insolvency Manual. He was assisted by Sam Alberts (Akin, Gump, Strauss, Hauer & Feld L.L.P, Washington) and Sam Maizel (Pachulski, Stang, Ziehl, Young & Jones PC, Los Angeles). The committee will be attempting to update and supplement this manual in early 2000. Anyone interested in assisting with the updating should contact either Ms. Peterman, Ms. Foster or Mr. Kannel.

The committee will hold its next meeting during ABI's Annual Spring Meeting; prior to that meeting, various members of the committee will be meeting via teleconference in order to pursue updating the Health Care Insolvency Manual and to prepare articles for the spring ABI Law Review.

1998 Winter Leadership Conference

Tim Czmiel (Arthur Andersen LLP) gave a presentation on a case study concerning a recent health care insolvency situation. He raised many issues unique both to his case study and to health care insolvency cases by addressing such issues as dealing with board members, state regulatory agencies and health maintenance organizations and other insurance companies.

The committee also considered various new projects, including the following:

1. The committee will pursue creating web pages for use by committee and ABI members at ABI World. The addition to the site would include the committee’s health care database, which contains case law, articles, pleadings and other information concerning health care insolvencies. In addition, the website would allow ABI members to address various issues unique to health care insolvency and obtain the input of other ABI members concerning solutions to consider. Jodie Getter (Getter Healthcare Consultants) and Nancy Peterman (Greenberg Traurig; Chicago) will coordinate this effort.
2. The committee also will pursue preparing a supplement to the Health Care Insolvency Manual published in December 1997. William W. Kannel (Mitz, Levin, Cohn, Ferris et al.; Boston) and Reese Baker (Broocks Baker & Lange; Houston) will develop a proposed table of contents for this supplement. This table of contents will be discussed and finalized at the next committee meeting, and volunteers will be solicited to prepare various portions of the supplement.

The committee will likely hold a meeting prior to the ABI Annual Spring Meeting in Washington in April so that the further progress can be made on the outstanding projects of the committee.