Just in Time for the Holidays, Federal Court Grants Bankrupt Hospitals ERISA “Special Collection Agent” for All Denied Claims
On Dec 03, 2015, a federal Bankruptcy Court approved an application to employ an ERISA “Special Collection Agent” for Debtors filed by Victory Parent Company, LLC in the wake of the Hospital group’s Chapter 11 bankruptcy filings. The approval underscores the profound impact ERISA will have for the entire hospital industry and medical providers, particularly out-of-network, facing economic hardships, including bankruptcy filings. Compliant ERISA and PPACA appeals and litigation are the only way to protect a hospital or healthcare provider from bankruptcy.
The Employment Retirement Income Securities Act (ERISA), enacted in 1974, is the key governing law for all employer sponsored plan’s healthcare claims in the private industry. ERISA is a federal law that sets minimum standards for most voluntarily established health plans in private industry to provide protection for individuals in these plans. In September of 2010, the Patient Protection & Affordable Care Act, (aka Obamacare), adopted ERISA in its entirety, as the governing federal laws, for internal appeals in all group plans and individual policies or PPACA exchange market plans, for both ERISA and non-ERISA plan claims.
The court approval allows the hospitals to immediately start filing ERISA/PPACA compliant appeals on all denied claims as well as the option to pursue judicial reviews in federal court in order to advocate for all patient ERISA/PPACA appeal rights.
This unprecedented approval will also have a profound impact on available collection remedies and affords the hospitals an alternative to, inevitably, dragging patients into medical bankruptcies, the leading cause of personal bankruptcy in the nation today.
The U.S. Bankruptcy Court for the Northern District of Texas approved the application to employ a “Special Collection Agent” for debtors filed by Victory Parent Company, LLC in the wake of the hospital group’s Chapter 11 bankruptcy filings on June 12, 2015 (Victory Medical Center Mid-Cities, LP et. al., Chapter 11, Case No. 15-42373-Rfn-11). The Court ordered that ERISA godfather Dr. Jin Zhou be employed as a “Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a).”
On June 12, 2015, Victory Parent Company, LLC and four Texas medical centers voluntarily filed under Chapter 11 to preserve value, effect asset sales, according to the Victory Parent Company web site.
According to Robert N. Helms, Jr., Chairman, CEO and Manager of Victory, who managed six for-profit Victory Healthcare medical and surgical centers in Texas before the filing for Chapter 11, Victory built an extremely high quality, state-of-the-art group of community-centric medical centers and hospitals. Unfortunately, due to their out-of-network provider business model, they came under attack by large insurance carriers. Even though they were able to secure in-network agreements with three large insurers, sluggish claim processing and lack of payment from the carriers constrained liquidity significantly.
Unfortunately the situation with Victory is becoming all too common. According to a recent Becker’s Hospital Review industry report published on Sep 15, 2015, 10 hospitals had filed for bankruptcy as of Sept 2015. In fact, Hospital bankruptcy filings are headline news every day, mainly due to alleged denied claims and failed claims reimbursement.
In Re: Victory Medical Center Mid-Cities, LP et. al., “The Debtors in these cases, along with the last four digits of their respective taxpayer ID numbers, are Victory Medical Center Mid-Cities, LP (2023) and Victory Medical Center Mid-Cities GP, LLC (4580), Victory Medical Center Plano, LP (4334), Victory Medical Center Plano GP, LLC (3670), Victory Medical Center Craig Ranch, LP (9340), Victory Medical Center Craig Ranch GP, LLC (2223), Victory Medical Center Landmark, LP (9689), Victory Medical Center Landmark GP, LLC (9597), Victory Parent Company, LLC (3191), Victory Medical Center Southcross, LP (8427), and Victory Medical Center Southcross GP, LLC (3460).” according to the Court document.
According to the court document published on December 3, 2015, the Court ORDERED THAT:
“1. Dr. Jin Zhou d/b/a ERISAclaim.com be employed as Special Collection Agent to provide all necessary collection services to the Debtor as described in the Application pursuant to 11 U.S.C. §§ 327(a) and 328(a);
- Dr. Zhou is employed, effective November 3, 2015, as Special Collection Agent to provide all necessary collection services to the Movant in this case as set forth in the Application.
- Dr. Zhou shall be entitled to compensation as set forth in the Application and in the Claims Recovery Service Agreement attached hereto as Exhibit A without further application or order of this Court.”
Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions. All medical providers and Health Plans should understand critical issues regarding the profound impact of this and other court decisions on the nation’s medical claim denial epidemic. Providers should also know how to correctly appeal every wrongful claim denial and overpayment demand and subsequent claims offsetting with valid ERISA assignment and the first ERISA permanent injunction. In addition, when faced with pending litigation and or offsets or recoupments, providers should look for proper litigation support against all wrongful claim denials and overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.