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This article examines four 2008 patient care ombudsman cases. In re Bridgeport Holdings Inc., __ B.R. ___, 2008 WL 2235330 (Bankr. D. Del. May 30, 2008), is not a health care case, but it provides important warnings to the directors and officers of health care businesses considering sales of the business or its assets. I am grateful to the Health Care Committee's Listserve Moderator, Bobby Guy, for pointing my attention to the Bridgeport Holdings case and its relevance to health care-related insolvencies.

Waller Lansden Dortch & Davis, LLP (Waller Lansden), home to one of the United States' largest and most comprehensive healthcare law practices, conducted a survey of hospitals entitled "Hospital Investments in Competitiveness: Financing Options." Waller Lansden published the survey in the December issue of HealthLeaders. According to Reggie Hill, the head of Waller Lansden's health care industry practice:

"Hospital Insolvency: The Looming Crisis," a recent study by the Healthcare Industry Group of global professionals services firm Alvarez & Marsal, shows that more than half of U.S. hospitals are now technically insolvent or in danger of becoming insolvent. On that point, Matthew Marcos, Senior Director of the Alvarez & Marsal Healthcare Industry Group, states:

In three recent New Jersey chapter 11 hospital sales, the unsettled legal issues associated with attempts to assign a hospital’s HHS provider agreement and/or its National Provider Identifier (NPI) without assigning the liabilities stemming from those agreements and NPIs were either avoided or postponed, rather than litigated. The particular exigencies surrounding each of those hospital sales and the interests of each of the buyers in those cases steered the transactions clear of the uncertain waters.

I find it interesting that a lifetime of experience can lead you to a point where what you’ve mastered has an impact on a whole new segment of an industry you’ve not considered. Through my health care professional liability (PL) experience, I have made inroads into third-party administrative (TPA) and investigative services, captive claims, coverage consulting, portfolio risk transfer and claim analysis of virtually every aspect of medical malpractice analysis and evaluation.

Newly incorporated into the Bankruptcy Code[2] as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),[3] 11 U.S.C.

One of the goals of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) is to provide greater protections to patients in health care business bankruptcies. See Pub.L. No. 109-8. To that end, new Bankruptcy Code provisions have been enacted to specifically address issues that arise in health care business bankruptcies. For example, §101(27A) now defines health care businesses as hospitals, nursing homes, physician practices and other entities that provide diagnosis or treatment of injury or disease.

Sicko, the need for improvement was apparent. Costs had spiraled out of control, quality of care was inconsistent and health care providers faced daunting operational and financial challenges. Incredibly, as other industries aggressively deployed technology to deliver products and services more efficiently, the otherwise technologically advanced U.S. health care industry lagged behind.

The 2005 amendments to the Bankruptcy Code have been the source of much controversy. The “patient care ombudsman,” a new position created in health care bankruptcies, however, is one addition that has received little attention in the press. Congress added the position in the newly-codified §333 of the Code. While not utilized in many cases to date, the position creates an employment opportunity for turnaround professionals, as well as a new challenge for professionals representing other parties.