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Pipeline Health System LLC, an operator of a network of community hospitals and health clinics serving patients on government insurance or who are uninsured, has filed for bankruptcy, citing rising labor costs and aging facilities, WSJ Pro Bankruptcy reported. The privately held hospital owner filed for chapter 11 on Sunday in the U.S. Bankruptcy Court in Houston to restructure roughly $603 million in senior debt and leases to address problems in the business that the company says have been exacerbated by the COVID-19 pandemic. The company said it plans to either sell its operations or hand the business to lenders. Pipeline blamed its bankruptcy in part on rising labor costs that cut into its margins and aging medical facilities that required significant expenditures to continue operating. The company, whose patients mostly rely on Medicare and Medicaid, said it has also had problems getting timely funding from federal and state authorities. Based in El Segundo, Calif., Pipeline operates seven so-called safety-net hospitals that provide care to vulnerable or socioeconomically disadvantaged patients. The company’s facilities include Weiss Memorial Hospital in Chicago, White Rock Medical Center in Dallas, Coast Plaza Hospital in Norwalk, Calif., East Los Angeles Doctors Hospital and Memorial Hospital of Gardena in Gardena, Calif. Read more.

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A New York bankruptcy judge on Wednesday approved Endo International PLC's request to hire a fiduciary in its chapter 11 case to represent the interests of future opioid claimants, Dow Jones Newswires reported. Bankruptcy Judge James Garrity Jr. approved the retention of attorney Roger Frankel to serve as future claims representative in the Endo chapter 11 case. Judge Garrity approved Mr. Frankel's retention after considering an objection by the Justice Department's bankruptcy watchdog which questioned whether other stakeholders in the case had a chance to propose other candidates. An Endo lawyer said yesterday that it had selected Mr. Frankel because of his extensive experience and only after considering more than a dozen other applicants. Mr. Frankel has served as a future claims representative in a number of large chapter 11 cases, including the bankruptcy of Mallinckrodt PLC which, like Endo, filed chapter 11 to resolve opioid-related liabilities.

James Biden, brother of President Biden, has agreed to pay $350,000 to settle a lawsuit alleging he played a role in the financial collapse of a rural hospital operator he advised, Americore Health LLC, WSJ Pro Bankruptcy reported. The proposed settlement resolves a bankruptcy trustee’s lawsuit alleging the hospital company wired Mr. Biden $600,000 in loans in 2018 that were never repaid, even when Americore was strapped for cash. Mr. Biden has contested the allegations, and argued that he has provided financial and consulting services that are of roughly equal value to the payments received, according to settlement papers filed on Friday in the Kentucky bankruptcy court where Americore sought chapter 11 protection in 2019. “Jim had a vision of revitalizing failing rural hospitals,” Mr. Biden’s lawyer, David Randolph Smith, told The Wall Street Journal on Monday. “He provided extensive financial and consulting services to Americore.” Carol Fox, the chapter 11 trustee for Americore, sued Mr. Biden earlier this year, saying that Mr. Biden received the loan money based on his “representations that his last name, ‘Biden,’ could ‘open doors’ and that he could obtain a large investment from the Middle East based on his political connections.” In reality, Ms. Fox said, Mr. Biden helped Americore get “an ill-advised bridge loan from a hedge fund that had a deleterious impact” on the company’s finances, pushing Americore to bankruptcy.

Johnson & Johnson faced tough questions from federal appellate judges about whether placing a unit in bankruptcy to deal with more than 40,000 cancer lawsuits over its baby powder was legitimate, Bloomberg News reported. The three-judge panel in Philadelphia heard arguments about LTL Management’s chapter 11 case Monday and will decide later whether the case was filed in good faith, or should be thrown out because J&J and its units don’t face immediate financial distress. Should J&J and LTL lose, juries would once again hear talc cancer claims, leaving J&J facing legal and financial uncertainties as it fights individual cases around the country. Last year, the health care giant used a legal maneuver, known as the Texas Two-Step, to funnel the suits into a new unit without any operations. That unit, LTL, immediately filed for bankruptcy to block the litigation while trying to negotiate settlements. Cancer victims claim tainted talc in J&J’s iconic baby powder made them sick and want the federal appeals court to let their lawsuits go forward instead of being resolved as part of LTL’s chapter 11 case. The judges asked LTL’s lawyers whether the case was really filed to project J&J from the lawsuits, or to give the company an advantage in negotiating a deal to end them all, as cancer victims claim.“The timing really suggests you did this for litigation advantage,” Judge Luis Felipe Restrepo asked during an unusual, three-hour hearing on Monday. “You concede there is a litigation advantage?” If there is an advantage to bankruptcy, it’s incidental, LTL lawyer Neal Katyal said. “I think it’s a byproduct, but that it isn’t the reason” for the bankruptcy. Katyal was a former acting solicitor general in the Obama administration, meaning he argued cases before the U.S. Supreme Court. J&J, which denies its baby powder products cause cancer, argues LTL’s chapter 11 case is the only way of corralling talc litigation costs and ensuring victims get a fair payment. Bankruptcy Judge Michael Kaplan, who is based in Trenton, New Jersey ruled in February LTL’s bankruptcy was legitimate and a better solution than continuing to have juries weigh claims nationwide. Read more.

The propriety of settling mass torts through bankruptcy is the topic of one of the “Great Debates” at Bankruptcy 2022: Views from the Bench, on Friday, September 23, happening in person at Hogan Lovell’s US LLP in Washington, D.C., and also available virtually. For more information and to register, click here.

Johnson & Johnson’s use of bankruptcy to shift mass talc lawsuits against the company to chapter 11 will meet its most serious test yet before a federal appeals judge whose influential bankruptcy rulings shape one of the nation’s top corporate restructuring hubs, WSJ Pro Bankruptcy reported. Judge Thomas Ambro sits on the three-judge panel that will hear arguments Monday in a Philadelphia courtroom over an emerging corporate restructuring strategy where companies facing mass personal-injury litigation use a Texas law to create a new subsidiary with minimal business operations and make it responsible for tort liabilities before filing for bankruptcy. The chapter 11 filings by Johnson & Johnson subsidiary LTL Management LLC and others have carried more than a quarter-million personal-injury claims nationwide into bankruptcy court in recent years, stopping further trials on those claims in the civil justice system. J&J’s case has divided bankruptcy specialists and the appeal’s outcome could determine whether the consumer-health giant’s legal strategy could potentially be used more widely by other businesses facing expansive, and costly, personal-injury litigation. Judge Ambro spent more than 20 years practicing bankruptcy law in Wilmington, Del., before assuming his judgeship on the Third U.S. Circuit Court of Appeals in 2000. His background as a bankruptcy practitioner is a rarity among judges in the federal appeals courts, making him an authoritative voice on thorny legal problems arising from complex chapter 11 cases.

Teva Pharmaceutical Industries expects to finalise an opioid settlement in the United States by year-end and start paying in 2023, its chief executive said on Sunday, while confirming he was unlikely to renew his contract next year, Reuters reported. After years of negotiations, Israel-based Teva in July proposed a $4.35 billion nationwide settlement — mostly cash and partly medicines that will amount to $300 million to $400 million over 13 years — to resolve its opioid lawsuits. U.S. states, cities and counties filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of playing down the risks of addiction and failing to stop pills from being diverted for illegal use. U.S. states, cities and counties filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of playing down the risks of addiction and failing to stop pills from being diverted for illegal use. CEO Kare Schultz said Teva was working on legal wording that should be wrapped up by the end of September. It then needs approval from states and subdivisions within states. "When they opt in, once that is all done . . . then it goes into force and that means the first payments happen next year and go on for 13 years," Schultz told a news conference. "So, by the end of the year, you should have this clarification that it all comes together and we will start paying next year." Teva has denied wrongdoing, saying it sold legal medication that was approved for treatment of pain. The U.S. opioid crisis has caused more than 500,000 overdose deaths over the past two decades, including more than 80,000 in 2021 alone, according to government data. 

Illinois-based generic drugmaker Akorn Pharmaceuticals has agreed to pay $7.9 million to resolve claims that it caused Medicare to be billed for over-the-counter drugs that were not eligible for coverage, Reuters reported. The settlement, announced on Wednesday by the office of Massachusetts U.S. Attorney Rachael Rollins, stems from a 2021 whistleblower lawsuit. Whistleblower Albermarle LLC, an entity formed for the purpose of bringing the lawsuit, will receive about $946,000 of the recovery. The case centers on three drugs: anti-inflammatory cream diclofenac, antihistamine eye drop olopatadine and antihistamine nasal spray azelastine. Until recently, Akorn sold generic prescription versions of these drugs, which were eligible for Medicare reimbursement. Dicolfenac and olopatadine became became available over the counter in February 2020, and azelastine followed in June 2021, meaning the drugs were no longer eligible for Medicare. Rollins' office said that Akorn continued to sell them with obsolete prescription labeling, resulting in false claims for reimbursement being submitted to Medicare. According to Rollins' office, Akorn waited until early 2021 to seek to convert its dicolfenac and olopatadine to over-the-counter, and until January 2022 to withdraw its azelastine from the market, in order to increase profits. Akorn in 2020 filed for bankruptcy after German healthcare company Fresenius SE pulled out of a deal to buy it. The company emerged from bankruptcy following a sale to its lenders.

Borrego Community Health Foundation announced Sept. 12 that it has filed for chapter 11 bankruptcy, but it will keep its clinics open, Becker's Hospital Review reported. The Borrego Springs, Calif.-based organization said the bankruptcy filing was driven by a notification from California Health and Human Services that payments for Borrego Health Medi-Cal services will be suspended Sept. 29. Borrego said the bankruptcy filing will prevent the payment suspension from taking effect. Borrego will also work to resolve ongoing state and federal investigations during the bankruptcy process, the organization said. "Unfortunately, the misguided action by [Department of Health Care Services] jeopardizes patients and has led us to make a difficut decision to protect our patients and their access to care," Borrego Health CEO Rose MacIsaac said in a Sept. 12 news release. "Our mission to provide high-quality local access to those most in need drives us forward and this filing with the court will allow us to continue to provide care as we do today while we secure the future of healthcare for our patients." Borrego Health has 21 locations and served more than 120,000 patients in 2021. The organization provides a variety of services, including primary, pediatric, behavioral and urgent care.

About 15,000 nurses in Minnesota walked off the job Monday to protest understaffing and overwork — marking the largest strike of private-sector nurses in U.S. history, the Washington Post reported. Slated to last three days, the strike spotlights nationwide nursing shortages exacerbated by the coronavirus pandemic that often result in patients not receiving adequate care. Tensions remain high between nurses and health-care administrators across the country, and there are signs that work stoppages could spread to other states. Minnesota nurses charge that some units go without a lead nurse on duty and that nurses fresh out of school are delegated assignments typically held by more experienced nurses, across some 16 hospitals where strikes are expected. The nurses are demanding a role in staffing plans, changes to shift scheduling practices and higher wages.

Nine months after Eagle Senior Living voluntarily began a chapter 11 process in the U.S. Bankruptcy Court for the District of Delaware, the company announced Thursday that it has successfully completed a comprehensive financial restructuring, McKnights Senior Living reported. The Wilmington, Del.-based company operates independent living, assisted living and memory care communities in seven states: Alabama, Colorado, Florida, Minnesota, Ohio, Tennessee and Wisconsin. “Through this process, we have secured a bolstered financial structure, allowing our communities to be the place for residents to do more of what they love for years to come,” Todd Topliff, president of American Eagle Delaware Holding Co., said in a press release. The sale of the Vista Lake assisted living and memory care community in Leesburg, FL, to Atlantis Senior Living marks the close of the chapter 11 case. In February, Atlantis was among the bidders for Vista Lake, according to court records. In addition to Atlantis, Eagle received qualified bids for the senior living community from Illuminate HC and Gold Standard of Care by the bid deadline. Illuminate initially won the bid to purchase the property for $7.1 million. As of July 1, however, the company had defaulted on the terms of the sale, according to American Eagle Delaware Holding Co. The court agreed and allowed Eagle to follow up with second-place bidder Atlantis at a $4 million purchase price.