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American Physician Partners, which until recently provided outsourced emergency room services to 150 U.S. hospitals, said Thursday that a ban on so-called "surprise" medical bills hastened the company's descent into bankruptcy, Reuters reported. The company's chief restructuring officer John DiDonato said at a Thursday bankruptcy court hearing in Wilmington, Delaware, that the 2020 No Surprises Act hampered the company's ability to raise revenue and recover from the long-term impacts of the COVID-19 pandemic. The law was passed to protect patients from surprise billing for care from providers outside their insurers' network. Insurers pay a much lower share of the cost of out-of-network providers than in-network providers. Before the No Surprises Act, providers typically billed patients for the balance of the cost. DiDonato on Thursday said although the law was motivated by a "sound" policy goal, it has unexpectedly worsened negotiations between healthcare providers and insurers who "unilaterally" refuse or delay payment for medical care. The private equity-backed company, which once employed 2,500 physicians, filed for chapter 11 bankruptcy on Monday after transitioning all of its medical services to new contractors and winding down operations. It has more than $570 million in debt. "The No Surprises Act had the unintended consequence of shifting the balance of power toward insurers," DiDonato told U.S. Bankruptcy Judge Brendan Shannon. "Surprise" billing had been particularly prevalent for emergency department visits, when patients would visit a hospital that was part of their insurance network but later receive a bill for out-of-network care from doctors who are not part of the same insurance network as the hospital. About 70% of emergency departments in the U.S. are outsourced, according to American Physician Partners' court filings. The company said that it did not bill patients for costs not covered by insurance. But the regulations implementing the ban have encouraged insurers to unilaterally reduce or deny payments, funneling cost disputes into a slow and ineffective "independent dispute resolution" process, according to the company's court filings.

A unit of UpHealth Inc. filed for bankruptcy after a judge recently ruled the telemedicine provider must pay investment bank Needham & Co. a $31.3 million fee for arranging its 2021 merger with a publicly traded blank-check company, Bloomberg News reported. UpHealth Holdings Inc. filed for chapter 11 yesterday, listing assets and liabilities each of between $100 million and $500 million, according to a Delaware bankruptcy petition. The company completed a combination with GigCapital2 Inc. and Cloudbreak Health LLC in June 2021 and began trading on the New York Stock Exchange. The deal is the latest involving a former special purpose acquisition company, or SPAC, transaction to collapse into a bankruptcy. Chief Executive Officer Sam Meckey said in a statement Uphealth turned to bankruptcy to protect its stakeholders “and achieve a fair resolution of this matter through an appeals process of the Needham judgment.” The chapter 11 filing is not expected to have an impact on UpHealth’s operations, Meckey said. The bankruptcy comes little more than a week after New York Supreme Court Justice Margaret A. Chan ruled against UpHealth in a contract dispute with Needham, which was retained to raise capital for the telehealth startup. Filing bankruptcy immediately pauses the litigation.

Bankrupt drugmaker Mallinckrodt is in talks with major investors about selling some or all of its business units, which could lead to its exit from the opioid business, according to a WSJ Pro Bankruptcy report. Some investors, poised to take control through the company's ongoing bankruptcy proceedings, are suggesting Mallinckrodt break up its business units. The Ireland-based company filed for its second bankruptcy in the United States last month, with a restructuring plan that would cut $1 billion from what it owes to victims of the U.S. opioid crisis. Mallinckrodt, which makes both branded and generic drugs, had first filed for bankruptcy in 2020 to address its high debt load, litigation over its marketing of highly addictive generic opioids and disputes over its drug pricing. As part of its plan to emerge from bankruptcy in June 2022, the company, which denied wrongdoing, agreed to pay $1.7 billion to settle about 3,000 lawsuits alleging it used deceptive marketing tactics to boost opioid sales. Mallinckrodt also disclosed in filings with the Securities and Exchange Commission last month that it recently received a grand jury subpoena from the U.S. Attorney's Office for the Western District of Virginia, seeking information about its reporting of suspicious opioid orders to the U.S. Drug Enforcement Administration.

A federal bankruptcy court hearing on Endo International's proposal to sell the pharmaceutical company to its senior lenders, which are owed nearly $6 billion, will not be held until October, the Philadelphia Business Journal reported. The hearing was initially slated to take place in late August. It was rescheduled for last week, before being rescheduled again. The new hearing date is Oct. 19 at 11 a.m. in the U.S. Bankruptcy Court for the Southern District of New York. Objections must be filed by Oct. 12. No reason for the delay was provided in court documents. Endo is domiciled in Ireland and has its U.S. headquarters in Malvern, Pa.. The company filed for chapter 11 bankruptcy protection last August while dealing with thousands of opioid-related lawsuits and with mountings debts of about $8 billion. The company — which now focuses on specialty pharmaceuticals, sterile injectable drugs and generic medicines — marketed generic pain medicines containing opioids up until late 2016. Its proposed deal to emerge from bankruptcy includes a provision under which the senior lenders agree to fund the almost $600 million in opioid settlements that Endo has agreed to pay to U.S. states and people affected by opioid addiction. The senior lenders have also agreed to establish a trust for future opioid claimants. The transaction has drawn objections from four federal agencies — the Department of Justice, the Internal Revenue Service, the Department of Health and Human Services and the U.S. Department of Veterans Affairs. The government said that the deal violates U.S. bankruptcy law because it provides payments to some of the company's creditors, including the opioid claimants, while federal government agencies and other creditors "have been singled out to recover nothing." In its objection, the government agencies called the proposed sale "an abuse of the bankruptcy system that is plainly unlawful and should be rejected by this court." Additionally, the court filing notes, the Department of Justice is pursuing billions of dollars in claims against Endo tied to alleged tax debts, overpayments for the company's medications by the government, and its ongoing criminal investigation into the company's opioid marketing practices.