%1

People are twice as likely to file for bankruptcy if their health insurance has been interrupted, according to a new study published this week, MarketWatch.com reported. In fact, all it takes is a coverage gap within two years for the chance of bankruptcy to jump twofold, according to the study published by the American Bankruptcy Institute. “Continuing health insurance matters,” said Prof. Michael Sousa, one of the authors and an associate professor at the University of Denver Sturm College of Law. Prof. Brooke Gotberg, the other author on the latest study, and an associate professor at the University of Missouri Law School, said that the study underscored the importance of health insurance. “There’s general consensus if somebody has a horrible, unforeseen unmitigated medical emergency, that’s shouldn’t destroy their lives.” The researchers analyzed Bureau of Labor Statistics data of more than 12,500 people. They found a “strong association” between coverage interruptions and consumer bankruptcies. That link held true even when controlling for variables like earnings and debt-to-income ratio. From 2008 to 2014, 454 people in that sample declared bankruptcy. Divorce, health problems and lower incomes were usually factors at play when someone experienced interrupted health coverage, the study said. Many insurance plans are connected to an individual’s employment or that of his/her spouse. Plus, a health limitation can create employment instability, it added. Read more. 

To read the full study published in the Summer 2019 edition of the ABI Law Review, please click here. 

Westlake Hospital in Melrose Park, Ill., filed for chapter 7 bankruptcy yesterday citing economic and industry hardship caused by health care policy implemented at the state level, the Chicago Sun Times reported. Owners of the hospital say that it is losing nearly $3 million a month and no buyer has emerged for the facility that is about 80 percent empty. The owners also blame the $4 million in Medicaid funding lost through the Illinois Hospital Assessment Program in 2018. They also say that the village of Melrose Park withdrawing $500,000 for Westlake’s redevelopment plan has stifled growth. SRC Hospital Investment II LLC requested a chapter 7 bankruptcy trustee be to oversee the hospital. If the trustee chooses to close Westlake, CEO Jim Edwards said, current patients will be transferred to one of the nearby hospitals such as Gottlieb Memorial Hospital in Melrose Park, Loyola Medical Center in Maywood or West Suburban Medical Center in Oak Park. Read more. 

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore. 

A blood-testing company filed for bankruptcy and says it's cutting jobs because Medicare payments have been withheld over allegations of fraud, the Associated Press reported. The Richmond Times-Dispatch reports True Health Diagnostics LLC filed for chapter 11 protection this week and notified officials of impending layoffs. The letter says that the suspension of all payments by the Centers for Medicare and Medicaid Services may cause additional layoffs "and/or a business shutdown." It says nearly 400 jobs are affected nationwide. Nearly 30 of them are at a Virginia laboratory.

The bankruptcy of helicopter operator PHI Inc. has transported the contentious issue of surprise health care bills to the steps of federal court, Bloomberg News reported. Bankruptcy Judge Harlin Dewayne Hale today will weigh objections to PHI’s plan to exit chapter 11 protection. Among them is a challenge by a group of consumers suing PHI’s air ambulance division over its billing practices. If their lawsuit is successful, the bankruptcy plan won’t work, they said in court papers. The objection highlights the mounting backlash over surprise billing — when patients are unwittingly billed huge amounts for care not covered by insurance. Surprise billing is common in emergency services scenarios like ground ambulance rides or anesthesiology — situations where consumers don’t have much ability to haggle over prices because they are injured or unconscious, for example. The issue has already reached the other branches of government. In an era of political divisiveness, a bill to curb the practice has received rare bipartisan support in Congress, while President Donald Trump this year called for an end to surprise bills.

A bankruptcy judge ordered the company closing Hahnemann University Hospital and selling St. Christopher’s Hospital for Children to alert Philadelphia officials if there are indications any prospective buyer would reduce services, WSJ Pro Bankruptcy reported. Lawyers for bankrupt hospital operator Center City Healthcare LLC, its creditors and the city debated during a hearing on Friday about how much involvement Philadelphia civic officials should get while the health system is broken up. The city, concerned about maintaining services at St. Christopher’s, had said it wanted to be designated a “consultation” party during the sale process for the 188-bed teaching hospital, which has 1,500 employees. That would have given the city the same standing in the sale process as the official committee of unsecured creditors and a representative for the lender financing the company during bankruptcy. Deputy city solicitor Megan Harper said on Friday that Philadelphia wanted to be involved in all aspects of the sale process, including reviewing information submitted by potential bidders and attending and participating in the auction.

Massive and at times violent protests in Puerto Rico showed no sign of stopping as labor unions yesterday organized a march today to keep up pressure on the governor to resign, while dozens of guns were stolen in a raid on a police firearms center, Reuters reported. Thousands of protesters have jammed streets in San Juan since Saturday, calling on Governor Ricardo Rossello to step down after the leak of a raft of controversial and vulgar text messages between him and his closest allies. The scandal comes on the heels of a federal probe into government corruption on the bankrupt island. The political turmoil comes at a critical stage in the U.S. territory’s bankruptcy. It has also raised concerns with U.S. lawmakers who are weighing the island’s requests for billions of federal dollars for health care and for recovery efforts following devastating hurricanes in 2017.

An Ohio drug wholesale distributor and two former executives were charged yesterday with profiting from the U.S. opioid epidemic by selling millions of pills despite signs the addictive drugs were being misused, Reuters reported. Federal prosecutors in Cincinnati charged Miami-Luken Inc. and four people in the second U.S. criminal case against a drug distributor over its role in a crisis that has killed hundreds of thousands of people. The indictment charged the Springboro, Ohio-based company; Anthony Rattini, its ex-president; James Barlay, Miami-Luken’s former compliance officer, and two pharmacists with conspiring to distribute controlled substances. Prosecutors said Miami-Luken and the executives failed to guard against the dangerous drugs it shipped to pharmacies in five states from being diverted for illegal uses or to report suspicious orders to the U.S. Drug Enforcement Administration. Prosecutors said Miami-Luken, which closed in October, made more than $173 million in consolidated sales from 2008 to 2015 supplying drugs to 200 pharmacies in Ohio, West Virginia, Kentucky, Indiana and Tennessee.

U.S. lawmakers yesterday called for heightened scrutiny of Puerto Rico’s Medicaid program as the bankrupt territory seeks increased federal health care funding while it deals with repercussions from a government corruption scandal, Reuters reported. The House Committee on Energy and Commerce agreed to several accountability measures linked to a $12 billion funding boost over four years for the low-income health care program in Puerto Rico. A group of Republican U.S. senators, meanwhile, sought information on whether any safeguards are in place to deter misuse of the island’s federal Medicaid dollars. Last week, Angela Avila-Marrero, former executive director of Puerto Rico’s Health Insurance Administration, pleaded not guilty to conspiracy and other charges related to her role in an alleged scheme to steal federal Medicaid dollars through a corrupt bidding process with private contractors. The charges were part of a 32-count indictment brought by U.S. law enforcement officials against six people in a government corruption probe. The House committee adopted an amendment proposed by U.S. Representative Greg Walden (R-Ore.) that added provisions for federal audits and probes of contracts related to Puerto Rico’s Medicaid program, as well as a quarterly reporting requirement on how much of the money was spent.