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LifeCare Holdings Inc., an operator of acute-care hospitals owned by Carlyle Group LP (CG), has filed for chapter 11 bankruptcy protection in Delaware, Bloomberg News reported today. Plano, Texas-based LifeCare listed assets of $422 million as of Sept. 30 and liabilities of $576 million in its filing. LifeCare, which took on about $400 million of debt to help Carlyle fund its 2005 buyout, spent $57.7 million on interest last year, double its total for 2010. The case is In re LifeCare Holdings Inc., 12-13321, U.S. Bankruptcy Court (D. Del.).

A West Virginia dermatologist has been charged with health care fraud in a 23-count federal indictment that says he fraudulently billed Medicare and Medicaid, the Associated Press reported yesterday. U.S. Attorney William Ihlenfeld said that Dr. Allen Saoud of Clarksburg, W.Va., was the sole owner and officer of AGS Inc. in Bridgeport. Saoud is also charged with filing false tax returns and a bankruptcy document, obstructing federal internal revenue laws, and making false statements to a federal agent. He faces 12 counts of bankruptcy fraud as well.

Moody's Investors Service has lowered the bond rating of the Pittsburgh-based West Penn Allegheny Health System even further into junk bond status because the hospital network may file for bankruptcy protection, the Associated Press reported yesterday. Highmark Inc. has proposed a $475 million takeover, but wants West Penn to file chapter 11 as part of that process in hopes of trimming the network's debt. West Penn has $750 million in bond debt and $280 million in unfunded pension liabilities.

Pennsylvania's troubled West Penn Allegheny Health System on Tuesday accused insurer Highmark Inc. of breaching a $475 million merger agreement, saying that Highmark tried to force it into bankruptcy to lower debt as a condition of the planned affiliation, Reuters reported yesterday. The countersuit is a rebuttal to an Oct. 1 lawsuit that Highmark filed in the Pennsylvania Court of Common Pleas. Highmark is seeking to block West Penn from talking to other potential investors and claims that West Penn violated their contract by pulling out of the deal.

Saint Catherine Hospital of Indiana, a regional facility that performs weight-loss surgery and other procedures, filed for chapter 11 Tuesday after being sued by an affiliated hospital in Pennsylvania that is also in bankruptcy, Dow Jones Small Cap reported yesterday. Court documents show that amid net operating losses of $1.2 million last year, Saint Catherine Indiana was sued for $300,000 by the chapter 7 trustee unwinding its sister hospital, Saint Catherine Hospital of Pennsylvania. The trustee alleged in a May 8 adversarial lawsuit that Saint Catherine Pennsylvania transferred cash to Saint Catherine Indiana to cover payroll expenses and was never paid back.