Judge’s decision on Hazel Hawkins bankruptcy case due in weeks

A judgment by the U.S. Bankruptcy Court’s Northern California District on Hazel Hawkins Memorial Hospital’s Chapter Nine bankruptcy eligibility is expected in the next few weeks. 

Judge Stephen L. Johnson is tasked with determining if the hospital’s “financial emergency”  that administrators cite as the reason for the bankruptcy filing is viable.

The final ruling is scheduled for Jan. 14.

The trial was spurred on by the California Nurses Association’s (CNA) specific objections to the San Benito Health Care District’s argument that HHMH is financially insolvent.

CNA represents over 100 nurses employed by HHMH. Representatives have repeatedly said that staffing cuts made to address the financial emergency have contributed to a decline in the quality of patient care.

In a trial brief for the December hearings obtained by the Free Lance, attorneys from CNA’s legal department said the hospital is currently solvent.

“After comprehensive discovery for many months, it has been established that the

following all confirm that the District is able to pay its current debts and its debts through at

least the Fiscal Year Ending June 30, 2024,” the brief said.

The district board unanimously voted in May 2023 for HHMH to file for Chapter Nine bankruptcy months after declaring a financial emergency in November 2022. At the time, hospital representatives told local media that the filing was a “final alternative to fix systemic issues”. 

The move was made in order to restructure the hospital’s debt and remain functional in the face of insolvency, according to hospital administrators. Additionally, the hospital is seeking a potential buyer to take over. 

Hospital administration has stated for months that its cash-on-hand is dwindling and cannot sustain operations in the long term, according to monthly financial reports. 

In September 2023, CNA representatives argued during a town hall that the hospital’s finances were in better shape than what the administration was alleging. They referenced the $921,900 in executive compensation given out in 2022, and a 3% increase in pay for administration in the last few years. Additionally, they touted as evidence a report commissioned by San Benito County that concluded that the hospital did not need to pursue bankruptcy.

A hospital spokesperson said at the time that the raises were standard and did not have bearing on the bankruptcy proceedings.  

The outcome of the December trial will be pivotal for the financial future of HHMH, the only hospital serving San Benito County. The district board and hospital administration are confident in their case.

“We feel we presented a strong case at the trial and await the judge’s decision,” said HHMH spokesperson Marcus Young in an email.

“[The] decision to go into Chapter 9 was not entered lightly. It has allowed us to improve our financial outlook, give us more time to find a partner or buyer, and is one of the main reasons that Hazel Hawkins is open and continues to deliver lifesaving care for the community every day,” he said.