The San Benito Health Care District announced that it is planning to appeal the U.S. Bankruptcy Court’s ruling that denied the district’s Chapter 9 filing for Hazel Hawkins Memorial Hospital.
Northern District Judge Stephen L. Johnson in a March 21 ruling sided with the California Nurses Association and the National Union of Healthcare Workers, which objected to claims of financial insolvency, leading to a trial in December 2023.
The district announced its decision to appeal in a March 29 press release, saying the court “got it wrong.”
“The Court agreed that the District was projected to have less than two days’ worth of cash on hand in December 2022. The District was on the verge of shutting down. It is not clear from the Court’s ruling how a District facing closure in December can be solvent just five months later,” said HHMH CEO Mary Casillas in the release.
After initially declaring a fiscal emergency in November 2022, the district moved to file for Chapter 9 bankruptcy May 2023. The decision was made based on projections by Los Angeles-based consultant B. Riley, which determined that the hospital’s lack of substantial cash-on-hand defined it as insolvent.
The court ruled against the district saying that the district “failed to present a coherent theory to show the appropriate number of days of cash on hand” and dismissed B. Riley’s conclusion due to inconsistencies between their projections and the hospital’s financial reports.
The district said despite the ruling, the bankruptcy status had allowed it to “gain millions in cash savings and further stabilized operations.” It will also continue to pursue a partner to buy the hospital.
“The appeal will not delay the District’s transaction efforts. The District is awaiting final proposals from four potential partners or buyers, and once received, the District Board will review those proposals and make a determination based on what is in the best interest of the District, the Hospital, and the community,” the release continued.
The CNA responded to the district’s decision to appeal in its own statement.
“The bankruptcy I see is the moral bankruptcy from our CEO and our board that seems bound and determined to privatize our hospital. How many millions of dollars, including taxpayer dollars, has our CEO and the district spent on their failed bankruptcy efforts? It is time to focus on patients and community needs. It is past time that our CEO and our board listen to the community and prioritize making this hospital whole, keeping it a community asset, and ensuring our patients are getting the care they need.”said Sonia Duran, a registered nurse at HHMH in an April 3 press release.
SBHCD spokesperson Marcus Young declined to estimate how much an appeal would cost the embattled hospital.
“We cannot comment on the potential cost because it would be premature and may divulge legal strategy. While every appeal is different, it is not uncommon for appeals to take about a year,” Young said in an email on April 2.
During a regular meeting last week, the district board decided to extend the deadline for proposal submissions from potential buyers in light of the bankruptcy ruling. The deadline will extend until the end of April.
“The District is currently discussing the impact of the Bankruptcy Court’s order with its transaction partners. The District is still moving forward with a transaction process but has extended the deadline to provide offers given the ruling. We do know it will take our potential partners some time to digest the new information, and it will be up to them to decide how it impacts their offers,” Young said.
Dear Friends,
If the Supervisors’ plan is anything like the bankrupt-from-conception County transit boondoggle, then they’ll have us on a faster Road to Serfdom than they presently have us. Public sector “solutions” to insolvent business of any kind is like throwing gasoline on a fire to extinguish it. What answer do the Supervisors give to the “crucial question,” posed by the late Honorable Norman Y. Mineta, while he was still in the House of Representatives: “The crucial question in transportation today is: “What should government do, and what should it leave to others?””
Norm’s “crucial question” remains our crucial question. Just ask yourself: How high will gas taxes have to go to pay for all the radical socialist “solutions” in the public sector, e.g., COG, VTA, FAX, TAMC, SCCRTC, MTA, Caltrain, ACE Train, SMART Train, Lite Rail, BART, Amtrak, Bullet Train, etc.? My estimate published by the Editor of Gilroy Dispatch before the election in 2009, Prop. 1A, was $10/gallon. Now today I think that I was wrong: it’s going to be more like $20/gallon to get Bullet Train running. But, if we tax people out of their cars, will we return to horses, mules, jackasses? If the Supervisors were serious about helping the taxpayers, they’d put COG in Ch. 9, cancel all burdensome contracts as the Bankruptcy Code permits, spin-off the boondoggles to anyone in the private sector foolish enough to pick-up the loosing boondoggle, and then convert the case to one under Ch. 7, liquidation bankruptcy. Better to cut-off the malignant tumor than to allow it to spread throughout our body. If COG is a separate, stand-alone entity of governance, then the Supervisors ought to adopt an ordinance requiring the County to cease all participation in the unelected governance abuse at COG, where the COG “directors” govern without the consent of the voters. Caveat viator.
Joseph P. Thompson, Esq.,
408-848-5506; E-Mail: [email protected];
Past-President 1999-2001, 2006, Gilroy-Morgan Hill Bar Assn.; Past-Member, Executive Committee, SCCBA’s Debtor-Creditor-Bankruptcy Committee when my office was in San Jose; Past-Chair, Legislation Committee, Transportation Lawyers Assn., and post-doc student, transportation law & policy, Norman Y. Mineta International Institute for Transportation Policy Studies, SJSU; Transportation Research Board, Georgetown U.; and Library of Congress