What's at stake:
A federal judge overruled an objection from a community advocacy organization, clearing the way for American Advanced Management, Inc. to reopen the Madera hospital.
A federal bankruptcy court judge confirmed a liquidation plan that allowed for American Advanced Management, Inc. to reopen the shuttered Madera Community Hospital, overruling an objection filed last month by a community advocacy organization.
Federal Judge Rene Lastreto said concerns about AAMI reopening the Madera hospital outlined in an objection, filed by the Madera Coalition for Community Justice, “were real and not irrational” — but they are also speculative. He added that allowing intervention now would delay a bankruptcy case that’s already dragged on for more than a year.
Tuesday’s court ruling came a little over a week after Gov. Gavin Newsom announced that state agencies had approved a $57 million loan for AAMI to reopen the Madera Hospital, and the company’s executives have outlined a plan to do so by July.
Lastreto also read into the record that Chief Executive Officer Karen Paolinelli will remain in her position, per an agreement between the hospital board and AAMI.
Before confirming the liquidation plan, Lastreto first ruled on whether MCCJ had standing before the court to raise a legal objection. Since MCCJ did not have a financial stake and is not a creditor in the bankruptcy case, Lastreto said MCCJ had no standing before the court.
However, Fresno attorney Patience Milrod, who represented the coalition, appealed to Lastreto that a financial stake is not the only thing that provides standing to file an objection in court regarding AAMI reopening the Madera hospital.
“There are lots of different kinds of harm and financial harm, I understand in this courtroom generally, that is the subject,” Milrod said in federal court Tuesday, citing federal case law. “But it’s not the only possible subject or basis for standing.”
However, Lastreto dissented, noting that creditors in a bankruptcy case of a nonprofit entity are the top priority, and MCCJ does not equate to their standing, according to federal bankruptcy case law.
“The Supreme Court has stated the traditional purpose of Chapter 11 (Bankruptcy) is to protect the interest of the debtor and its creditors, not the world at large,” Lastreto said, citing a 2008 Supreme Court bankruptcy ruling.
After ruling that MCCJ’s objection had no standing, Lastreto said he shared concern that a full acute care facility will result from AAMI taking over the Madera hospital. However, he dismissed the substance in MCCJ’s objection as conjecture and improper attacks.
The coalition has complained that AAMI is not committed to reestablishing Madera Community Hospital as a safety net medical facility in Madera County, citing as evidence that the company’s executives do not plan to restore a labor and delivery ward at the hospital.
In last month’s objection, Milrod called into question state regulators that approved AAMI’s reopening plan despite clear gaps in care, and she called on Lastreto to impose a requirement to restore safety net services at the hospital.
However, Lastreto said federal bankruptcy court is not the setting to examine those details.
“The coalition has accused whether these regulators and others have exercised due diligence, but as mentioned, this just isn’t the forum to examine that,” Lastreto said. “The court has been presented with no evidence that any actions of the regulators have been arbitrary or capricious, and therefore presumes the regulators have acted in good faith and within their statutory authorities.”
Right after Lastreto overruled the objection and confirmed the liquidation plan, he looked to the attorney representing AAMI, Hamid Rafatjoo.
“Mr. Rafatjoo, I hope your client understands that they have the future of health care in Madera County at stake,” Lastreto said.
“They do, your honor,” Rafatjoo said, “and they won’t take that lightly.”
Thank you Omar Shaikh Rashad for another excellent article on the status of the Madera Community Hospital. I have doubts that American Advanced Management, Inc. (AAMI) will be able to provide adequate medical care to serve the needs of the community, and at the same time generate adequate revenue to both run the facility, pay staff and at the same time have money to invest in needed upgrades as time goes on. From the start AAMI is not providing needed obstetric services. What other services will AAMI not be providing? In addition, AAMI has done some there is concern that AAMI will just skim the revenue and leave the facility in worse condition.