Three hospitals in New Jersey are facing a challenging situation as their bankruptcy rescue plan is being contested by former owners. These hospitals, which serve a large community in Hudson County, are struggling financially and are at risk of closure.
The plan to save CarePoint Health Systems involves a financial agreement with Hudson Regional Hospital. However, the former owners argue that the deal is flawed and unfair. They claim Hudson Regional would receive over $330 million over the next ten years, along with protections from lawsuits that could help pay back creditors. Matthew Harvey, a lawyer for the former owners, expressed concerns in court, stating, “Our issue is that the plan is fatally flawed.”
The hospitals, located near Manhattan, are vital for many low-income residents. They have changed hands several times and have faced ongoing financial difficulties. Recently, Hudson Regional took over their management after a Michigan firm was involved last year.
The bankruptcy hearing, overseen by US Bankruptcy Judge J. Kate Stickles, began on Wednesday and is set to last four days. The former owners include Vivek Garipalli, who is the chairman of Clover Health Investments Corp. They allege that just before CarePoint filed for bankruptcy in November, Hudson Regional struck a deal to buy land for Christ Hospital at a significantly lower price than its market value, which they claim was $150 million. This deal, they say, unfairly excluded CarePoint and its former owners from making a bid.
In addition to the land deal concerns, the former owners highlighted mismanagement issues at CarePoint. They claimed that the hospital failed to properly follow up on medical bill collections, resulting in lost revenue. Thousands of bills were reportedly not submitted to insurance companies, leading to financial losses.
In defense of the agreement, a lawyer for Hudson Regional argued that they are the only entity willing to invest money and management expertise into reviving CarePoint. Vincent Roldan stated that the performance of the hospitals has improved since Hudson Regional took over.
The New Jersey Department of Health had previously provided over $8 million to CarePoint to help with payroll and management issues. State officials have also been monitoring the situation closely, recently instructing the hospitals to prepare a disaster plan in case they need to shut down services suddenly.
The outcome of this bankruptcy case will be crucial for the future of these hospitals and the community they serve. The hearing continues, and the judge will need to weigh the arguments from both sides before making a decision.