All claims have been filed and accounted for, so now doctors and other creditors in the FPA Medical Management bankruptcy case must wait to find out if they will get any of the money the troubled physician practice management company owes them.
FPA filed its creditors' list in U.S. Bankruptcy Court in Wilmington, Del., on Sept. 16, two days after the deadline for creditors to file their claims.
Chicago attorney Keith Shapiro, who represents the unsecured creditors committee, says there's no guarantee any claimants will receive the money Miami-based FPA owes them. However, they surely won't be paid back if they don't file claims, he says.
Shapiro's committee represents creditors outside of banks and other lenders.
"My phone is lit up from doctors trying to find out what is going on," he says.
The U.S. Bankruptcy Court trustee did not say how many claims had been filed against FPA and its 95 subsidiaries, which were set up to contract with physicians. All had to file separate creditors' reports.
But as of Sept. 17 Shapiro's assistants said they had received four computer-paper boxes full of names of claimants, and more were coming. At its peak, FPA had purchased the assets of 7,900 doctors and managed independent practice associations comprising 5,600 physicians.
When FPA filed for bankruptcy July 19, it listed $45.6 million in assets and $345.6 million in liabilities, including $315 million in loans from a BankBoston-led group. The total dollar amount of physician claims has not been determined.
As unsecured creditors, physicians are a low priority for repayment. That's why a few states tried to assert that their regulations on timely health plan payments to physicians superseded any Bankruptcy Court-approved plan.
However, on Sept. 3 the U.S. District Court in Wilmington dealt a blow to that effort. Federal Judge Sue Robinson refused to grant the California Department of Corporations' request for a stay on $50 million in debtor-in-possession bank financing approved by the Bankruptcy Court pending an appeal of that court's ruling.
The department argued the financing violated state law, which requires FPA's California subsidiary to maintain "independent financial integrity and viability."
The department said FPA California, which on June 4 transferred $32 million to its parent company in an apparent violation of the state's Knox-Keene Act, would again be subsidizing its parent company. On July 15, four days before FPA's bankruptcy, the Department of Corporations ordered FPA California "to cease and desist" subsidizing its parent.
Under California law, a health plan that doesn't meet solvency requirements and liquidates its assets must give first priority to providers.
However, Robinson ruled against the stay, saying California would be unlikely to win its appeal, which is pending in District Court, on the grounds that state law can't supersede federal law.
Opponents, including Shapiro's committee, argued that if the stay had been granted, FPA would have had no cash flow and would have been put out of business.
California Department of Corporations spokeswoman Julie Stewart says the department is still confident it can win its appeal.