A rural Louisiana hospital that filed for bankruptcy will remain open under a debt repayment plan that won court approval late last month.
South Cameron Memorial Hospital in Cameron, La., filed for Chapter 9 bankruptcy protection in November 1999 after former Chief Executive Officer Joseph Soileau was charged with stealing more than $400,000 in hospital funds.
A federal bankruptcy judge signed off on the repayment plan after it was approved by HCFA, the hospital's largest creditor. The hospital owes the federal agency an estimated $8 million for Medicare overpayments, but it's unlikely the debt will ever be fully repaid because the hospital's assets are so small, said Arthur Vingiello, an attorney representing the South Cameron Hospital Service District, the public organization that operates the facility. Vingiello said the facility, the first municipal organization in the state to file for bankruptcy protection, has an estimated liquidation value of $160,000.
Vingiello said HCFA rejected an earlier plan that would have ended debt payments after five years. Under the approved plan, the hospital district will continue to pay HCFA indefinitely, he said, with no interest.
He said it was "common sense" for HCFA to approve the plan, which preserves the only hospital within 60 miles and serves the state's sparsest region.
"The hospital needs to stay open, and the debtor was doing what it could," he said.
Earlier this year, local voters overwhelmingly approved a lease of the hospital to a private management company and the renewal of a hospital maintenance tax to fund emergency care, said Cameron Parish District Attorney Glenn Alexander, who served as a legal adviser to the hospital district. The hospital also has a new board.
As of last week, the hospital will operate under a 10-year lease to Camelot Healthcare, a hospital and nursing home management company based in Shreveport, La. The hospital now staffs 35 acute-care beds and 15 psychiatric beds, said Richard Merk, Camelot senior vice president. Camelot will pay $180,000 annually for three years, with subsequent increases. Half of the proceeds will be used to repay HCFA and the state's Medicaid plan, with the other half going to other creditors, Vingiello said. The total amount of the hospital's debt has not been determined, Vingiello said.
Soileau, 57, is expected to go to trial early in 2001 on four felony theft counts, and a grand jury is weighing further indictments, Alexander said. Soileau is free on $100,000 bond.