A judge in the bankruptcy case of 139-bed Granada Hills Community Hospital, Los Angeles, has ordered the hospital's former turnaround firm, Healthcare Resource Specialists, Tampa, Fla., to disgorge $1.23 million in fees it paid itself during the eight months it managed the now-closed hospital. In issuing his order late last month, U.S. Bankruptcy Court Judge Arthur Greenwald overruled objections from the turnaround firm's parent, Bay Management Corp. Granada Hills filed for bankruptcy in 2002 following the collapse of healthcare financier National Century Financial Enterprises, Dublin, Ohio, which Granada Hills said owed it $12 million. In January, Greenwald appointed Healthcare Resource Specialists and its principal James Doulgeris to manage the hospital. Doulgeris did not return after a July vacation, and later federal investigators reported that at least $1.4 million in employee tax withholdings had not been paid to the Internal Revenue Service. Doulgeris has denied wrongdoing. At deadline, neither Doulgeris nor Bay Management officials could be reached for comment. Michael Lubic, an attorney with the Los Angeles office of Sonnenschein, Nath & Rosenthal who represents one of the creditors, said a disgorgement order against a turnaround expert is highly unusual. -- by Mark Taylor
Judge orders turnaround firm to return fees
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