Bankruptcy Judge Approves Plan to Pay KPC Workers
A federal bankruptcy judge Wednesday approved a plan that will help failed KPC Medical Management cut final paychecks for its employees, the Orange County Register reports. The plan, funded by several HMOs, will allocate $3.2 million toward final paychecks for 2,600 former KPC employees and will allot an additional $1.7 million to pay 250 workers during a three-week transition period. The approved plan is an amended version of an earlier plan that would have allowed the HMOs to receive a credit of $1.50 for every dollar they paid for the payroll and transition work, with the credits going toward any debts they might owe KPC. Judge James Barr decided that the arrangement "unfairly benefited the HMOs," and lawyers for the managed care companies agreed to a $1-to-$1 credit deal. However, Barr still expressed "concern" over the modified plan because it "favors employees over other creditors" and the credit for HMOs "could eat up $5 million that might otherwise be available to pay other claims against KPC," the Register reports. But Barr indicated that "the alternative is to have no transition." Meanwhile, KPC says HMOs still owe the group nearly $11 million, while the health plans "vehemently disagree" with that figure. The issue is likely to be resolved as part of the bankruptcy case (Wolfson, Orange County Register, 11/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.