Creditors To Vote on Health Plan of the Redwoods Liquidation Plan
About 2,000 creditors of bankrupt Health Plan of the Redwoods will receive ballots in the mail next week to vote on whether to accept a liquidation plan proposed by the health insurer, the Santa Rosa Press-Democrat reports (Rose, Santa Rosa Press-Democrat, 11/16). Faced with an $8 million budget deficit since Jan. 1, HPR filed for federal Chapter 11 bankruptcy protection on May 31. HPR officials estimate that the health insurer owes $38.7 million to creditors, which include local hospitals, physicians and other health care providers. HPR officials in August announced plans to liquidate and shut down by Oct. 31. Under the liquidation plan, HPR could pay between 23 and 37 cents per dollar owed to creditors, down from an earlier estimate of 48 to 50 cents per dollar. HPR officials attributed the reduced estimate to increases in medical costs. HPR will not determine the exact amount repaid to creditors until January, the deadline for HPR members to file medical and legal claims related to the health insurer's decision to end operations (California Healthline, 10/16). U.S. Bankruptcy Court Judge Alan Jaroslovsky on Friday approved the details of HPR's financial information that will appear in the ballots; the ballots also include letters from HPR and Kurt Hahn, chair of a 13-member committee of HPR creditors, in support of the liquidation plan. Creditors must submit the ballots by Dec. 6, and Jaroslovsky has scheduled a hearing on Dec. 13 to certify the results of the vote. Creditors, who are expected to approve the HPR liquidation plan, would not likely receive payments for up to one year (Santa Rosa Press-Democrat, 11/16).
The closure of HPR has made Health Net of California the second-largest health insurer in Sonoma County behind Kaiser Permanente. Health Net has "taken aggressive steps" to enroll a large number of former HPR members; thousands of seniors have switched to Health Net supplemental Medicare plans from MediPrime, HPR's Medicare+Choice plan, and at least 33% of the 64,000 HPR members in employer-sponsored health plans have switched to Health Net. As a result, Health Net "will easily double its size" in Sonoma County, the Press Democrat reports (Rose, Santa Rosa Press-Democrat, 11/17).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.