Family Medical Group’s Debt May Reach $20M
The lawyer overseeing the liquidation of Family Health Care Medical Group said yesterday that the group may owe creditors up to $20 million, $14 million more than previously estimated, the Los Angeles Times reports. At a meeting with nearly 200 of FHCMG's creditors, Peter Gilhuly, a lawyer with Development Specialists Inc., said, "That's the estimate we were given by the company." The Simi Valley-based medical group folded last month, leaving the care of 135,000 patients and the businesses of 900 doctors affiliated with the group in question. Gilhuly indicated that many doctors who contracted with FHCMG want to investigate "wrongdoing" by company executives. "We're going to pursue all allegations of fraud, and hire forensic accountants to scrub all the financials. They will look at every check that has been cashed," Gilhuly said.
Because FHCMG collapsed under a state procedure known as "general assignment for the benefit of creditors," the group's creditors are likely recoup to "pennies on the dollar" for the amounts they are owed. The Times reports that as the group's overall debt increases, the amount creditors will receive decreases. FHCMG officials blamed the groups' financial demise on a "Y2K" computer error that resulted in some doctors receiving double and triple payments in the first three months of this year. Some of the money owed to debtors could come from the nearly $4 million that insurance companies owe the group and the sale of FHCMG's medical and office equipment (Talev, Los Angeles Times, 11/16).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.