Final Payments Expected in Health Plan of the Redwoods Bankruptcy Case
Creditors of the bankrupt HMO Health Plan of the Redwoods expect U.S. Bankruptcy Court Judge Alan Jaroslovsky this week to approve the HMO's sale of stock it holds in a real estate company, meaning that HPR will send final payments to creditors in the near future, the Santa Rosa Press Democrat reports (Rose, Santa Rosa Press Democrat, 7/12). HPR, which covered about 78,000 local residents, filed for bankruptcy protection in May 2002 and ceased operations in October 2002. About 1,300 creditors filed $60 million in claims against HPR (California Healthline, 1/26). According to the Press Democrat, Pacific Foundation for Medical Care has agreed to purchase HPR's interest in a company that owns property containing medical offices surrounding Sutter Warrack Hospital. The sale will yield a net of about $300,000 that HPR will use to pay creditors. The Press Democrat reports that in the near future HPR will send final checks totaling roughly $2 million to about 1,000 providers of medical and administrative services that contracted with the HMO. With the checks, HPR will have repaid a total of $13 million to creditors, about 45 cents per dollar owed. Initial estimates had creditors receiving between 23 cents and 37 cents per dollar. "The final distribution is certainly better than anyone anticipated," Kurt Hahn, chair of the committee that represented the creditors, said, adding, "We worked to get everybody a maximum return, but we were not about to drag it out forever either" (Santa Rosa Press Democrat, 7/12).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.