Editor’s Note: The story has been revised to update the date of the judge’s anticipated verdict. Last updated Dec. 8 at 2:05 p.m. Lea este articulo en español aquí.
A San Jose court will decide if San Benito Health Care District’s bankruptcy filing is warranted.
The district, which governs Hazel Hawkins Memorial Hospital, began its bankruptcy trial Dec. 4 in San Jose. The trial is expected to end Dec. 8 and determine whether the hospital is eligible for bankruptcy protection after the California Nurses Association opposed the filing.
Held at the U.S. Bankruptcy Court at 280 South First Street, Judge Stephen L. Johnson will make a ruling in January, health care district Spokesperson Marcus Young said.
Young believes the judge should have a decision on Jan. 14.
On Nov. 7, the San Benito County Board of Supervisors approved a contract with ECG Management Consultants, a staff report said, to initiate phase two of the Joint Powers Authority by creating a strategic plan and a financial feasibility assessment.
While Johnson weighs the case, San Benito County will have time to create a business plan, according to health care district consultant Cecilia Montalvo.
“We’ve started to see preliminary numbers,” Montalvo said. “It’s extremely doable” for the county to get involved in managing the hospital, she said Dec. 4.
The San Benito Health Care District voted unanimously on May 22 to file for Chapter 9 bankruptcy. The filing occurred May 23.
The five-day trial looks at the hospital’s Chapter 9 filing after the California Nurses Association filed a contention against the bankruptcy filing, saying the hospital’s finances do not point to financial struggle, according to court documents.
The nurses union alleges that the hospital is able to pay its current debts through June 30, 2024, court documents said. It pointed to the hospital’s monthly financial statements, its approved operating budget for the fiscal year ending in June 30, 2024, the opening of the new primary and surgical center and the state’s $10 million interest-free loan as grounds for the hospital’s ineligibility to file for bankruptcy, court documents said.
Unionized Hazel Hawkins nurses have not been shy about their disapproval of the bankruptcy filing.
In July, the nurses hosted a town hall where Mike Rabourn, who led the research on the hospital’s finances for the association, said the hospital had a “strong financial position.”
In basic terms, if the court finds that the hospital does not qualify to file for bankruptcy, the hospital would move out of the bankruptcy process, Young said.
When BenitoLink asked Young what specifically would happen to the hospital if the judge finds the hospital financially sound he said, “We can’t speculate.”
Young also could not answer if the hospital could file for bankruptcy at a later time, if the ruling favors the nurses’ union.
The bankruptcy case is helping the hospital stay open, Young clarified.
“With out it, we are not sure how long we will be able to operate at current levels,” he said.
The district currently has 40 days of cash on hand, Young states. If the district were to stop taking money from insurers, the hospital could operate for 40 days.
As of Dec. 4, the hospital has three letters of intent to bring in new management: American Advanced Management, Inc (AAM); the San Benito County’s Joint Powers Authority; and a third agency, which is still pending and not public, Young said.
He said that the hospital’s goal remains the same: to find a strategic buyer.
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