MONTGOMERY, Ala. – An attorney representing Montgomery’s Jackson Hospital on Tuesday confirmed that the hospital will not close on Wednesday as it had previously warned it could.
Attorney Derek Meek said in bankruptcy court that Blue Cross Blue Shield of Alabama and the hospital are continuing to negotiate to keep the hospital open.
“No closing is scheduled for July 1 in light of the substantial progress in those negotiations, but I understand those are happening in real time and people are watching their phones, even as we speak, as those negotiations progress,” Meek said. “In any event, our cash position remains incredibly tight, and every day matters as those negotiations progress.”
Meek made the comments during a Tuesday status hearing about the hospital’s bankruptcy case and the adversary proceedings it has filed against the state’s largest insurer.
The hospital, which filed for bankruptcy last year, currently operates under a $25 million debtor-in-possession loan from Jackson Investment Group, the parent company of Georgia-based Jackson Healthcare. The board of directors previously threatened that the hospital would cease operations if a deal with the state’s largest insurer to raise reimbursement rates wasn’t reached by June 25.
It filed a motion earlier this year requesting that the court compel BCBSAL to pay Jackson what it pays nearby Baptist Medical Center South for inpatient and outpatient services. Jackson is a level-three trauma center, while Baptist South is a level one, the highest designation a hospital can get.
U.S. Bankruptcy Judge Christopher Hawkins denied that request for a preliminary injunction in mid-June.
Jackson shortly after filed a motion to reconsider on Hawkins’ memorandum, claiming that he got the facts wrong about the grants available to the hospital once it completed the complex process of “emerging” from bankruptcy.
The state of Alabama has pledged $40 million to help the hospital once it emerges. There are several conditions the hospital must meet before it can do that, including renegotiating rates with Blue Cross. Meek said on Tuesday that deal is the only condition that remains.
Hawkins in his ruling also referenced $40 million in support from the city of Montgomery and Montgomery County, but the hospital said he got this wrong.
Jackson’s attorneys explained that it has already received $25 million of this funding and that the city and would dole out the remaining $15 million in equal increments over the next three years.
Hawkins denied Jackson’s motion to reconsider during Tuesday’s hearing because the $40 million in question wouldn’t change his overall decision. He said Jackson Hospital failed to meet the four prongs necessary for a court to grant a preliminary injunction.
The decision also decried how the hospital has blamed Blue Cross for its financial woes, calling the hospital’s issues “self-harm” and its impending closure “unequivocally avoidable.”
Hawkins said on Tuesday that he was confused by Jackson’s motion because it downplayed the importance of the governmental grants.
“I think I’m getting a little bit of whiplash because if you look at the motion for a preliminary injunction, paragraph four of it puts in bold and italic with some words underlined that if you don’t raise the rates, we won’t receive funding from the state of Alabama,” Hawkins said on Tuesday. “Then the next bullet point is we’ll be forced to permanently close, and so it seemed to me that the hospital in the motion and at the hearing on the motion made the grants at least maybe not the central piece but a very important piece of the puzzle in maintaining operations.”
Attorney Joshua Iacuone said that there are “multiple pieces to the puzzle.” He said both grants and higher reimbursement rates are “necessary pieces” for the hospital to pay weekly and monthly bills and stay operational.
“I’m not saying that the hospital doesn’t need these governmental funds. They absolutely do…” Iaucone said. “The way the order read is that that $40 million is in the kitty, so to speak, to offset the operational deficit moving forward for at least a good while. So our only argument was that that’s not the case. In that of the 40 (million), 25 million has already been spent. The other 15 is earmarked for years in the future, so that does not help us from an operational standpoint moving forward.”
The two parties also agreed to a briefing schedule on Blue Cross Blue Shield of Alabama’s motion to dismiss the case. The debtors, Jackson Hospital, have to respond by July 14. BCBSAL will then have until July 21 to respond to the hospital’s response.
Hawkins also scheduled another status hearing on the bankruptcy and adversarial proceeding cases for July 27 at 10 a.m.