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January 31, 2019

Court grants Lincoln hospital right to pay wages and bills during Ch. 11 proceedings

Courtesy / Maine Hospital Association Penobscot Valley Hospital filed for Chapter 11 bankruptcy protection Tuesday morning, citing the economic blow to the area of the area's major employer, LIncoln Paper and Tissue, closing in 2015 and lack of Medicaid expansion.

Documents filed at U.S. Bankruptcy Court for the District of Maine in the Chapter 11 bankruptcy case by Penobscot Valley Hospital reveal that the Lincoln hospital owes up to $10 million to more than 1,000 potential creditors.

The top creditor is the U.S. Department of Agriculture’s Office of Rural Development, with a partially secured claim of $3.1 million. The next largest creditor is the Maine Department of Health and Human Services, which lists an unsecured claim of $2.6 million for alleged Medicaid overpayments, which court documents say are disputed by the hospital.

Machias Savings Bank is the third largest creditor, with an unsecured claim of $960,100, followed by the federal Centers for Medicare and Medicaid Services, with an unsecured claim of $628,304 for alleged Medicare overpayments that are disputed by the hospital.

In addition to the 878 creditors listed in the Jan. 29 filingBangor Daily News reported that the hospital’s lawyer, Andrew Helman of the Portland firm Murray Plumb & Murray, said that there are 154 former patients that could be owed money by the hospital.

Helman told the newspaper the hospital is still computing its total debt, but estimated that it is between $8 million and $10 million. In an order issued on Jan. 30, Judge Michael A. Fagone granted the hospital the right on an interim basis to continue paying its employees and bills, saying that “doing so is in the best interests of PVH’s estate and its creditors.”

“We are very pleased with today,” Penobscot Valley Hospital CEO Crystal Landry told the BDN. “Today is our first step toward financial stability so we can continue to provide hospital services in the Lincoln area.”

In a statement issued on Wednesday, Northern Light Health said that while Penobscot Valley Hospital is not part of its system, the two entities “have enjoyed a productive and collaborative relationship around clinical care and patient health” and it pledged to continue doing so during the Chapter 11 bankruptcy proceedings.

“As Penobscot Valley Hospital continues to make the changes necessary for financial stability, we stand ready to collaborate so as to assure the continued availability of quality health care for the people of Penobscot County,” Northern Light Health said.

Fagone ordered Penobscot Valley Hospital to provide weekly “actual to budget” reporting, beginning this week. Each weekly report would be due on the Thursday of the following week.

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