President – Organizing for America
Remember 1997? Balanced Budget Act of 1997- In 1997, HCA (Hospital Corporation of America) – was the LARGEST HOME HEALTH CARE Company in our country.
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.
Columbia/HCA was a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott.
Under the Balanced Budget Act of 1997- Home health - was struggling; about 1,400 agencies closed nationwide in 1998.
On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA
Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.
(Note: Rick Scott was terminated by Darla Moore, the wife of Richard Rainwater in 1997. According to Fortune Magazine, the “Toughest Babe in the Business”, Moore created the Corporate Bankruptcy Finance Tool- DIP- (Debtor in Possession), while employed at a Chase bank on Wall Street.
“They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine. “
2003-WWW.USDOJ.GOV - HCA INVESTIGATION - LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED
HCA not only robbed the country’s Medicare/Medicaid system, but the entire Healthcare system and its tentacles.
Connect- Healthcare Finance Fraud, SEC Fraud, Bankruptcy Fraud, Financial Fraud and Mortgage Fraud- all for ‘market driven healthcare’ in America?
2009 - The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals,...
In 1997, Rick Scott was terminated by Darla Moore. As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.
1997 + 5 = 2002
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
In October 2008- Leo Wise, now at the OCE ---stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.
Guess where ALL of Richard Scott's & Richard Rainwater’s Columbia/ HCA and certain subsidiaries and joint ventures were?
National Century Financial Enterprises, Inc.! (NCFE).
One prosecutor stated ‘…’NCFE- the largest corporate fraud investigations involving a privately held company and no one has ever heard of.’
NO ONE HAS EVER HEARD OF? (The largest corporate fraud investigation…)
Why is that?
Richard Rainwater was GW Bush’s ex- partner with the Rangers.
October 2008, Leo Wise now at the OCE office prosecuted the CEO and co-founder of National Century Financial Enterprises - CEO Sentenced to 30 Years in Prison
12 Executives/co-Founders already found guilty-
December 18, 2008, almost one month before GW Bush leaves office- the last person to stand trial, the ONE and ONLY acquittal- James K Happ!
Jurors stated 'PROSECUTOR DID NOT DO HIS JOB'-
Prosecutors' case fell short juror says-National Century fraud case produces 1st and only acquittal The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.
Instead, they were more a belief that federal prosecutors had not done their job, ...
"He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name...
While Richard Scott was at Columbia in 1997 - James K Happ was CFO of Columbia Homecare Group, Inc.
James K Happ, only acquittal at National Century Financial Enterprises, Inc‘s who just so happened to be the CFO of Columbia Homecare Group.
Showing posts with label BANKRUPTCY COURTS. Show all posts
Showing posts with label BANKRUPTCY COURTS. Show all posts
Wednesday, July 15, 2009
Cigna Whistleblower to Testify
http://www.pbs.org/moyers/journal/07102009/profile.html
July 10, 2009
Last month, testimony in front of the U.S. Senate Committee on Commerce, Science and Transportation by a former health insurance insider named Wendell Potter made news even before it occurred: CBS NEWS headlined: "Cigna Whistleblower to Testify." After Potter's testimony the industry scrambled to do damage control: "Insurers defend rescissions, take heat for lack of transparency."
In his first extended television interview since leaving the health insurance industry, Wendell Potter tells Bill Moyers why he left his successful career as the head of Public Relations for CIGNA, one of the nation's largest insurers, and decided to speak out against the industry. "I didn't intend to [speak out], until it became really clear to me that the industry is resorting to the same tactics they've used over the years, and particularly back in the early '90s, when they were leading the effort to kill the Clinton plan."
Potter began his trip from health care spokesperson to reform advocate while back home in Tennessee. Potter attended a "health care expedition," a makeshift health clinic set up at a fairgrounds, and he tells Bill Moyers, "It was absolutely stunning. When I walked through the fairground gates, I saw hundreds of people lined up, in the rain. It was raining that day. Lined up, waiting to get care, in animal stalls. Animal stalls."
Looking back over his long career, Potter sees an industry corrupted by Wall Street expectations and greed. According to Potter, insurers have every incentive to deny coverage — every dollar they don't pay out to a claim is a dollar they can add to their profits, and Wall Street investors demand they pay out less every year. Under these conditions, Potter says, "You don't think about individual people. You think about the numbers, and whether or not you're going to meet Wall Street's expectations."
You can view Wendel Potter's congressional testimony online or read the text.
You can learn more about Remote Area Medical, the organization that put on the "health care expedition" here.
AHIP Strategy Memos
During the interview, Bill Moyers read from confidential documents drafted by America's Health Insurance Plans (AHIP) in May and June of 2007. The documents outline a unified strategy for AHIP members to prepare for the release of Michael Moore's documentary, SICKO on June 29, 2007.
You can download and read the full AHIP documents by clicking here and here (PDFs).
Red-Flagging and Rescission
Among the other testimony heard by the Committee on Commerce, Science and Transportation was that of Robin Beaton. It reflected some of the insurance company tactics condemned by Potter.
It was a nightmare scenario. The day before she was scheduled to undergo a double mastectomy for invasive breast cancer, Robin Beaton's health insurance company informed her that she was "red flagged" and they wouldn't pay for her surgery. The hospital wanted a $30,000 deposit before they would move forward. Beaton had no choice but to forgo the life-saving surgery.
Beaton had dutifully signed up for individual insurance when she retired from nursing to start a small business. She had never missed a payment, but that didn't matter. Blue Cross cited two earlier, unrelated conditions that she hadn't reported to them when signing up — acne and a fast beating heart — and rescinded her policy.
Beaton pleaded with the company and had her doctors write letters on her behalf to no avail. It was not until Rep. Joe Barton (R-TX) personally called Blue Cross that her policy was reinstated and she could undergo surgery. In that year, Beaton's tumor doubled in size, leading to further complications necessitating the removal of her lymph glands as well.
>>Watch Robin Beaton's testimony to the House Energy and Commerce Subcommittee on Oversight and Investigations.
The practice is called "rescission" and Beaton's is not an isolated case. The House Energy and Commerce Committee found that the major private health insurers had rescinded the policies of approximately 20,000 people in a five year period, to avoid paying out approximately $300 million in benefit claims.
Appearing before the same committee, CEOs of the major health insurance companies stated that they would continue to use rescission, arguing that it is a necessary protection against fraud and abuse.
>>Watch the health care CEOs appear before the House Energy and Commerce Subcommittee on Oversight and Investigations.
Wendell Potter
Wendell Potter has served since May 2009 as the Center for Media and Democracy in Madison, Wisconsin's senior fellow on health care. After a 20-year career as a corporate public relations executive, last year he left his job as head of communications for one of the nation's largest health insurers to try his hand at helping socially responsible organizations — including those advocating for meaningful health care reform — achieve their goals.
Based in Philadelphia, Potter provides strategic communications counsel and planning services as an independent consultant. He also speaks out on both the need for a fundamental overhaul of the American health care system and on the dangers to American democracy and society of the decline of the media as watchdog, which has contributed to the growing and increasingly unchecked influence of corporate PR.
Before his switch, Potter held a variety of positions at CIGNA Corporation over 15 years, serving most recently as head of corporate communications and as the company's chief corporate spokesman.
Prior to joining CIGNA, Potter headed communications at Humana Inc., another large for-profit health insurer and was director of public relations and advertising for The Baptist Health System of East Tennessee. He also has been a partner in an Atlanta public relations firm, a press secretary to a Democratic nominee for governor of Tennessee and a lobbyist in Washington for the organizers of the 1982 World's Fair in Knoxville, Tenn.
Wendell Potter first worked as a journalist. When fresh out of college, he worked for Scripps-Howard's afternoon paper in Memphis. He wrote about Memphis businesses and local government before being sent to Nashville to cover the governor's office and state legislature. Two years later he was promoted to the Scripps-Howard News Bureau in Washington where he covered Congress, the White House and the Supreme Court and wrote a weekly political column.
Wendell Potter is a native of Tennessee and a graduate of the University of Tennessee in Knoxville where he received a B.A. degree in communications and did postgraduate work in journalism and public relations. He holds an APR, which means he is accredited in public relations by the Public Relations Society of America, and is still a dues-paying member of the Society of Professional Journalists and the National Press Club in Washington.
Guest photos by Robin Holland.
July 10, 2009
Last month, testimony in front of the U.S. Senate Committee on Commerce, Science and Transportation by a former health insurance insider named Wendell Potter made news even before it occurred: CBS NEWS headlined: "Cigna Whistleblower to Testify." After Potter's testimony the industry scrambled to do damage control: "Insurers defend rescissions, take heat for lack of transparency."
In his first extended television interview since leaving the health insurance industry, Wendell Potter tells Bill Moyers why he left his successful career as the head of Public Relations for CIGNA, one of the nation's largest insurers, and decided to speak out against the industry. "I didn't intend to [speak out], until it became really clear to me that the industry is resorting to the same tactics they've used over the years, and particularly back in the early '90s, when they were leading the effort to kill the Clinton plan."
Potter began his trip from health care spokesperson to reform advocate while back home in Tennessee. Potter attended a "health care expedition," a makeshift health clinic set up at a fairgrounds, and he tells Bill Moyers, "It was absolutely stunning. When I walked through the fairground gates, I saw hundreds of people lined up, in the rain. It was raining that day. Lined up, waiting to get care, in animal stalls. Animal stalls."
Looking back over his long career, Potter sees an industry corrupted by Wall Street expectations and greed. According to Potter, insurers have every incentive to deny coverage — every dollar they don't pay out to a claim is a dollar they can add to their profits, and Wall Street investors demand they pay out less every year. Under these conditions, Potter says, "You don't think about individual people. You think about the numbers, and whether or not you're going to meet Wall Street's expectations."
You can view Wendel Potter's congressional testimony online or read the text.
You can learn more about Remote Area Medical, the organization that put on the "health care expedition" here.
AHIP Strategy Memos
During the interview, Bill Moyers read from confidential documents drafted by America's Health Insurance Plans (AHIP) in May and June of 2007. The documents outline a unified strategy for AHIP members to prepare for the release of Michael Moore's documentary, SICKO on June 29, 2007.
You can download and read the full AHIP documents by clicking here and here (PDFs).
Red-Flagging and Rescission
Among the other testimony heard by the Committee on Commerce, Science and Transportation was that of Robin Beaton. It reflected some of the insurance company tactics condemned by Potter.
It was a nightmare scenario. The day before she was scheduled to undergo a double mastectomy for invasive breast cancer, Robin Beaton's health insurance company informed her that she was "red flagged" and they wouldn't pay for her surgery. The hospital wanted a $30,000 deposit before they would move forward. Beaton had no choice but to forgo the life-saving surgery.
Beaton had dutifully signed up for individual insurance when she retired from nursing to start a small business. She had never missed a payment, but that didn't matter. Blue Cross cited two earlier, unrelated conditions that she hadn't reported to them when signing up — acne and a fast beating heart — and rescinded her policy.
Beaton pleaded with the company and had her doctors write letters on her behalf to no avail. It was not until Rep. Joe Barton (R-TX) personally called Blue Cross that her policy was reinstated and she could undergo surgery. In that year, Beaton's tumor doubled in size, leading to further complications necessitating the removal of her lymph glands as well.
>>Watch Robin Beaton's testimony to the House Energy and Commerce Subcommittee on Oversight and Investigations.
The practice is called "rescission" and Beaton's is not an isolated case. The House Energy and Commerce Committee found that the major private health insurers had rescinded the policies of approximately 20,000 people in a five year period, to avoid paying out approximately $300 million in benefit claims.
Appearing before the same committee, CEOs of the major health insurance companies stated that they would continue to use rescission, arguing that it is a necessary protection against fraud and abuse.
>>Watch the health care CEOs appear before the House Energy and Commerce Subcommittee on Oversight and Investigations.
Wendell Potter
Wendell Potter has served since May 2009 as the Center for Media and Democracy in Madison, Wisconsin's senior fellow on health care. After a 20-year career as a corporate public relations executive, last year he left his job as head of communications for one of the nation's largest health insurers to try his hand at helping socially responsible organizations — including those advocating for meaningful health care reform — achieve their goals.
Based in Philadelphia, Potter provides strategic communications counsel and planning services as an independent consultant. He also speaks out on both the need for a fundamental overhaul of the American health care system and on the dangers to American democracy and society of the decline of the media as watchdog, which has contributed to the growing and increasingly unchecked influence of corporate PR.
Before his switch, Potter held a variety of positions at CIGNA Corporation over 15 years, serving most recently as head of corporate communications and as the company's chief corporate spokesman.
Prior to joining CIGNA, Potter headed communications at Humana Inc., another large for-profit health insurer and was director of public relations and advertising for The Baptist Health System of East Tennessee. He also has been a partner in an Atlanta public relations firm, a press secretary to a Democratic nominee for governor of Tennessee and a lobbyist in Washington for the organizers of the 1982 World's Fair in Knoxville, Tenn.
Wendell Potter first worked as a journalist. When fresh out of college, he worked for Scripps-Howard's afternoon paper in Memphis. He wrote about Memphis businesses and local government before being sent to Nashville to cover the governor's office and state legislature. Two years later he was promoted to the Scripps-Howard News Bureau in Washington where he covered Congress, the White House and the Supreme Court and wrote a weekly political column.
Wendell Potter is a native of Tennessee and a graduate of the University of Tennessee in Knoxville where he received a B.A. degree in communications and did postgraduate work in journalism and public relations. He holds an APR, which means he is accredited in public relations by the Public Relations Society of America, and is still a dues-paying member of the Society of Professional Journalists and the National Press Club in Washington.
Guest photos by Robin Holland.
Thursday, May 28, 2009
HCA International- Conservatives for Patients Rights
Conservatives for Patients' Rights commercial with the Doctor in England?
2008--- HCA International
Welcome to London's leading private hospitals- HCA International
Why we are London's No. 1 private hospital group- HCA International
� More than 3,000 top London and UK specialists in private practice- HCA International
No. 1 private hospital?- HCA International
This is what STUPID AMERICA gets:
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.
1997- As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.
1997+5 years consulting =2002
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio.
National Century Financial Enterprises
Guess where ALL of Rick Scott’s Columbia homecare units were? National Century Financial Enterprises.
Largest fraud case the FBI has ever investigated-one acquittal- James K Happ, the ex-CFO of Columbia Homecare Group, Inc.
Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"�hmm
Leo Wise , now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
"Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated. (Leo Wise )
The ONLY acquittal; James K Happ--the CFO of Columbia Homecare Group.
Leo Wise , (now at the ethics CBO) stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.
Then- low and behold: December 18, 2008 The ONLY acquittal; James K Happ!...belief that federal prosecutors had not done their job, the juror said.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Richard Rainwater, ex-partner of GW Bush with the Rangers
Leo Wise, now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio
"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.
1997 - Columbia/HCA Healthcare Corp. - the nation's largest for-profit health care company
2008--- HCA International
Welcome to London's leading private hospitals- HCA International
Why we are London's No. 1 private hospital group- HCA International
� More than 3,000 top London and UK specialists in private practice- HCA International
No. 1 private hospital?- HCA International
This is what STUPID AMERICA gets:
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.
1997- As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.
1997+5 years consulting =2002
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio.
National Century Financial Enterprises
Guess where ALL of Rick Scott’s Columbia homecare units were? National Century Financial Enterprises.
Largest fraud case the FBI has ever investigated-one acquittal- James K Happ, the ex-CFO of Columbia Homecare Group, Inc.
Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"�hmm
Leo Wise , now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
"Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated. (Leo Wise )
The ONLY acquittal; James K Happ--the CFO of Columbia Homecare Group.
Leo Wise , (now at the ethics CBO) stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.
Then- low and behold: December 18, 2008 The ONLY acquittal; James K Happ!...belief that federal prosecutors had not done their job, the juror said.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Richard Rainwater, ex-partner of GW Bush with the Rangers
Leo Wise, now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio
"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.
1997 - Columbia/HCA Healthcare Corp. - the nation's largest for-profit health care company
Saturday, October 4, 2008
The Bankruptcy Code Today...
The Bankruptcy Code Today
The present Bankruptcy Code, which became law in 1978, combines three previous reorganization chapters into one, Chapter 11. Chapter 11 is designed to be a flexible tool for the reorganization of the business and debts of corporations, partnerships and individuals. The goals of the reorganization process are many: to maintain the going concern value of the enterprise; to protect workers, their jobs and their retirement benefits; to realize greater value for creditors than a straight liquidation of assets would make possible; to avoid the ripple effects of a failed enterprise. In exchange for opening its books and records, a debtor obtains an automatic stay of any action to commence or continue civil litigation, or to collect an indebtedness, by any creditor in any court anywhere in the United States. Upon the filing of a petition, the previous entity or person becomes a new legal entity, called the debtor in possession, which is charged with fiduciary responsibility for the proper administration of the case for the benefit of creditors and equity holders. A trustee is appointed in a Chapter 11 case only if the debtor in possession is found to have engaged in fraudulent activities or gross mismanagement. The goal and purpose of the reorganization process is the filing of a plan of reorganization that will provide for the repayment of claims on a fair and equitable basis while at the same time permitting the debtor entity to continue its operations.
A reorganization plan must be accompanied by a disclosure statement that has been approved by the bankruptcy court as containing adequate information to enable a creditor to make an informed decision to vote to accept or reject the plan. As in the old composition agreements, confirmation of the plan requires that the majority in number but only two-thirds in amount of creditor claims in each impaired class must vote to accept it. If a debtor is unable to achieve the requisite number of votes to obtain acceptance of its plan by the acceptance method, it may ask the court to confirm the plan over the objections of creditors. The court must evaluate whether the plan is fair and equitable and does not discriminate unfairly with respect to each class of claims impaired under the plan. Upon confirmation of a reorganization plan, property of the estate vests in the reorganized debtor, and the plan becomes a new contract between the debtor and its creditors.
Chapter 11 reorganization has come to be seen as the vehicle of choice for addressing mass tort claims. Cases have been filed, for example, by manufacturers of asbestos-containing building materials, Agent Orange, and the Dalkon Shield birth control device. The focus of these cases was the development of a process that would permit all interested parties, including victims, lenders, debtors and shareholders, to come together to develop an equitable method of compensating victims while permitting the debtor to continue in operation. The formation of various official committees, each with its own advisers, facilitates the process.
Chapter 11 and the U.S. Catholic Church
These are the principles that have led to the filing of the diocesan reorganization cases. In each case, the bishops have cited the need for a process that permits equitable and compassionate treatment of victims while permitting the diocese to return to its role as a church. From its first pages, the disclosure statement in the Tucson case emphasizes that the purpose of the filing was to “fairly, justly, and equitably compensate the victims of sexual abuse by clergy or others associated with the Diocese and bring healing to victims, parishioners and others affected by the past acts of sexual abuse committed by clergy and others while allowing the Diocese to continue its ministry and mission.” The proposed plan provides for the creation of two trusts to be funded by settlements from insurers and the liquidation of certain diocesan assets, exclusive of parish and school property. Trustees for each of these trusts are to be given responsibility for resolving all pre-petition tort claims, investing and managing settlement funds, and making payments to holders of allowed claims.
One issue that has received much attention in these cases is whether the assets of the parishes are assets of the bankruptcy estates. While it does not define property rights, the Bankruptcy Code does prescribe which assets become property of the bankruptcy estate upon the filing of a petition for relief. Property of the estate is very broadly defined to include “all legal and equitable interests of the debtor in property as of the commencement of the case.” There are certain exceptions to this broad definition. Property of the estate does not include property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest. Pursuant to canon law, all clerics and lay persons who take part in the administration of ecclesiastical goods are bound to fulfill their functions in the name of the church according to the norms of law. But the Code of Canon Law does not specify how title to the temporal goods of the church is to be held, and the practice varies from state to state.
It has been argued that pursuant to canon law, the bishop’s interest in parish assets is a bare legal title and that parish assets are therefore not property of a diocese’s bankruptcy estate. This is far from clear, however, and trial and appeal of this issue could take years. But through the plan negotiation process, it may be possible for interested parties to agree upon an adequate amount to fund a plan in lieu of liquidating parish assets. Victims and parishes, through their representatives, may fully participate in the plan negotiation process.
Other questions have arisen about the role of the bankruptcy judge in supervising diocesan activities and the administration of diocesan assets, and whether this would impermissibly interfere with the free exercise of religion. In point of fact, the bankruptcy judge has no responsibility for case administration under the present Bankruptcy Code. That role is placed upon the trustee. While it is possible under the Bankruptcy Code for a judge to appoint an operating trustee for a nonprofit debtor in the event of gross mismanagement or fraud, it is more likely that a judge would first address specific creditor concerns through the appointment of an examiner. An examiner may be a lawyer or an accountant, but need not be, and is charged with investigating allegations concerning fraud, dishonesty, incompetence, misconduct, mismanagement or irregularities in the management of the affairs of the debtor, and with making a report of his findings to the court and other interested parties. If the report of the examiner reveals the need for the appointment of a trustee, a person is elected to serve as trustee by non-insider creditors holding allowable, undisputed, fixed and liquidated unsecured claims.
In a Chapter 11 case, however, there ordinarily is no trustee. Rather, the debtor in possession is clothed with the rights, duties and powers of a case trustee. So long as a diocese remains in possession of its property, the bishop of that diocese, together with his consultors, will continue to make decisions concerning the operation of the diocese. While a debtor may not use, sell or lease property outside the ordinary course of its business without the approval of the bankruptcy court, this approval is routinely given where there are no objections to the proposed action by affected parties. Whether in connection with obtaining confirmation of a plan or during the administrative phase of a case, the role of the bankruptcy judge is limited to deciding whether a proposed action does or does not meet the requirements of the Bankruptcy Code. In deciding that question, the judge generally has no power to compel an alternative action.
Bankruptcy law is certainly not the solution for all problems, and I am not urging a rush to the bankruptcy courts. But more Catholics need to become familiar with the reorganization process and value it for the creative solution it can provide for some very difficult problems now being faced by the church in the United States.
Jennie D. Latta is a United States bankruptcy judge for the Western District of Tennessee.
The present Bankruptcy Code, which became law in 1978, combines three previous reorganization chapters into one, Chapter 11. Chapter 11 is designed to be a flexible tool for the reorganization of the business and debts of corporations, partnerships and individuals. The goals of the reorganization process are many: to maintain the going concern value of the enterprise; to protect workers, their jobs and their retirement benefits; to realize greater value for creditors than a straight liquidation of assets would make possible; to avoid the ripple effects of a failed enterprise. In exchange for opening its books and records, a debtor obtains an automatic stay of any action to commence or continue civil litigation, or to collect an indebtedness, by any creditor in any court anywhere in the United States. Upon the filing of a petition, the previous entity or person becomes a new legal entity, called the debtor in possession, which is charged with fiduciary responsibility for the proper administration of the case for the benefit of creditors and equity holders. A trustee is appointed in a Chapter 11 case only if the debtor in possession is found to have engaged in fraudulent activities or gross mismanagement. The goal and purpose of the reorganization process is the filing of a plan of reorganization that will provide for the repayment of claims on a fair and equitable basis while at the same time permitting the debtor entity to continue its operations.
A reorganization plan must be accompanied by a disclosure statement that has been approved by the bankruptcy court as containing adequate information to enable a creditor to make an informed decision to vote to accept or reject the plan. As in the old composition agreements, confirmation of the plan requires that the majority in number but only two-thirds in amount of creditor claims in each impaired class must vote to accept it. If a debtor is unable to achieve the requisite number of votes to obtain acceptance of its plan by the acceptance method, it may ask the court to confirm the plan over the objections of creditors. The court must evaluate whether the plan is fair and equitable and does not discriminate unfairly with respect to each class of claims impaired under the plan. Upon confirmation of a reorganization plan, property of the estate vests in the reorganized debtor, and the plan becomes a new contract between the debtor and its creditors.
Chapter 11 reorganization has come to be seen as the vehicle of choice for addressing mass tort claims. Cases have been filed, for example, by manufacturers of asbestos-containing building materials, Agent Orange, and the Dalkon Shield birth control device. The focus of these cases was the development of a process that would permit all interested parties, including victims, lenders, debtors and shareholders, to come together to develop an equitable method of compensating victims while permitting the debtor to continue in operation. The formation of various official committees, each with its own advisers, facilitates the process.
Chapter 11 and the U.S. Catholic Church
These are the principles that have led to the filing of the diocesan reorganization cases. In each case, the bishops have cited the need for a process that permits equitable and compassionate treatment of victims while permitting the diocese to return to its role as a church. From its first pages, the disclosure statement in the Tucson case emphasizes that the purpose of the filing was to “fairly, justly, and equitably compensate the victims of sexual abuse by clergy or others associated with the Diocese and bring healing to victims, parishioners and others affected by the past acts of sexual abuse committed by clergy and others while allowing the Diocese to continue its ministry and mission.” The proposed plan provides for the creation of two trusts to be funded by settlements from insurers and the liquidation of certain diocesan assets, exclusive of parish and school property. Trustees for each of these trusts are to be given responsibility for resolving all pre-petition tort claims, investing and managing settlement funds, and making payments to holders of allowed claims.
One issue that has received much attention in these cases is whether the assets of the parishes are assets of the bankruptcy estates. While it does not define property rights, the Bankruptcy Code does prescribe which assets become property of the bankruptcy estate upon the filing of a petition for relief. Property of the estate is very broadly defined to include “all legal and equitable interests of the debtor in property as of the commencement of the case.” There are certain exceptions to this broad definition. Property of the estate does not include property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest. Pursuant to canon law, all clerics and lay persons who take part in the administration of ecclesiastical goods are bound to fulfill their functions in the name of the church according to the norms of law. But the Code of Canon Law does not specify how title to the temporal goods of the church is to be held, and the practice varies from state to state.
It has been argued that pursuant to canon law, the bishop’s interest in parish assets is a bare legal title and that parish assets are therefore not property of a diocese’s bankruptcy estate. This is far from clear, however, and trial and appeal of this issue could take years. But through the plan negotiation process, it may be possible for interested parties to agree upon an adequate amount to fund a plan in lieu of liquidating parish assets. Victims and parishes, through their representatives, may fully participate in the plan negotiation process.
Other questions have arisen about the role of the bankruptcy judge in supervising diocesan activities and the administration of diocesan assets, and whether this would impermissibly interfere with the free exercise of religion. In point of fact, the bankruptcy judge has no responsibility for case administration under the present Bankruptcy Code. That role is placed upon the trustee. While it is possible under the Bankruptcy Code for a judge to appoint an operating trustee for a nonprofit debtor in the event of gross mismanagement or fraud, it is more likely that a judge would first address specific creditor concerns through the appointment of an examiner. An examiner may be a lawyer or an accountant, but need not be, and is charged with investigating allegations concerning fraud, dishonesty, incompetence, misconduct, mismanagement or irregularities in the management of the affairs of the debtor, and with making a report of his findings to the court and other interested parties. If the report of the examiner reveals the need for the appointment of a trustee, a person is elected to serve as trustee by non-insider creditors holding allowable, undisputed, fixed and liquidated unsecured claims.
In a Chapter 11 case, however, there ordinarily is no trustee. Rather, the debtor in possession is clothed with the rights, duties and powers of a case trustee. So long as a diocese remains in possession of its property, the bishop of that diocese, together with his consultors, will continue to make decisions concerning the operation of the diocese. While a debtor may not use, sell or lease property outside the ordinary course of its business without the approval of the bankruptcy court, this approval is routinely given where there are no objections to the proposed action by affected parties. Whether in connection with obtaining confirmation of a plan or during the administrative phase of a case, the role of the bankruptcy judge is limited to deciding whether a proposed action does or does not meet the requirements of the Bankruptcy Code. In deciding that question, the judge generally has no power to compel an alternative action.
Bankruptcy law is certainly not the solution for all problems, and I am not urging a rush to the bankruptcy courts. But more Catholics need to become familiar with the reorganization process and value it for the creative solution it can provide for some very difficult problems now being faced by the church in the United States.
Jennie D. Latta is a United States bankruptcy judge for the Western District of Tennessee.
Saturday, June 30, 2007
Corporate bankruptcy fraud and HEALTHCARE in America
DARLA MOORE has earned the distinction as "the queen of DIP" (debtor-in-possession financing, which Moore pioneered during her highly successful tenure at Chemical Bank), "the toughest babe in business" (emblazoned on a Fortune magazine cover story
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