Judge expands control of hospital receiver
Lawyer also granted permission to quit case
The only one to show up Tuesday in Marion County District Court to speak on behalf of the owners of Hillsboro Community Hospital was Wichita lawyer Thomas Gilman, who has already asked the court’s permission to withdraw from the case.
Tuesday’s hearing was to decide on a motion to expand the powers of HCH receiver Cohesive Healthcare Management and Consulting, appointed Jan. 18. The motion, filed Feb. 13 by Bank of Hays and the city of Hillsboro, asked that Cohesive be given power to oversee the business of the hospital owner, including power to place the owner company into voluntary bankruptcy.
District judge Steven Hornbaker granted both the motion to expand Cohesive’s power and Gilman’s motions to withdraw from representing both hospital owner CAH Acquisition Co. 5 and a related company, Health Acquisition Co.
Gilman had earlier filed an answer on behalf of CAH, an appeal of the Jan. 18 ruling appointing a receiver, and a motion to intervene in the case on behalf of Health Acquisition Co., LLC. He also filed a motion in Kansas Court of Appeals asking to withdraw from representing CAH in the appeal.
Hornbaker told Gilman that his ruling allowing Gilman to withdraw is contingent upon the appellate court’s ruling on his request to withdraw.
The motion to expand Cohesive’s powers cited several re sons why the powers should be granted:
- The state threatened to revoke the hospital’s license.
- Termination of Medicare payments was threatened.
- No governing body was present to oversee hospital operations.
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- HCH’s parent company, Empower HMS, CAH Acquisitions Co. No. 5, and related companies are under criminal investigation by the Department of Justice.
- Other courts have taken action against entities related to HCH’s parent company.
Five lawyers appeared at the hearing, although there are 13 parties in the case. Bank lawyer Nicholas Zluticky, Kansas City, Missouri, did most of the talking. He told the judge Cohesive has done a good job of improving conditions at the hospital and CAH shouldn’t be allowed to use an appeal to shield themselves from expansion of Cohesive’s powers.
“We have to get the hospital stabilized,” Zluticky said.
Zluticky told the judge a buyer will be sought for HCH while it is still able to provide services and retain its standing as a critical access hospital.
“Our goal is to be able to sell this hospital as a going concern,” Zluticky said.
Hornbaker asked Gilman to tell HAC that if they do not cooperated with his order expanding Cohesive’s power, he will impose “significant sanctions.”
Hornbaker set a status hearing for May 7 to review the case.
Last modified March 7, 2019