UMC files emergency motion to present its plan to salvage El Paso’s Children’s Hospital

Late Thursday, after several deadlines for an agreement between the El Paso Children’s Hospital and the county’s University Medical Center came and went, UMC made an emergency request to the bankruptcy court for permission to introduce its plan to reorganize the bankrupt hospital.

Bankruptcy law allows the debtor, in this case the Children’s Hospital, to be the only one to present its plan to reorganize. Because the plan was filed by deadline, bankruptcy rules award two additional months for the plan to be considered as the exclusive solution.

However, UMC attorneys reminded Judge H. Christopher Mott in a motion Thursday that Children’s is running out of money and time.

“Maintaining exclusivity will leave the Children’s Hospital no closer to a successful reorganization in sixty days. Indeed, the Debtor will have accomplished nothing but more delay, a substantial increase in professional fees, and pushing the Children’s Hospital that much closer to the brink of total failure and closure,” the motion reads.

Here’s how UMC makes its case:

The Debtor has effectively conceded that competing plans are required in this case by proposing two separate and incompatible options for reorganization: (i) “Plan A,” a “Hail Mary” premised on prevailing on every issue in its pending adversary proceedings against UMC and finding a white knight “strategic partner;” and (ii) a fallback “Plan B” in the form of Debtor’s unilateral markup of a draft offered by UMC as an exhibit to the First Termination Motion premised on forcing UMC to involuntarily contribute additional funds to pay EPCH’s creditors. Neither EPCH Plan scenario is confirmable.”

In addition, UMC argued the Texas Health and Human Services Commission objects to the plans presented by Children’s.

HHSC is investigating why Children’s reported it paid millions of dollars in rent and services to UMC and Texas Tech when in reality, the payments were not made. The reports allowed Children’s to obtain Medicaid funding. HHSC is entitled to recover any overpayments it made.

Children’s CEO Mark Herbers denied any wrongdoing and told ABC-7, “Our cost reports are filed consistent with Medicaid guidelines which matches our audit report.”

The hospitals have been engaged in vigorous negotiations this week.

The latest deadline for Children’s to accept UMC’s proposal outside of court is Friday morning.

“El Paso Children’s Hospital received a proposal from University Medical Center of El Paso this afternoon and is currently reviewing it,” said Herbers in a statement Thursday. “We will respond to University Medical Center of El Paso’s proposal by 10 a.m tomorrow. We are optimistic that it will meet with UMC’s approval and result in a timely resolution.”

As negotiations were going on, both hospitals continued filing motions Thursday to advance their case in bankruptcy court.

If the judge grants UMC’s request to terminate Children’s exclusivity period, the hospital could present its argument on Tuesday during a hearing in Austin.

“An expeditious and effective end to the Children’s Hospital’s bankruptcy case is critical to the El Paso community,” UMC’s emergency request read.