Powell Valley Healthcare files for Chapter 11 bankruptcy

Posted 5/16/16

The bankruptcy filing is intended as a way to deal with the litigation in an organized manner while allowing employees to focus on providing quality care for PVHC patients.

Approximately 20 lawsuits have been filed or are pending against Powell …

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Powell Valley Healthcare files for Chapter 11 bankruptcy


Bankruptcy process will help PVHC deal with lawsuits involving former orthopedic surgeon

Facing “a flood of litigation” over surgeries performed years ago by Dr. Jeffrey Hansen, the Powell Valley Healthcare Board of Directors unanimously approved filing for Chapter 11 bankruptcy on Monday.

The bankruptcy filing is intended as a way to deal with the litigation in an organized manner while allowing employees to focus on providing quality care for PVHC patients.

Approximately 20 lawsuits have been filed or are pending against Powell Valley Healthcare regarding surgeries performed by Hansen, an orthopedic surgeon who was employed by Powell Valley Healthcare from 2006-14. (See related story.)

“These lawsuits are being brought by former patients of Dr. Hansen for services rendered back in 2013 and prior years. ... The lawsuits have nothing to do with the current medical staff or care being provided by the medical staff and PVHC to its patients,” according to a prepared statement from the PVHC board.

Hansen resigned in February 2014 after being placed on suspension by the PVHC Medical Executive Committee in November 2013. Bill Patten, former chief executive officer for Powell Valley Healthcare, said then that the committee took the action “because of patient safety concerns.”

In Monday’s statement, the PVHC board said, “A Chapter 11 bankruptcy is the best available alternative to PVHC for managing and effectively dealing with these multiple lawsuits and the underlying personal injury claims.”

Planning for the bankruptcy took place in executive sessions during previous board meetings.

The lawsuits are the only reason for the board’s decision to file for Chapter 11 bankruptcy, the statement said.

“Except for the litigation arising out of alleged events from several years ago, which has caused a tremendous strain in personnel time and finances at the hospital, PVHC would not be in bankruptcy,” the statement said. “PVHC has not had creditor problems, and does not anticipate any going forward other than from the multiple litigants asserting claims arising out of care received from Dr. Hansen.”

Terry Odom, interim PVHC chief executive officer, said Powell Valley Healthcare’s gross revenue for the fiscal year to date (since July 1) is 7.2 percent higher than a year ago, and 6.5 higher than the same point in 2014.

While operating under Chapter 11, Powell Valley Healthcare will remain in control of its hospital and the day-to-day operations of Powell Valley Hospital, Powell Valley Clinic, Powell Valley Care Center and The Heartland. No layoffs or staff reductions are planned, the statement said.

According to Mike Long, PVHC’s chief financial officer, the organization paid nearly $29 million in fiscal year 2015 in salaries and benefits to its approximately 400 employees, 313 of whom work full time.

“It is expected that the patients and community which support PVHC, and which PVHC highly values, will not be impacted and should see no changes resulting from the bankruptcy,” the statement said.

“PVHC intends to retain its full staff of employees. There are no planned layoffs or staff reductions. PVHC intends to honor all its obligations to its employees and it is expected that there will be no financial impact upon the employees as a result of the Chapter 11 filing.

 “The filing of the Chapter 11 case should have little or no effect upon the day-to-day operations of PVHC,” according to the board’s statement.  

Attorney Tracy Copenhaver, who represents Powell Valley Healthcare, said Monday the PVHC board’s decision to file for Chapter 11 bankruptcy was the result of much discussion over a long period of time, and it was not made lightly.

“It’s an extremely difficult decision, but this is a very unusual situation,” he said. “Just the volume of claims necessitated that this be managed in a more controllable fashion.”

Copenhaver said a tremendous amount PVHC employees’ time and effort has gone toward compiling huge document requests and other requirements for each lawsuit.

“When you have 20 of these going on at one time, you could spend a lot of time doing nothing but litigation,” he said. “We needed to get this in an organized forum, and a bankruptcy seemed to be the best option to get this under control and manage it.”

Odom said compiling the information for the lawsuits has consumed the time equivalent of 2.5 to three full-time employees, and Powell Valley Healthcare has spent $585,000 defending litigation related to Hansen during the current fiscal year.

The bankruptcy process will stay and stop all the litigation brought against Powell Valley Healthcare until a bankruptcy court judge determines the best way to deal with the lawsuits, he said.

“While the lawsuits are stayed, the lawyers and officers of PVHC can focus all their efforts on resolving the personal injury claims without the costs and distractions of litigating all these claims,” the PHVC board’s statement said. “The Chapter 11 case will allow PVHC to propose and negotiate a plan of reorganization with the personal injury creditors and to deal with Homeland Insurance and Utah Medical Insurance, Inc. which have also filed lawsuits against PVHC.”

The insurance companies claim they have no obligation to defend or cover the many underlying lawsuits, the statement said.

Copenhaver said some of the possible ways the court could help PVHC resolve the lawsuits are (but are not limited to):

• Allow all 20 litigants to go forward and try to prove their cases, with the knowledge that the funds available to satisfy those claims are limited.

• Try to get the 20 claims settled on a specific dollar amount and set aside an account to fund that.

• Decide that none of the cases will move forward until questions about Powell Valley Healthcare’s malpractice insurance coverage are answered.

Copenhaver said the bankruptcy process “should be very helpful” for the organization’s longterm planning.

“They can plan; they can move forward now ... with planning future endeavors that before were extremely uncertain,” he said.

It will take time for the Bankruptcy Court process to be completed, but “PVHC seeks to move through the bankruptcy as quickly as possible and hopes to have it resolved in less than one year,” the statement said.

Eric Boley, president of the Wyoming Hospital Association, said he learned about the PVHC bankruptcy filing on Monday.

Boley said he’s lived and worked with hospitals in Wyoming for 23 years, and he’s never heard of a hospital in the state filing for bankruptcy in that time.

“But around the country, I have seen it,” he said.

In this case, however, “from what has been described to me, I think it’s a smart decision that really would, at this point, protect the hospital and allow them to take care of liability and the lawsuits,” Boley said.

“It would be great for Powell hospital to get out from under those ... (to) get them taken care of. It’s too bad that they’re in this situation, but from what I understand, it makes quite a bit of sense what they’re trying to do. ... To me, this actually shores up the hospital.”

Boley encouraged local residents to continue to support Powell Valley Hospital.

“I think the hospital is doing a good job,” he said. “It’s my understanding that Terry (Odom) and the board of trustees are doing all that they can to take care of this so that the hospital stays viable.

“The worst thing that could happen is if people quit supporting their local hospital.”

The 10-member Powell Valley Healthcare board is composed of seven Powell Hospital District trustees — R.J. Kost, Deb Kleinfeldt, Jim Carlson, Bonita Katz, Larry Parker, Beth Gilb and Mark Olson — plus three medical officers, Drs. Michael Tracy, Nathaniel Rieb and William Jarvis.  

The lawsuits are against Powell Valley Healthcare only and do not involve Powell Hospital District, the public entity that owns the PVHC campus and its facilities, Copenhaver said.