Doctors' Hospital of Prince George's County, ordered to reduce its charges to patients, has filed for bankruptcy, in what the hospital owners describe as an attempt to protect it against a potential of $21 million in lost revenue.
Attorneys for the hospital filed a Chapter 11 petition in U.S. Bankruptcy Court in Baltimore Monday. Chapter 11 bankruptcy allows a corporation to continue operating while it works out plans to pay off or dispose of its debts.
Asked yesterday if the hosptial was losing money, one of its attorneys said it was in good financial shape, but wouldn't be if it had to reduce charges dramatically.
Included in the court documents are minutes from a Sept. 6 meeting in which Dr. Leon R. Levitsky, president of the small Lanham hospital, discussed filing for bankruptcy "to protect the financial liability of the corporation." According to those minutes, the hospital board unanimously approved the measure.
"The action was necessitated by the Maryland Court of Special Appeals' failure to stay an order by the Maryland Cost Review Commission . . . for alleged overcharging," hospital attorney Leonard Baxt said yesterday.
Last month, the appellate court refused to postpone a lower court's order that the hospital reduce rates to make up for $21 million in patient charges that the state regulatory agency said were excessive.
The rate case is now pending before the Maryland Court of Appeals, the state's highest court. Baxt said he expects a decision in about four months.
Baxt said if the court reverses the cost commission, the bankruptcy procedure "will no longer be necessary."
"We fully expect to prevail on the merits," Baxt said, because he believe that the hospital's rates aren't excessive.
Jay Levy, the assistant attorney general who is representing the Maryland Cost Review Commission, said the hospital was cited by the commission for charging $225 a day for a medical/surgical room -- a rate higher than other county hospitals.
Last spring, the commission determined that an appropriate room charge would be $195. But to compensate the public for the excessive charges of the past, the commission told the hospital owners the daily rate should be dropped to $145, Levy said.
Baxt said that, within a few days, a bankruptcy judge will determine what interim rates the hospital will be allowed to charge.
Until the rate and bankruptcy issues are resolved, Baxt said, the hospital will operate as usual and will continue paying normal expenses, such as staff salaries and utilities.
Last spring, Dr. William R. Greco, one of the major owners of Doctors' Hospital, was convicted on six counts of Medicaid fraud in connection with expenses charged against his Lanham nursing home. Sentenced to 18 months in jail and fined $110,000, he is currently free on bond pending appeal.