A federal bankruptcy judge has thrown out a petition by the beleaguered Doctors' Hospital of Prince George's County to realign its debts and stave off an $18 million reduction in patient charges ordered by the Maryland Health Services Cost Review Commission.
Holding that hospital officials had "not filed their petition in good faith," Judge James F. Schneider last Thursday dismissed the hospital's request to establish what would have amounted to a delayed debt-payment schedule to various creditors under corporate reorganization provisions of the federal bankruptcy laws, according to court observers.
Also, according to cost review commission authorities, the judge rejected the hospital's request to delay implementing lower medical and surgical charges ordered by the commission.
Hospital officials had claimed that the rate-reduction order would place the hospital in a "precarious financial condition." Cost review commission officials said today that hospital attorneys had hoped Schneider would grant the debt-reorganization petition, on the theory that it would automatically delay implementation of the lower patient charges.
Hospital attorneys could not be reached for comment, and it was not known if they plan to appeal Schneider's rulings.
The cost review commission ruled a year ago that the hospital was charging an excessive daily rate of $225.77 per patient, the highest in Prince George's County and one of the highest in the state.
It ruled that a fair rate was $198.71, but ordered the hospital to charge only $145.35 for the next 20 months to compensate for the overcharges.
Commission officials said the overcharges totaled about $18 million.
Jay E. Levy, an assistant state attorney general representing the cost review commission, said today he has "every indication" the hospital is currently charging the $198.71-a-day rate, rather than $145.35.
He said his office will seek a Baltimore City Circuit Court order later this week compelling it to charge the lower rate.
Hospital attorneys have appealed the rate reduction and asked for delays in its implementation without success in both the Baltimore court and the Maryland Court of Special Appeals.
Most recently, they sought review before the Maryland Court of Appeals, the state's highest tribunal, where the case is currently pending.
One of the hospital's principal owners, William R. Greco, was convicted of Medicaid fraud last March in connection with his job as administrator of the Magnolia Gardens Nursing Home, a retirement home adjacent to Doctors' Hospital.
He was sentenced in Baltimore Circuit Court to 18 months in prison and fined $60,000, and is free on bond pending appeal.