Bankrupt hospital's ER physicians aren't paid as 'critical vendors'

A Mississippi bankruptcy judge ruled earlier this month that three emergency room physicians will not be deemed "critical vendors" of bankrupt Magee, Miss.-based Pioneer Health Services, meaning the physicians' claims will not get special payment priority, according to Bloomberg BNA.

Pioneer, which owns hospitals across the Southeast, filed for Chapter 11 bankruptcy protection last spring. Nearly a year after filing its bankruptcy petition, Pioneer brought a motion requesting to pay the pre-bankruptcy debt of three ER physicians. Pioneer argued the physicians were "critical vendors" entitled to priority payment, according to the report.

On April 4, Judge Neil P. Olack of the U.S. Bankruptcy Court for the Southern District of Mississippi denied Pioneer's motion. In his opinion, the judge said he denied the motion because Pioneer failed to show the three ER physicians were irreplaceable and that they would leave Pioneer if their pre-bankruptcy claims were not paid. The court noted that the physicians could be sanctioned for threatening to leave the system because their pre-bankruptcy claims weren't paid, according to the report.

The bankruptcy court also took issue with the amount of time it took Pioneer to file its critical vendor motion. These motions are typically brought soon after the Chapter 11 petition is filed. However, Pioneer waited 10 months after the bankruptcy case was initiated to file its critical vendor motion, according to the report. 

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