California hospital operator enters bankruptcy after Anthem sues

Sonoma West Medical Center, Inc., which formerly managed a hospital in Sebastopol, Calif., entered Chapter 7 bankruptcy Sept. 26, according to the Sonoma West Times & News.

Here are four things to know:

1. In September, SWMC terminated its management agreement with Palm Drive Health Care District, which owns the hospital. The healthcare district entered into a 10-year management agreement with Modesto, Calif.-based American Advanced Management Group, and the hospital changed its name to Sonoma Specialty Hospital.

2. The decision to enter bankruptcy came after Anthem and its affiliates in nine states sued SWMC and the company that managed the hospital's toxicology program June 1. The lawsuit alleges SWMC engaged in a fraudulent billing scheme.

3. Dan Smith, chairman of SWMC's board, told the Sonoma West Times & News that the bankruptcy filing basically nullifies Anthem's lawsuit against SWMC because the bankruptcy case automatically stops most collection actions against the debtor or the debtor's property.

4. Barbara Vogelsang, MSN, RN, former COO of SWMC, told the Sonoma West Times & News that the hospital predicted the bankruptcy filing and "took every measure … to ensure employee benefits were paid."

Access the full Sonoma West Times & News article here.

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