California regulators, creditors agree to non-binding mediation in clinic chain's bankruptcy case

Borrego Health officials, California regulators and creditors have agreed to non-binding mediation in the federally qualified health center's bankruptcy case, the San Diego Union-Tribune reported Nov. 11. 

Negotiations will be overseen by an independent court-appointed official, according to the report. 

"Because litigation is time-consuming and expensive, it is beneficial to both Borrego Health and our patients if we are able to sit down with DHCS in front of a judicial officer and resolve our issues quickly," a spokesperson for the Borrego Springs, Calif.-based clinic chain told the Union-Tribune

Borrego Health filed for bankruptcy Sept. 12. The bankruptcy filing came after California Department of Health Care Services officials announced a plan to suspend Medicaid reimbursements, following ongoing allegations of fraud and mismanagement at the health clinic. 

The bankruptcy filing prevented the payment suspension from taking effect. A bankruptcy judge in October blocked health officials from suspending reimbursements. Lawyers for the state have appealed that decision, but the federal district court has yet to issue a ruling, according to the report.     

Borrego Health acknowledged millions of dollars in debt in its initial bankruptcy filing, according to the report. The debts were owed to thousands of vendors, service providers and others, such as resorts, casinos, restaurants and a flower shop. Borrego Health officials said all questionable spending was made by prior executives. 

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