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Bankrupt clinic chain to auction off millions in assets

Bankrupt clinic chain Borrego Health will auction off millions of dollars worth of real estate, medical equipment and other property in January, the San Diego Union-Tribune reported Dec. 24. 

Officials at the Borrego Springs, Calif.-based federally qualified health center said the auction is the best way to protect thousands of low-income and rural patients who rely on it for medical care, according to the report. 

The auction was approved by a federal bankruptcy court judge, but the move is opposed by HHS, which is concerned that property paid for by U.S. taxpayers will be included in the property set to be sold, according to the report. HHS contends that the government — not the bankruptcy estate — owns the HRSA funds, the personal property purchased with those funds and COVID-19 relief funds. 

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.

Borrego Health acknowledged millions of dollars in debt in its initial bankruptcy filing. 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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