California hospital appeals court decision ending bankruptcy

The board overseeing Hollister, Calif.-based Hazel Hawkins Memorial Hospital is appealing a California judge's ruling that found the hospital ineligible to remain in Chapter 9 bankruptcy. 

The San Benito Health Care District, which oversees the hospital, voted in May 2023 to file for bankruptcy after declaring a fiscal emergency in November 2022. The California Nurses Association objected to the filing and noted in a hearing last year that financial cuts led to lower-quality care. The union also said the hospital was solvent and able to pay bills through the fiscal year's end in June.

The judge acknowledged the financial challenges Hazel Hawkins has faced but concluded the hospital is not insolvent. 

After reviewing the judge's decision, the San Benito Health Care District voted unanimously to appeal the ruling, according to a March 28 Hazel Hawkins news release. The board said it disagrees with the judge's reasoning for why the hospital did not meet the definition of "insolvent."

"We have made great progress since declaring a fiscal emergency in November 2022," Hazel Hawkins CEO Mary Casillas said in the release. "The court agreed that the district was projected to have less than two days' worth of cash on hand in December 2022. The district was on the verge of shutting down. It is not clear from the court's ruling how a district facing closure in December can be solvent just five months later."

The release said that regardless of the judge's ruling, the Chapter 9 filing allowed the district to "accomplish several critical objectives," including extending the runway to find potential partners and buyers, and it now has four interested parties that are presenting final proposals. The filing also allowed the hospital to keep its doors open.   

Hazel Hawkins nurses are calling for management to "focus on patient care and restore eliminated medical services and staffing, instead of directing taxpayer money toward an appeal following their failed bankruptcy case," according to an April 2 National Nurses United news release. 

The release also said nurses have "long charged that the bankruptcy filing is an effort to bust the unions who represent Hazel Hawkins workers by paving the way for a sale to a private entity."

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