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Chapter 11 for Medical Professions and the Health Care Ombudsman

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If you are a health care business in Tampa Bay or are a medical professional who owns your own business in the Tampa Bay area, filing for bankruptcy can be extremely complicated. While businesses typically have the option of filing for Chapter 7 or Chapter 11 bankruptcy depending upon the business’s specific needs and circumstances, it is important to know that there are specific requirements for a health care business under the U.S. Bankruptcy Code. More specifically, Section 333 of the U.S. Bankruptcy Code requires a bankruptcy code to appoint a patient care ombudsman unless the court specifically finds that such an appointment is not necessary given the particular facts of the case.

We want to provide you with additional information about Chapter 11 bankruptcy for medical businesses and the role of the health care, or patient care, ombudsman.

Requirement of a Patient Care Ombudsman Under Section 333

When a debtor is a “health care business” according to the U.S. Bankruptcy Code, Section 333 says:

“[T]he court shall order, not later than 30 days after the commencement of the case, the appointment of an ombudsman to monitor the quality of patient care and to represent the interests of the patients of the health care business unless the court finds that the appointment of such ombudsman is not necessary for the protection of the patients under the specific facts of the case.”

When a bankruptcy court does appoint an ombudsman to monitor the quality of patient care and to represent the interests of the patients, that ombudsman must be a “disinterested person” other than the U.S. bankruptcy trustee. When the business filing for Chapter 11 bankruptcy is a health care business that provides long-term care to patients (such as a nursing home or assisted-living facility that provides services to elderly adults in the Tampa Bay area), then the bankruptcy court can appoint the State Long-Term Care Ombudsman to fill the required role of ombudsman discussed above.

Defining a Health Care Business

Which debtors count as health care businesses such that they may need to have an ombudsman appointed as part of the Chapter 11 bankruptcy case? Under the U.S. Bankruptcy Code, a health care business is defined as “any public or private entity . . . that is primarily engaged in offering to the general public facilities and services for” one of the following:

  • Diagnosis or treatment of an injury or a disease;
  • Surgical care;
  • Drug treatment;
  • Psychiatric treatment; and/or
  • Obstetric care.

A health care business can include a hospital, a hospice facility, a home health agency, and other facilities designed for diagnosing, treating, or otherwise providing medical care.

Requirements of the Patient Care Ombudsman

Under Section 333, a patient care ombudsman is tasked with the following:

  • Monitoring the quality of patient care provided by the debtor, which can include interviewing patients, physicians, and other staff members at the health care business;
  • Reporting to the court about the quality of patient care within 60 days after the date of appointment, and then in 60-day intervals following; and
  • Filing a motion with the court or a written report if there are signs that the patient is not receiving sufficient care.

A patient care ombudsman is typically necessary in a Chapter 11 bankruptcy case involving a health care business unless it is clear that the ombudsman is not necessary. According to an information sheet provided by the U.S. Department of Justice, the bankruptcy court can consider a wide variety of factors in deciding whether the ombudsman is not necessary. Those factors may include, for example, whether the health care business is currently in operation, whether the business has sufficient staff to ensure good patient care, whether the business has a history of inadequate care, the level of care needed by the patients, and the existence of internal safeguards to protect patient safety.

Contact a Tampa Bankruptcy Attorney

Do you have questions about filing for Chapter 11 bankruptcy as a health care business or medical care provider? An experienced Tampa bankruptcy attorney can speak with you about the requirement of the patient care ombudsman and how it could impact your case. Contact Tampa Law Advocates, P.A. for more information.

Resource:

law.cornell.edu/uscode/text/11/333

/recent-changes-to-bankruptcy-law-what-you-should-know-about-the-small-business-reorganization-act/

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