Brooklyn judge orders mediation in Interfaith bankruptcy case

Hospital closing still on hold

November 14, 2013 By Mary Frost Brooklyn Daily Eagle
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Giving a small measure of hope to advocates for Interfaith Medical Center, Chief Bankruptcy Judge Carla E. Craig on Wednesday deferred making a final determination on closing the ailing Central Brooklyn hospital, instead assigning the case to mediation.

The goal is to work out a compromise combining elements of plans submitted by Interfaith supporters, and a closure plan backed by the Dormitory Authority of the State of New York (DASNY) and the state Department of Health.

Judge Craig assigned as mediator Judge Elizabeth Stong, U.S. Bankruptcy Judge for the Eastern District of New York.

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Proposals put forward by the IM Foundation and other supporters attempt to preserve Interfaith’s 287 inpatient hospital beds, 120 of which are for psychiatric patients.

The closure plan backed by DASNY and DOH looks to shift Interfaith’s outpatient clinics and urgent care center to Kingsbrook Jewish Medical Center, but would not include the hospital’s inpatient beds. Attorneys for DASNY and DOH agencies said that the state envisioned a new model of health care emphasizing clinics over hospitals.

One possible outcome, according to Interfaith lawyers, would preserve the clinics and the urgent care center, and “repurpose” other hospital facilities with the health care needs of the community in mind.

“Everyone agrees it would be terrific if we could save Interfaith, or most of it. The problem is it requires substantial funds,” said Alan J. Lipkin, counsel for Interfaith. “The debtor [Interfaith] believes it presented to the Department of Health a viable, common sense plan, and the amount of money available then was far less than that available now. The state does not believe the plan made sense,” he said, adding that Interfaith believes that a number of alternate plans could be viable, but DASNY and DOH have refused to consider them.

Millions of dollars in funds from DASNY have been based on the closing process beginning by December 26, DASNY attorneys said, and Kingsbrook would require “ramp up time” before taking over Interfaith’s clinics.

Towards the end of the five-hour hearing, a lawyer for DASNY who had contacted Kingsbrook about the delay told the court, “We’re still scraping Kingsbrook off the ceiling; they wanted a decision today.”

Interfaith supporters argued in court that their hands had been tied by an exclusivity arrangement with DASNY and DOH. Charles E. Simpson, representing the IM Foundation, said, “It restricted who we negotiated with until July,” when a merger plan being worked on with Brooklyn Hospital Center fell through.

Judge Craig pointed out, however, that DASNY is Interfaith’s major secured creditor. “Your plan cannot be confirmed without DASNY support.” She preserved the exclusivity arrangement, saying that ending it could lead to the “loss of an orderly process going forward.”

Avram Rosen, attorney for the New York State Nurses Association (NYSNA) and 1199 SEIU healthcare workers, argued that Interfaith’s bankruptcy is “a political case,” with DOH stealthily setting health care policy while taking the official position that “they do not dictate policy, they just approve plans.”

Interfaith advocates also described billions of dollars in Medicaid funds that could be released in the future, and legal issues surrounding DOH’s entire hospital closure procedure.

Decisions in these areas may not be made for months, however, while the clock is ticking for an orderly closure of Interfaith. Noting that her court “does not set health care policy in Brooklyn,” Judge Craig said, “My job here is being concerned with the assets and liabilities of the hospital and marshalling assets for the benefit of creditors.”

Multiple parties have been ordered to the mediation table, including representatives of Interfaith, creditors, 1199 SEIU healthcare workers, the New York State Nurses Association (NYSNA), IM Foundation, DASNY, and DOH. Community groups, however, must work through one of these parties.

“We have large issues ahead of us but this is a major step in the right direction,” Diane Porter, president of the IM Foundation, said in a statement. “Tens of thousands of Brooklyn residents depend on Interfaith and another hospital closing in the borough cannot be tolerated.”

Ari Moma, a psychiatric nurse at Interfaith and a NYSNA leader, said the decision to move forward with mediation was a positive step. “We are particularly concerned about the impact of any cuts to mental health services,” he added. “The Affordable Care Act mandates insurers to treat mental health care on par with physical health so the demand for psychiatric care will soon expand. At the same time we’ve seen cuts in mental health services, with fewer in-patient psychiatric beds in Brooklyn. Interfaith is the largest private provider of psychiatric services in the borough and essential to the care of thousands of mental health patients.”

Interfaith, serving Bedford-Stuyvesant, Crown Heights and nearby neighborhoods with 11,000 inpatient visits and 250,000 outpatient visits last year, was forced to file for bankruptcy last December after the state rejected its proposed restructuring plan.

Perplexingly, many of the services that would be jettisoned under the state’s closure plan, including psychiatric inpatient beds and surgery, may be more profitable than the outpatient clinics that would be maintained. Attorneys for DOH say, however, that hospital figures don’t account for every expense of individual departments, and that walk-in clinics often drive referrals to inpatient beds.

Judge Craig has adjourned bankruptcy proceedings several times as stakeholders have worked to find a solution.

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