Health Care Providers, Doctors Who File Bankruptcy

When a health care provider – doctor, physician, dentist, chiropractor – declares bankruptcy there are special problems that need to be dealt with.

Congress was concerned that patients’ medical care might suffer when the health care provider has financial problems leading to bankruptcy. One of the concerns was that the healthcare provider might dispose of confidential medical records in violation of the patient confidentiality laws. Another concern was that patients might be abandoned during the process.

In response to these concerns, Congress enacted 11 USC § 333 and 11 USC § 351. Under these sections, the court must determine if a patient ombudsman is necessary to protect the interests of the patients. The court must also determine if the health care provider is handling the patients’ records properly.

If you are a health care provider and you file for bankruptcy the trustee will contact your attorney and usually request a site inspection to make these determinations.

The rules require that the trustee file a report to the Court concerning your patients’ medical records shortly after you file for bankruptcy. The time limit for the trustee to file this report is short. So there will often be a big rush to set up the site inspection.

Your attorney might call you and say “We have to set this up in the next week”. Don’t be surprised by this. It is due to the tight timeline imposed on the trustee.

At the site inspection, the trustee or his representative will want to see where you keep your records. He will check to see if they are locked up and secure. He will also want to make sure that if the patients’ (or their health insurance carriers) want their records you can get them for the patients in a timely manner.
In most cases, you will pass the site inspection.

The trustee will file a report with the court saying this and that will be the end of the issue regarding your patients’ records. If, however, the trustee concludes that you are not handling your patients’ records properly then he will ask the court to appoint an ombudsman who will take responsibility for the records.

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