San Benito Health Care District to appeal court decision

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The San Benito Health Care District unanimously agreed to appeal the recent court decision to dismiss its bankruptcy petition. The district also extended the deadline to April 22 to receive proposals to buy, lease with option to own, or manage the hospital. At the district’s March 28 board meeting, members of the public said the board should consider extending the deadline even further. 

In an order following the trial, the court “found that the district has not met its burden of proving it was eligible to be a debtor under chapter 9,”  and dismissed the case. 

However, the district disagreed.  

“We feel the court got it wrong when it tried to understand the district’s finances,” Hazel Hawkins Memorial Hospital CEO Mary Casillas said in a news release. “The fact remains that the district still requires a transaction partner to stabilize the district’s operations for long-term success.”

In regards to accepting proposals for the hospital, the district’s temporary advisory committee, consisting of Directors Jeri Hernandez and Devon Pack, recommended the deadline be extended. Hernandez said the move from April 2 to April 22 was to give Hazel Hawkins Memorial Hospital suitors more time to update proposals. She said the extension would give more time for transactions to move forward after the recent court decision and subsequent decision to appeal.

The San Benito Health Care District Board of Directors unanimously approved a deadline extension for possible hospital suitors during its March 28 meeting. Photo by Monserrat Solis.

The directors also granted the advisory committee the authority to extend beyond the April 22 deadline if needed. 

“One thing to mention is that April 22 is as close as we can get to a deadline that is still posted for public records requirements for the April 20 regular board meeting,” Pack said.

The four suitors asked for an extension, Hazel Hawkins Chief Executive Officer Mary Casillas told the board. They include American Advanced Management (AAM), Insight Foundation of America, the San Benito County Joint Powers Authority (JPA) paired with San Benito Health Alliance and Ovation Collaborative.

No additional parties with letters of intent were mentioned.

The district is waiting for an updated fair market evaluation from HealthCare Appraisals, a healthcare consulting firm, Casillas said, at the request of some of the suitors. The firm’s last appraisal stated San Benito Health Care District is worth between $55.3 million and $61.1 million, excluding liabilities.

Health care district legal counsel Heidi A. Quinn said Aug. 9 is the last day to approve a ballot measure for the Nov. 5 election. Voter approval of over 50% will be required to ratify the sale of the hospital. Quinn said board discussions on the matter should start in late May or early June to ensure ballot language is correct and to include public engagement.

Director Rick Shelton asked if the county was updating its proposal to address liabilities. Casillas said, “I believe they’re working on another proposal. I don’t know what it includes.”

Four members of the public offered comments.

Resident Mary Zanger speaks during the San Benito Health Care District March 28 meeting. Photo by Monserrat Solis.

Hollister resident Elia Salinas said she was concerned that the district was favoring the four suitors and not other agencies that might be interested in buying the hospital after the court ruled out bankruptcy. She asked the board to consider extending the deadline further to give other possible suitors time to submit a letter of intent. 

“You need to be really considerate of your position,” Salinas said. “You have the entire county residents depending on your decision and the most important decision is that this hospital does not close.”

“An additional 20 days is not going to suffice from either having these four individuals or entities saying that they need the time to go back or they have to start over again. They may actually need more time, but you’re not giving yourself an option that there is something else out there that may come forward as well.”

Follow BenitoLink’s coverage of Hazel Hawkins Memorial Hospital here.

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