Health-Care Providers Must Treat Maxicare Clients, Court Orders

Maxicare Health Plans Inc. said Monday that it obtained a federal court order barring doctors, hospitals and other health-care providers from refusing to treat Maxicare members solely because of its past due debts.

The company, which said it has resumed making payments to providers, said it acted because of scattered reports that some members had been refused treatment after Maxicare filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code last Thursday.

The court order applies to health-care providers who had contracts or agreements to treat Maxicare members. Such an order is typical in Chapter 11 cases in which companies seek to prevent suppliers of essential goods or services from shutting them down.

While Monday’s order prevents providers from dropping Maxicare members because of debts owed through last Thursday, it does not appear to prevent them from acting if the company does not pay bills on time for services rendered after the bankruptcy filing. Last week, the company promised to keep current on its debts incurred after March 16.

Payments will be sent within the next two days to contractors who provide services for a fixed monthly fee per patient, Maxicare spokeswoman Tobi Nyberg said. The company intends to begin payments later this week to other providers, including specialists who are paid on a fee-for-service basis, she said.

“These efforts demonstrate our ability to continue to provide quality medical care to our members,” Peter J. Ratican, Maxicare’s chairman and chief executive, said in a prepared statement. “We want to ensure that it is business as usual for all of our members.”

The court order, signed by U.S. District Judge John J. Wilson in Santa Ana, also prevents state regulators from seizing or interfering with the operations of Maxicare units in their states. Regulators in Illinois, Indiana and Ohio said last week that they intend to try to get the Maxicare units in those states dismissed from the bankruptcy proceedings.

Maxicare also said Monday that it is negotiating with various lenders for funds to use in its current operations. Nyberg said the amount of funding hasn’t been determined. Lenders who vetoed a $15-million loan that Maxicare was seeking from an investor in early March will not be involved in this transaction, Nyberg said. The veto by the banks holding about $150 million in Maxicare debt was the immediate reason for Maxicare’s Chapter 11 filing, according to the company’s bankruptcy attorney.

On another matter, Maxicare said Thomas A. Zimmerman, executive vice president and chief financial officer since last September, resigned. Zimmerman’s resignation was “for personal reasons” unrelated to the Chapter 11 filing, Nyberg said.

Richard Link, senior vice president for accounting, will temporarily assume day-to-day financial responsibilities, the company said. A successor to Zimmerman will be announced shortly, Maxicare said.