Maxicare Says It Will Trim Payroll Again : Health Care: The ailing HMO is trying to emerge from Chapter 11 bankruptcy proceedings.

Embattled Maxicare Health Plans Inc., once the nation’s largest for-profit health maintenance organization, will again trim its payroll by laying off an undisclosed number of workers at its Los Angeles headquarters.

Maxicare, which at its height in the mid-1980s employed 7,000 workers and provided medical services for 2 million people in 27 states, said it decided to trim its 800-person work force to further cut costs and reorganize itself so that it can emerge from its nearly yearlong bout with Chapter 11 bankruptcy proceedings.

“The layoffs will not be inconsequential,” said Maxicare spokesman James B. Lucas, who nevertheless declined to say how many Maxicare employees might be affected. But he said senior managers as well as support staff would be laid off.

“We are continuing the decentralization of management functions at Maxicare and moving authority and accountability down to the local level as we prepare to emerge from reorganization,” Lucas said.

The decision on layoffs, which was reached in a special senior management meeting Thursday, came two days after Maxicare had formally filed a proposed plan of reorganization with the U.S. Bankruptcy Court in Santa Ana.

Maxicare, which last March filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, has proposed to distribute cash, notes and a new issue of common stock to satisfy creditor claims. The proposed layoffs, which had not been disclosed to employees, were not mentioned in the plan.

“They have an uphill battle because their name has been so badly damaged by what’s gone on,” said Randy Huyser, a health-care analyst at Montgomery Securities. “It’s a real shame that Maxicare shot itself in the foot by leveraging itself” in the mid-1980s when it got heavily into debt to buy competing health maintenance organizations.