Maxicare Will Listen to PacifiCare Buyout Plan
Managers of Maxicare Health Plans have agreed to meet today with officials of PacifiCare Health Systems Inc. to hear more about PacifiCare’s plan to make a bid for the Los Angeles-based health maintenance organization, which is now operating under federal Chapter 11 bankruptcy protection.
The meeting is to “explore their intentions,” Maxicare attorney Peter J. Wolfson said Monday during a U.S. Bankruptcy Court hearing in Santa Ana on Maxicare’s disclosure statement and plan of reorganization to emerge from Chapter 11. Although the company agreed to talk to PacifiCare, it doesn’t intend to let that delay Maxicare’s plan to emerge from Chapter 11 as soon as possible, he said.
“While we are delighted that a major competitor has the confidence in our plan to make this offer--we are flattered by that--nobody wants to see a delay in the process that we are in now,” he said.
Maxicare believes it is essential that the bankruptcy proceedings be concluded no later than June 25, Wolfson said. Maxicare, which has lost substantial membership since its March, 1989, bankruptcy court filing, is seeking to be out of bankruptcy court before the next period when major employers choose the health plans they will offer to employees. Wolfson said the HMO’s most recent figures showed about 310,000 members.
In a surprise move last week, Cypress-based PacifiCare said it would make a bid to acquire Maxicare--a move that would boost PacifiCare’s membership by about 50%--but disclosed no details of the proposed buyout. Maxicare officials said the company is not for sale. The announcement came just days before a critical phase of the bankruptcy proceedings was to begin.
In a packed courtroom, U.S. District Court Judge John J. Wilson began Monday to hear objections to Maxicare’s amended plan filed with the court. The hearing will continue May 7.
On one issue that has been plaguing Maxicare since the bankruptcy filing, Wolfson said, the company has agreed to settle with providers who are successful in getting relief from the court injunction that currently prevents providers from directly billing Maxicare members for services provided.
In connection with that issue, Maxicare agreed to provide a means for providers who think they qualify for relief from the injunction to give information to Maxicare, rather than always having to file a petition with the court, he said. “This has been one of the most vigorously negotiated provisions with our creditors committees,” he said.
If a provider manages to meet stringent conditions to get relief from the injunction, “Maxicare would simply make the payment,” Wolfson said. The reason is that employers will not tolerate their workers being sued for bills arising out of their Maxicare membership.
