Firm to Rescind Worker Bonuses, Pay Bosses More

FPA Medical Management Inc. won’t pay promised bonuses to employees of an Orange doctors organization acquired shortly before FPA filed for bankruptcy, but executives are seeking $2.8 million in bonuses for themselves, workers said.

As many as 50 workers at Orange Coast Managed Care Services Inc., bought by FPA in March, have been told they won’t get bonuses equaling 25% of their salaries in the wake of FPA’s Chapter 11 filing, said Neri Gamble, a claims examiner. Gamble said she was promised a bonus of $5,668 if she stayed with Orange Coast through November.

Meanwhile, FPA, a San Diego-based manager of medical practices, is asking a bankruptcy judge to approve a total of $2.8 million in bonuses for its top executives.

FPA Chief Executive Stephen Dresnick stands to get a $1.1 million bonus if he stays with the company until it emerges from bankruptcy-court protection in December, court records show.

FPA officials refused to comment Thursday, but Dresnick says the financial incentives are the only way to retain executives to carry out the bankruptcy reorganization.

The argument was of little consolation to Gamble.

“I’m upset that they are taking the money they promised to the little people who do the work and are giving it to the big bosses,” Gamble said. “Five thousand dollars may not be much to some executive, but I was counting on that money to live after I left this job.”

FPA filed for Chapter 11 protection from creditors in July after a cash crunch left the company unable to pay doctors, employees and the interest on some of its bonds.

Physician-practice managers buy doctors’ practices and clinics, then oversee administrative duties and negotiate with health plans in return for a percentage of the practices’ income or a set fee.

To expedite the company’s bankruptcy reorganization, FPA filed a prepackaged reorganization plan that has major creditors’ support. The company hopes to have that plan approved by December.

In the wake of the bankruptcy filing, FPA also is refusing to pay laid-off workers at Orange Coast and other units for accrued vacation time, or to provide any severance package.

In another controversial move, the company’s directors gave raises to FPA’s three top executives five days before the company filed for bankruptcy-court protection.

Dresnick got a 70% salary hike to $850,000, according to court papers.

U.S. Bankruptcy Judge Peter Walsh is expected to decide Sept. 23 whether FPA can pay the executive bonuses.

Samuel Maizel, a Los Angeles bankruptcy attorney representing a health-care provider that had business ties to FPA, said FPA is legally justified in refusing to pay bonuses to Orange Coast workers.

“It’s incongruous, though, to pay $1 million to executives to stay around while stiffing people on $5,000 bonuses,” Maizel said. “It looks pretty cheap.”