MedPartners’ Interim Pact Expires Today

Some action is expected today in the state’s negotiations with MedPartners Inc., the Alabama-based physician practice management company whose California health plan was seized and forced into bankruptcy in March by the Department of Corporations.

An interim agreement, under which the state returned the assets and some control to MedPartners in exchange for the company’s promise to pay its bills, is set to expire today.

The company has been pushing for a final settlement because if the interim deal is allowed to lapse and the state regains control, MedPartners could be forced into technical default on hundreds of millions of dollars worth of bonds.

The company has consistently denied that it would be in default under such a scenario but has nonetheless pressed state officials to settle before the interim agreement expires.

In the negotiations, MedPartners is fighting to regain permanent control of its assets and the right to represent itself in the bankruptcy proceedings. Under the temporary agreement, the company does have those rights, but they will revert to the state as of today unless a further accommodation is reached.

For its part, the state is seeking assurance that MedPartners will pay the more than $100 million owed hospitals and doctors by the health plan and that the company will pay all of the bills associated with health clinics it owns in the state.

The California Medical Assn., which represents medical specialists owed money by MedPartners, has expressed concern over the talks, saying that MedPartners has not lived up to its promise to pay doctors. The company says it is not behind in payments.