Tower Health Under Bankruptcy Protection

The state Department of Managed Health Care filed a Chapter 11 bankruptcy petition on behalf of Tower Health. The department assumed control of the Long Beach-based HMO last month and is in the process of assigning its 100,000 enrollees to new health plans.

Tower’s largest unsecured creditor, according to the filing, is Salt Lake City-based RX America, a prescription-drug insurance broker that is owed $2.8 million. Dominating the list of creditors are 18 local hospitals, led by Pasadena-based Garfield Medical Center, which is owed $497,000. The bankruptcy filing allows regulators to challenge previous financial transactions, if warranted, said department Director Daniel Zingale.

Regulators will look closely at Tower’s decision to forgive a $19.5-million loan to one or more of its owners--brothers Dr. Robert Cohen and David Cohen and sister Susan Weinberg--and companies affiliated with Tower, said Zingale. The owners couldn’t be reached late Thursday.