The San Francisco trustee, E. Lynn Schoenmann, says she has done her job to seize all the remaining assets to pay off the creditors of the medical center. But the trustee says she should not bear the cost or legal liability associated with storing and distributing the thousands of patient records from the shuttered clinic.
Approximately 37,000 records from the former clinic are being stored at a private facility in San Jose, and are currently not being released to patients or their physicians — a situation that could be a medical disaster. Court filings say the trustee has paid $40,000 so far to store and manage the records.
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The trustee’s motion alleges the board of directors used a seven-week lapse before the bankruptcy filing to “squander” the remaining funds to pay off employee salaries and legal costs, leaving nothing to pay for securing records. Before the bankruptcy filing, the board also used donated funds to pay for malpractice tail insurance for its former physicians.
“The (Coastside Family Medical Center) failed in their duty,” Schoenmann wrote. “Instead they have sought to foist that duty onto the Trustee, after they squandered the assets that would have … made such storage and access economically feasible.”
It is unclear what would happen to the inventory of patient records if the bankruptcy is nullified. Most if not all of the assets from the clinic have been liquidated, leaving no resources to finance distributing patient records. In her court motion, Schoenmann said the principals for the medical center “may be held liable to the extent they have breached their duty.”
The bankruptcy court will review Schoenmann’s request on July 17, after a mandatory 20-day period for objections.
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