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| Trustee: annul clinic bankruptcy By Mark Noack [ mark@hmbreview.com ] Published/Last Modified on Wednesday, July 1, 2009 3:15 PM PDT The court-appointed trustee for the Coastside Family Medical Center has formally objected to providing bankruptcy protections for the shuttered clinic, alleging the nonprofit’s directors filed for bankruptcy only to evade their responsibilities to secure and distribute records of abandoned patients. The trustee, E. Lynn Schoenmann of San Francisco, submitted a court motion on Friday to dismiss the Chapter 7 bankruptcy, which if affirmed by the judge, would return responsibility for distributing medical records to the former leaders of the nonprofit. Schoenmann says she has done her job to seize all the remaining assets and 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. “The bankruptcy is to liquidate what can be liquidated for the creditors,” Schoenmann said on Monday. “Patients are not creditors, and bankruptcy is not designed to dump unwanted files.” Approximately 37,000 records from the former clinic are now being stored at a private facility in San Jose, and are currently not being released to patients or their physicians — a situation that is potentially dangerous to former clinic patients. Court filings say the trustee has paid $40,000 so far to store and manage the records, which has exhausted the assets left over at the nonprofit. 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 and directors. “When they closed the medical facility they should have taken steps to deal with the medical records,” Schoenmann said. “As we looked at their financial records … it became more apparent the only reason for bankruptcy was to find a place to dump the records.” It is also unclear what would happen to the inventory of former patient records if the bankruptcy is nullified. All assets from the clinic have been liquidated, leaving no resources to finance distributing patient records. Schoenmann said if the judge dismisses the bankruptcy, all responsibilities for the medical center would be reinstated back on the board of directors and its chief executive officer. Board President Ev Ascher said Monday the nonprofit directors have not formed any specific opinion on the trustee’s motion. He said he expects the board’s bankruptcy attorney to file an objection. Calls to the board’s legal counsel were not returned in time for this story. Organizers for the Phoenix Project, a recently formed Coastside health care coalition, say they found the trustee’s arguments “cogent.” “When it did become necessary to close the clinic doors, (the board) had no plan in place for how to proceed in an orderly fashion, and everything was done in a haphazard way,” said spokesman Dr. Grant Weiss. “The biggest loser in all of this is, of course, the Coastside community. Patients still do not have access to their medical records. It is outrageous.” The bankruptcy court will review the trustee’s request on July 17, after a mandatory 20-day period for objections. |