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Healthcare

Complaint Pits Forest Park Fort Worth At Odds With Founding Physician And Management Company

A complaint filed this week in federal court alleges that the management company of the luxury Forest Park Medical Center hospital chain attempted to repay a debt to a founding physician within 90 days of filing for bankruptcy, thus violating a provision that blocks any preferential payments to creditors.
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A complaint filed this week in federal court alleges that the management company of the luxury Forest Park Medical Center hospital chain attempted to repay a debt to a founding physician within 90 days of the Fort Worth facility filing for bankruptcy, thus violating a provision that blocks any preferential payments to creditors.

Forest Park Medical Center Fort Worth filed for Chapter 11 protection on January 10. Two days later, attorneys representing the hospital filed a complaint that alleges that Mary Hatcher, who is chief financial officer for the Management Company at Forest Park Medical Center, signed off on an agreement that pledged to repay $2.55 million to physician founder Wade Barker’s limited partnership (known as Jefe Plover Interests, LTD.) using some of the hospital’s assets as collateral. Hatcher signed the security agreement on Nov. 1 on behalf of the hospital, according to the filing.

It argues that this violates U.S. Bankruptcy Code section 547, which includes the so-called Preferential Payment Rule, blocking any payments to creditors within 90 days of filing for bankruptcy protection. Chapter 11 is meant to treat all the creditors the same. Hatcher, the complaint alleges, did not have permission to make such an agreement. Despite her role with the management company, Hatcher is not a manager at the Fort Worth hospital, according to the filing. And, the complaint argues, she would have to get written permission from the board of managers.to pledge more than $1 million to any entity.

In an interview over the weekend, board member Dr. Alok Chaudhari said whether Hatcher is a manager or not is irrelevant—no one has permission to pledge more than $1 million to any entity without a consenting vote from the board, which did not happen. He also said that the hospital chose to file for Chapter 11 in part to prevent any more money being drawn from it by the management company.

Todd Furniss, chairman and CEO of The Management Company of Forest Park Medical Center, refuted that allegation. Furniss said he and Hatcher have been managers of the hospital since March of last year and are the only two individuals with the authority to sign agreements on its behalf. He also questioned the validity of the filing because no money had been transferred to Barker’s limited partnership. The Texas Secretary of State lists Hatcher as the registering agent for the hospital’s LLC.

Attorneys representing the hospital, J. Robert Forshey and Jeff Prostok, did not return calls and emails.

In an interview Thursday afternoon, Darlene Rohrer, Barker’s aunt and the accountant who manages his limited partnership Jefe Plover Interests, said that Barker has provided more than $6 million to the hospital in both equity payments and loans since November 2014. An attached exhibit shows that Barker lent the hospital the $2.55 million in the first four months of 2014. Barker is one of the original four founding physicians of the luxury Forest Park chain. Rohrer says he paid equity portions for the Fort Worth hospital on behalf of two others who reneged: Dr. Richard Toussaint, a founding physician who has been indicted on 17 counts of healthcare fraud, and Wilton “Mac” Burt, the original head of the management company who was bought out last year.

Then, when the hospital opened without a revolving loan, Barker stepped forward in providing capital for operational expenses, Furniss said. Rohrer said that she attempted to get a promissory note from the Fort Worth hospital to repay these loans, but its managers would never sign it. Dr. Abdolreza Siadati, who is listed as the chairman of the board of managers in the bankruptcy filing, was out of the country Thursday and unavailable for comment.

“They delayed and delayed and delayed,” Rohrer says. “They weren’t happy with the interest rate, it was one thing after another. But we initiated and provided to them the documentation necessary for a secured promissory note and security interest. They continued to refuse to sign it. At that point in time, Ms. Hatcher had a signature authority as a managing member. She signed that.”

Rohrer says she then entered a UCC filing with the Texas Secretary of State to protect the note. And that’s where the hospital and Barker are at odds: The complaint alleges that Hatcher did not have the authority to make such a decision.

“Mary Hatcher is neither the manager nor the managing member of the Hospital and had no authority to execute the Security Agreement or otherwise pledge or encumber the Hospital’s assets, including the Accounts,” the complaint reads. “Under the terms of the applicable agreements, a pledge of the Hospital’s Accounts to secure a debt in excess of $1.0 million must be authorized in writing by the Hospital’s Board of Managers.”

Furniss disputes this assertion.

“The hospital has just a few people who are authorized to sign on its behalf. There are only two of them. Mary is one. And I’m the other,” he said. “There’s nobody else to sign to reflect the obligation on the part of the hospital. So the assertion that there’s no authorization is nonsensical.”

As of the bankruptcy filing on January 10, Barker has not been paid any money, Furniss said.

Barker has been an ATM of sorts for the crumbling chain. He says he’s provided “around $20 million” to Fort Worth and the other campuses when they could not secure working capital. Since its Dallas hospital opened in 2009, Forest Park is in shambles. Its Dallas and San Antonio facilities have shuttered, its Frisco hospital is operating on Chapter 11 protection, and its Austin hospital never opened. Except for Southlake, all the related companies that own the real estate for each hospital have filed for bankruptcy. Fort Worth and Frisco are the only two facilities where its associated operating company has filed for Chapter 11 protection.

“I’m just trying to make this work and people weren’t going to make payroll, weren’t going to be able to pay the light bill and I just kept giving,” Barker said in a phone interview Thursday afternoon. “Once you get down that road you gotta believe in what you believe in. And I believe in Todd and Mary.”

According to the bankruptcy petition, Forest Park Medical Center at Fort Worth has between $50 million and $100 million in debt. It has an estimated number of creditors of no less than 200 and no more than 999. It has assets valued at $10 million to $50 million. In a bankruptcy, all those creditors are treated the same. The assets are frozen as it makes it way through the courts. None of those creditors are allowed to be paid out within 90 days of the bankruptcy and that date jumps to a year if the creditor is deemed by the court to be an “insider,” according to federal bankruptcy law.

“We do not agree specifically with their conditions, nonetheless we are not going to do anything that will impede their attempt at a Chapter 11,” Rohrer said. “It would not be to (Barker’s) benefit or the organization’s.”

Asked if she would support being shifted to an unsecured creditor and repaid through the bankruptcy process, Rohrer said “we would not be in favor of that.”

“He forwarded the money in good faith and he has yet to see a payment,” she said. “And it’s a total that is well in excess of $6 million.”

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