The Appointment of Patient Care Ombudsman
Congress added several provisions to the Bankruptcy Code in 2005 that were intended to protect patients’ interests in bankruptcies involving health care businesses by mandating that the court appoint a patient care ombudsman (“PCO”) or “patient advocate.” Such appointment is limited to debtors operating a “health care business.” Section 101(27A) of the Bankruptcy Code defines the term “health care business” as:
(27A) The term “health care business”—
(A) means any public or private entity (without regard to whether that entity is organized for profit or not for profit) that is primarily engaged in offering to the general public facilities and services for—
(i) the diagnosis or treatment of injury, deformity, or disease; and
(ii) surgical, drug treatment, psychiatric, or obstetric care; and
(I) general or specialized hospital;
(II) ancillary ambulatory, emergency, or surgical treatment facility;
(IV) home health agency; and
(V) other health care institution that is similar to an entity referred to in subclause (I), (II), (III), or (IV); and
(ii) any long-term care facility, including any—
(I) skilled nursing facility;
(II) intermediate care facility;
(III) assisted living facility;
(IV) home for the aged;
(V) domiciliary care facility; and
(VI) health care institution that is related to a facility referred to in subclause (I), (II), (III), (IV), or (V), if that institution is primarily engaged in offering room, board, laundry, or personal assistance with activities of daily living and incidentals to activities of daily living.
The role of the PCO is to monitor the quality of care provided to patients of the debtor, to the extent necessary under the circumstances, including interviewing patients and physicians. Pursuant to 11 U.S.C. § 333(a)(1) of the Bankruptcy Code, the Court must order appointment of an ombudsman “unless the court finds that the appointment of such ombudsman is not necessary for the protection of patients under the specific facts of the case.” 11 U.S.C. § 333(a)(1). In making this evaluation the Court will examine the totality of the circumstances surrounding the bankruptcy filing and the operations of the debtor. This determination will be made by analyzing the following non-exclusive list of nine salient factors:
(1) the cause of the bankruptcy;
(2) the presence and role of licensing or supervising entities;
(3) debtor’s past history of patient care;
(4) the ability of the patients to protect their rights;
(5) the level of dependency of the patients on the facility;
(6) the likelihood of tension between the interests of the patients and the debtor;
(7) the potential injury to the patients if the debtor drastically reduced its level of patient care;
(8) the presence and sufficiency of internal safeguards to ensure appropriate level of care;
(9) the impact of the cost of an ombudsman on the likelihood of a successful reorganization.
In re Alternate Family Care, 377 B.R. 754, 758 (Bankr.S.D.Fla. 2007).
Some additional factors courts have considered include: (i) the facility’s patient care is of high quality, (ii) that the debtor has adequate financial strength to maintain high-quality patient care, (iii) that the facility already has an internal ombudsman program in operation or (iv) that the situation at the facility is adequately monitored by federal, state, local or professional association programs so that the ombudsman would be redundant. 3 COLLIER ON BANKRUPTCY ¶ 333.02 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2012).
Furthermore, if a debtor does not operate any long-term care facility nor perform any onsite surgery, this will also lessen the need for the appointment of a PCO to insure continuity of day-to-day care for patients. See In re Total Woman Healthcare Ctr., 2006 WL 3708164 (Bankr. M.D. Ga. Dec. 14, 2006) (finding appointment of ombudsman unnecessary where debtor provided outpatient care at her office or performed medical procedures at area hospitals where hospital staff provided additional patient care, where no complaints had been received since bankruptcy filing, and where neither office staff nor patient scheduling had changed due to bankruptcy).