The operating company of the Nye Regional Medical Center in Tonopah is poised to emerge from bankruptcy in January, according to an attorney representing the county.
County commissioners approved a settlement agreement, and a new 20-year lease agreement with a retooled Prime Care Nevada with new administrator and board, bringing almost to a close a year-long processes of untangling the financial problems with the various entities controlled by the facility’s former director, Dr. Vincent Scoccia.
“This puts the hospital in a very good position to emerge from bankruptcy and to have a sustainable future,” county attorney Talitha Gray Kozlowski said.
County Commissioner Frank Carbone said the settlement and agreement is important for not only Tonopah but the region.
“One of the biggest things is that we’ve now brought a hospital back to the area where Elko and the rest of the other communities can use this hospital,” Carbone said. “People can feel confident that they can come back and actually be taken care of properly.”
The 10-bed facility is the only hospital in a 100-mile radius of Tonopah.
The county backed a $250,000 loan during the bankruptcy, and took the steps in court to recover the hospital’s property and equipment, which had been transferred to Scoccia’s various entities.
“This has been facilitated by the county’s support,” Kozlowski said. “The bankruptcy court has been astounded by the community’s support of making sure this hospital is sustainable.”
Kozlowski told county commissioners Dec. 2 that the dramatic turnaround in the past seven months since Scoccia was removed from hospital oversight is due in large part to the support of the commission.
“When the bankruptcy case was filed … the hospital was in far worse condition than I think anyone of us had any level of expectation,” said Kozlowski of the Las Vegas-based law firm Gordon Silver. The hospital was operating without an official budget and without any financial controls.
Under the agreement approved Dec. 2, the hospital’s property and equipment will be transferred to the county, which will be transferred back to Prime Care Nevada. Prime Care will also take over the lease of the Scoccia-controlled hangar at the Tonopah Airport, which is used for life-flight services.
Additionally, $4 million in proofs of claim filed by Scoccia parties will be disallowed, as well as no money on $180,000 in claims filed by the doctor for medical services provided in May.
Scoccia had originally asked for $1 million to return the equipment and assets, according to Kozlowski, but he will instead have to return $500,000 paid back during a 10-year period.
Kozlowski said if the agreement was not approved, litigation over the various parts of the case could have cost the county at least “a couple hundred thousand” during the next few years.
Commission Chairman Dan Schinhofen said the agreement “sounds like a perfect settlement.”
Chapter 11 bankruptcy case was filed Dec. 13, 2013 with only two doctors remaining at the facility, one being Scoccia. All other health care providers had left, unwilling to provide services under Scoccia’s control, and the nonprofit status was under jeopardy for failure to comply.
Also problematic was the facility’s failure to have medication in the pharmacy, expired medication in the pharmacy, reports of falsifying records, delaying plane transports, the hospital’s Medicare and Medicaid licensing were in jeopardy, and numerous life-safety violations that had remained uncorrected.
“The community had certainly lost any confidence in the hospital and its medical services which was evident by the dramatically declining patient counts,” said Kozlowski, adding payments were going directly to Scoccia and his various entities instead of providers and hospital vendors.
Additionally, all the hospital’s assets – real property, vehicles, equipment – had been transferred into entities controlled by Scoccia, Kozlowski said.
Scoccia was removed from his role as chief executive officer in May after the county accused him of grossly mismanaging the facility and continuing to pay his own interests while other doctors and vendors went unpaid.
The Internal Revenue Service also filed a proof of claim in the amount of $416,819 as a result of unpaid payroll taxes.
“The hospital was absolutely facing closure,” she said. “If not for the bankruptcy filing, there might not have been a hospital.”