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Brooklyn's Interfaith Hospital Goes Under


Posted on Dec 22, 2012

Earlier this month, Brooklyn's Interfaith Medical Center filed for bankruptcy protection, dragging approximately $200 million worth of liabilities into the public limelight.

The hospital system includes a 287-bed facility in Bedford-Stuyvesant, as well as an eight-clinic ambulatory care network in various areas of Brooklyn.

Interfaith has $142.4 million in assets and $341 million in liabilities, which means $198.6 million in total debt to state and federal governments, private creditors, and malpractice settlements and verdicts.

The hospital's largest unsecured creditor is the Centers for Medicare & Medicaid Services, which is owed $16.1 million. Also included is a nurses' pension fund for $5.4 million and a Local 1199 National Benefit Fund for $4 million. Among the largest lenders is the Dormitory Authority of the State of New York, which is owed $12.2 million. Its most recent loan to Interfaith hospital was a $2 million package in November 2011, which comes due at the start of the new year. The Dormitory Authority also has a secured $123.8 million deal for long-term debt.

The hospital also owes $9 million in medical malpractice judgments and out-of-court settlement payments of $22.5 million. Most cases involve the obstetrics and gynecology units, which are no longer in operation. The largest of these payments is a $7 million jury verdict from July. A motion for award reduction and new trial is pending.

An injured victim who suffered wrongdoing as a result of improper medical care and treatment often asks “Can I still bring a lawsuit if the hospital has filed for bankruptcy?”

The short answer is “Yes.”

There many procedural obstacles that come up when a hospital like Interfaith has declared bankruptcy.

Importantly, it is vital to know whether there is available medical malpractice insurance. If there is, then we can ask the bankruptcy court for special permission to proceed forward with a lawsuit and only seek monies that are covered by medical malpractice insurance.

If the hospital did not have private medical malpractice insurance, and was relying on a “self-insured fund” to pay out claims, then it will likely be much more challenging to recover full value for your injuries.

The reason is that the self-insured fund, if not setup correctly, will likely be considered part of the bankruptcy estate. If it's part of the bankruptcy process, that means injured victims might only receive pennies on the dollar for their injuries.

In addition, the bankruptcy process will extend the medical malpractice process by many months and possibly years.

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