Area Creditors Seek $650 Million in Failure of National Health Care Firm
By LAURENCE DARMIENTO
Staff Reporter
More than two dozen claimants with either headquarters or major operations in the Los Angeles area are seeking close to $650 million from National Century Financial Enterprises Inc., which is in the process of being liquidated amid questions of financial impropriety.
The claims, received April 22 in U.S. Bankruptcy Court in Columbus, Ohio, range from an unspecified amount sought by a group of Calabasas health care providers to a $600 million claim filed by Doctors Community Healthcare Corp., a Scottsdale, Ariz.-based company that owns two area hospitals.
Among the other large claims filed were $22 million by Intercare Health Systems, operator of City of Angels Medical Center in Los Angeles; $11.9 million by International Philanthropic Hospital Foundation, the non-profit operator of Granada Hills Community Hospital; and $3.3 million by Howrey Simon Arnold & White LLP, a Los Angeles law firm.
National Century was the nation’s largest health care factoring firm. It bought receivables from health care companies at a discount, providing them with a steady source of cash. Its collapse occurred after being unable to make a scheduled bond payment.
The Federal Bureau of Investigation has raided National Century’s Dublin, Ohio headquarters and is investigating.
National Century has perhaps $200 million to pay off $5.2 billion in claims. Government entities have additional time to file claims. “There is some money, but there is not a lot,” said Joe Whitalec, a National Century bankruptcy attorney.
Many of the operations financed by National Century declared bankruptcy themselves, and National Century is making its own claims in their bankruptcy cases in an attempt to maximize the amount it has available to pay its creditors as the company is liquidated.
As a factoring company, National Century holds a collateral claim to accounts receivable of the organizations it funded. “Our biggest asset is our claims against providers,” Whitalec said.
Operations facing National Century claims include City of Angels and Granada Hills hospitals, and Doctors Community, which operates Pacifica of the Valley Hospital in Sun Valley and Pine Grove Hospital in Canoga Park.
Michael Kogan, an attorney for City of Angels, said the claims and counterclaims in its case might cancel each other out, but it’s too soon to tell.
Officials with Doctors Healthcare, which has filed the largest single claim so far against National Century, did not return calls. Pacifica of the Valley is still operating, but officials at Pine Grove, a psychiatric facility, announced that facility would be closing.
Among the other local claimants are Irell & Manella LLP, a law firm seeking $150,000, and Freeman & Mills Inc., a litigation consulting firm seeking $106,000.
