MONTGOMERY, Ala. – Attorney fees and investor recoups would be prioritized over hospital operations for payment should Jackson Hospital reach a settlement in its lawsuit with Blue Cross and Blue Shield of Alabama, according to a court filing.
The Montgomery hospital filed for bankruptcy last year and has sued Blue Cross, insisting that only an increase in the insurance reimbursement rates would save the facility from closure.
But the joint prosecution agreement that lays out potential lawsuit parameters dictates that the hospital and its operations would be last in line for money from a settlement, after attorney fees and payments to investors.
Under the ” Waterfall Distribution of Litigation Proceeds,” funds would first go to repaying the legal expenses of the Jackson Investment Group, the investors that now own the facility through a debtor-in-possession loan. After that, money would trickle down to the Jackson Investment group itself to satisfy “and accrued and unpaid interest thereon as provided in this agreement.”
The hospital itself comes third, but only 70% of the remaining money would go to the Jackson Hospital Corporation for the purpose of paying out any obligations owed to JIG. The remaining 30% of the money would go to a nonprofit organization of JIG’s choosing.
Taken from court documents, this breakdown of potential litigation proceeds shows that only a fraction of winning would make it to the hospital.
The waterfall structure of distribution for theoretical court winnings is complicated and depends on the status of Jackson Hospital’s bankruptcy case, but a victory in court doesn’t necessarily mean Jackson is saved.
Despite multiple attempts, Alabama Daily News could not reach a spokesperson for Jackson Hospital on Tuesday.
U.S. Bankruptcy Judge Christopher Hawkins has scheduled a status hearing for the case for June 30 at 2:00 p.m. in Montgomery.
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