Report 2018-102 Recommendation 6 Responses
Report 2018-102: Tulare Local Healthcare District: Past Poor Decisions Contributed to the Closure of the Medical Center, and Licensing Issues May Delay Its Reopening (Release Date: October 2018)
Recommendation #6 To: Tulare Local Healthcare District
To ensure that the district budgets for all costs necessary to reopen, it should immediately include in its budget the costs to pay pre-petition debt for vendors with whom it must reestablish relationships before it can resume operations.
Annual Follow-Up Agency Response From October 2020
On September 30, 2017, the District filed a bankruptcy petition in federal court under Chapter 9 of the U.S. Bankruptcy Code. Through the bankruptcy process a plan for adjustment of debts (the "Plan") was confirmed by the Bankruptcy Court and overwhelmingly approved by required creditors of the District. The Plan took effect on October 17, 2019.
- Completion Date: October 2019
California State Auditor's Assessment of Annual Follow-Up Status: Resolved
The district has provided us its approved plan to address pre-petition debt. This resolves our concern related to this recommendation.
1-Year Agency Response
The district did not submit a one-year response for this recommendation.
- Response Date: January 2020
California State Auditor's Assessment of 1-Year Status: Pending
The district, in its 60-day and 6-month responses, states that these items were addressed prior to the issuance of the State Auditor's report, that the items are largely completed, and that budget estimates always have included costs to resolve bankruptcy debt issues with vendors needed to continue hospital operations. It further states that the actual amounts of pre-petition debt will not be established until late 2019. As the district has not yet established the amount of pre-petition debt it must address, we assess the status of the district's response as pending.
6-Month Agency Response
The 60 day response remains valid, though the completion date was extended by 2 months.
- Estimated Completion Date: December 2019
- Response Date: April 2019
California State Auditor's Assessment of 6-Month Status: Pending
The district reopened the medical center on October 15, 2018, subsequent to the issuance of our audit report on September 9, 2018. As the district states in its 60-Day response, the actual amounts of pre-petition debt are not yet established and expected to take until late 2019. Therefore, we have assessed the response as pending.
60-Day Agency Response
These items were addressed at the time of the state audit and prior to issuance of the state audit report. The hospital is open. The items largely are completed, though negotiations with some vendors continue.
Budget estimates always have included, and will continue to include, costs to resolve bankruptcy debt issues with vendors needed to continue hospital operations. However, the actual amounts of pre-petition debt will not be established until formal approval of a bankruptcy plan by the Bankruptcy Court. The District expects that process to take until late 2019.
- Estimated Completion Date: October 2019
- Response Date: December 2018
California State Auditor's Assessment of 60-Day Status: Pending
The district reopened the medical center on October 15, 2018, subsequent to the issuance of our audit report on September 9, 2018. As the district states in its response, the actual amounts of pre-petition debt are not yet established and expected to take until late 2019. Therefore, we have assessed the response as pending.
All Recommendations in 2018-102
Agency responses received are posted verbatim.