Humble (Texas) Surgical Hospital, which filed for Chapter 11 bankruptcy Feb. 24, says it will have to cease operations and lay off its 50 employees if Aetna doesn't release garnishments on its bank accounts.
Prior to Humble Surgical Hospital filing for bankruptcy, a judge ordered the hospital to pay Hartford, Conn.-based Aetna $51.4 million, including nearly $10 million in interest, in a seven-year-old court battle over the hospital's out-of-network charges. After the hospital filed its bankruptcy case, Aetna garnished Humble Surgical Hospital's bank accounts in an attempt to satisfy the judgment.
On March 1, Humble Surgical Hospital filed a motion to hold Aetna in contempt for attempting to collect. While Aetna argues it followed the court's orders regarding the garnishment of the hospital's bank accounts, Humble Surgical Hospital claims Aetna failed to comply with a federal bankruptcy rule by attempting to collect too soon.
Humble Surgical Hospital said in its March 1 motion that it has no funds to operate after Aetna garnished approximately $545,000 from its bank accounts. Without access to cash, the hospital said it will have to convert to Chapter 7 bankruptcy and cease operations, which will result in 50 employees losing their jobs.
Regions Bank is also attempting to stop Aetna's collection efforts and to intervene in Aetna's suit against Humble Surgical Hospital.
In its motion for intervention, Regions Bank argues it "has a clear interest in the funds that are the subject of the Aetna garnishments." The bank says it has a secured claim of about $3.56 million on the hospital' assets that supersedes Aetna's $51.4 million judgment.
"It is evident that if Aetna continues with collection activities on its judgment that it will be exerting control over funds in which Regions has a superior perfected security interest," according to Regions' motion. "Without the ability to appear in this matter and provide notice to Aetna and this court, Regions' ability to recover its security could be severely impaired."
Humble Surgical Hospital is currently appealing the court's $51.4 million judgment.
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