A bankruptcy judge has blocked California health officials from suspending Medicaid reimbursements to Borrego Springs, Calif.-based federally qualified health center Borrego Health, the San Diego Union-Tribune reported Oct. 17.
State officials had planned to suspend reimbursement Sept. 29 after alleging ongoing fraud and mismanagement at the health clinic, according to the report. Borrego Health filed for Chapter 11 bankruptcy Sept. 12, which prevented the payment suspension from taking effect.
Borrego Health lawyers argued that axing the clinic's reimbursement would cripple the organization and threaten the quality of care it provides to more than 90,000 patients.. The bankruptcy judge agreed, ruling Oct. 11 that the state "is not pursuing a regulatory remedy to benefit the public, such as revoking debtor’s ability to operate as a healthcare provider."
The judge's ruling gives Borrego Health more time to restructure its finances, which have plummeted over the past two years amid allegations that former executives, board members and contractors fraudulently spent millions of dollars, according to the Union-Tribune.
In a separate ruling, the judge ordered state health regulators to stop directing Borrego patients to other Medicaid providers, according to the report.