Five staffing agencies contracted by Mercy Iowa City began pulling their workers from the hospital shortly after it filed for bankruptcy protection, The Gazette reported Sept. 30.
The hospital filed for Chapter 11 bankruptcy in April — in part due to challenges with staffing, according to the newspaper. These needs have worsened since the filing as agencies began retracting contract workers from the hospital, Mercy alleged in a late September petition.
"Shortly after the petition date, the staffing agencies began removing temporary staff from placement at Mercy prior to the expiration of the staff members' contracts, began refusing to provide any future staffing services to Mercy, and/or began threatening to do the same unless Mercy pays the pre-petition debts," the petition says. "The staffing agencies base their post-petition non-performance under the agreements on Mercy's non-payment of pre-petition amounts."
Mercy entered a "vendor management agreement" with Medefis in September 2021 to connect with staffing agencies for temp workers. The agencies named in the petition as having pulled workers from the hospital include Aureus Medical Group, Innovate Healthcare, StaffDNA, Travel Nurse Across America and LiquidAgents Healthcare.
The hospital alleges these agencies broke their contracts and violated bankruptcy law, which prevents anyone in contract with a debtor from terminating or changing the arrangement after a bankruptcy filing.
Mercy is asking a judge to require the agencies to return their staff for the remainder of the contract; impose sanctions in the form of punitive damages and attorney fees; credit the hospital for the time each staff member was gone from their position; and hold any agency that does not show up to court within seven days in civil contempt. The hospital also asked to be allowed to later "seek an assessment of appropriate damages for each of the staffing agencies' violations."
A judge will hold an "expedited hearing" on the matter Oct. 3.