Grassley Continues Effort to Reform Bankruptcy Code

Grassley Continues Effort to Reform Bankruptcy Code

- Sen. Chuck Grassley today introduced bi-partisan legislation to protect patients when health care providers declare bankruptcy. The initiative is part of Grassley's effort to achieve an overhaul of the federal bankruptcy code.

"Right now, the bankruptcy code does a good job of helping debtors reorganize and creditors recover losses. My bill would make sure the bankruptcy courts also look out for patients' interests. It would require bankruptcy judges to appoint patient ombudsmen, and it would require bankruptcy trustees to make sure patients get transferred to other facilities when health care providers are closed down," Grassley said.

The legislation introduced today would:

• Provide specific guidance to trustees who may not be aware of state law requirements for maintaining patient records and/or the confidentiality issues associated with those records.
• Bring costs associated with closing a health care business into the category for administrative expenses of the bankruptcy code. This would include any expenses incurred by disposing of patient records and transferring patients to another health care facility. This creates an incentive for state agencies to intervene during bankruptcy proceedings on behalf of patients.
• Provide for an ombudsman to act as an advocate for the patient. This is aimed at balancing the interests between the creditor and the patient. Grassley said these interest need balancing because the court-appointed professionals owe fiduciary duties to creditors and the estate but not necessarily to the patients. "The provision will help ensure continued quality of care for patients," Grassley said.
• Require a bankruptcy trustee to use reasonable and best efforts to transfer patients when a health care business closes.

Grassley introduced this health care bankruptcy bill with Sen. Robert Torricelli of New Jersey. The two senators also have advanced legislation to reform the consumer bankruptcy code. This legislation is currently under consideration by the Senate Judiciary Committee. The bill is aimed at reducing the number of bankruptcies filed each year. It is estimated that the bankruptcies in the United States will reach an all-time high in 1999, for the fourth year in a row.

Grassley said the he hopes to combine the two initiatives during full Senate consideration of bankruptcy reform later this spring. Grassley is chairman of the Judiciary subcommittee with jurisdiction over bankruptcy policy. Torricelli is the subcommittee's ranking member. Grassley held a hearing on his health care bankruptcy reform provisions in June 1998.