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The Alabama Senate passed SB222 on Thursday, a bill allowing medical clinic boards to readjust debt under federal bankruptcy law.
The bill was introduced by Sen. Kirk Hatcher, D-Montgomery, in the wake of Jackson Hospital and Clinic in Montgomery filing for bankruptcy after defaulting on $60 million in debt in September last year.
Sen. Will Barfoot, R-District 25, presented the bill to the Senate on Thursday in Sen. Hatcher’s stead and explained why it was a necessary step in restoring Jackson Hospital to solvency.
“Currently, in our area, in Montgomery, Jackson Hospital has filed for bankruptcy. The problem with that is that the assets– Jackson Hospital basically doesn’t own any of the assets,” Barfoot explained. “There’s a medical clinic board, its a public corporation established by local government to finance, own, and lease the healthcare facilities. Under current law, medical clinic boards aren’t allowed to file for bankruptcy and, in short, what SB222 would do is grant specific authority for a medical clinic board to file bankruptcy if it leases property to a licensed acute care hospital or general healthcare provider that has filed chapter 11 bankruptcy.”
“It’s just allowing that healthcare medical clinic board the opportunity to file for bankruptcy. They hold the assets for the hospital and ultimately we hope to make sure that Jackson Hospital is again solvent and is able to operate to provide services for not only folks in Montgomery, but the tricounty area and those from outside the tricounty area that come,” Barfoot continued.
Barfoot went on to explain that the provisions of the bill in no way supersede federal bankruptcy law and, again, would simply allow medical clinic boards, like the one which owns Jackson Hospital’s assets, to restructure a healthcare facility’s debt after it files for chapter 11 bankruptcy.
Since filing for bankruptcy, Jackson Hospital has reorganized its leadership, appointing a new chief operating officer and chief information officer. Now, the hospital is looking to undergo restructuring, which could be greatly aided by SB222 if the bill ultimately passes into law.
Now that it has passed the Senate, SB222 will need to pass through the House before reaching Gov. Ivey’s desk where it could be signed into law.
