Madera hospital creditors want to be paid, including CEO. She’s asking for $200,000
Madera hospital’s creditors want to be repaid through the bankruptcy process – including the hospital’s chief executive.
Last month, the hospital’s creditors submitted to a federal bankruptcy court their plan to liquidate the hospital, which, if approved by the court, would start the process of selling off the hospital assets to pay back millions owed to the creditors.
Among the dozens of businesses, doctors and individuals who filed claims is Karen Paolinelli, Madera Community Hospital’s chief executive. Earlier this year, she filed a claim requesting payment for $200,658 in unpaid vacation time and unpaid self-funded insurance benefits.
Paolinelli, who earns an annual salary of $359,668, according to the hospital’s latest available tax records, is a key player along with the hospital board of trustees in trying to find a partner to reopen the hospital, which ceased operations and closed its doors nearly a year ago.
Paolinelli didn’t respond to multiple requests from The Fresno Bee seeking comment.
The hospital has just months to secure a reopening partner before creditors plan to vote on the liquidation plan in February. The liquidation plan filed by creditors allows for the hospital to pursue an agreement with a partner to reopen the hospital, subject to creditor and court approval.
The hospital presently has two suitors, Modesto-based American Advanced Management Inc. (AAMI) and Praise Healthcare LLC. Walter, the hospital’s lawyer, told The Bee that the board plans to select a suitor before the end of the month.
Skeleton staff
According to court filings, Paolinelli is one of five employees still collecting a paycheck during the bankruptcy proceedings. A human resources director, maintenance lead, network analyst and health information tech staff are also on the payroll.
Riley C. Walter, an attorney representing the Madera hospital in bankruptcy proceedings, declined to comment on Paolinelli’s claim, specifically, but he told The Bee this week that it’s “fairly common” for employees to file claims during a Chapter 11 bankruptcy.
“Many times, the person leading the business is just trying to keep it afloat,” Walter said, “sometimes at their own peril.”
The limit for employee claims for pre-bankruptcy wages, salaries, and vacation pay, or other unpaid benefits, which have priority over other unsecured claims, is up to $15,150 per employee, according to the City Bar Justice Center legal assistance nonprofit.
Questions remain about when and how the hospital’s 700 former employees will be repaid. They are owed an estimated $2 million, according to hospital records reviewed by The Bee in March.
Clock ticking on finding a partner
Since the Madera hospital announced its closure in late December of last year, 160,000 Madera County residents have been left without a general acute care hospital.
Last month, Adventist Health, at one time the announced would-be partner, said it was walking away from plans to take over management of the hospital because they couldn’t find a “fiscally viable solution.”
The broken deal marks the second time in a year a major hospital system has backed out of a deal with Madera. Last December, Trinity Health, owners of Fresno’s St. Agnes Medical Center, pulled out of a deal to purchase the hospital.
The committee of unsecured creditors is scheduled to vote on a liquidation plan by Feb. 13 if no other viable plan or proposed reopening partnership is submitted to the court. If approved, a hearing to consider confirmation of the liquidation plan is scheduled for Feb. 27, 2024 at 9:30 a.m.
This story was originally published December 14, 2023 at 1:52 PM.
