Northern Berkshire Healthcare Files Chapter 7 Bankruptcy

Mary Beckman, chief of the AG's Non-Profit Organizations/Public Charities Division, explains some of the difficulties for emergency services in North County.

PITTSFIELD, Mass. — Northern Berkshire Healthcare filed for Chapter 7 bankruptcy Thursday morning, throwing efforts to restore emergency services in North County into uncertainty.

Judge John J. Agostini continued a temporary restraining order on North Adams Regional Hospital to restore emergency services through the auspices of Berkshire Medical Center. The restraining order is continued until a Tuesday hearing in Northampton.

Agostini's authority to continue the restraining order, however, is now called into question because of the bankruptcy filings earlier in the morning.

Attorneys representing the attorney general's office argued that the public health emergency created by the hospital closure takes precedent.

They are asking for a 90-day injunction — the amount of time required by state regulations for closing an "essential hospital service" — to allow time for alternatives to be considered.

"We are reacting to a difficult situation not of our making," said Bart Hollander, chief of the Western Massachusetts Regional Office for Attorney General Martha Coakley.

Daniel C. Cohn of Murtha Cullina LLP, representing Northern Berkshire Healthcare, said his client wanted the talks of reopening the emergency department to continue but the federal bankruptcy proceedings trumped the judge's authority. Until a federal trustee is assigned, there is no one who can make decisions regarding the hospital property.

"Really, there is nothing for this court to do," he said. "There is no one who has legal power to deal with the state's complaint."

Thursday's hearing in Berkshire Superior Court had been for an injunction to prevent the hospital from liquidating assets necessary to operate the emergency department. The temporary restraining order had been put in place last week to provide a mechanism for Berkshire Medical Center to begin the process of re-opening emergency services.

Northern Berkshire Healthcare's a sudden closure last week has complicated the process; there are also federal and state permitting processes that have to be followed.

Attorney John Rogers, representing Berkshire Health Systems, said 110 employees of NBH already have been hired.

Some electronic medical records have been integrated into the BHS system and another 10 days are expected to complete the process.

"We're concerned that a lack of certainty would impede progress," Hollander said.

Judge John J. Agostini extended the temporary restraining order although it was not clear he had authority to do so.

Berkshire Medical Center Inc., charged by the attorney general and state Department of Public Health to operate a satellite emergency service, has been in talks with the NBH leadership and DPH officials. Hollander said as earlier as 9:15 Thursday morning talks had "seemed fruitful and moving in a good direction but did not bear fruit."

The state's attorneys said they had learned Wednesday of the possibility of the bankruptcy filing, and were informed on their way to court Thursday morning.

Attorney General Martha Coakley termed the move a "surprise."

"Today's surprise bankruptcy filing by Northern Berkshire Healthcare and the North Adams Regional Hospital Board does not change our goal of ensuring access to safe emergency services for area residents. We are disappointed the board does not appear to share this same goal," she said in a statement. "We are pleased that the court extended its order through Tuesday and we will continue to work with all stakeholders with the purpose of reopening an emergency room in North Adams as soon as possible."

The hospital has previously been in Chapter 11 bankruptcy, which sets up plans for creditors to be paid off. Chapter 7 is another type of filing which allows the liquidation of assets. The restraining order requires all NBH-owned materials stay on premise.

The court also accepted intervenor status for the Massachusetts Nurses Association, representing more than 100 registered nurses at NBH, and Wells Fargo, a senior creditor. Neither the attorney general's office or BHS had issue with the either intervenor. The status of Health Care For All, an advocacy group for accessible health care, was taken under advisement.

Agostini continued the hearing, with the TRO in place, until Tuesday morning pending the appointment of a bankruptcy trustee and any agreements between the parties.

Cohn said afterward that a skeleton staff of essential personnel have been prepaid through the end of the week.  

"We are attempting to provide records, and extend whatever type of cooperation the Department of Public Health needs in order to get emergency services back on, limited, as quickly as possible," he said.

 A bankruptcy trustee would have to the authority to deal with patient records or the mortgage on the property held by the bondholders — including any leasing agreements for Berkshire Medical Center reopening the emergency room.

"We have performed our duties as best we can under the circumstances," he said.

This article was updated with Attorney General Martha Coakley's statement at 4:53 p.m.

#NBH files for Chapter 7 bankruptcy; Superior Court extends restraining order for #NARH

— iberkshires (@iberkshires) April 3, 2014

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