Case Document 235 Filed in TXSB on 04/14/15 Page 1 of 5

Transcription

1 Case Document 235 Filed in TXSB on 04/14/15 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: UNIVERSITY GENERAL HEALTH SYSTEM, INC., et al., Debtors. 1 Chapter 11 Case No Jointly Administered MOTION TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS OF UGHS AUTIMIS BILLINC, INC. AND UGHS AUTIMIS CODING, INC. TO SYSINFORMATION HEALTHCARE SERVICES LLC D/B/A EQUALIZERCM A HEARING WILL BE CONDUCTED ON THIS MATTER ON MAY 11, 2015, at 1:00 P.M. CT IN COURTROOM 401, 4 th FLOOR, 515 RUSK, HOUSTON, TEXAS THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 23 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: University General Health System, Inc. (2436), UGHS Autimis Billing, Inc. (3352), UGHS Autimis Coding (3425), UGHS ER Services, Inc. (6646), UGHS Hospitals, Inc. (3583), UGHS Management Services, Inc. (4100), UGHS Support Services, Inc. (3511), University General Hospital, LP (7964), and University Hospital Systems, LLP (3778).

2 Case Document 235 Filed in TXSB on 04/14/15 Page 2 of 5 UGHS Autimis Billing, Inc. and UGHS Autimis Coding, Inc. (collectively, Autimis ), two of the Debtors in this jointly administered case, file this Motion to Assume and Assign Certain Executory Contracts to SysInformation Healthcare Services, LLC d/b/a EqualizeRCM (the Motion ). JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion under 28 U.S.C. 157 and This is a core proceeding under 28 U.S.C. 157(b). Venue of these cases and this Motion in this District is proper under 28 U.S.C and FACTUAL BACKGROUND 2. Autimis began as an affiliate of the Debtors created to bill and collect the Debtors accounts receivable. As Autimis developed expertise and certain proprietary software, it began contracting with third parties to provide medical billing and collection services. 3. On or about July 19, 2013, Autimis entered into that certain Billing Collection and Coding Services Professional Services Agreement with Lakeway Regional Medical Center, LLC ( Lakeway ), as amended, and that certain Business Associate Agreement with Lakeway (collectively, the Lakeway Agreements ). Pursuant to the Lakeway Agreements, Autimis provided billing, coding and collection services to Lakeway in exchange for a percentage of all amounts collected. 4. On or about July 1, 2014, Autimis entered into that certain Professional Services Agreement with LRMC Physician Services, Inc. ( LRMC ) and that certain Business Associate Agreement with LRMC (collectively, the LRMC Agreements ). Pursuant to the LRMC Agreements, Autimis provided billing, coding and collection services to LRMC in exchange for a percentage of all amounts collected. 2

3 Case Document 235 Filed in TXSB on 04/14/15 Page 3 of 5 5. On February 27, 2015 (the Petition Date ), Autimis filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code and are two of the Debtors in this jointly administered case. 6. Shortly before the Petition Date, Autimis terminated all of its employees and ceased providing billing and collection services to Lakeway and LRMC. 7. As of the Petition Date, Lakeway and LRMC owed Autimis approximately $500,000 (the Lakeway Debt ) under the Lakeway Agreements and the LRMC Agreements (collectively, the Agreements ). 8. SysInformation Healthcare Services, LLC d/b/a EqualizeRCM ( EqualizeRCM ), a company that offers similar services as were previously provided by Autimis, has offered to assume Autimis rights and obligations under the Agreements. 9. Further, EqualizeRCM will use its best efforts to pursue collection of the Lakeway Debt. Any amount collected from Lakeway or LRMC on account of the Lakeway Debt, whether paid directly to Autimis or EqualizeRCM, will be divided 73% to Autimis and 27% to EqualizeRCM. However, Autimis will retain the right to approve any settlement that is for less than 90% of the total amount outstanding on the Lakeway Debt as well as the decision to initiate litigation to collect the Lakeway Debt, if necessary. Further, and for the avoidance of doubt, EqualizeRCM may first apply any amounts collected from Lakeway or LRMC to satisfy unpaid invoices from EqualizeRCM before applying any amounts to the Lakeway Debt. RELIEF REQUESTED 10. Pursuant to 11 U.S.C. 365, Autimis seeks entry of an order (1) assuming and assigning the Agreements to EqualizeRCM, (2) determining that there are no cure payments due to Lakeway and LRMC under 11 U.S.C. 365(b), (3) directing EqualizeRCM to pay Autimis 3

4 Case Document 235 Filed in TXSB on 04/14/15 Page 4 of 5 73% of any amounts collected from Lakeway or LRMC on account of the Lakeway Debt, after first satisfying its own invoices to Lakeway or LRMC; and (4) declaring that Autimis has no further obligations to any party in connection with the Agreements. 11. Section 365(a) of the Code provides that a debtor may, subject to the Court s approval, assume or reject any executory contract or unexpired lease. 11 U.S.C. 365(a); Wainer v. A.J. Equities, Ltd., 984 F.2d 679, 684 (5 th Cir. 1993); see, In re National Gypsum Company, 208 F.3d 498 (5 th Cir. 2000). In reviewing a debtor s request regarding assumption or rejection under 365, a Court should generally defer to the debtor s business judgment. NLRB v. Bildisco & Bildisco, 465 U.S. 513, 523 (1984); Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5 th Cir. 1985); In re Food City, Inc., 94 B.R. 91, 93 (Bankr. W.D. Tex. 1988). 12. Autimis believes that assumption and assignment of the Agreements to EqualizeRCM is in the best interests of the estate. Autimis currently has no employees and cannot perform under the Agreements. Further, the Debtors lack the financial and human resources to pursue collection from Lakeway. By assigning the Agreements to EqualizeRCM, Autimis is alleviating itself from the burdens of the Agreements while maximizing its ability to recover on amounts owed by Lakeway. 13. Autimis is not in default under the Agreements. Accordingly, there is no cure payment required to Lakeway or LRMC under 11 U.S.C. 365(b). 14. To the extent that the foregoing is construed as a compromise, it meets the criteria set forth in Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968). 15. Accordingly, Autimis requests that the Court approve the assumption and assignment of the Agreements as set forth above and grant such other relief as is just. 4

5 Case Document 235 Filed in TXSB on 04/14/15 Page 5 of 5 Dated: April 14, 2015 Porter Hedges LLP By: /s/ Joshua W. Wolfshohl John F. Higgins State Bar No Joshua W. Wolfshohl State Bar No Aaron J. Power State Bar No Main Street, 36 th Floor Houston, TX (713) (713) (fax) Counsel for Debtors and Debtors in Possession 5

6 Case Document Filed in TXSB on 04/14/15 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: UNIVERSITY GENERAL HEALTH SYSTEM, INC., et al., Debtors. 2 Chapter 11 Case No Jointly Administered ORDER GRANTING MOTION TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS OF UGHS AUTIMIS BILLINC, INC. AND UGHS AUTIMIS CODING, INC. TO SYSINFORMATION HEALTHCARE SERVICES, LLC D/B/A EQUALIZERCM (Relates to Doc. No. ) Upon consideration of the Motion to Assume and Assign Certain Executory Contracts to SysInformation Healthcare Services, LLC d/b/a EqualizeRCM (the Motion ); and due and sufficient notice of the Motion having been given under the particular circumstances; and it appearing that no other or further notice need be provided; and it appearing that the relief requested by the Motion is in the best interests of the Debtors, their estates, their creditors and other parties in interest and represents an exercise of sound business judgment by the Debtors; and after due deliberation thereon and good and sufficient cause appearing therefor, it is hereby, ORDERED that the Agreements are hereby assumed and assigned to EqualizeRCM pursuant to 11 U.S.C. 365; and it is further The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: University General Health System, Inc. (2436), UGHS Autimis Billing, Inc. (3352), UGHS Autimis Coding (3425), UGHS ER Services, Inc. (6646), UGHS Hospitals, Inc. (3583), UGHS Management Services, Inc. (4100), UGHS Support Services, Inc. (3511), University General Hospital, LP (7964), and University Hospital Systems, LLP (3778). All defined terms used herein shall be given the meaning ascribed to them in the Motion.

7 Case Document Filed in TXSB on 04/14/15 Page 2 of 2 ORDERED that the Debtors have no cure obligation to Lakeway, LRMC, Southside and Source pursuant to 11 U.S.C. 365(b); and it is further ORDERED that EqualizeRCM shall use its best efforts to collect the Lakeway Debt (as defined in the Motion) from Lakeway or LRMC; and it is further ORDERED that EqualizeRCM shall, after satisfaction of its own invoices to Lakeway or LRMC, promptly pay Autimis 73% of all amounts collected from Lakeway or LRMC on account of the Lakeway Debt; and it is further ORDERED that Autimis shall promptly pay EqualizeRCM 27% of all amounts collected directly from Lakeway or LRMC on account of the Lakeway Debt; and it is further ORDERED that Autimis shall have the right to approve any settlement with Lakeway or LRMC that is for less than 90% of the total amount of the Lakeway Debt then owing; and it is further ORDERED that EqualizeRCM shall not file suit against Lakeway or LRMC to recover amounts due on the Lakeway Debt without the prior consent of Autimis; provided, however, that EqualizeRCM shall retain all rights and remedies available to it under the assigned Agreements and under applicable law to collect any amounts owed to EqualizeRCM; and it is further ORDERED that the Debtors have no further obligation to any party in connection with the Agreements. Dated: Houston, Texas, 2015 THE HONORABLE LETITIA Z. PAUL UNITED STATES BANKRUPTCY JUDGE 2