Posted: Nov 6, 2010 3:51 PM by Andrea Babin
Updated: Nov 6, 2010 3:52 PM
BATON ROUGE, La. (AP) - Federal bankruptcy court Judge Douglas
Dodd has given Stanocola Medical Center until Jan. 31 to complete a
sale of its assets to People's Health, a Metairie-based,
doctor-owned Medicare Advantage plan.
Stanocola, which filed for bankruptcy protection in September,
had sought to convert its bankruptcy to a liquidation when People's
Health stepped in as a potential buyer.
Health plan attorney Brad Axelrod says People's Health provided
up to $50,000 to help with the clinic's operating expenses for the
last two weeks.
According to Saturday's Advocate, People's Health has agreed to
extend that assistance while negotiations continue.
Axelrod said he doesn't think it will take much time to complete
the deal, though there are lots of agreements that must be
completed. Those include deciding which Stanocola assets the health
plan intends to acquire, how best to accomplish that, and working
out a lease agreement with Ochsner Medical Center, the clinic's
Stanocola owes Ochsner $100,000 in rent for the roughly two
months since the clinic filed for bankruptcy protection from its
creditors, Axelrod said.
People's Health's continued weekly support will cover lease
payments going forward, Axelrod said.
Given People's Health and Ochsner's strong relationship, Axelrod
said he is confident that the two can come to some sort of
arrangement on the $100,000 in past-due rent at 16777 Medical
The Jan. 31 date was set to make sure that there is enough time
to work out all the arrangements for a Stanocola sale, Axelrod
Dodd said he would like to see the deal completed and that
everything sounds "peachy." But the judge added he wanted to make
sure that Stanocola didn't use up all of its remaining assets on
administrative expenses in the meantime, and that the deal gets
done before Jan. 31.
"I want to communicate the need for speed," Dodd said.
Brandon Brown, the attorney representing the clinic, said
Stanocola's monthly expenses are roughly $454,000, which includes
$25,000 for marketing.
Cutting the marketing budget would bring the monthly expenses to
around $430,000 a month, Brown said.
Meanwhile, during the past four months, Stanocola's monthly
revenue has ranged from a low of $342,000 to a high of $414,000,
Brown said. With the additional $100,000 per month from People's
Health, Stanocola would be able to cover its operating expenses,
including the lease payments to Ochsner, or at the worst fall a
little short of the required amount.
Dodd set a status conference for 11 a.m. Dec. 3 to check the
progress of the negotiations.
People's Health is owned by doctors that provide services to its
more than 42,000 members. The company's service area includes
Ascension, East Baton Rouge, Jefferson, Livingston, Orleans,
Plaquemines, St. Bernard, St. Charles, St. James, St. John, St.
Tammany, Tangipahoa, Washington and West Baton Rouge parishes.
Stanocola Medical was founded in 1924 as a subsidiary of
Standard Oil Co. as one of the country's first prepaid medical
plans to cover employees.
Standard Oil's refinery in Baton Rouge became the second-largest
refinery in the country. The company's name changed from Standard
to Esso to Exxon and now ExxonMobil.
Stanocola eventually opened its membership to people who weren't
employees of ExxonMobil and provided services for a number of area
In the mid-1990s, Stanocola employed more than 300 people and
had 50 doctors.