After being hit with a $5.6 million claim, the Tulare Local Healthcare District is home free – except for its debt restructuring.

The claim, issued by the state’s Department of Healthcare Services, came around the time of Tulare Local Healthcare District’s bout with bankruptcy in 2017. 

The claim was first filed for “an undetermined amount,” and then amended to $5.6 million in 2019. 

Back in September 2017, the health care district filed Chapter 9 bankruptcy, by which it plans to restructure its debt and pay back creditors. By August 2019 Tulare’s debt restructuring plan was approved by its creditors. But The Department of Healthcare Services waited until after Tulare’s bankruptcy plan was confirmed in 2019 to amend its claim from “an undetermined amount” to $5.6 million.

The number was based on the Healthcare Services’ review of its own accounting dating over 13 years ago. Tulare opposed the request.

The claim was ultimately denied by the U.S. Bankruptcy Court in Fresno. The U.S. Bankruptcy Court ruled on April 27, 2021 that the $5.6 million request was prejudicial to Tulare and its creditors, and the court cut off Healthcare Services’ ability to revise the claim 

Tulare was represented by Riley Walter of Wanger Jones Helsley as the bankruptcy counsel. 

“The ruling means that the Department of Healthcare Services claim will not dilute what other creditors who timely filed their claims will receive under the plan,” said Sandra Ormonde, CEO of the Tulare Local Healthcare District.