USDA, ICMC dispute in court

A disagreement between Iron County Medical Center and the United States Department of Agriculture Rural Development Division has been taken to court.

At issue is what entity gets paid first under the terms of a Chapter 9 Bankruptcy filing in February 2018.

The hospital’s CEO says the USDA is acting in bad faith - like a bully is his term - and has taken action that may threaten the future of the institution.

“Like many rural critical care hospitals around the country, we have been struggling financially for many years,” said Joshua Gilmore, CEO for Iron County Medical Center. “Last year our board took a major step in filing for Chapter 9 bankruptcy protection as we work toward a more sustainable future while keeping the hospital open. We reached agreements with Medicaid and Medicare to restructure our debt, but USDA officials’ unresponsiveness has been appalling.”

The dispute is basically this: Under the terms of the agreement, Gilmore said he is allowed to pay the hospital vendors (businesses that supply goods and services to keep it operating) first.  USDA officials - who hold the bonds issued for the completion of the hospital in December 2006, said the payments on those bonds need to be paid first.

To that end the federal agency is threatening to terminate the hospital’s agreement with Medicare, an agreement that allows the payback of roughly $2 million over 10 years with no interest.  Should that agreement be disallowed, the entire amount would be due immediately, an amount beyond the financial capability of the local hospital.

“We are doing everything we can to keep this hospital open and settle our debts in an equitable way,” Gilmore said. “We are disappointed that a USDA program designed to help struggling, impoverished rural communities is actually a bully in disguise, threatening the very healthcare services they are supposed to help provide to our patients.”

That dispute will likely be settled by the time you read this.

A hearing in federal court was set for 9 a.m. Tuesday, June 25 about the bankruptcy filing. Gilmore said Friday he believes the hospital has a good case because of the actual wording of the bond issue agreement.  However, should the court uphold the USDA’s position, it would effectively shut down the hospital.