Borrego Health files for chapter 11 bankruptcy, but will keep all clinics open

Borrego Community Health Foundation announced Monday that it has filed for Chapter 11 bankruptcy protection, but will keep all its clinics open — including several in the Coachella Valley — while it restructures its finances and resolves state regulators' concerns about its billing practices.

CEO Rose MacIsaac said "nothing changes" for staff members or patients during the Chapter 11 proceedings.

"All of our clinics will remain open, we will continue to provide care and paychecks will get paid and everyone will be operating as they would any other day," she told The Desert Sun.

In the valley, the nonprofit's clinics include Centro Medico in several cities, Palm Springs Family Health, Stonewall Medical Center in Cathedral City and the new Coachella Valley Community Health Center in Coachella.

The chapter 11 filing is the latest turn for a nonprofit organization that has spent years trying to recover from what its new leaders say was years of corruption, self-dealing and theft by company insiders.

Borrego Health is a federally qualified health center, which means it receives funds from the federal government to provide primary care services in underserved areas. In 2021, Borrego Health served more than 120,500 patients and had more than 463,000 visits. It has offices in Riverside and San Diego counties.

Under chapter 11, often known as a "reorganization" bankruptcy, a business proposes a restructuring plan so it can stay alive and pay creditors over time. That's different from a chapter 7 "liquidation" bankruptcy, where a business' assets are sold off to pay creditors.

MacIsaac said the filing will let Borrego Health "pause, regroup and gather what we need to really keep the momentum going again."

The filing is driven by an Aug. 19 notice that said the state intends to reimpose its 100% payment suspension on all Borrego Health Medi-Cal services beginning Sept. 29. The state said it was withdrawing Medi-Cal reimbursements because of “continued and unresolved inappropriate billings,” according to the San Diego Union-Tribune.

The offices of Borrego Health and Premiere Healthcare, a medical billing company that served it, were raided by the FBI and state investigators in October 2020 as part of a criminal investigation into potential Medicare fraud. Both companies said last year that the criminal case involved a single dental clinic or a few facilities.

Months later, the California Department of Health Care Services suspended Medi-Cal payments to the Borrego Community Health Foundation.

The Chapter 11 process will prevent the latest suspension from taking effect, according to a press release.

"This was not an easy decision to make by no means with everything that Borrego has really faced over the last two years," said MacIsaac, who was named interim CEO in June. "The changes and the improvements that our team has started to make and ... very huge impacts to the operations of the organization, for that letter to come across my desk, it was really a surprise and it really knocked the wind out of my sails with the momentum that we'd been building with the state, with the positive feedback they were giving us regarding the significant improvements they've been seeing."

Borrego Health has also faced a number of other changes and legal troubles in recent years.

In July, Borrego Community Health Foundation sued a number of top former trustees and employees, alleging they schemed for years to siphon off millions of dollars from the corporation.

The nonprofit also announced that more than 200 employees in its Riverside and San Diego county offices would be laid off this summer.

Since stepping into the CEO position, MacIsaac said it's been a "rollercoaster" ride at times.

"There's moments of weakness where I feel like, wow, what did I walk into? But when I'm reminded of the commitment that our staff continue to bring every day, that gives me the energy to keep fighting for everyone," she said. "Our communities depend on the care that we provide in locations that no one would even think about putting a clinic in."

Borrego Health is discussing "different options and different strategies" in regards to next steps, MacIsaac said, but it will continue to prioritize access and continuity of care.

"Borrego Community Health Foundation has always put their patients and communities first, providing services to areas that have at-risk populations and tremendous barriers to care has been something that Borrego will always pride itself with doing and will continue to do," the CEO said. "Borrego isn't going to stop fighting for what we know is right for our patients and our communities, and we'll always have that as our guiding light."

Ema Sasic covers entertainment and health in the Coachella Valley. Reach her at [email protected] or on Twitter @ema_sasic.

This article originally appeared on Palm Springs Desert Sun: Borrego Community Health in bankruptcy but will keep clinics open