A federal bankruptcy judge today ordered El Paso Children’s Hospital to pay University Medical Center of El Paso $2.3 million in rent it owes from the date the pediatric hospital filed for bankruptcy protection to the present.
U.S. Bankruptcy Judge H. Christopher Mott said Children’s Hospital should “timely perform” all obligations of the lease agreements that arose after the bankruptcy filing on May 19. Children’s Hospital must pay $869,000 in rent to UMC monthly until the lawsuit in which the pediatric hospital is accusing UMC of acting fraudulently is resolved. UMC’s litigation is set for trial in late October.
In the lawsuit, Children’s Hospital is disputing more than $100 million in rent and services to UMC.
Mott gave Children’s Hospital credit for $1 million the hospital paid UMC in July for rent, and $150,000 in adequate protection that it paid UMC in August.
Mott said the court allowed Children’s Hospital to present evidence to try to prove that the facility lease agreement was not “a true lease.” However, the court concluded that Children’s Hospital was not successful in proving its point.
The lease agreement has typical obligations contained in a “true lease,” Mott said, and Children’s Hospital does not have the right to purchase the facility that houses the hospital
Mott said that at a hearing last week, El Paso Children’s Hospital admitted that the lease agreement was valid and it’s the only document that gives the hospital the right to occupy the premises.
Mott said Mark Herbers, CEO of El Paso Children’s Hospital, also testified that he agreed that the amount stated on the contract was the amount to which both parties had agreed even if UMC was overcharging it.
“It’s not over until it’s over,” said Rosemary Castillo, chairwoman of El Paso Children’s Hospital, after today’s hearing.
Castillo, who has rarely addressed the media since the bankruptcy filing, said that the board eventually will address the public.
“I’m very concerned about the situation. What you need to focus on is the fact that UMC is clearly an insider, they directed everything that would make it possible for them to profit from the children of El Paso,” she said.
“Yes. We signed the agreements, but UMC orchestrated everything,” she added.
Children’s Hospital CEO Mark Herbers released a written statement after the hearing.
“Our priority and focus is to continue to serve the health needs of the children of this region,” the statement reads. “As we stated when we began the bankruptcy process, EPCH sought the protection of the bankruptcy court to be able to deliver on the promise that taxpayers voted on in 2007 and to be able to restructure our debt and emerge as a stronger organization.”
Aileen B. Flores may be reached at 546-6362.