IHHI Hospital Bids Continue for the Mortgage –Prem Reddy at 57M and Kali Chaudhuri at 55M

The story of this 4 hospital chain has had just about a little bit of everything here and of course money woes and the SEC investigation of their financer just adds icing to the cake. This is what happened to some of the money:

SEC Investigation Finds Medical Capital Holdings Diverting Investor Funds to Pornography and Other Businesses Aided by Former IHHI President – Orange County

The local Orange County Register has followed this along pretty closely. Now the people that works there are normal people just trying to run hospitals but have had all of this hanging over their heads since 2007 when it all erupted. Now there’s a bidding war on who’s going to take over. Prem Reddy is upping the bid by a couple of million and his lawsuit with the State of California for balance billing is still pending. Prime hospitals don’t sign contracts with insurers and thus bill at their customary fees. The two I see here in Orange county no longer are a busy center like they used to be, but they run a good ER, and this appears to be the focus on where the money may be with collecting from insurers.

California sues Prime Healthcare over balance-billing practices

Physicians picketed a few years ago against Chaudhuri taking over the chain of hospitals which was an ugly scene.

MedCap has about 60 investors in Massachusetts suing as well to get their money back. About the former CEO trying to cover some of the yacht and porn business:

Former CEO Mogel denied involvement and his own attorney found copies of emails he tried to delete from his computer, well not very smart if you want to hide all evidence with just putting in the recycle bin. Even so, forensics do a very good job recovering information from computers that have not been wiped of all data through a number of runs. If you had subscribed to any of the cell phone programs with the women in bikinis and they go away, well I guess you can figure out why. Overall this is going to be an interesting bid from 2 that have been in out of the healthcare business controversy here in southern California.

One controversial physician is vying with another controversial physician for the mortgage on Western Medical Center - Santa Ana and three other Orange County hospitals.

Prem Reddy’s Prime Healthcare Services said in a court filing Wednesday that it will bid against Kali P. Chaudhuri for the mortgages on Integrated Healthcare Holdings Inc. A court-appointed receiver for Tustin-based Medical Capital Holdings is selling the mortgages, which have a face value of $81 million. The sale is scheduled for March 22.

Chaudhuri, the majority shareholder of IHHI, has bid $55 million for the mortgages.

Reddy is offering $57 million.

Reddy objected in a court filing to the bidding terms, saying they favor Chaudhuri. As an “overbidder,” Reddy must deliver a cashier’s check or letter of credit for $57 million while Chaudhuri only has to make a $2 million deposit, according to the motion.

A Chaudhuri-controlled company, KPC Medical Management, collapsed in 2000, disrupting health care for 300,000 Southern California residents. That led state regulators and local physicians to block Chaudhuri’s attempt to take control of IHHI in 2005. But over the past five years he gradually has bought a majority stake.

Reddy owns 12 hospitals, including four in Orange County. In July 2007 the state blocked his attempt to buy Anaheim Memorial Hospital. A year later, the state sued Prime Healthcare for billing patients for costs not fully paid by their insurers. That lawsuit is pending.

MedCap financed IHHI’s 2005 purchase of WestMed -Santa Ana and three other hospitals — Western Medical Center - Anaheim, Coastal Communities Hospital in Santa Ana and Chapman Medical Center in Orange. The four hospitals together have 12 percent of the county’s hospital beds and serve many of the county’s poorest residents.

The Securities and Exchange Commission sued MedCap for fraud last summer. Receiver Thomas A. Seaman took control of MedCap’s assets in August and is trying to sell them off. MedCap investors are owed more than $1 billion, Seaman has reported.

The Securities and Exchange Commission sued MedCap for fraud in July 2009. A court-appointed receiver subsequently reported that most of the accounts receivable on MedCap’s books — billings with a face value of $543 million — did not exist.