Patient Trust Fund

[chefman]

I am trying to obtain a patient trust fund bond $125,000 (Maryland). Current owner in chapter 11. My client is the management company - who is in the process of purchsing the facility. Need to obtain bond for current owner until sale completed. The sale should be complete in 2-6 months. Obligee is Maryland Dept of Health and the facility is located in Baltimore, MD. Can you help me?

[marietta68]

Originally Posted by chefman

I am trying to obtain a patient trust fund bond $125,000 (Maryland). Current owner in chapter 11. My client is the management company - who is in the process of purchsing the facility. Need to obtain bond for current owner until sale completed. The sale should be complete in 2-6 months. Obligee is Maryland Dept of Health and the facility is located in Baltimore, MD. Can you help me?

Patient trust funds are supposed to be segregated from operating funds and are certainly not a part of the assets of the current owner (so are exempt from restriction by the bankruptcy court).

What happened to the current owner's bond? Remember, bankruptcy filing acts as a stay and the bond company can't send cancellation notice once the BK filing is made.

Check on status of employee dishonesty insurance, which is always mandatory, but especially under these circumstances.

If I were in your shoes, I'd beg the incumbent surety to reinstate their bond (assuming it was cancelled prior to the BK filing) until the sale is complete by showing them evidence of the employee dishonesty insurance and monthly statements for the trust account for the last year.

Key factors to remember are that the trust funds are NOT owned by the facility and the potential exposure is covered by insurance (subject to a deductible, of course).

All this assumes the facility has been run with strict controls and that the patient funds account has been monitored and is intact - otherwise, it would be hard to get anyone to write it, even with collateral. But if you can offer the necessary support in terms of documentation that the patients' money is well guarded, and are nice when you do it, begging can be very effective.