Valley Hospice of Arizona Files Bankruptcy to Absolve Nearly $2.5 Million in Debt

Valley Hospice of Arizona, Inc., recently filed for bankruptcy protection in the face of at least $2.49 million owed to more than 70 creditors. The bankruptcy petition was filed under Chapter 11 subchapter V, indicating the hospice owes less than $7.5 million, though a total amount was undisclosed.

Many of the creditors were unsecured, or those incurred without collateral. The company’s most significant unsecured debts included Medicare overpayments, federal and state payroll taxes, employee health care benefit expenditures and legal expenses, as well as debts owed to technology, pharmacy and medical supply/service vendors, according to court documents.

Amount disclosures and statements of cash flows were not included in the supporting financial documents. The company omitted this information due to concern that publicly reported documentation might “influence the user’s conclusion about the company’s financial position and result of operations,” according to a signed statement by Rogelio Cruz, serving as the hospice’s certified public accountant.

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Administrator Christine Muturi Lewis signed the bankruptcy petition. She was appointed to the role in 2016.

Filing for Chapter 11 bankruptcy typically allows an organization to develop a financial plan that will enable it to remain open and sustain in the future, remaining in control of business operations and subject to court oversight.

Based in Mesa, Ariz., Valley Hospice of Arizona provides chronic and terminal illness care, including home-based skilled nursing services. The hospice’s total income reached slightly less than $2.7 million in 2020, operating expenses that year came to more than $3.1 million. The company in 2020 reported a loss of nearly $435,600, according to documents filed with the court.

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Medicare overpayments represented a hefty chunk of Valley Hospice of Arizona’s most significant unsecured debts, coming to roughly $1.3 million. Hospices work within an aggregated payment system monitored by the U.S. Centers for Medicare & Medicaid Services (CMS). If a hospice exceeds the payment capitation rate, then it must refund the amount to CMS.

Hospice utilization reached 59.2% among Medicare decedents in 2018, the second-highest rate nationwide that year, according to the National Hospice and Palliative Care Organization (NHPCO). This swelled above the national average of 51.6% the following year in 2019, NHPCO reported.

The Better Business Bureau (BBB) in 2018 alleged that it received information the Valley Hospice of Arizona may have falsely reported ownership of an unaffiliated company and falsely advertised employment opportunities under a different company name. The bureau indicated that the hospice did not respond to its inquiries.

According to the bureau’s website, it “makes no representations or guarantees that information, content, or other materials on [its] sites are accurate. BBB asks users who submit content to affirm that any information in the content is accurate, but BBB does not verify the accuracy of the information submitted by users.”

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