Well Sourced: Bankruptcy files can reveal health care battles and bad medicine

Nothing gets a source to talk like anger.

If someone was at the bad end of a business deal, they will often want to punish the other party, especially if they are owed a lot of money. That’s why it pays to spend some time in bankruptcy court when you are looking for good stories on your beat. You can find the names of people who you will want to interview, details about health care practices and problems, and financial histories for some of the biggest health care players in your community.

SOURCE: Federal bankruptcy court

WHAT IT DOES: Gets you inside the finances of local medical institutions with amazing detail.

WHAT IT DOES NOT DO: Hold your hand while you’re trying to make sense of literally mountains of financial statements and other data.

RESOURCES: Bankruptcy records can be a gold mine of information about topics well beyond the scope of the bankruptcy. Look for hospitals that went bankrupt. Doctor groups. Nursing homes. Health care suppliers. Often the same players who sent one entity down the tubes are involved in a new venture. Look first for the statement of claims. Talk to some of the people who are owed the biggest amounts of money. Entire medical histories are often are filed, including patient names. Many of the records are online. Ask the attorneys for their records, too.

Many of the courts have some of the filings – but not all – online for free. For example, in Western Washington you can view decisions in the cases for free, and the decisions often provide much of the relevant information. In Southern California, all the court searches are routed through the federal PACER system. Just to look at a file in the PACER system, you need to pay.

Here’s a three-step process that may save you some money.

1. Start by doing a search on the U.S. Government Publishing Office site just of U.S. court opinions. It won’t include everything, but it’s a start. And it’s free.

2. If you find an opinion and want to see if there are more records out there, go to the PACER site. If you don’t find an opinion, you should still go to the PACER site because there may be filings that don’t yet include published opinions.

3. After you identify which cases you want to review and where they are located, go to the individual court websites to see if you can get the records for free. If you’re close enough, you may just want to go to the courthouse to look up the case files.

DRAWBACKS: For PACER, you have to register online and provide a credit card – unless you want to wait seven days to receive a registration in the mail. Once you do get access, you may be overwhelmed by the sheer volume of information. You will want to have some good sources inside the target organization to help you navigate these records.

SUGGESTION: When a group of investors is talking about buying a hospital or a doctor group, check to see what has happened to their earlier ventures. Always check aliases and alternate spellings.

EXAMPLE: Bob LaMendola at The Sun-Sentinel in Fort Lauderdale wrote an excellent piece about uninsured doctors in July 2008 that used bankruptcy records to provide key details. He wrote:

Uninsured Juno Beach neurosurgeon Jacques Farkas filed for bankruptcy in 2004 after two patients sued. In the more severe case, a paralyzed man said in a lawsuit that his brain was pierced by a back rod Farkas implanted badly. Bankruptcy court records show Farkas sheltered $2.6 million in assets, including a $1.6 million oceanfront home. His payout to creditors: $16,200. The two patients got nothing. ‘Fair or not fair... he did what the law allowed,’ said Charles Cohen, a Farkas attorney who said the doctor denies wrongdoing in the surgeries.

TESTIMONIAL: LaMendola said he turned to the bankruptcy records after hearing from sources that there might be good material there. He found everything he needed electronically.

“To be honest, I never left the building to check the bankruptcy records. I used PACER solely,” LaMendola told me.

He was able to download the actual filings and find out which debts remained unpaid. He even tried to broaden his search to capture any doctor who had gone bankrupt but found out that PACER only lets you search by specific names.

“I tried getting fancy by searching the PACER system trying to identify bankrupt doctors, but that went nowhere,” LaMendola said. “That would be a nice feature, to be able to search by profession or type of business. In the end, I had to just do it the old way and ask experts and lawyers.”

Photo by Kevin Dooley via Flickr.