PORTLAND — A judge has given the state’s largest for-profit mental hospital more room to deal with a crippling cash-flow problem by refusing to appoint an outside consultant to manage the financially troubled Jackson Brook Hospital.
In a written decision Wednesday, Susan W. Calkins decided appointing a receiver to manage the private South Portland hospital “may do more harm than good for everyone’s interest.”
The judge also denied a request to freeze $2.3 million in Jackson Brook’s assets for the duration of its legal battle with a general partner in a partnership that owns the building housing the hospital.
Since May, the hospital has been plagued by financial problems stemming in part from a dispute with the state over Medicaid payments and a sharp cut in such payments to the hospital.
The state has cut its weekly payments to Jackson Brook from $300,000 to less than $200,000. The state also maintains the hospital owes it $8 million from overpayments in recent years. In addition, Jackson Brook is waiting to collect $2.3 million from the state for unpaid bills.
The financial upheaval prompted the hospital in October to lay off about 50 employees and reduce its beds from 106 to 76. In December, Jackson Brook asked its 400 remaining employees to delay cashing their paychecks. The hospital also owes almost $64,000 in overdue property taxes. Meanwhile, ongoing court battles concern nearly $400,000 in unpaid rent.
Jackson Brook is eight months behind in rent. The hospital’s landlord, JBI Associates, has sued for payment. A general partner in JBI Associates, Dr. Robert Cserr, contends mismanagement — the skimming of profits by the hospital’s parent company, Community Care Systems — is at the root of the hospital’s problems.
As part of the lawsuit, Cserr requested the appointment of a receiver and an attachment of $2.3 million, the amount outstanding on the mortgage.
Jackson Brook had contended putting the hospital into the hands of a receiver would cause the hospital to lose accreditation and lines of credit, crippling efforts to treat mentally ill patients.
“Given enough time, given enough hard work by our people and given some measure of cooperation by all involved, we’re confident a reasonable solution can be worked out and we can move forward,” said David C. Hillman, Jackson Brook’s lead attorney.