Hospitals’ Bankruptcy Won’t Stop Suit Against Manager

Shareholders in a Missouri-based hospital operator can sue a management firm that allegedly used the hospitals to conduct an illegal billing scheme.

Ten hospitals managed by defendants Health Acquisition Corp., Empower H.I.S. LLC, and three individuals filed for bankruptcy, but the defendants can’t invoke the Bankruptcy Code’s automatic stay to delay the shareholders’ derivative suit against them, the U.S. District Court for the Western District of Missouri said April 3.

James and Phyllis Shaffer sued HAC on behalf of HMC/CAH Consolidated Inc. HMC previously owned the hospitals, but HAC acquired a majority interest in 2017 and took over the financial ...