Univita files Chapter 7 with long list of creditors

Filing also reveals $47 million in assets, with $41 million in A/R
Friday, September 4, 2015

MIRAMAR, Fla. – Now that Univita Health has filed for Chapter 7 bankruptcy, the picture looks bleak for HME providers owed money by the now-shuttered company.

“All of these providers who have pending claims could be told to work their way through the bankruptcy process, which usually means getting pennies on the dollar,” said Dan Leyton, a partner with Kravitz, Talamo & Leyton in Hialeah.

The Aug. 28 filing with the U.S. Bankruptcy Court in Delaware includes a list of creditors that is more than 1,100 pages. There are two secured claims listed—Genstar Capital for about $20.6 million and Isuzu Finance of America for about $400,000—followed by pages and pages of unsecured claims with no dollar amounts.

Many of those unsecured claims are from HME providers, some of whom say they are owed hundreds of thousands of dollars by Univita, which had a contract with numerous health plans to administer DME and other homecare services for Medicaid recipients in the state.

But at a creditor hearing scheduled for Sept. 27, secured claims from Genstar Capital, which provided Univita with a $40 million credit facility in March, will get first dibs.

“It will take a couple of months to a year to liquidate the assets, and any recoveries will go to the secured creditor,” said Eric Monzo, a restructuring attorney with Morris James in Wilmington, Del.

But not all may be lost for providers. In an email to HME News, Florida’s Agency for Health Care Administration stated that it has been in discussions with health plans about reconciling payment issues.

“We expect to issue additional guidance when appropriate considerations are adequately addressed, and clear and consistent direction can be communicated to all parties involved,” stated AHCA.

In a clue of what pushed Univita to collapse in August, the filing lists assets of nearly $47 million, with nearly $41 million in accounts receivable. That’s a lot of money to have tied up in A/R, says analyst Jonathan Sadock.

“It’s one thing to bill revenue, it’s a whole other to collect,” said Sadock, president of Paragon Ventures. “My understanding is they had some issues with their accounts receivables that got them upside down.” 

Univita gained control of much of the Florida Medicaid market in 2014, when AHCA transitioned beneficiaries into managed care. Of the 14 health plans running the program, 10 contracted with Univita to administer DME. Less than a year later, however, AHCA announced Univita was no longer processing prior authorizations and told providers to contact health plans directly.

The private-equity backed Univita formed in 2008 and entered the HME market in 2010, when it acquired Davie-based Atenda Healthcare Solutions. By 2012, the company had 5 million patients across several states, including Tennessee, California, Minnesota, Indiana, Wisconsin and Massachusetts.