Gordian Medical Inc., an Irvine-based wound-care provider for nursing homes, has filed for bankruptcy reorganization in a move tied to a reimbursement dispute with Medicare.
Gordian, which operates as American Medical Technologies, filed a Chapter 11 petition in U.S. Bankruptcy Court in Santa Ana on Feb. 24.
Gordian serves 14,000 nursing home patients in 49 states and offers services including evaluation, treatment and assessment of wounds; staff training; clinical support; and patient-risk management.
It also has a medical-supply business with products such as prosthetic orthotics and surgical dressings.
The company said in the bankruptcy filing that its liabilities and assets each fall in the range of $10 million to $50 million. Gordian’s petition notes a $9 million disputed unsecured claim from Medicare, as well as a $1.75 million disputed tax bill from the State Board of Equalization.
Court Intervention
The company said it will continue to try to work out its Medicare dispute but might need court intervention to resolve the matter.
Gordian said it relies on Medicare payments for more than 90% of its revenue and was operating at a weekly cash deficit of $1.25 million. Its assets include $4.3 million of cash and cash equivalents, along with $31.1 million of accounts receivable, mostly from Medicare.
The privately held company, founded in 2007, had $81.2 million in revenue in the 12 months ended in March 2011, up from $77.4 million in the previous 12 months, according to its filing.
Gerald Del Signore is the company’s president and sole board member. He co-owns Gordian with his wife, Jean Del Signore, and son Joseph Del Signore, who is the company’s sales vice president.
The company has 394 workers, according to its filing.
Gastrostomy Tubes
Gordian’s court papers detail events leading up to its filing, mostly centering on its providing gastrostomy tubes.
The tubes are inserted into patients’ stomachs through surgical holes called ostomies and may require open-wound dressings to contain bleeding and drainage.
About 40% of Gordian’s business consists of supplying such dressings, the company said.
Gordian said it has based its billing protocol on a 2002 regulatory decision that providers should be reimbursed for irrigation and site-care supplies provided to gastrostomy tube patients “notwithstanding conflicting guidance” in a regulatory manual that stated such supplies couldn’t be billed separately.
The company said administrative law judges held in a number of decisions that it should be reimbursed for dressings supplied to gastrostomy tube sites “because such dressings were in fact medically necessary.”
Payments
Gordian in November received a letter from Medicare claims-reviewer Advance-Med Corp. of Baltimore notifying the company that payments would be withheld “for all jurisdictions in which you bill the Medicare program.”
AdvanceMed’s letter said “the suspension of your Medicare payments is based on reliable evidence of an overpayment or that the payments to be made may not be correct.”
Gordian’s attorneys responded in detail to AdvanceMed’s letter in December.
AdvanceMed replied by informing Gordian that payments still would be withheld, the company said.
The company “disputes Medicare’s right to handle the payment issues in this manner and is taking appropriate action to defend its rights,” Gordian said in its petition.
Gordian’s filing also gave details about its business, noting that wound care is a growth market expected to reach $9.1 billion a year in the U.S. by 2013.
“There are a number of key factors driving the market’s growth, including but not limited to aging baby boomer population, advances in new wound care products and increasing government regulations on the proper care of wounds in hospi- tals and nursing facilities,” the company said.
