2012-03-16 / Front Page

Trustee Takeover

By Howard Schwach


CB 14 board member Steve Cooper tells Miller, “I speak for a lot of people here that they’re pretty much disgusted with your organization and how you handled the whole thing.” CB 14 board member Steve Cooper tells Miller, “I speak for a lot of people here that they’re pretty much disgusted with your organization and how you handled the whole thing.” A court-appointed trustee, reportedly familiar with both bankruptcy procedures and the healthcare industry, has taken over operation at the troubled Peninsula Hospital Center, court sources say.

In a court memorandum, dated March 6, the Federal Bankruptcy Court for the Eastern District of New York appointed Long Island attorney Lori Lapin Jones as the hospital’s trustee, with a mandate to take over the operation of the hospital during the period it is going through the bankruptcy process.

And, while CEO Todd Miller continues to say that he is in charge and “working collaboratively” with Jones, court records show that she now has operational control of the hospital.


Peninsula Hospital CEO Todd Miller talks about the closing of the hospital’s lab at the CB 14 meeting this week. Peninsula Hospital CEO Todd Miller talks about the closing of the hospital’s lab at the CB 14 meeting this week. In fact, when asked for comment about management of the hospital, Miller told a Wave reporter, “I’m not speaking formally to the press on the advice of counsel.”

According to the bankruptcy law, the appointment of a trustee is done only where there is suspected “fraud, dishonesty, incompetence or gross mismanagement of the affairs of the debtor by current management.”

Jones, principal of Lori Lapin Jones PLLC, has been practicing bankruptcy law for 25 years. She began her career as a staff attorney in the Manhattan District Counsel’s Office of the Internal Revenue Service, following which she served as a law clerk to the Honorable Tina L. Brozman, United States Bankruptcy Judge for the Southern District of New York. Jones is a co-author of a bimonthly column on bankruptcy law for The New York Law Journal and is a co-author of Creditors’ Committee Manual.

“She was a good appointment,” Howard Fensterman, the attorney who formerly represented the hospital in its bankruptcy proceedings, told the Daily News. “She is a knowledgeable bankruptcy attorney with some experience in health.”

The appointment and the change in management came after state inspectors closed the hospital’s laboratory in February due to a seven-page list of violations. After the lab was closed, an internal December report came to light that pointed to the danger inherent in the laboratory and predicting that it would be closed by state inspectors should an inspection be done.

The inspectors, looking at the lab two months later, found many of the same problems mentioned in the December internal report.

Miller showed up for a scheduled meeting of Community Board 14 on Tuesday night.

He told the board, “When this event was first scheduled I was looking forward to speaking about some of the exciting things happening in the hospital. I’m still looking forward to speaking about those exciting things, but I think everyone’s a little more focused on what the current status is of the hospital given the fact that it has been closed since February 22.

“As most of you are aware, if not all of you are aware, the hospital had a routine survey of its lab which resulted in the lab license being suspended for a period of 30 days. During this time we’ve been working very aggressively and have made many improvements to the equipment, to the policies and procedures and what was [seen as] some of the deficiencies by the department of health. We’ve been working with the department of health on a corrective action plan and with some new initiatives where the hospital is optimistic that it will be able to open in the near future.”

When asked by board member Steve Cooper when the 240 laid-off staff members would be recalled, Miller said, “We would expect to bring back as many people as quickly as possible. The employees were very supportive of the hospital and its need to conserve cash during this critical time. I’m very appreciative of that. We are optimistic that within a few weeks all of the staff will be back but certainly much of the staff will be brought back …. I don’t have a hard date. The state has suspended the license for a 30-day period and we’re working within that timeframe to have it inspected ….”

“On some level the hospital fell down on some very basic elements according to the department of health,” Miller said. “Whether or not those elements were true or not is irrelevant because the department of health has findings, they have findings. So we can respond to those findings but at this point the hospital, from a clinical supervision perspective, from a pathologist’s perspective, they didn’t feel that the person was properly supervising the people in the lab. It felt that way because certain things weren’t documented in a certain way they were looking for. It wasn’t necessarily that things were wrong or there were problems, it was a documentation issue.”

Calls to Miller and to the public relations firm hired by the hospital two months ago went unreturned. — Additional reporting and photos by Miriam Rosenberg.

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