LifeMasters Files for Chapter 11 Bankruptcy

Les Masterson, for HealthLeaders Media , September 15, 2009

One of the leading population health management companies announced Monday it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. LifeMasters Supported SelfCare, Inc., based in South San Francisco, CA, alleges that the costs associated with participating in Centers for Medicare and Medicaid Services' demonstration projects is a reason for the decision.

"The Chapter 11 filing is the most efficient path for the company to restructure liabilities that are a result of demonstration projects previously performed under contracts with the Centers for Medicare and Medicaid Services, " said George D. Pillari, who was named president of LifeMasters Monday.

Pillari, a managing director of Alvarez & Marsal Healthcare Industry Group, LLC, has been working with the company and its board as a restructuring advisor prior to the filing, and replaces Christobel Selecky, who has been an industry leader and longtime president and CEO of the company. Selecky will remain on the company's board of directors and will also work as a senior advisor on a consulting basis for the company.

LifeMasters has participated in three CMS demonstration projects over the past four years that tested disease management in the senior and dual eligible populations, most notably the Medicare Health Support demonstration project in which CMS reported that the disease management programs did not "demonstrate success based on CMS' study design and measurement methodologies. Because CMS didn't deem the projects successful, LifeMasters has to repay fees to CMS "earned in excess of savings generated during the multi-year projects," according to the company.

"Rather than endure a costly and time-consuming legal path to challenge CMS, we have chosen to restructure our CMS and other liabilities through the Chapter 11 process," Pillari said.

The company added that it doesn't expect disruptions in its services and believes it has "ample cash on hand to emerge from Chapter 11 as a viable health improvement company."

Les Masterson is an editor for HealthLeaders Media.

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