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Lawsuits force cancer clinic network to file Chapter 11 petition

Many people in Kentucky have used the services of 21st Century Oncology, a large cancer treatment network concentrated in southeastern states. Following years of declining revenue and the settlement of several lawsuits, the company recently filed a petition for bankruptcy under Chapter 11.

The company provides a number of cancer-related diagnostic procedures and treatments, including radiation, pathology, urology and oncology. The company operates clinics at 179 locations in 17 states, mostly in the southeastern United States. The bankruptcy petition was filed in bankruptcy court in Manhattan. The company reported a nine-month operating loss of $92.9 million as of Sept. 30, 2016. The company has also listed more than $1.1 billion in long-term debt. With promised new financing, the company hopes to restructure its long term debt and to keep operating.

The company's need for bankruptcy protection and reorganization became acute in 2015 when an "unauthorized" third party gained access to 2.2 million patient records. Irate patients began filing lawsuits based upon the breach. Most of these cases are still pending. Further, the company paid a total of $54.5 million to settle two federal investigations of alleged billing fraud. Company whistleblowers had told federal investigators that doctors in the company were billing insurers for tests that were not medically necessary.

According to its acting CEO, the company hopes to use the bankruptcy proceeding as an aid in resolving the pending lawsuits. Despite the scale of the company's financial difficulties, it has no immediate plans to close clinics or to lay off employees. The CEO said that he expects very few changes in the company's operations during the bankruptcy process and that the company hopes to continue to operate as usual without disrupting patient care.

Source: USA Today, "21st Century Oncology files for Chapter 11 bankruptcy protection," Frank Gluck, May 26, 2017

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