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KPC Medical Still Awaiting $31-Million Bailout Loan

Health care: Some nurses and doctors said they did not get paid. Talks over funding are expected to continue.


KPC Medical Management, the ailing giant medical practice representing 500,000 Southern California patients, has not yet received a promised loan of as much as $31 million, sources said, and appeared to be having trouble meeting its payroll Friday.

KPC has been close to bankruptcy for several months. The company is months behind in paying many doctors and vendors, and in June owner Kali Chaudhuri said he was two to four months away from bankruptcy.

A bailout plan under which most of the state's health plans would loan KPC $31 million and raise the monthly rate paid to care for patients has been only partially implemented since it was announced two weeks ago, sources said.

The raise in fees has gone into effect, but some or all of the loan has become bogged down in negotiations over the real estate meant to secure it, sources said.

Those negotiations are set to continue through the weekend, said Jim Harris, spokesman for Cigna Healthcare, one of the plans involved in the bailout.

Meanwhile, several doctors and nurses said that their paychecks did not arrive with the morning mail on Friday as they typically do.

However, others in the company said they did receive their paychecks, and that top executives had assured employees that checks went out by U.S. mail late Thursday.

When asked whether the company was having trouble meeting payroll, company President Donald Smallwood said: "We're still working on it."

He would not comment on rumors that the company would file for bankruptcy as soon as next week, saying only: "I don't think it would be productive to talk about that right now."

To add to the company's troubles, a group of 61 physicians in the Artesia and Cerritos area have resigned from KPC, effective Oct. 4.

Their attorney, Manuel Sanchez, said that several of his clients did not receive their paychecks Friday.

"Nobody cares about the patients and what happens to them," said one doctor, who asked not to be identified. "This is a serious problem, and it's going to have serious repercussions."

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