Filed 09/08/23 Case 23-10457 Doc 932

2
16
WANGER JONES HELSLEY
3 Riley C. Walter, # 91839
rwalter@wjhattorneys.com
4 Kurt F. Vote, # 160496
kvote@wjhattorneys.com
5 265 E. River Park Circle, Suite 310
6 Fresno, CA 93720
Telephone: (559) 490-0949
7

8 Attorney for Debtor and Debtor in Possession, Madera Community Hospital

10 UNITED STATES BANKRUPTCY COURT

11 EASTERN DISTRICT OF CALIFORNIA

12 FRESNO DIVISION
13
In re: Case No. 23-10457
14
MADERA COMMUNITY HOSPITAL, Chapter 11
15
Debtor in Possession. DCN: HRR-1
16

17 Tax ID#: 23-7429117 INDEX OF EXHIBITS IN OPPOSITION

Address: 1270 E. Almond Avenue TO MOTION TO COMPEL PRODUCTION
18 Madera, CA 93637 OF CERTAIN DOCUMENTS PURSUANT
TO FEDERAL RULE OF BANKRUPTCY
19 PROCEDURE 2004
20
Hearing:
21
Date: September 12, 2023
22 Time: 9:30 a.m.
Place: 2500 Tulare Street
23 Courtroom 13
Fresno, CA 93721
24
Judge: Honorable René Lastreto II
25

26

27

28

{10538/011/01660070.DOCX} 1
INDEX OF EXHIBITS IN OPPOSITION TO MOTION TO COMPEL
Filed 09/08/23 Case 23-10457 Doc 932

Exhibit Date Description Pages Page #(s)

1 No.
2 A 5/30/23 Unsolicited Offer of Employment to 1 4
Karen Paolinelli from AAMI
3 B 5/30/23 Check for $150,000 from AAMI to 1 6
Karen Paolinelli (Account number
4 and routing number redacted)
5 C 5/31/23 Letter from Karen Paolinelli to Dr. 1 8
Gurpreet Singh of AAMI
6 D 8/30/23 Fresno Bee Article regarding 7 10-16
Debtor and AAMI
7

8
Dated: September 7, 2023 WANGER JONES HELSLEY PC
9

10

11 By: /s/ Kurt F. Vote

Riley C. Walter
12 Kurt F. Vote
13 Attorneys for
Debtor and Debtor in Possession
14 Madera Community Hospital

15

16

17

18

19

20

21

22

23

24

25

26

27

28

{10538/011/01660070.DOCX} 2
INDEX OF EXHIBITS IN OPPOSITION TO MOTION TO COMPEL
Filed 09/08/23 Case 23-10457 Doc 932

EXHIBIT “A”
Filed 09/08/23 Case 23-10457 Doc 932

American Advance Management, Inc.

700 17th Street Suite 201
Modesto, CA 95354

May 30, 2023

Karen Paolineli
Madera Community Hospital
1210 E Almond Ave,
Madera, CA 93637

Subject: Letter of Commitment

Dear Karen Paolineli,

I am writing on behalf of American Advanced Management, Inc. (AAMI) to affirm our commitment to
retaining Karen Paolineli, the current CEO of Madera Community Hospital, in an active leadership
capacity should AAMI move forward with reopening the hospital.

Your experience and contributions throughout your many years with Madera Community Hospital are
invaluable. We understand the importance of continuity and the need to retain key personnel with
institutional knowledge, and your expertise in hospital management and healthcare administration will
be instrumental during the reopening phase and beyond.

We will work closely to determine the terms and responsibilities of your new leadership role, which will
be outlined separately. Our goal is to ensure a smooth transition as we reestablish delivery of
exceptional healthcare services in Madera County. Karen Paolineli, your signature below constitutes
your acknowledgment that you have read and understood this offer, and that you wish to accept
ongoing employment with Madera Community Hospital under the direction of American Advanced
Management.

AAMI looks forward to collaborating with Madera Community Hospital and achieving new milestones of
excellence together. If you have any questions or need further information, please don't hesitate to
contact me.

Sincerely,

Dr. Shamsher Bhullar

Senior Vice President
American Advanced Management, Inc.

Acknowledged and accepted:

Signature: ___,!____!___
Karen Paolineli Date
Filed 09/08/23 Case 23-10457 Doc 932

EXHIBIT “B”
AMERICAN ADVANCED MANAGEMENT INC• 4120 DALE ROAD JS-140 • MODESTO, CA 95356
Filed 09/08/23 Case 23-10457 Doc 932

AMERICAN ADVANCED MANAGEMENT INC Tri Counties Bank

1-S00-922-8742
PAYROLL
CHECK
010550
4 120 DALE ROAD JB-140 !I0-3504/1211
MODESTO, CA 95356

~ W~ ~ J~~1;n \b _ao~
- ~~--=---
~ -----'---+-
s- o~~ -=--
3

~~~E vKOJ<_V\J
ORDER~ )1
1 ~o/,·N~((.' I.
AMERICAN ADVANCED MANAGEMENT INC
OF

I,

11•0 .o s son•
Filed 09/08/23 Case 23-10457 Doc 932

EXHIBIT “C”
Filed 09/08/23 Case 23-10457 Doc 932

05/31/2023

Dr. Gurpreet Singh, MD

4120 Dale Road, J8-140
Modesto, Ca. 95356

Dear Dr. Singh,

It was a pleasure meeting with you and Matthew Beehler last evening to discuss Madera Community
Hospital (MCH). During the meeting, you made an unsolicited offer of employment to me and left me a
check for $150,000.00, with a Letter of Commitment. As I mentioned in our meeting, I am unable to
accept an offer of employment with American Advance Management, Inc. (AAMG), and I would be
informing our attorney Riley Walter, and our board chair, Deidre da Silva, of this offer.

Madera Community Hospital has not made any decisions to move forward with AAMG. Until the MCH
board has information from AAMG it cannot move forward.

I am returning to you the check and Letter of Commitment. Any decision to move forward with AAMG is
a decision of the MCH board solely and then must be approved by the creditor's committee, Saint Agnes
Medical Center, and the court.

Sincerely,

-K~Karen Paolinelli

cc: Riley C. Walter

Deidre da Silva
Filed 09/08/23 Case 23-10457 Doc 932

EXHIBIT “D”
Filed 09/08/23 Case 23-10457 Doc 932

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The Fresno Bee Part of the McClatchy Media Network

Local News Sports Opinion Food & Drink Vida en el Valle Obituaries • Education Lab Central Valley Collab Per:

'Jilted lover' or likely suitor? New firm wants to

take over bankrupt California hospital
BY MELISSA MONTALVO

UPDATED AUGUST 30, 2023 1:15 PM

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Filed 09/08/23 Case 23-10457 Doc 932

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Tarps cover the signs outside Madera Community Hospital and the ER on Monday, July 24, 2023. The hospital closed early t his year.
CRAIG KOHLRUSS ckohlruss@fresnobee.com

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This story is part of the Central Valley News Collaborative - a bilingual, community journalism
project funded by the Central Valley Community Foundation and with technology and train ing
support from Microsoft Corp. The collaboration includes The Fresno Bee, Valley Public Radio,
Vida en el Valle, Radio Bilingue and the Institute for Media & Public Trust at Fresno State.

Less than a week after the state announced a multi-million dollar loan for a
bankrupt Central San Joaquin Valley hospital, a new player has emerged
unexpectedly that wants to take over hospital management.

Modesto-based hospital management company American Advanced Management,

Inc., announced their interest at a bankruptcy hearing Tuesday in taking over
operations of Madera Community Hospital.

The company says it has experience saving bankrupt medical facilities. Earlier this
month, the company announced a proposed "lease to own" partnership to take over
Hazel Hawkins Memorial Hospital in Hollister, according to CalMatters. They also
operate Coalinga Regional Medical Center in Fresno County. The hospital system says
on its website that it was the first company in California to revive a rural hospital
following bankruptcy and closure.
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"We want to make sure the public knows there's an alternative," Matthew Beehler,
chief strategy officer for American Advanced Management, said in an interview with
The Bee on Tuesday."This hospital is of interest to us because of our facilities that are
nearby, and we believe that there's an opportunity here," said Hamid Rafatjoo, a
partner with Raines Feldman Littrell LLP and counsel for American Advanced
Management, Inc., during a Tuesday bankruptcy hearing.

News of this new interested party comes just days after the state of California
announced that Madera Community Hospital now has access to a $50 million state
loan, plus a $2 million bridge loan to cover operational costs while it works out a
potential deal, as part of the state's Distressed HosP-ital Loan Program.

Madera Community Hospital is already in negotiations with another suitor,

Adventist Health, a faith-based, nonprofit health system operating in California,
Oregon and Hawaii. The P-roP-osed Adventist deal was made public late July and is
contingent upon the $50 million loan from the state in year one, plus another $30
million in funding for year two.

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CLAIM OFFER

Madera Community Hospital closed in December and filed for bankruP-tcy in March
after a deal fell through to sell the hosP-ital to Trinity Health. owners of Fresno-based
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St. Agnes hospital. The abrupt closure left 160,000 Madera County residents without
access to an acute medical care facility in their county.
Filed 09/08/23 Case 23-10457 Doc 932

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to investigate why the hospital hasn't reported its other options to the court.

"We would like to ... find out if this is a situation where people are just trying to
preserve their jobs in the future," Rafatjoo said at a Tuesday bankruptcy
hearing.Without providing any evidence, he said that under Adventist Health's
proposal, management would be able to keep their jobs, but not with American
Advanced Management. (The Adventist Health letter of intent doesn't specify details
on hospital management's future employment.)

Madera Community Hospital Chief Executive Karen Paolinelli said in an email

statement to The Bee that Rafatjoo's contention is "completely false."

While Paolinelli said she couldn't share information on potential suitors, she said
"the hospital Board of Trustees voted on Adventist Health as they felt Adventist
Health would be able (to) serve the health care needs of our community in the
future," Paolinelli said.

Riley Walter, an attorney representing Madera Community Hospital in the

bankruptcy proceedings said that American Advanced Management was "acting like
a jilted lover who wants to get back together."

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Filed 09/08/23 Case 23-10457 Doc 932

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Madera hospital "welcomes the opportunity to respond to AAMI (American

Advanced Management Inc.) and to lay out its reasons why the Board chose
Adventist," he said.

Madera Community Hospital still has the exclusive right until Oct. 6 to put forth a
plan to file a reorganization plan to keep the business alive and to pay creditors over
time.

Advanced American Management was able to address the court because they
recently purchased a general, unsecured claim of $391 to Madera Community
Hospital, court records show.

WHAT AMERICAN ADVANCED MANAGEMENT IS PROPOSING

According to American Advanced Management executives, they've been engaged

with Madera Community Hospital since December 2022.

Beehler said they want to turn Madera Community Hospital into a true community
hospital that serves as a referral destination where they can transfer patients from
their Coalinga-based facility, for example.

"For us, we want Madera (Community Hospital) to be a hub, not a spoke," he said.

They're proposal includes a management services agreement to run the hospital,

followed by a transition to change of ownership with an asset purchase agreement.
They're also putting up to $30 million of their own funding in the deal in exchange
for the real estate and license of the facility.

As part of this plan, "creditors would be, if not paid in full, close to that," Beehler
said.
X
American Advanced Management says in court filings that their proposal is
"materially more favorable to the Debtor (Madera Community Hospital), its estate,
Filed 09/08/23 Case 23-10457 Doc 932

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Beehler said they also offered to cover the hospital's operational costs so that Madera
County taxpayers don't have to foot the bill during negotiations. On Friday, Madera
County Board of Supervisors voted to allocate $500,000 to support the hospital's
operational costs during the month of September, in addition to the $500,000 they
gave to the hosP-ital in August.

Adventist, he said, is not contributing any of their own funds to help reopen the
hospital.

"Our belief is that (Adventist Health's current proposal) has a low likelihood of
success in getting through bankruptcy court, especially given that there is an
alternative proposal that brings significant repayment to the creditors," Beehler said.

It isn't immediately clear when or how creditors would be paid under the proposed
deal with Adventist Health. A spokesperson for Adventist Health didn't answer
specific questions from The Bee about a proposed repayment plan for creditors.

CREDITORS WANT TO SEE OTHER PROPOSALS

Madera Community Hospital creditors say they want to see more proposals for the
hospital.

X
Filed 09/08/23 Case 23-10457 Doc 932

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"As far as where a transaction ultimately goes," Sherman said, "we welcome a
competitive process."

American Advanced Management, Rafatjoo added, is "not gonna go away."

"Everybody is hanging their hat on this concept of 'oh, we already signed up with
Adventist," he said, "that's not binding on this estate."

Any deal that Madera Community Hospital moves forward with requires court
approval.

This story was originally published August 30, 2023, 12:31 PM.

RELATED STORIES FROM FRESNO BEE

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initial loan from state. 'A step in the financial 'life raft,' but needs millions
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AUGUST 24, 2023 12:44 PM AUGUST 01, 2023 4:49 PM

A MELISSA MONTALVO

'6.._-£-, ~ II J 559-212-4425

Melissa Montalvo covers Latino communities for the Fresno Bee as the part of the Central Valley News
Collaborative, a partnership which includes The Fresno Bee, Vida en el Valle, Valley Public Radio and Rad io
Bilingue. She is a regular contributor to La Abej a, The Bee's free weekly newsletter on Latino issues.Prior to
joining the collaborative, she covered labor and economy in California's Central Valley for The Fresno
Bee/Fresnoland as a Report for America Corps member. She graduated from the University of Southern
California with a B.A. in international relations.

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