NATCHEZ — A lawsuit could soon be filed against the management and officers of the former Natchez Regional Medical Center.

Speaking at a status conference for the formerly county-owned hospital’s federal bankruptcy case, Kenneth Lefoldt — the court-appointed liquidation trustee — said he has seen a draft of the lawsuit against the hospital’s managing officers.

The possibility of the lawsuit was included as part of the bankruptcy settlement in September, but it as yet has not been filed.

“We are looking at some sort of action against some people, possibly regarding the RAC audits that should have been appealed,” Lefoldt said.

In the RAC process, a third party — known as a Recovery Audit Contractor — reviews Medicaid and Medicare claims filed by a hospital to see if they were properly filed or if the treatment billed for was appropriate. If the auditor makes a negative finding, funding from future Medicare and Medicaid payments can be withheld by the federal government to compensate for the previous inappropriate payment.

Prior to the hospital’s bankruptcy settlement, it was disclosed that audits that could have been appealed were not. Appeals of audits are often successful.

Lefoldt said the venue for the lawsuit has not yet been decided.

Lefoldt also said the estate is still filing a few more audit appeals, and expects “no more than $40,000” to come from the last round of appeals.

Another lingering issue from the bankruptcy is the fate of retirement payments employees made even while the hospital was not making its share of payments into the Public Employee Retirement System.

From November 2013 until the hospital filed for bankruptcy the following March, the hospital did not remit the employer portion of retirement payments even while employee payments were collected and sent. Under the PERS system, employers make a 15 percent match to employee contributions.

PERS has maintained that employee payments cannot be posted without the employer match, meaning those months have not yet been counted toward the employees’ total retirement.

The non-payments of PERS benefits continued after the bankruptcy filing, but the post-petition claims were paid when the bankruptcy court approved the plan that included the ultimate sale of the hospital.

Without penalties, approximately $445,000 is owed. With penalties, that amount comes to a little less than approximately $500,000.

Attorney Steve Rosenblatt, who was in the courtroom representing the hospital, said the issue could be resolved in the first quarter of 2016.

“We are working with PERS, with Adams County and with the liquidating trustee,” Rosenblatt said. “We are having good discussions in that regard, because we want to resolve that employee issue.”

Members of the Adams County Board of Supervisors have suggested the county can make up the difference needed to close out the PERS matter. Even though the hospital operated independently of the county government, it was county-owned. If the county gave the funds to make up the difference, the action would require legislative approval because of the former hospital’s independence.

After its bankruptcy, the hospital was sold to a private company and has since been rebranded as Merit Health Natchez.