NATCHEZ — Two years after the Mississippi Legislature approved a bill to allow Natchez Regional Medical Center to file bankruptcy, state lawmakers will again consider legislation tied to the now-defunct hospital’s final administration.

The bill in question will address the lingering question of employee retirement benefits, which went quietly unpaid for months leading up to the hospital’s March 2014 Chapter 9 filing, its second bankruptcy in five years.

The solution calls for Adams County to essentially buy a further stake in the bankruptcy’s waterfall payments to unsecured creditors. Though officials say it won’t be needed, the county is also seeking permission to take on debt to do it.

The missing money

After the hospital — which was county-owned but operated independently and kept separate books — declared bankruptcy, employees found that despite their continued contributions into the Public Employees Retirement System, the hospital had not made its required employer match payments from December 2013 through February 2014, making the retirement system itself an unsecured creditor.

Under the PERS system, employers — all of which are publicly owned bodies — are required to remit a 15-percent match for all employee retirement payments.

PERS officials said at the time the situation was unprecedented.

The post-bankruptcy employee match for PERS was eventually paid from the proceeds of the hospital’s sale to a private company, but because of the unpaid months in the pre-bankruptcy period PERS hasn’t posted the payment, leaving employees with 11 months of retirement benefits not credited to them.

A total of $488,160.38 is needed to make up the difference, and Adams County’s Board of Supervisors has expressed a willingness to provide those funds, but because the hospital was technically a separate entity from the county government, the county has to seek legislative approval to donate the funds needed.

“For the employees, it was a part of their contract when they went in,” Supervisors President Mike Lazarus said. “It is all about the employees now.”

The solution

The supervisors adopted Jan. 26 a resolution to request that permission from the Legislature, and Rep. Sam Mims has filed it with the Legislature, which will consider it under local and private legislation.

The legislation won’t call for straightforward payments of the claims, however, which include contributions of $147,523 for December 2013, $151,418.76 for January 2014 and $149,218.62 for February 2014.

Instead, the solution would be for Adams County to purchase the PERS claim in the bankruptcy waterfall.

“Since PERS filed a claim in the bankruptcy, they are sitting there as a creditor waiting to get paid like all the other creditors,” Board Attorney Scott Slover said. “Chapter 9 bankruptcy does not put retirement payments ahead of other claims, so they are holding out their hands and waiting just like all the other creditors.”

PERS will allow the county to purchase the stake in the waterfall without the penalties and interest accrued from the late payment, Slover said.

“Once it is allowed for the purchase, then PERS will take the proceeds of that sale and credit the employees for their full service, and the county will wait (for the waterfall payment). If we estimated 50 percent reimbursement, we would get half that money back; if it is full payment, we would get all of it back.”

Lazarus said before the county makes its final purchase into the PERS stake, he wants to sit down with PERS and find out how many employees have already cashed in their retirement benefits.

“We need to sit down with PERS and figure out a price of what it is going to take to make everybody whole,” he said. “I am upset that a lot of these people weren’t vested, so they will never get the retirment, but PERS wants us to pay all of it.

“For those who only had a couple of years in and already cashed that in, I don’t see why we would have to match that because there is nothing to match — this is still taxpayer money we are talking about.”

The bill before the Legislature would allow the county to take out a 10-year bond to finance the county’s buy-in of the waterfall.

“As a fail-safe, we could authorize borrowing the money to pay that off if it is necessary,” Slover said. “I don’t think it is necessary, but it was included just to make sure there are no issues taking care of these employees before the next budgeting cycle.”

The PERS portion of the bankruptcy payments, once released, would be the county’s second stake in the waterfall.

Adams County served as a late-stage financer of the hospital bankruptcy process, taking out a $3 million loan to cover the closing costs.

Under the court-approved settlement, $4 million from its sale to Community Health Systems were placed in an escrow account for two years in case Medicaid and Medicare audits result in any clawback of funds, and the hospital’s accounts receivable are also directed to the waterfall.

The settlement directs that when the accounts receivable and escrow money become available, the first $1 million will be directed to Adams County, the second $1 million will be directed to the unsecured creditors, and the remainder would be split.

A PERS spokesperson deferred comment about the matter to local officials.

Since Community Health Systems purchased the former NRMC facility, it has merged NRMC with the former Natchez Community Hospital and rebranded the consolidated hospital as Merit Health Natchez.