FAMILY HEALTH CARE TO LIQUIDATE ASSETS.

Byline: Chris Sieroty Staff Writer

SIMI VALLEY - Family Health Care Medical Group will not file for bankruptcy, but has decided instead to dissolve the corporation and sell its assets to pay creditors, a company spokeswoman confirmed Wednesday.

Family Health Care, which provided care for 135,000 people in Ventura and Los Angeles counties, closed its doors last week after running up at least $6 million in debt.

Mari Zag, a spokeswoman for the company's former board of directors, said the medical group reached an agreement late Tuesday night with Development Specialists Inc., a Chicago-based firm that provides restructuring services to businesses.

``Our job is to manage the liquidation and distribute the assets to the various creditors,'' said Geoffrey Berman, who will oversee FHC's liquidation. ``We will also collect any money owed the medical group.''

The medical group blames its demise on a number of factors, including cost overruns and low reimbursements from managed-care providers.

``I don't know exactly how much the medical group is owed, because I don't know how many claims there are pending against the company,'' Berman said.

FHC had contracts with 16 managed-care companies, including Health Net and Blue Shield of California.

``This process ensures the continuity of care vs. filing Chapter 7, in which most our assets would have been turned over to a bankruptcy judge, making it more difficult for our doctors to see patients. This enables the physicians to continue their practices,'' Zag said.

Brad Kieffer, a spokesman with Woodland Hills-based Health Net, said the managed-care company would continue to guarantee its members access to their physicians through Nov. 30.

``We are also working to ensure that as many members as possible can retain their existing doctor past this interim period,'' Kieffer said.

``Their business plan doesn't change our focus,'' said Michelle Naiditch, a spokeswoman with Blue Shield of California. ``We remain focused on our members and ensuring they receive the care they need.''

The collapse of the medical group, which acted as a middleman between doctors and health insurance providers, forced the layoffs of 300 employees and left 700 other physicians it contracted with searching for answers.

Zag said the closure of Family Health was the ``worst-case scenario.''

``It was never anticipated and never wanted,'' she said. ``I think the physicians are personally devastated, but they are committed to trying to make a go of it on their own.''

The 7-year-old company, which had expanded from 20,000 enrollees in 1997 to 135,000 this year, was meeting regularly with state regulators and insurance company representatives as late as Oct. 13 to secure a $3 million loan.

When negotiations failed, the medical group was forced to close its offices in Simi Valley, Camarillo and Thousand Oaks. The closure also affected 16,000 patients at its West Hills clinic.

Zag said the office in Simi Valley is open and will schedule patients for appointments between 8:30 a.m. and 4 p.m., Monday through Friday. Other physicians are in the process of moving and should reopen within the next couple of days, she said.

``They have been calling patients to update them on the situation and continue to provide urgent care, including delivering babies,'' Zag said.