Judge Dismisses Lawsuits From 2 Bankrupt Maine Hospitals Seeking Federal Relief

Jun 4, 2020

Penobscot Valley Hospital in Lincoln.
Credit Maine Hospital Association

A U.S. Bankruptcy court judge has dismissed lawsuits filed by two rural Maine hospitals that have been barred from receiving coronavirus relief funds through the federal Paycheck Protection Program.

Penobscot Valley Hospital in Lincoln and Calais Regional Hospital each filed lawsuits against the U.S. Small Business Administration for denying them access to funds from the Paycheck Protection Program, or PPP, because the hospitals are in bankruptcy proceedings.

The PPP is a federal loan program to help businesses keep employees on payroll during the coronavirus pandemic.

According to court documents, the hospitals have seen steep declines in patient revenue as outpatient visits and procedures have been cancelled or postponed. From March through mid-May, Penobscot Valley Hospital experienced a $1.2 million shortfall, while Calais saw a $1.8 million decline.

On Wednesday, Judge Michael Fagone issued an opinion that sided with the SBA. While Fagone the hospitals' situation "particularly sympathetic," he said the SBA did not act illegally in making the decision to deny a portion of limited PPP funds to them.