Filing indicates Adventist Health settled with Fire Victim Trust for $200 million while abandoning Paradise hospital [The Press Democrat]

May 10—A new report from Adventist Health indicates the sprawling, religious-affiliated nonprofit settled with the PG&E Fire Victim Trust for $200 million for the loss of its Paradise hospital during the 2018 Camp Fire.

The $200 million figure, which has not been previously reported, indicates negotiators for the trust brought Adventist Health down considerably from an original $1 billion claim the company sought during aggressive legal maneuvering in federal bankruptcy court. To date the company has received 60 percent of the settlement.

But the payout still represents a sizable chunk out of the Fire Victim Trust, a fund established out of PG&E's bankruptcy to pay damage claims to victims of utility-caused wildfires dating from 2015. Those claims include the 2017 North Bay fires and the 2018 Camp Fire, which burned the Butte County community of Paradise to the ground.

The bankruptcy deal that established the cash-strapped trust was structured in a way that favored corporate entities over individuals and has left many fire victims suffering compounding financial impacts while waiting to be made whole.

The burden is especially difficulty in Paradise, which has a large population of older and low income residents.

An Adventist Health executive told The Press Democrat earlier this year they would not reopen the Feather River Hospital in Paradise as the community seeks to reestablish itself. The company instead announced a $2 million investment to expand a health clinic.

"It's good, but it's just not enough," Paradise council member Steve Crowder told The Press Democrat Tuesday.

Adventist last week released an audited report on its 2022 financials that revealed the nonprofit had received a $90 million "initial payment" from the trust.

The fund, which was supposed to have a value of $13.5 billion, was composed of half cash and half utility stock. However stock prices plummeted following the company's culpability for the fires and has never reached a sufficient value to make victims whole.

In 2022, the trust was only able to pay claimants, including corporate ones like Adventist, up to 45% of what they're owed.

Trust officials and Adventist executives say a confidentiality agreement prevents either side from the settlement amount or other details.

But on Tuesday, the trust confirmed that like any other claimant, Adventist had been paid 45% of its claim by the end of last year. The $90 million dollars reported in the audit is 45% of $200 million.

In a statement, a spokesperson for Adventist declined to confirm the settlement figure.

Since then, the company, like other claimants, received an additional 15% payment, bringing it to 60% or $120 million of its total payout.

Still, while the company took in millions from the bankruptcy settlement and pandemic relief funds, it operated at a loss in 2022, according to the company's audit.

Before the Camp Fire, Adventist ran a well-regarded 100-bed acute-care hospital, cancer center and maternity ward in Paradise. While firefighters made a considerable effort to save the hospital, it has been shuttered since fire and water damage rendered the facility inoperable.

The community has long anticipated the return of the hospital. The only healthcare provider and the largest employer in Paradise, it was both as a critical health resource and an economic driver to a town working hard to rebuild.

But the hospital system slow-walked a decision about whether to rebuild its hospital or its emergency room and misled the community about its plans, residents and town officials say.

Meanwhile, fire victim lawyers argued that the company maneuvered to maximize its settlement in bankruptcy court, slowing the process for compensating families and individuals. The settlement affected how much of the underfunded pot of money would be left for everyone else. Unlike most fire survivors, lawyers pointed out that Adventist was able to recoup significant amounts from insurance. Alongside its trust settlement, the company has received at least $138 million so far, according to public tax audits. It received $10 million in 2022.

Bolstered by recent sales of PG&E's improving stock, the Fire Victim Trust has been able to pay out more than $9 billion to victims and sent claim determination notices for 96% of claimants. However, the amount of the claims awarded so far, $16.6 billion, exceeds the fund's maximum value by more than $3 billion.

Negotiations continue between the trust and two other corporate behemoths, AT&T and Comcast, who also have large settlement claims.

As payments go out, fire victims, legislators and other advocates have lobbied for legislation that would exempt all fire victim compensation from taxation. California eliminated such state taxes in 2022, but a federal bill to do the same for federal taxes, proposed by Reps. Mike Thompson, D-St. Helena, and Doug LaMalfa, R-Richvale, failed last year. A new version re-introduced in January has yet to move forward.

As a 501(c)(3) tax exempt nonprofit, it is unclear what, if any, Adventist's federal tax liability will be on its settlement. The company did not respond to a question about whether it will owe taxes on the payments.

The company has yet to follow through with a commitment made earlier this year to hold a town hall to explain its plans for Paradise to residents, according to Crowder. In the meantime, he and other town leaders are inviting other health care companies to consider the town.

"I'm not going to quit looking for a provider to do emergency services here," Crowder said.

You can reach Staff Writer Andrew Graham at 707-526-8667 or [email protected]. On Twitter @AndrewGraham88.

You can reach staff Writer Marisa Endicott at 707-521-5470 or [email protected]. On Twitter @InYourCornerTPD and Facebook @InYourCornerTPD.

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