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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 20, 1998
FPA Medical Management, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24276 33-0604264
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3636 Nobel Drive
Suite 200
San Diego, CA 92122
(Address of principal executive offices) (Zip Code)
(619) 453-1000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
As reported on July 22, 1998, on July 19, 1998, the Registrant and 89
of its subsidiaries and affiliates (collectively, the "Debtors") filed for
protection under Chapter 11 in the United States District Court for the District
of Delaware (the "Bankruptcy Court"). The cases have been consolidated for the
purpose of joint administration and have been assigned to Chief United States
Bankruptcy Judge Peter J. Walsh. The consolidated caption is: In re FPA Medical
Management, Inc., et. al., Debtors, Case Nos. 98-1596 through 98-1685.
On August 20, 1998, the Bankruptcy Court approved the Debtors' $50
million debtor-in-possession financing agreement provided by a group of the
Debtors' prepetition lenders. The Bankruptcy Court also approved a modified
order under which health maintenance organizations and other pre-paid health
insurance plans are directed to continue to provide post-petition capitation and
other payments directly to the Debtors without setoff or recoupment.
The Debtors have reached agreement with their bank group and the
official committee of unsecured creditors as to their proposed employee
retention program. A hearing for final approval of this program by the
Bankruptcy Court has been scheduled for September 23, 1998, after the program
has been reviewed by the U.S. Trustee.
At the August 18 hearing, the Bankruptcy Court also approved the
Debtors' motions to, among other things: assume executory contracts with key
billing service providers regarding Sterling Healthcare Group; reject
approximately 30 unexpired real property leases; reject certain agreements with
Foundation Health Systems and provide for certain transition of care issues with
respect to enrollees in Arizona and California; and obtain provider excess
insurance coverage.
The Debtors are scheduled to file their formal disclosure statement and
plan of reorganization by September 30, 1998. The Bankruptcy Court has scheduled
a disclosure statement hearing for October 28, 1998 and a plan confirmation
hearing for December 9, 1998.
Copies of the orders and other pleadings filed in the case may be
obtained for a nominal cost directly from (i) IKON Office Solutions at 901 North
Market Street, Suite 718, Wilmington, Delaware 19801 (telephone (302) 777-4500),
facsimile (302) 777-5155); and (ii) Lason Systems, Inc., Delaware Legal Copy
Division, at One Rodney Square, Suite 505, Wilmington, Delaware 19801 (telephone
(302) 426-1500; fax (302) 426-1503).
On August 20, 1998, the Registrant issued the press release
attached hereto as Exhibit 99 announcing the orders entered by the Bankruptcy
Court at the August 20, 1998 hearings.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99 Press Release dated August 20, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FPA MEDICAL MANAGEMENT, INC.
By: /s/ Stephen J. Dresnick
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Date: September 29, 1998 Stephen J. Dresnick
Chairman and Chief Executive Officer
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EXHIBIT INDEX
Number Exhibit
99 Press Release dated August 20, 1998.
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EXHIBIT 99
FPA RECEIVES COURT APPROVAL ON PERMANENT DIP FINANCING
MIAMI, FLA. - AUGUST 20, 1998 - FPA Medical Management, Inc. (OTC
Bulletin Board; FPAMQ) said today that it received final approval from the
Delaware Bankruptcy Court of the Company's $50 million debtor-in-possession
(DIP) financing agreement provided by a group of the Company's prepetition
lenders led by BankBoston, N.A.
"The DIP financing agreement, along with cash generated by operations,
should provide adequate financial resources to fund the turnaround of our
businesses necessary for the Company to emerge from Chapter 11," said FPA
Chairman and Chief Executive Officer Dr. Stephen J. Dresnick.
In other action, FPA said the court approved on Tuesday August 18 a
modified order under which payors - health maintenance organizations and other
pre-paid health insurance plans - are directed to continue to provide
post-petition capitation and other payments directly to FPA without setoff or
recoupment. Additionally, the Company has reached agreement with its bank group
and the official committee of unsecured creditors on its proposed employee
retention program, developed to ensure that critical employees remain with the
Company during its restructuring. A hearing for approval by the Court of the
program has been scheduled for September 23, 1998, after the program has been
reviewed the by U.S. Trustee.
FPA Medical Management and its subsidiaries filed a term sheet for a
plan of reorganization along with petitions under Chapter 11 of the Bankruptcy
Code in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on
July 19, 1998. The Company is scheduled to file a disclosure statement and the
reorganization plan by September 30, 1998, and a plan confirmation hearing has
been scheduled for December 9, 1998.
"FPA is continuing to move forward with its strategic plan," Dr.
Dresnick said. "We have shed more than 50 facilities that are either
unprofitable or fall outside FPA's core business areas. We are making excellent
progress in further refining and strengthening our remaining businesses and
facilities, and continuing our effort to reduce costs."
At the August 18 hearing, the Court also approved several other motions
filed by the Company to, among other things:
- Assume executory contracts with key billing service providers
regarding Sterling Healthcare Group;
- Reject approximately 30 unexpired real property leases;
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- Reject certain agreements with Foundation Health Systems and
provide for certain transition of care issues with respect to
enrollees in Arizona and California; and
- Obtain provider excess insurance coverage.
FPA Medical Management, Inc. is a national physician practice
management organization that organizes and manages primary care physician
networks to contract with HMOs and other prepaid insurance plans to provide
physician and related health care services and provides contract management
support services to hospital emergency departments.
This press release contains statements which constitute
"forward-looking statements" within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. "Forward-looking statements" in this press
release include the intent, belief or current expectations of the Company and
members of its senior management team with respect to the timing of, completion
of and scope of the current restructuring, reorganization plan, strategic
business plan, bank financing, and debt and equity market conditions and the
Company's future liquidity, as well as the assumptions upon which such
statements are based. While the Company believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business and
operations, prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance, and involve risks and
uncertainties, and that actual results may differ materially from those
contemplated by such forward-looking statements. Important factors currently
known to management that could cause actual results to differ materially from
those contemplated by the forward-looking statements in this press release
include, but are not limited to, further adverse developments with respect to
the Company's liquidity position or operations of the Company's various
businesses, adverse developments in the Company's efforts to renegotiate its
funding and adverse developments in the bank financing or public or private
markets for debt or equity securities, or adverse developments in the timing or
results of the Company's current strategic business plan (including the time
line to emerge from Chapter 11), the difficulty in controlling health care costs
and integrating new operations, the ability of the Company to realize the
anticipated general and administrative expense savings and overhead reductions
presently contemplated, the ability of the Company to return the Company's
operations to profitability, the level and nature of any restructuring and other
one-time charges, the difficulty in estimating costs relating to existing
certain markets and consolidating and closing certain operations, and the
possible negative effects of prospective health care reform. Additional factors
that would cause actual results to differ materially from those contemplated
within this press release can also be found in the Company's Form 8-K periodic
filings during 1998, Form 10-Q for the quarter ended March 31, 1998, and the
Company's Form 10-K for the year ended December 31, 1997.
