# Sameh H. Aknouk, Dental Services, P.C.

> United States Bankruptcy Court, S.D. New York · March 3, 2023

URL: https://www.frixlaw.com/law-library/cases/10460877

## Case

- **Court:** United States Bankruptcy Court, S.D. New York
- **Decided:** March 3, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10460877

## How later opinions describe it (automated extraction)

- finding that a debtor’s dental practice was not a health care business because it did not “provide patients with shelter and sustenance in addition to medical treatment” or “fit within the categories of health care businesses described in” section 101(27A)(B)
- stating that “[b]ecause malpractice does not appear to have caused the bankruptcy, no likelihood of tension between the interests of the patients and Debtors appears to exist”
- finding a low level of provider dependency where dental patients have access to their medical records and the nature of a dental clinic is such that a patient may “seek alternate dental or orthodontic care” if he or she so chooses
- stating that internal safeguards were sufficient where the debtor’s dentists worked in teams, which “provide[d] a form of internal oversight and safeguard for patient care”

## Opinion text

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: FOR PUBLICATION

SAMEH H. AKNOUK, DENTAL SERVICES, P.C., Chapter 11

Debtor. Case No. 22-11651 (MG)
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MEMORANDUM OPINION AND ORDER DENYING THE UNITED STATES
TRUSTEE’S MOTION FOR APPOINTMENT OF A PATIENT CARE OMBUDSMAN
UNDER 11 U.S.C. §§ 101(27A) AND 333

A P P E A R A N C E S:

KIRBY AISNER & CURLEY LLP
Attorneys for the Debtor
700 Post Road, Suite 237
Scarsdale, New York 10583
By: Erica R. Aisner, Esq.

OFFICE OF THE UNITED STATES TRUSTEE
U.S. Federal Office Building
201 Varick Street, Room 1006
New York, NY 10014
By: Shannon Anne Scott, Esq.

MARTIN GLENN
CHIEF UNITED STATES BANKRUPTCY JUDGE

Pending before the Court is the motion of the United States Trustee (“US Trustee”) for
appointment of a patient care ombudsman in this Subchapter V, Chapter 11 case. (“Motion,”
ECF Doc. # 33.) The debtor, Sameh H. Aknouk Dental Services, P.C. (“Debtor”) filed an
objection to the Motion. (“Objection,” ECF Doc. # 38.) A hearing was held on the Motion on
February 16, 2023. The Motion raises the important question whether the Court should deny the
Motion for appointment of an ombudsman in an SBRA case where adding administrative
expense may make it considerably more difficult for the Debtor successfully to restructure and
no issues relating to patient care have arisen.
For the reasons explained below, the Court SUSTAINS the Debtor’s Objection and
DENIES the Motion WITHOUT PREJUDICE.

I. BACKGROUND
The US Trustee filed the Motion pursuant to section 333(a)(1) of the Bankruptcy Code
(the “Code”), which requires the Court to order the appointment of an ombudsman to monitor the
quality of patient care (a “Patient Care Ombudsman”) where the debtor is a health care business,
as defined by section 101(27A), filing for chapter 7, 9, or 11 relief, unless the Court finds that
such appointment is not necessary for the protection of patients. See 11 U.S.C. § 333(a)(1). The
Debtor did not affirmatively acknowledge that it is a health care business in its voluntary
petition. (Motion at 1; see also “Petition,” ECF Doc. # 1, at 2.) According to the declaration of
Dr. Sameh H. Aknouk annexed to the Debtor’s Objection (“Aknouk Declaration,” ECF Doc. #
38-1) and Dr. Sameh Aknouk’s Section 341 Meeting testimony cited in the Declaration of

Shannon Anne Scott annexed to the Motion (“Scott Declaration,” ECF Doc. # 33-1), the Debtor
is a family owned and operated full-service general and cosmetic dentistry practice which has
been in operation for approximately twenty-five years and services between 1,000 and 2,000
patients. (Aknouk Declaration ¶ 2; Scott Declaration ¶ 4.) The Debtor currently operates as a
debtor-in-possession and manages patient record keeping using a software program called
“Dentrix.” (Motion at 2.)
The Debtor initiated bankruptcy proceedings due to mounting legal costs stemming from
a labor dispute in conjunction with declining revenues due to the COVID-19 pandemic.
(Aknouk Declaration ¶ 6.) According to the Debtor’s declaration filed pursuant to Local Rule
1007-2 (“Rule 1007-2 Declaration,” ECF Doc. # 2), the Debtor had a collective bargaining
agreement (the “CBA”), now terminated, with Local 553, International Brotherhood of
Teamsters (the “Union”) at the time Dr. Aknouk began operating the dental practice, which the
Debtor renewed several times over the years. (Rule 1007-2 Declaration ¶ 4.) The Debtor claims

it was the Debtor’s understanding that only full-time employees were eligible for certain benefits
under the CBA. (Id.) The Union’s audit firm conducted regular audits of the Debtor’s payroll
records to confirm proper reporting to the Union, and, following the audit firm’s 2018 payroll
audit, the Union demanded approximately $98,378.30 for unpaid benefits to part-time
employees. (Id. ¶¶ 5–7.)
The Union commenced an action in the United States District Court for the Eastern
District of New York on August 24, 2018 (the “District Court Action”) seeking to recover
allegedly delinquent contributions plus 18% interest and attorneys’ fees. (Id. ¶ 8.) In February
2021, the National Labor Relations Board investigated the Union’s claims and sought recovery
from the Debtor of $232,139 (the “NLRB Action”), which the Debtor believes would need to be

paid in addition to any judgment or settlement arising out of the District Court Action. (Id. ¶ 9.)
The Debtor failed to file an answer in the NLRB Action by the deadline, which was sometime in
November 2022, although Debtor does not provide an exact date. The NLRB subsequently
moved for entry of a default judgment. (Id.) The Debtor denies that it has any liability to the
Union but seeks Chapter 11 bankruptcy protections in order to restructure its affairs. (Id. ¶ 10–
11.)
A. The Debtor’s Status as a Health Care Business
The US Trustee claims that the Debtor is a health care business within the meaning of
section 101(27A) despite the Debtor not identifying itself as such in its voluntary petition.
(Motion at 7–9.) The US Trustee relies on information presented on the Debtor’s website as well
as Dr. Aknouk’s testimony to argue that the Debtor offers surgical treatments to the general
public at its facilities. (Id.) Specifically, the US Trustee notes that the Debtor’s website
advertises dental procedures including root canals, crowns, tooth extraction, and dental implants

to the general public and that Dr. Aknouk testified to administering local anesthesia to patients
for such procedures. (Id. at 8.) The Debtor objects to the US Trustee’s claim that it is a health
care business within the meaning of section 101(27A) on the grounds that it does not provide
inpatient services and is therefore not the type of business described in section 101(27A)(B).
(Objection ¶¶ 5–6.)
B. The Necessity of a Patient Care Ombudsman
The US Trustee states that a Patient Care Ombudsman is necessary because the Debtor’s
record keeping software, Dentrix, does not provide any oversight or monitoring of the quality of
Debtor’s patient services. (Motion at 2.) The US Trustee argues that such oversight is required
because a decline in the quality of patient care could reduce the Debtor’s income, which is

essential to funding the Debtor’s reorganization efforts. (Id. at 10.) The US Trustee further
claims that the cost of appointing an ombudsman would not render it unnecessary because
Debtor has sufficient cash on hand and a busy practice and because industry-wide revenues have
substantially recovered to pre-pandemic levels. (Id. at 10–11.) The Debtor objects to the US
Trustee’s claim that a Patient Care Ombudsman is necessary even if it were properly classified as
a health care business because, among other reasons, the cause of its bankruptcy is unrelated to
patient care quality, it is subject to licensing and supervising authorities, and it has no prior
history of deficient patient care. (Objection ¶¶ 7–16.) At a hearing in this matter on January 4,
2023, counsel for the Debtor indicated that the parties had tried to reach a compromise whereby
the subchapter V trustee, Yann Geron, (the “Subchapter V Trustee”) would serve as the Patient
Care Ombudsman, but Debtor’s counsel indicated that proposal had not been acceptable to the
US Trustee.
II. LEGAL STANDARD

Section 333(a)(1) of the Code provides:
(a)(1) If the debtor in a case under chapter 7, 9, or 11 is a health care business, the
court shall order, not later than 30 days after the commencement of the case, the
appointment of an ombudsman to monitor the quality of patient care and to
represent the interests of the patients of the health care business unless the court
finds that the appointment of such ombudsman is not necessary for the protection
of patients under the specific facts of the case.
11 U.S.C. § 333(a)(1) (emphasis added).
Compensation and reimbursement of an ombudsman is allowable as an administrative
expense pursuant to section 503(b)(2) of the Code. 11 U.S.C. § 503(b)(2). The last italicized
clause permits the Court to deny the motion for appointment of an ombudsman if it is “not
necessary for the protection of patients under the specific facts of the case.” Thus, the Court
must decide whether the facts in this case make the appointment unnecessary.
A. The Debtor’s Status as a Health Care Business
The definition of a “health care business” is defined in 11 U.S.C. § 101(27A) as follows:
(27A) the term ‘health care business’ —
(A) means any public or private entity (without regard to whether that entity
is organized for profit or not for profit) that is primarily engaged in offering
to the general public facilities and services for —
(i) the diagnosis or treatment of injury, deformity or disease; and
(ii) surgical, drug treatment, psychiatric, or obstetric care; and
(B) includes-
(i) any-
(I) general or specialized hospital;
(II) ancillary ambulatory, emergency, or surgical treatment
facility;
(III) hospice;
(IV) home health agency; and other health care institution
that is similar to an entity referred to in subclause (I), (II),
(III), or (IV); and
(ii) any long-term care facility, including any-
(I) skilled nursing facility;
(II) intermediate care facility;
(III) assisted living center;
(IV) home for the aged;
(V) domiciliary care facility; and
(VI) health care institution that is related to a facility referred
to in subclause (I), (II), (III), (IV), or (V), if that institution
is primarily engaged in offering room, board, laundry, or
personal assistance with activities of daily living and
incidentals to activities of daily living.
11 U.S.C. § 101(27A).
Courts determine whether a debtor is a health care business under section 101(27A) by
applying a four-part test (the “Pinellas test” or “Pinellas elements”):
The leading case on § 101(27A)(A) is In re Medical Assc. Of Pinellas, LLC . . .
[which held that] (1) the debtor must be a private or public entity; (2) the debtor
must be primarily engaged in offering to the general public facilities and services;
(3) the facilities and services must be for the diagnosis or treatment of injury,
deformity or disease; and (4) the facilities must be for surgical care, drug treatment,
psychiatric care or obstetric care.
In re Alternate Family Care, 377 B.R. 754, 757 (Bankr. S.D. Fla. 2007) (citing In re Med.
Assocs. of Pinellas, LLC, 360 B.R. 356, 359 (Bank. M.D. Fla. 2007)).
Courts are divided over the existence of an implicit fifth factor—whether a business is an
inpatient facility. The debate hinges on whether the statute requires the Debtor to meet the
requirements of subsections A and B of section 101(27A), which would require the Debtor to be
both a medical provider and an inpatient provider, or only subsection A, which would not require
the debtor to be an inpatient provider. Contrast, e.g., In re Anne C. Banes, D.D.S., P.L.L.C., 355
B.R. 532, 534-35 (Bankr. M.D.N.C. 2006) (finding that a debtor’s dental practice was not a
health care business because it did not “provide patients with shelter and sustenance in addition
to medical treatment” or “fit within the categories of health care businesses described in” section
101(27A)(B)) (citing In re 7-Hills Radiology, LLC, 350 B.R. 902, 904 (Bankr. D. Nev. 2006))
with In re Smiley Dental Arlington, P.C., 503 B.R. 680, 687 (Bankr. N.D. Tex. 2013)
(“Requiring this judicially created element . . . misconstrues the statute. The language in section
101(27A)(B) is inclusive of the specific entities listed and other similar entities, but not exclusive

of other business entities meeting the test under section 101(27A)(A).”).
B. The Necessity of a Patient Care Ombudsman
In determining whether a Patient Care Ombudsman is necessary under the specific facts
of a case, courts have examined the following nine non-exclusive factors:
1. The cause of the bankruptcy;
2. The presence and role of licensing or supervising entities;
3. Debtor’s past history of patient care;
4. The ability of the patients to protect their rights;
5. The level of dependency of the patients on the facility;
6. The likelihood of tension between the interests of the patients and the debtor;
7. The potential injury to the patients if the debtor drastically reduced its level of
patient care;
8. The presence and sufficiency of internal safeguards to ensure appropriate level
of care; and
9. The impact of the cost of an ombudsman on the likelihood of a successful
reorganization.
In re Valley Health Sys., 381 B.R. 756, 761 (Bankr. C.D. Cal. 2008); Alternate Family Care, 377
B.R. at 758.
“Other factors to be considered by the court include: (1) the high quality of the
debtor’s existing patient care; (2) the debtor’s financial ability to maintain high
quality patient care; (3) the existence of an internal ombudsman program to protect
the rights of patients, and/or (4) the level of monitoring and oversight by federal,
state, local, or professional association programs which renders the services of an
ombudsman redundant.”
Valley Health, 381 B.R. at 761 (citing 3 COLLIER ON BANKRUPTCY P 333.02, at 333-4 (Alan N.
Resnick & Henry J. Sommer eds., 15th ed. 2007)).
Section 333 requires the appointment of a Patient Care Ombudsman unless a court finds
such appointment is not necessary. 11 U.S.C. § 333. Debtors found to be health care businesses
bear the burden of establishing that the appointment of a Patient Care Ombudsman is not
necessary. See In re Starmark Clinics, LP, 388 B.R. 729, 734 (Bankr. S.D. Tex. 2008) (“The
text of Section 333(a)(1) of the Bankruptcy Code makes clear that the burden of demonstrating
that appointment of an ombudsman is not necessary for the protection of patients is on any party

opposing the appointment of an ombudsman.”).
III. DISCUSSION
In this case, the Court agrees with the US Trustee, and rejects the Debtor’s argument—
the Debtor qualifies as a health care business under section 333 of the Bankruptcy Code under
the more reasonable disjunctive interpretation of section 101(27A). Nevertheless, the Court
finds that a patient services ombudsman is not necessary here on the facts.
A. Debtor is a Health Care Business
Debtor qualifies as a health care business under the broader interpretation of section
101(27A), which is the more reasonable reading of the statute. Under the broader (disjunctive)
interpretation of section 101(27A), the analysis requires merely that the Debtor meet the

definition of subsection A, which tracks the original four Pinellas Elements. See, e.g., Smiley
Dental, 503 B.R. at 685-86. The narrower (conjunctive) interpretation of section 101(27A)
requires the Debtor meet the definition of subsection B as well, which contains an inpatient
requirement. See, e.g., Banes, 355 B.R. at 534-35. For the reasons set forth in section III.A.2,
infra, this Court declines to follow the narrower (conjunctive) interpretation of the statute.
1. The Debtor Meets All Four of the Pinellas Elements
The first factor of the Pinellas test, that the debtor is a public or private entity, “‘includes
almost every conceivable entity,’ so the inquiry typically focuses on the last three elements.” In
re William L. Saber, M.D., P.C., 369 B.R. 631, 636 (Bankr. D. Colo. 2007) (quoting Pinellas,
360 B.R. at 359). This is satisfied because Debtor here is undoubtedly a private entity. (See
Rule 1007-2 Declaration ¶ 2.) The second factor, which requires the debtor to be primarily
engaged in offering facilities and services to the general public, is met where patients can make
appointments without the assistance of a referring physician. Alternate Family Care, 377 B.R. at

757. The fact that a debtor has a website through which prospective patients can make
appointments is strong evidence that this second prong is satisfied. Id. (“[T]he very presence of
the website suggests that [the debtor] has a public presence and with [a link to check availability
of appointments] it is plausible to suggest that it is offering its services to the general public.”).
The second factor is satisfied here because Debtor operates a website that advertises various
services patients can obtain at Debtor’s facilities and encourages interested patients to call to
book appointments. (Scott Declaration ¶¶ 2–3.)
The third Pinellas factor requires that a debtor’s services or facilities be used for
“treatment of injury, deformity or disease.” Pinellas, 360 B.R. at 359; 11 U.S.C. § 101(27A).
This prong is met where a debtor provides “medically supervised treatment, whether or not it

involves pharmacological treatment” for patients’ conditions but is not met if a debtor provides
solely administrative or procurement services for medical care facilities. Alternate Family Care,
377 B.R. at 758; see also Pinellas, 360 B.R. at 360. The Debtor here meets this prong because it
provides root canals, tooth extraction, dental implants, and treatment for sleep apnea, and
administers local anesthesia to patients for some of these procedures. (Scott Declaration ¶¶ 2, 4.)
Finally, the fourth Pinellas factor requires that “the services or facilities be used for surgical
care, drug treatment, psychiatric care or obstetric care.” Alternate Family Care, 377 B.R. at 758.
Courts have held that minor surgeries performed with local anesthetics are sufficient to qualify a
business as a facility providing surgical care because “the statute does not differentiate between
minor and major surgeries.” Saber, 369 B.R. at 637. Debtor qualifies as a surgical facility under
this factor because “Dr. Aknouk administers local anesthesia to patients for dental procedures
such as root canals for the Debtor.” (Scott Declaration ¶ 4.) In sum, the Debtor undeniably
qualifies as a health care business under section 101(27A) per the Pinellas test.

2. The Court Will Not Read the Inpatient Requirement into the Statute
Courts applying the conjunctive interpretation of section 101(27A) typically require that
the debtor offers inpatient services and provides “sustenance and shelter” to patients. See, e.g.,
Banes, 355 B.R. at 535 (quoting In re 7-Hills Radiology, LLC, 350 B.R. 902, 904 (Bankr. D.
Nev. 2006)). The inpatient requirement was first enunciated in In re 7-Hills Radiology, LLC, in
which the court held that subsections A and B of section 101(27A) should be read conjunctively
and then applied the canon of noscitur a sociis to subsection B to find that only businesses
providing “direct and ongoing contact with patients to the point of providing them shelter and
sustenance in addition to medical treatment” qualified as health care businesses. 350 B.R. 902,
905 (Bankr. D. Nev. 2006). A later decision by another bankruptcy judge applied this analysis

and held that “the types of businesses listed [in subsection B] are all of such a similar nature in
that they provide both housing and treatment . . . that it is difficult to imagine that the legislature
would have intended . . . an outpatient dental practice[] to be read into the statute.” Banes, 355
B.R. at 535.
Other courts have declined to follow this requirement, mainly disagreeing with the 7-
Hills Radiology court’s approach to statutory interpretation. See, e.g., Smiley Dental, 503 B.R. at
687-88. In Smiley Dental, the court analyzed the debtor, a dental practice, to determine if it was
a health care business as defined by section 101(27A). Id. Although the court ultimately held
that a Patient Care Ombudsman was unnecessary regardless whether the debtor was a health care
business, it reasoned that the debtor’s provision of minor dental surgeries such as “root canals,
wisdom tooth removal, and tooth extractions” was likely sufficient to qualify the debtor as a
health care business under both possible constructions of section 101(27A) because it met all of
the requirements of section 101(27A)(A) and was specifically enumerated in section

101(27A)(B)(i)(II) as a “surgical treatment facility.” Id. The Smiley Dental court declined to
read the “sustenance and shelter” requirement into section 101(27A) because it believed such a
reading “misconstrue[d] the statute” and because several other courts had determined debtors to
be health care businesses despite only providing outpatient services. Id. at 687 (collecting
cases). The court further noted that “[t]he language in section 101(27A)(B) is inclusive of the
specific entities listed and other similar entities, but not exclusive of other business entities
meeting the test under section 101(27A)(A).” See id. (citing 11 U.S.C. § 102(3)) (“In this title ...
‘includes’ and ‘including’ are not limiting.”).
This Court similarly declines to read an inpatient services requirement into the definition
of a health care business in section 101(27A). As Smiley Dental correctly notes, to read in this

limitation would inappropriately curtail the reach of the statute, when there is nothing in the text
to indicate that the statute should be read conjunctively. Further, there is no need to turn to
canons of construction such as noscitur a sociis to interpret the statute when a plain reading of its
language reveals that the entity at issue (Debtor) is explicitly enumerated as an example in
subsection B. 11 U.S.C. § 101(27A)(B)(i)(II) (“includes . . . any . . . ancillary . . . surgical
treatment facility.”) Here, as noted above, Debtor is a “surgical treatment facility” because it
provides root canals; the Debtor therefore qualifies as a health care business under a plain
reading of the statute and the Court need not turn to canons of interpretation to make that finding.
See, e.g., Pfizer v. United States Dep’t of Health and Human Servs., 42 F.4th 67, 73-77 (2d Cir.
2022) (noting that canons of construction such as noscitur a sociis are only necessary where the
meaning of a term is ambiguous according to a plain reading of the statute).
Because the Debtor meets all the required elements of the Pinellas test and because a
plain reading of section 101(27A) indicates there is no inpatient services requirement, the Debtor

here qualifies as a health care business.
B. A Patient Care Ombudsman is Not Necessary
Even though the Debtor is a health care business, the Debtor has met its burden of
establishing that a Patient Care Ombudsman “is not necessary for the protection of patients under
the specific facts of the case.” 11 U.S.C. § 333(a)(1). Each of the factors enumerated in Valley
Health, discussed in turn below, weigh against appointing a Patient Care Ombudsman.
1. Factor 1: Cause of Bankruptcy
This factor weighs against the appointment of a Patient Care Ombudsman because the
cause of the bankruptcy was liability related to the Debtor’s alleged failure to remit employer
contributions to the Union, and not any patient care issues, such as a malpractice. While this

triggering event does indicate that the Debtor lacked the funds to satisfy potential liability arising
out of the labor dispute, there is no indication that there has been any reduction in patient care or
privacy due to financial constraints or any other reason. See Smiley Dental, 503 B.R. at 689
(finding affiliated dental clinic debtors satisfied the burden to show a patient care ombudsman
was not necessary in large part because the bankruptcy was caused by “cash flow problems
resulting from changes to Medicare reimbursement practices for orthodontics.”).
2. Factor 2: The Presence and Role of Licensing
The Debtor, as a dental practice, is monitored by state regulatory and licensing agencies.
(See Aknouk Declaration ¶¶ 8–10.) Further, the dentists employed by the Debtor are also subject
to state licensing rules and regulations. (Objection ¶ 13.) The Debtor is inspected regularly by
New York State and the dentists complete continuing education to ensure that they are up to date
on the latest skills, treatments, techniques, and developments in the industry. (Aknouk
Declaration ¶¶ 8–10.) The presence and role of these licensing agencies weighs against

appointing a Patient Care Ombudsman. See Alternate Family Care, 377 B.R. at 758; Smiley
Dental, 503 B.R. at 689 (up-to-date licenses and insurance coverage in accordance with state
requirements weigh against the appointment of a Patient Care Ombudsman). Thus, this factor
weights against appointing a Patient Care Ombudsman.
3. Factors 3 and 4: The Debtor’s History of Patient Care; the Ability of Patients
to Protect Their Rights
The Debtor has no history of compromised patient care or rights. The Debtor has
operated for 25 years in good standing and Dr. Aknouk, its principle, has been in practice for 30
years. (Aknouk Declaration ¶ 4.) There have been no malpractice suits filed against the Debtor
or its dentists and no complaints relating to deficient patient care. (Id. ¶¶ 7, 11.) The Debtor’s
patients are fully informed about their treatment plan and their rights and have avenues both
within and outside the Debtor’s organization to voice questions or concerns if any exist.
(Objection ¶ 15.) At the hearing, the US Trustee argued that because the Debtor operates a large
practice, reportedly between 1000 and 2000 patients, the possibility of a future complaint is high
and additional oversight is needed. As an initial matter, the US Trustee cites no caselaw for the
proposition that the size of the practice is a factor that weighs in favor of appointing a Patient

Care Ombudsman. (See Motion at 10.) Nevertheless, the Court agrees that as a practical matter,
no party can guarantee that future patient complaints will not arise. Given that the Court here
denies the Motion without prejudice, the US Trustee is free to bring a renewed motion should
patient care concerns arise in the future. Accordingly, these factors weigh against appointing a
Patient Care Ombudsman.
4. Factor 5: The Patients Level of Dependency on the Debtor
Where, as here, a debtor is entirely an outpatient facility, courts have considered patients

to be less dependent on the facility than they would be in an inpatient facility. See, e.g., In re
Miss. Maternal-Fetal Med., P.A., No. 21-0091-NPO, 2021 WL 1941627, at *3 (Bankr. S.D.
Miss., Feb. 18, 2021) (“The risk to patient care is lessened further by the Debtor’s role in only
providing outpatient care instead of a continuity of day-to-day care.”). Courts have also found a
low level of dependency, where, as here, a debtor’s services are easily found at numerous other
dental offices. See, e.g., Smiley Dental, 503 B.R. at 689 (finding a low level of provider
dependency where dental patients have access to their medical records and the nature of a dental
clinic is such that a patient may “seek alternate dental or orthodontic care” if he or she so
chooses). While patients who are under local anesthesia following a dental surgery are certainly
dependent on the Debtor, there is no long-term dependency comparable to that of a hospital or

other inpatient facility because such patients leave shortly after surgery. Accordingly, this factor
weighs against appointing a Patient Care Ombudsman.
5. Factors 6 and 7: The Likelihood of Tension Between the Interests of the
Patients and the Debtor; the Potential Injury to the Patients if the Debtor
Drastically Reduced its Level of Patient Care
There is a low likelihood of tension between the interests of the patients and the Debtor
because the Debtor did not file bankruptcy because of deficient patient care or an inability to pay
vendors and suppliers who are critical to patient care. See Smiley Dental, 503 B.R. at 689
(stating that “[b]ecause malpractice does not appear to have caused the bankruptcy, no likelihood
of tension between the interests of the patients and Debtors appears to exist”).
As to the consequences of a drastic reduction in patient care, courts typically find this
factor to weigh in favor of appointing a Patient Care Ombudsman where the Debtor is a long-
term care facility or hospital that performs a high volume of inpatient procedures. See, e.g.,
Valley Health, 381 B.R. at 764 (finding that the seventh factor weighed in favor of appointing a

Patient Care Ombudsman because the sensitive nature of the debtor’s patient services, including
inpatient surgery, critical care, and pediatric services, meant that “a drastic reduction in the
quality of care [could] create[] a significant risk for patients” and because a “cessation of
operations at one of the Debtor’s hospitals would require a transfer of patients to another
facility”) For example, in Alternate Family Care, which involved an inpatient psychiatric
facility for children, the court found this factor weighed in favor of appointing a Patient Care
Ombudsman because a drastic reduction in the quality of the debtor’s patient care services would
require children to be moved to another facility, likely causing severe trauma and disruption.
377 B.R. at 760. Here, in contrast, the Debtor provides dental services that involve only local
anesthesia on occasion and require little to no recovery time for patients in the clinic. (Objection

¶ 20.) If the level of Debtor’s patient care became drastically reduced, it could certainly be
harmful to patients, but patients could find another dentist to frequent without the attendant
disruption that occurs when one is moved from one inpatient setting to another.
6. Factor 8: The Presence and Sufficiency of Internal Safeguards to Ensure
Appropriate Level of Care
As set forth in detail in the Aknouk Declaration, the Debtor has sufficient internal
mechanisms in place to monitor patient care and resolve complaints. The Debtor is certified in
Emergency Care and Safety and maintains the number of continuing education credits required
by New York State. (See Aknouk Declaration ¶¶ 8–10.) The Debtor’s x-ray machines are
inspected by the Department of Health and Dental Hygiene every three years, and the Debtor
provides a lead shield to patients using the x-ray machine. (Id.) To ensure cleanliness, the
Debtor uses an air purifier; an ultraviolet light to sterilize the room and dental tools; and dentists
and assistants use gloves, masks, shields, and disposable coats. (Id. at ¶¶ 11–13.)
While the US Trustee argues that the Debtor’s dental record system, Dentrix, provides no

oversight of patient care (Motion at 2), the Debtor has explained that it has numerous checks and
balances in place to ensure appropriate patient care. (See Objection ¶¶ 8–10; 14–15.) In
addition to oversight from regulatory agencies, the Debtor has systems in place to process
complaints or issues with care through its team of dentists and its office manager. (Objection
¶ 23); see also Smiley Dental, 503 B.R. at 689 (stating that internal safeguards were sufficient
where the debtor’s dentists worked in teams, which “provide[d] a form of internal oversight and
safeguard for patient care”).
Furthermore, though not articulated in the caselaw, the Court noted at the hearing, and
reiterates here, that this case is a small business bankruptcy under Subchapter V of Chapter 11
with the Subchapter V Trustee appointed. The presence of such a trustee weighs against

appointing a Patient Care Ombudsman. While a Subchapter V trustee does not provide the same
level of oversight as a Patient Care Ombudsman would, and the Court can certainly imagine
situations in which a Patient Care Ombudsman would be necessary in addition to a Subchapter V
trustee, the Subchapter V trustee is an extra safeguard against patient care issues that gives the
Court additional comfort that the Debtor’s operations are being monitored. Thus, this factor
weighs against appointing a Patient Care Ombudsman.
7. Factor 9: the impact of the cost of an ombudsman on the likelihood of a
successful reorganization
The US Trustee argues that because the Debtor has approximately $25,000 on hand and
does not anticipate needing a loan from the Debtor’s principle, the cost of an ombudsman is not
an issue here. The Court disagrees. For the reporting month of January, the Debtor’s monthly
operating report shows that the Debtor was cash negative in the amount of $7,464.24.
(“Operating Report,” ECF Doc. # 41, at 3.) The Debtor does project that it will be cash flow
positive in the amount of $9,995.29 next month. (Id.) However, the budget that the Debtor

submitted as part of its cash collateral motion indicates that the Debtor will be very narrowly
cash positive week to week, sometimes by under $1000 dollars. (See generally “Budget,” ECF
Doc. # 24.) In short, the margins here are thin and the Debtor does not have much room for
additional administrative expenses, even if it does have a modest amount of cash on hand. The
additional cost of a Patient Care Ombudsman could eat into these small margins and be the
difference between a cash flow positive and negative business. Accordingly, this factor weighs
against appointing a Patient Care Ombudsman.
IV. CONCLUSION
In sum, even though the Debtor is a health care business under the statute’s meaning,
because all of the Valley Health factors weigh against appointing a Patient Care Ombudsman, the

Debtor has met its burden of establishing that a Patient Care Ombudsman is not necessary on the
facts. Nevertheless, because the Court is cognizant that further patient care issues could arise
and because the Court takes seriously the need to protect patient care during the pendency of the
bankruptcy, the Motion is DENIED WITHOUT PREJUDICE. Should patient care issues arise
in the future, the US Trustee may renew the motion.

Dated: March 3, 2023
New York, New York

Martin Glenn
_____ ____________
MARTIN GLENN
Chief United States Bankruptcy Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10460877. Public record. Not legal advice.