Rescue Mission: Bankruptcy attorney helped save community hospitals, clinics

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By Sheila Pursglove
Legal News

Bankruptcy attorney David Miller uses his creative side in representing his clients in difficult insolvency related matters just as he does pursuing his hobbies of woodworking and the enjoyment of fine wine.

Miller starts each case by determining his clients’ goals—be they to pursue potential, long-term business prospects or maximize short-term returns.

“When the goal is to maximize money, we look at not only who’s wrong and who’s right, but what’s the most efficient way to obtain the result we want,” says Miller, a shareholder at Erman, Teicher, Miller, Zucker, & Freedman in Southfield. “I’ve often told people I can win and we can spend $10,000 winning and receive $1, or we can spend a $1,000 and get $9,000. Which do you want? Their answer often tells me the nature of my client. 

“Our business is largely about money. The principal variable is long-term gain versus short-term return. However, it’s also about people and their businesses. If you look at it as how do I get the best outcome, it doesn’t matter who wins or loses. The focus is on getting the outcome my client wants. In bankruptcy, it’s about creating pots of money and dividing it. If I ‘win’ the case and there’s no money to divide, I’ve not accomplished anything.”

Miller’s law niche provides tremendous satisfaction—with several major cases standing out in his mind. In each, Miller represented a different constituency, showing the breadth of his experience.

Recently, he and colleague Julie Teicher negotiated a resolution where a client was able to buy the assets of Cheboygan Memorial Hospital, saving jobs and helping the community.

“This was a case where the hospital, the only hospital in a 45-minute radius and the area’s largest employer, was actually shut down due to certain regulatory mandates,” Miller says.

“In bankruptcy, we have debtors, creditors, secured creditors, unsecured creditors, governmental agencies and quasi-governmental agencies—they all have their interests which are often conflicting. We were able to negotiate a creative resolution bridging the various regulators’ interpretations. Our client was able to buy the hospital assets, preserving much-needed jobs and health services for the community. The resolution for both the client and the community made the case most satisfying.”

Another case, Michigan Healthcare Corporation, started as a Chapter 11.

“There were five separate cases and we represented one of the creditor’s committees,” Miller says. “There was a set of bondholders involved. The hospitals had to go out of business. There were accusations of fraud and abuse, which is a term of art under the Medicare, Medicaid and Blue Cross Blue Shield Provider Agreements. The Debtors’ Management, of course, countered the allegations, but the point was that the creditors were the losers in the dispute.

These cases eventually converted into a Chapter 7 and a trustee was appointed. Miller’s team was appointed counsel for the trustee.

“The payors, Medicare, Medicaid and Blue Cross, all of which had sworn they would never pay a dime, ended up paying millions of dollars into the estate. The funds came from collections on Cost Reports, a source not previously identified,” Miller says. “I had previously convinced the bondholders to waive their remaining claims by allowing them to take the funds in the estates at the time of the conversion, something to which they were already entitled. Because the bondholder deficiency claims were withdrawn, we were able to sue the cost report proceeds to make a distribution to unsecured creditors, who, under Chapter 11, couldn’t get anything. The bondholders had blocked a proposal that would have allowed 2.5 cents on the dollar to unsecured creditors.”  

Due to Miller’s efforts, the unsecured creditors received a distribution in excess of 60 cents on the dollar.

“This took 10 years, but was a very satisfying outcome. Medical malpractice claims received even more because there was a trust we were able to set up for them.”

Another interesting case involved Giliad Baptist Church in Taylor that took money from members and investors to expand its purpose.

“The people who lost money needed to understand that, while they had a right to be upset, the reason why the money was lost was less important than what we could do for them,” Miller says.

He and his colleagues crafted a plan and worked with counsel for the creditor’s committee, allowing the church to stay in existence.

“We were able to maximize the return to investors,” he says. “It didn’t result in full payment, but there was a significant return to creditors. To me, that was a very worthwhile from a personal standpoint in bankruptcy.”

In bankruptcy, a client’s feeling of shame can be difficult to overcome, Miller says.

“You need to point out bankruptcy laws exist for a purpose—there’s no ‘debtor’s prison.’  It’s an efficient way to help people who legitimately find themselves in a financial bind. Even creditors need a mechanism to write off bad debts so they have finality. It helps both sides. Creditors learn what’s a good risk and what’s a bad risk. Debtors can make an honest mistake or have an unexpected change of circumstance and get a fresh start.

“It’s really difficult when debtors come to you with their failed or failing businesses into which they or their father or their grandfather put their life and soul,” Miller explains.  “The business often was what they were going to live and retire on and what their children were going to inherit. To them, all their money and future prospects are gone.

“Sometimes, you need to tell them it’s time to give up this venture. I can’t wave a magic wand and suddenly create more business. So let’s talk to them about how to get their retirement or their children’s future back, which doesn’t necessarily include the business they thought they were going to have. They still have a future, it will just be different—let’s explore the different ways and different business opportunities, and learn from the mistakes.”

Miller, who earned his undergrad degree from the University of Michigan, and his juris doctor, cum laude, from Boston College, followed his father into the law. He joined Erman Teicher in1985, and has been a shareholder since 1991. He and his fellow partners at the firm, Earle Erman, Julie Teicher, Craig Zucker and David Freedman have been together for almost 28 years.

“We support one another. We each have different ways of thinking and areas of expertise,” he says. “Although all of us practice insolvency-related law, we each have our own little niches that are fluid, so we can always help one another.”

In his leisure time, Miller enjoys building things out of wood, a hobby stemming from his days as a law clerk in Holland, Mich., where his boss’s husband was a vineyard master and woodworker. Since his first project—a wooden blanket chest—he has built bookcases, end tables, coffee tables, cradles, a rocking horse, and a wooden pergola over his patio.

“In law, it’s great to have a fabulous outcome, but it’s really hard to show other people what I do.  In woodworking, the finished product, speaks for itself,” he says.

As in law, Miller uses his creativity in his woodworking. He inherited some oak from his grandfather’s farm in Galien, Mich., from which he built a coffee table. He also inherited a pane of glass from an early television, which he used with a board his grandmother used to prop the barn door open, to create a glass end table, a family legacy with a unique history.

“Both of these items were treasured mementos which I converted to items we use in our house,” he says.

His law clerk days also led to his other hobby—wine. His boss’ husband taught him about it every time Miller stopped by—the differences from wine to wine and the geographies and areas from which they came. Now, with daughters Rachel and Lisa attending the University of Michigan, Miller and Mary Beth, his wife of 28 years, are enjoying wine tasting as an empty nester hobby, including a visit last February to the vineyards in California’s Sonoma Valley. At one vineyard they went through nine different wines.

“Our guide took us through the nuances of each, showing us mixes of the same wines taken from different vintages with an attempt to make them taste the same,” Miller says. “I’ve never been much of a drinker, but it doesn’t stop me from appreciating the art of wine tasting. It’s the creative side-fixing problems and finding solutions.”