Eric Fleischauer
The Decatur Daily, Ala.
DECATUR, Ala. — Even as DEMSI took all its ambulances off the road Friday, its lawyers argued the City Council has no right to revoke its license with Decatur.
Decatur Emergency Medical Services Inc. had one ambulance in service Thursday and most of Friday, but notified Decatur EMS Coordinator Ted McKelvey on Friday evening that it had stopped all operations.
The move came after the Decatur City Council canceled a hearing on DEMSI’s operating license after the ambulance company claimed revocation of its licence would violate bankruptcy laws.
First Response had five medic ambulances in service Friday. McKelvey said Decatur Fire and Rescue units now are responding to all emergency calls in the city and its police jurisdiction to provide assistance to First Response, Decatur’s lone remaining ambulance provider, to expedite response times.
The city council Friday canceled a public hearing on DEMSI’s operating license after the ambulance company claimed revocation of its licence would violate bankruptcy laws.
DEMSI filed a motion in bankruptcy court Thursday, and U.S. Bankruptcy Judge Jack Caddell scheduled a hearing on the motion for Monday morning.
The City Council’s revocation hearing was scheduled for 6 p.m. Monday but was removed from the agenda Friday.
Assistant City Attorney Chip Alexander said the city is hiring a bankruptcy lawyer, and he hopes the lawyer can delay the court hearing. He said he is frustrated by the delay in the revocation hearing, which he hopes will go forward soon.
“We can’t just sit back and let the bankruptcy take its course and let them field however many ambulances they feel like,” Alexander said. “That’s not good for the safety of the people of Decatur.
“What we’re talking about is not a financial issue. We’re not trying to collect money. This is a matter of providing public safety, and DEMSI’s not doing it.”
DEMSI’s motion, filed Thursday and posted on the court’s docket Friday, argues that the bankruptcy petition it filed Tuesday prevents the city from taking any action to revoke the license.
“Upon information and belief, the City of Decatur plans to go forward with making this determination to revoke (DEMSI’s) license despite having knowledge of the filing of this case,” the motion reads.
When a company files for bankruptcy, federal law imposes an “automatic stay” that prevents creditors and others from taking some actions against the debtor. Typically the automatic stay prevents creditors from trying to collect debts, but the bankruptcy code also prevents other actions.
According to the motion filed by DEMSI attorney Kevin Heard of Huntsville, the filing of the bankruptcy petition blocks governmental entities from revoking any license.
University of California-Davis law professor John Ayer, who specializes in bankruptcy law, said it’s not clear whether the bankruptcy petition blocks revocation of a license.
“The city will argue that the revocation is police or regulatory and thereby exempted from the stay,” Ayer said.
University of Alabama law professor Gary Sullivan, also a bankruptcy law specialist, said the bankruptcy court could rule either way. Even if the court prevents the city from revoking the license, Sullivan said, it may order DEMSI to provide assurances that it is capable of meeting the requirements of the license.
DEMSI has not met city requirements since Feb. 7, when a work stoppage over payroll issues caused it to remove all its ambulances from service. The city requires DEMSI to have two ambulances in service at all times and a third in service 12 hours a day.
The Decatur EMS Committee on Feb. 21 recommended that the City Council revoke DEMSI’s license.
DEMSI had only one ambulance in service on Thursday and Friday, said Morgan County 911 Director Ryan Welty, who also is a member of the EMS Committee. First Response, the only other company licensed to provide ambulance services in Decatur, had five medic ambulances in service Friday.
Welty said DEMSI’s shortcomings also could complicate efforts to enforce city requirements against First Response, if that becomes necessary. The city’s only enforcement threat under the ambulance ordinance is revocation of the license to operate, and it is an ineffective threat against First Response. The city is too dependent on First Response to take action against it should it violate city requirements.
“DEMSI’s issues exacerbate the existing enforcement problems in the ordinance,” Welty said. “It causes me a lot of concern.”
DEMSI is owned by Roger Stanmore of Huntsville, who also owns Gadsden/Etowah EMS ambulance service. Both Stanmore and Gadsden/Etowah filed for reorganization bankruptcies at the same time as DEMSI.
Unlike DEMSI, however, Gadsden/Etowah — one of two ambulance services in Gadsden — is not trying to retain its license. According to Gadsden media reports, Gadsden/Etowah is in the process of voluntarily surrendering its state EMS license. State EMS Director Dennis Blair did not return calls Friday.
A motion DEMSI filed with its bankruptcy petition indicated Stanmore is trying to sell the company. A city ordinance would prevent DEMSI’s license from transferring to a purchaser, but Sullivan said DEMSI has an argument under the bankruptcy code that the ordinance’s ban on a transfer is not valid.
Alexander said Friday no prospective purchaser of DEMSI has applied for a license from the city.
Billy Chenault, a lawyer in Decatur who practices bankruptcy, said he could not predict how the bankruptcy judge will rule on DEMSI’s motion to prevent a revocation hearing from going forward, but he doubted the matter would be resolved quickly.
“You’re probably several months down the road before you have a final resolution,” Chenault said. “My concern is if I have a wreck and I need an ambulance today. What in the world is going to happen? That should concern everybody.”