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Ala.'s DEMSI gives up its license

The company had filed for bankruptcy as the city tried to strip its license for an ambulance shortage; First Response now has a monopoly on services

By Eric Fleischauer
The Decatur Daily

DECATUR, Ala. — Decatur Emergency Medical Services Inc. told U.S. Bankruptcy Judge Jack Caddell on Monday it would surrender its license to operate an ambulance service in Decatur.

"Decatur EMS made the decision to simply withdraw its motion and the city is free to pursue what it will be doing," DEMSI attorney Kevin Heard told Caddell at an emergency hearing in Decatur. "The debtor intends on surrendering its license."

DEMSI suspended operations Friday. First Response now has a monopoly on ambulance services in the city. On Monday, First Response had six medic ambulances in service.

The Decatur City Council previously had scheduled a hearing Monday to consider revocation of DEMSI's license. It removed the item from the agenda last week after DEMSI lawyers filed a motion claiming the hearing and a revocation of its license would violate bankruptcy laws.

Assistant City Attorney Chip Alexander said the City Council may not have to act on the revocations, which the Decatur EMS Committee recommended Feb. 21.

"I expect the paperwork to be done in a matter of days and that there will be no need for action by the City Council other than accepting the surrender of the license," Alexander said. "It depends on the circumstances surrounding the surrender of the license and whether it is actually surrendered."

DEMSI filed a bankruptcy petition Feb. 25. Gary Sullivan, a bankruptcy professor at the University of Alabama School of Law, said it was unclear under bankruptcy laws if the filing of the petition prevented the city from proceeding with the revocation.

Caddell's comments from the bench indicated DEMSI's motion to block the city's revocation hearing would have been denied. He said he and his staff had researched the issue extensively over the weekend.

A summary of that research, which The Daily obtained, included numerous bankruptcy cases ruling that the filing of a bankruptcy petition does not prevent governmental agencies from revoking licenses when the purpose is the protection of public safety.

DEMSI also appeared to drop any argument it had that the city had to agree to assignment of the ambulance license to any company that buys the business. A city ordinance would prevent such a transfer, but Sullivan said there was an argument the bankruptcy petition invalidated the ordinance.

Caddell brought up the topic at the bankruptcy hearing.

"It's not going to try to undertake to sell this service subject to its license?" he asked Heard.

Heard said his conversations with city attorneys suggested any purchaser would have to qualify for its own license from the City Council, and could not simply receive an automatic transfer of DEMSI's license.

"My client has spoken to potential buyers," Heard said. "We felt like we'd be up here before the court with a letter of interest, rather than a letter of intent."

Here again, Caddell's comments from the bench indicated he would have ruled against any effort by DEMSI to require the city to transfer its license to a buyer.

"The result of our research was that this is a regulatory matter and that this court cannot enforce the transfer of this license or franchise to someone else," Caddell said. "We found numerous cases where bankruptcy courts had tried to do that and were overruled."

Alexander said he was confident the city ordinance preventing automatic assignment of an ambulance license to a purchaser was valid despite the bankruptcy.

"That is not relevant to the discussion at this point because we have no one trying to buy DEMSI, as far as I know," Alexander said.

The city retained attorney Steve Sasser of Decatur to represent it in the bankruptcy hearing.

According to documents filed with its bankruptcy petition, DEMSI owes the Internal Revenue Service $785,227.

Its problems with the EMS Committee began after a Feb. 7 work stoppage.

Several employees walked off the job over payroll issues. DEMSI took all its ambulances out of service for about three hours. It has not met the city requirement of keeping two ambulances in service at all times and a third ambulance in service for 12 hours a day since Feb. 7.

McClatchy-Tribune News Service

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