Waterloo, Iowa-based Cedar Valley Medical Specialists, an independent physician network with more than 20 clinics in northeast Iowa, closed Oct. 30 after it was no longer able to pay its employees, The Gazette reported Nov. 10.
On Nov. 6, a judge appointed Habbo Fokkena, a former U.S. trustee for Iowa, Minnesota, North Dakota and South Dakota, as receiver to take control of the network’s assets, accounts and operations and oversee an orderly wind-down, NBC affiliate KWWL reported. The order excludes patient medical records from the receivership.
Mr. Fokkena told Becker’s the network’s physicians have all left to open their own practices and that he is working to recover and reconcile the network’s assets to pay off the bank. A large amount of unpaid wages owed to employees cannot be paid until the bank is repaid, he said. The process will take a lot of time, and he could not say with any certainty how long.
The receivership capped a monthslong dispute with the network’s lender, Linn County, Iowa-based Farmers State Bank, which is owed more than $15 million, according to court documents.
In May, the bank petitioned the court to access the network’s collateral, alleging insufficient payments. A chief restructuring officer was appointed instead to develop a financial management plan. According to court filings, the officer never presented a usable restructuring plan and charged more than $800,000.
The network’s attorneys alleged that the bank later took control of its accounts and refused to release funds, leaving Cedar Valley Medical Specialists unable to make payroll. On Oct. 27, Black Hawk County District Judge David Staudt denied the network’s request for a temporary injunction that would have restored access to its funds, concluding the organization was aware its assets could be blocked but did not take enough action to prevent it.
Thirty-one employees were laid off Oct. 28, according to the Iowa Worker Adjustment and Retraining Notification website. The network announced its closure in an Oct. 30 statement.
“The inability to continue providing that care as we have for so many years is devastating,” the statement said.
“Throughout this crisis, our physicians have remained committed to their patients, even demonstrating a willingness to continue working without compensation to preserve access to care.”
Several of the network’s former practices are carrying on independently. Cedar Valley Eye Care reopened Nov. 9, and Ascent Integrated Specialists — which operates a Waterloo clinic and satellite clinics in Grundy, Independence, Waverly, Oelwein and Hiawatha — said it would reopen as an independent practice. Cedar Valley Family Medicine will partner with Waverly Health System in January 2027. Its providers will likely work from the Waverly hospital until the practice has an accredited location in Waterloo.
“While it may be painful over the next few months, in the end, I think it will give a great new number of opportunities for us and our patients,” the practice said in an Oct. 30 Facebook post.
MercyOne and UnityPoint Health said their locations in the area would remain open to patients. Farmers State Bank did not respond to The Gazette‘s request for comment, and the network’s administration could not be reached. Becker’s has also reached out to Farmers State Bank and will update this article if more information becomes available.
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