UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 12, 2007
Dynacq Healthcare, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-21574 76-0375477
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
10304 Interstate 10 East, Suite 369
Houston, Texas 77029
(Address of principal executive offices and zip code)
(713) 378-2000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events.
Reference is made to the Form 10-Q of Dynacq Healthcare, Inc. ("Dynacq"
or the "Company") for the fiscal quarter ended November 30, 2006 for a full
description of the method in which accounts receivable are accounted for by the
Company. A material component of accounts receivable are long-term receivables,
which are those net receivables for services provided by the Company not
expected to be collected within twelve months of the balance sheet date. Those
amounts represent receivables in the Medical Dispute Resolution ("MDR") process
and legal third-party financial class.
The MDR process is an established reimbursement resolution process
available to providers of healthcare services under the regulations guiding
reimbursement for services provided to injured workers in the state of Texas.
The Company, in conjunction with many of the Texas hospital medical providers,
has attempted over the past several years to resolve the pending claims
regarding payment for the treatment of injured workers under the Texas workers
compensation laws.
The Company has a significant number of reimbursement disputes where the
MDR decision was unsatisfactory to either the insurance carrier or us, and these
decisions have subsequently been appealed to the State Office of Administrative
Hearings ("SOAH") or district court. Many of these cases involve the "stop-loss"
rule governing reimbursement to providers and were consolidated into a single
docket. On November 3, 2006, the en banc panel which presides over the
Consolidated Stop-Loss Docket at SOAH and which consists of nine administrative
law judges, heard the arguments of both the carriers and providers regarding the
stop-loss issue. On January 12, 2007, the en banc panel issued its ruling
regarding when and how to apply the Texas Department of Insurance, Division of
Workers' Compensation Stop-Loss exception to the per diem reimbursement
methodology for injured workers treated in acute care inpatient hospitals in the
835 pending cases before it. That ruling sided with the Company's position on
all matters before the en banc panel. As a result of the ruling, each of the
Company's MDR cases pending in the Consolidated Stop-Loss Docket at SOAH will
now be set for trial and determined on the merits of each case, applying the
decision of the en banc panel. Although we are unable to predict the timing of
the resolution of those cases or the ultimate success of our position, the
ruling of the en banc panel should expedite the resolution process.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dynacq Healthcare, Inc.
By: /s/ Philip S. Chan
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Philip S. Chan
Chief Financial Officer
Date: January 19, 2007