A federal judge granted a temporary restraining order on Friday against the Small Business Administration stemming from a lawsuit alleging the SBA discriminated against Hidalgo County EMS.
Allegations are tied to a complaint that a Payment Protection Program application question involving bankruptcy caused the SBA to deny Hidalgo County EMS federal aid.
Hidalgo County EMS, a privately owned company that operates about 100 ambulances throughout South Texas, applied for a PPP loan earlier this month through Plains Capital Bank in the amount of $2,601,805.92, court documents read.
The documents say that Hidalgo County EMS’ call volume has declined about 30% since the onset of the pandemic crisis, causing a significant decrease in revenue.
“It’s a nationwide situation. People are afraid to go to the doctor, they’re afraid to call an ambulance, they’re afraid to go to the hospital,” said Omar Romero, chief restructuring officer for the Hidalgo County EMS.
Court documents argue that the decrease prompted the organization to apply for the loan.
“Hidalgo EMS needs the PPP loan to shore up its finances and allow it to continue to support the community as a front-line medical services provider during the crisis,” documents read.
The application was denied. On Wednesday, Hidalgo County EMS filed suit against the SBA alleging that a question in the document had prevented them from being approved due to the organization’s pending bankruptcy.
“Is the Business or any owner presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy,” the question asked.
Hidalgo County EMS answered yes, and subsequently argued that the question conflated bankruptcy as it relates to other elements of the question.
“There is no statutory provision in either the CARES Act or the Small Business Act that prohibits extending a PPP loan to a debtor and debtor in possession under chapter 11 of the Bankruptcy Code,” court documents stated.
On Friday, Chief U.S. Bankruptcy Judge David Jones approved a temporary restraining order against the SBA.
“We’re encouraged by Judge Jones’ ruling on the TRO allowing us to strike out the bankruptcy language from that part of the application so we can resubmit to the SBA,” Romero said.
Romero said that emergency services will continue to operate even if that resubmitted application is denied.
“Even if it doesn’t go through, 9-1-1 service will be the last thing affected. I mean, we’ll furlough administrative personnel, non-emergency personnel, before we ever get to 9-1-1 personnel,” he said. “Even if we can’t get this done, we’re not going to shut our doors and there’s not going to be this giant, gaping hole in 911 service. The last thing we’ll ever get to is cutting emergency services … heck, I’ll cut my pay. We’ll do what we have to do to stay open.”