For a better understanding of the Medserv problem, this topic outlines briefly what happened:

May 2009 – Liquidity Problem
• Checks issued by Medserv as reimbursements for medical claims were returned by drawee bank as DAIF.
• Medserv explained that there was miscommunication problem with the bank since the account from where the funds are supposed to be drawn was a dormant account.
• LBPEA gave Medserv the benefit of the doubt and a chance to remedy the situation.

Middle of May- suspension of access to hospitals and clinic services
• Hospitals/clinics in Metro Manila Area and the National Capital Region started to suspend their services to Medserv clients.
• It donned on the LBPEA Officers that the Medserv problem was getting serious.
• Letters and phone calls from exasperated LBPEA members started to barrage the LBPEA Office.

June 10 & 11 – LBPEA NEB Meeting
• Alarmed by the situation, LBPEA NEB convened on June 10 to decide on the fate of Medserv.
• The LBPEA Board decided to give Medserv a chance to recover and renegotiated for a monthly payment of premium wherein one of the conditions was the lifting of suspensions for hospitals.

June 15 - Payment of Premium for July 2009• So an advance payment for the month of July amounting to P6.8M was paid out of the P41M premium fund.
• Despite the payment, the condition continue to worsen and 90% of hospitals nationwide suspended their services

July 9 & 10 – National Emergency Meeting
• On the face of the worsening condition a National Emergency Meeting was held on July 9 and 10 at the LandBank Plaza.
• In attendance were the Regional Governors and Vice-Governors bankwide.
• A position paper was made duly signed by majority of the officers preterminating the contract with Medserv effective July 31, 2009.

Medserv’s Side:
• On one of the sessions, Medserv Officials were invited to explain the problem and discuss their plan of actions.
• Mr. Del Valle-Spokesperson of Medserv explained to the group that it has P70M payables/unsettled obligations including unpaid reimbursements.
• Solutions presented were Mortgage Trust Indenture and Capital Infusion