Appeals Court Rules Against Nursing Home: Bankruptcy Cannot Affect Prevent Cancellation of Medicare or Medicaid Contacts
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On July 11, 2016, a federal appeals court stated that a bankruptcy judge did not have the authority to block government health officials from cutting off Medicare and Medicaid payments to a Florida nursing home that was alleged to have violated patient-care regulations. A three-judge panel of the 11th U.S. Circuit Court of Appeals sided with the U.S. Department of Health and Human Services (HHS) and the Florida Agency for Health Care Administration (AHCA) in the dispute with nursing home operator Bayou Shores SNF LLC (Bayou Shores).
In 2014, state inspectors cited a St. Petersburg nursing home operated by Bayou Shores. Contending that the violations posed a threat to patients’ health and safety, federal officials notified Bayou Shores that they were terminating an agreement that included Medicare payments, according to the court’s decision.
Bayou Shores subsequently filed for Chapter 11 bankruptcy protection and asked the bankruptcy court to prevent the state and federal agencies from ending the Medicare payment agreements. The bankruptcy judge sided with Bayou Shores and blocked the termination of the contracts. This led the government agencies to appeal to the local U.S. District Court.
Bankruptcy Court Did Not Have Jurisdiction.
The U.S. District Court judge ruled that the bankruptcy court did not have jurisdiction over the payment agreements, prompting Bayou Shores to appeal the case to the U.S. Eleventh Circuit Court of Appeals. After review, the three-judge panel issued a 66-page ruling on Monday July 18, 2016. The decision gave a detailed analysis of federal legislation involving federally funded healthcare programs and bankruptcy law. It and upheld the ruling by the U.S. District judge concluding that the bankruptcy court did not have jurisdiction to make a decision affecting the agreement.
Click here to read the 66 page ruling.
“HHS, not the bankruptcy court, has been charged by Congress with administering the Medicare Act and regulating Medicare providers,” the ruling written by Judge Raymond Clevenger III said. “And though charged with broad jurisdiction to deal with issues related to a debtor’s bankruptcy estate, bankruptcy courts generally lack the institutional competence or technical expertise of HHS to oversee the health and welfare of nursing home patients or to interpret and administer a ‘massive, complex health and safety program such as Medicare.’”
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The attorneys of The Health Law Firm represent healthcare providers in Medicare audits, ZPIC audits and RAC audits, surveys and inspections of nursing homes, and termination of Medicare and Medicad provider agreements, throughout Florida and across the U.S. We also represent physicians, medical groups, nursing homes, home health agencies, assisted living facilities, pharmacies, hospitals, occupation therapists (OTs), physical therapists (PTs), speech therapists (STs), rehabilitation therapists (RTs) and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid program.
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Morning Edition. “Appeals court rules against nursing home in Medicare fight.” Tampa Bay Business Journal. (July 12, 2016). Web.
Brahm, Phil. “Court confirms: Nursing home can’t use bankruptcy to preserve Medicare, Medicaid agreements.” McKnight’s. (July 12, 2016). Web.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawfirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone; (407) 331-6620.
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