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Medicare Jurisdictional Bar Limits Bankruptcy Court Authority in Health Care Bankruptcy

Pratt’s Government Contracting Law Report November 2015

Wendy G. Marcari, a Member of the Firm in the Corporate Services and Health Care and Life Sciences practices, in the firm’s New York office, authored an article in Pratt’s Government Contracting Law Report titled “Medicare Jurisdictional Bar Limits Bankruptcy Court Authority in Health Care Bankruptcy.”

Following is an excerpt (see below to download the full article in PDF format):

The U.S. District Court for the Middle District of Florida recently ruled that the bankruptcy court administering the Bayou Shores SNF, LLC (“Debtor” or “Bayou Shores”), Chapter 11 proceeding lacked subject matter jurisdiction to enjoin the termination of the Debtor’s Medicare and Medicaid provider agreements or to order the assumption of the provider agreements. … Specifically, the district court held that the Medicare jurisdictional bar under 42 U.S.C.§ 405(h) limits the authority of the bankruptcy court to interfere with efforts by the Centers for Medicare & Medicaid Services (“CMS”) to terminate the provider agreements except to provide judicial review under Section 405(g) after administrative remedies have been exhausted. Bayou Shores has expressed its intention to appeal the district court’s decision, but if the decision is affirmed, it could have broad implications for health care bankruptcies by limiting the ability of health care businesses in bankruptcy to reorganize or sell their assets on a going-concern basis.