Chu v. State of Texas (In the Matter of Chu)

Case Type:
Case Status:
No. 15-11001 (5th Circuit, Feb 09,2017) Published
Fifth Circuit affirmed ruling of district court (N.D Tex.), which affirmed bankruptcy court's entry of summary judgment in favor of creditor on objection to chapter 7 debtor's discharge. State of Texas had standing to contest discharge despite holding likely nondischargeable claim related to debtor's Medicaid fraud. Dischargeability of claim had not yet been determined. Aggregate of record supported finding of at least reckless indifference to truth in SOFA and schedules. Debtor failed to meet burden of accounting for disclosed assets.
Procedural context:
Bankruptcy court granted summary judgment motion of creditor (State of Texas) on denial of discharge claim. Debtor appealed to district court (N.D. Texas), which affirmed. Debtor appealed to 5th Circuit.
Orthodontist filed chapter 7 bankruptcy after State of Texas (Health and Human Services Commission) disqualified him from receiving further Medicaid payments. Texas alleged debtor received over $11 million in Medicaid overpayments. After a Rule 2004 examination, the State of Texas filed a 727 action seeking denial of debtor's discharge based on inaccuracies in his SOFA and schedules, including the failure to disclose the disposition of various luxury items, such as watches, jewelry, and other personal items valued at more than $75,000 on his schedules.
Jolly, Higginbotham, Graves

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