First Circuit declines to take sides in circuit split over jurisdiction in Medicare disputes.
- Rochelle Quick TakeView Rochelle Summary
- Case Type:
- Case Status:
- 16-1731 (1st Circuit, Nov 29,2016) Published
Affirming the lower courts’ decisions, the First Circuit held that the termination by the Centers for Medicare & Medicaid Services (CMS) of their provider agreement with the debtor did not violate the automatic stay, as it fell under the “police and regulatory power” exception. 11 U.S.C. § 362(b)(4). In so holding, the circuit expressly declined to weigh in on the existing circuit split over a federal court’s jurisdiction over the administratively “unexhausted” claims of a debtor against CMS.
- Procedural context:
Parkview Adventist Medical Center filed a motion to compel CMS’s performance under its Medicare provider agreement, seeking determinations that CMS’s postpetition termination of the provider agreement was void as a postpetition termination of an executory contract and was done in violation of the automatic stay under 11 U.S.C. § 362(a). Both the bankruptcy court and the district court denied the debtor’s motion, concluding (as a majority of courts have concluded) that the Medicare statute 28 U.S.C. §§ 405(g), (h)) does not permit judicial review of claims against CMS until all administrative remedies are exhausted. The debtor appealed.
The debtor (Parkview) owned and operated a 55-bed inpatient hospital. The day before filing chapter 11, Parkview sent a letter to CMS stating that it would no longer participate in the Medicare program, and informing CMS that Parkview was closing as a hospital and would thereafter only provide outpatient services. In response, CMS notified Parkview that its Medicare provider agreement would be terminated immediately based on Parkview’s voluntary termination and because Parkview no longer met the definition of a “hospital” set forth under applicable law (i.e., “an institution primarily engaged in providing specified inpatient services”). Days later, Parkview had a change of heart, and informed CMS that it was not terminating the provider agreement, to which CMS responded that it would rescind the termination if Parkview resumed inpatient services.
- Lynch, Stahl, and Barron