In re Farkas, 04-34601-BKC-SHF.
| Decision Date | 09 March 2006 |
| Docket Number | No. 04-34601-BKC-SHF.,04-34601-BKC-SHF. |
| Citation | 343 B.R. 336 |
| Parties | In re: Jacques N. FARKAS, Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
Lara Armstrong, Esq, Roswell, GA, for Wells Fargo Bank NA, Creditor.
Barry S Balmuth, Esq, West Palm Beach, FL, for Matilda Sanguonchitte, Sam Sanguonchitte, Creditors.
Marc P Barmat, Esq, Boca Raton, FL, Charles I Cohen, Esq, Boca Raton, FL, for Jacques N. Farkas, Debtor.
Craig I Kelley, Esq, West Palm Beach, FL, for Wachovia Bank NA, Creditor.
Alexander J Perkins, Esq, Coral Gables, FL, for Thelma McAloon, Creditor.
Gregory L Scott, Esq, West Palm Beach, FL, for Flagler Bank, Creditor.
John L Walsh, Esq, Ft. Lauderdale, FL, for Patricia A Dzikowski, Trustee.
ORDER DENYING MOTION TO DISMISS CHAPTER 7 CASE
THIS CAUSE came before the Court on June 13, 2005 upon the Amended Motion to Dismiss Bankruptcy Proceeding, filed by creditors Sam and Matilda Sanguonchitte (C.P.38), and upon the Joinder to Sanguonchittes' Motion to Dismiss (C.P.48) filed by Thelma McAloon. The Court, having considered the arguments of counsel and being otherwise fully advised in the premises, denies the Motion to Dismiss Bankruptcy Proceeding.
Jacques Farkas ("Dr.Farkas") commenced a voluntary chapter 11 bankruptcy on October 7, 2004. On March 15, 2005, Dr. Farkas converted his case from a chapter 11 proceeding to a chapter 7 proceeding. Dr. Farkas is a medical doctor who is licensed to practice medicine in the State of Florida and specializes in the field of neurosurgery. On August 6, 1999, Sam Sanguonchitte underwent surgery performed by Dr. Farkas. Mr. Sanguonchitte is alleging that Dr. Farkas performed the surgery negligently and, as a result, Mr. Sanguonchitte suffered a devastating injury. Specifically, Mr. Sanguonchitte alleges that rods and wires were improperly inserted into his cervical spine which later migrated into his brain, causing his cervical spine to become unstable. Matilda Sanguonchitte, the wife of Mr. Sanguonchitte, alleges that she also was afflicted as a result of Dr. Farkas' negligence due to her loss of her husband's comfort and consortium. The Sanguonchittes initiated a civil suit against Dr. Farkas, and a jury trial had been scheduled to commence on March 7, 2005.
Thelma McAloon holds a second medical malpractice claim against Dr. Farkas. Ms. McAloon claims to have suffered injury to her lower back caused by a drill that slipped out of Dr. Farkas' hand during surgery. Both the Sanguonchittes and Ms. McAloon had initiated civil actions against Dr. Farkas prior to the petition date. The Sanguonchittes have filed a proof of claim in the amount of $9 million and Thelma McAloon has filed a proof of claim in the amount of $800,000.
Based upon circumstances surrounding the medical malpractice actions, the Sanguonchittes and Ms. McAloon seek dismissal of Dr. Farkas' bankruptcy premised upon the following grounds: (1) Dr. Farkas' bankruptcy interferes with the State of Florida's regulation of the practice of medicine pursuant to Fla. Stat. § 458.320 and Art. 10, § 26 Fla. Const.; and/or (2) Dr. Farkas' bankruptcy was filed in bad faith under 11 U.S.C. § 707(a).
The Sanguonchittes contend that Dr. Farkas filed his bankruptcy in an effort to interfere with the State of Florida's obligation to protect the public's health. The Sanguonchittes cite to Fla. Stat. 458.320(1) ("Florida Medical Financial Responsibility Law") which provides:
As a condition of licensing and maintaining an active license, and prior to the issuance or renewal of an active license or reactivation of an inactive license for the practice of medicine, an applicant must by one of the following methods demonstrate to the satisfaction of the board and the department financial responsibility to pay claims and costs ancillary thereto arising out of the rendering of, or failure to render, medical care or services ....
For physicians with privileges at hospitals the required method for demonstrating financial responsibility mandates that the physician establish an escrow account, maintain a policy of professional, liability insurance, or provide an irrevocable letter of credit in the amount of $250,000. However, Fla. Stat. § 458.320(5)(g) provides that a physician with hospital privileges need not obtain the escrow account, insurance policy, or letter of credit, if the physician agrees to pay a medical malpractice judgment up to the amount of $250,000. The Sanguonchittes allege that Dr. Farkas' chosen method of compliance, in accordance with Fla. Stat. § 458.320(5)(g), was his agreement to make payment on any medical malpractice judgment up to $250,000. To date, neither the Sanguonchittes nor Thelma McAloon have received any payments upon their respective medical malpractice claims.
The Sanguonchittes argue that the sole purpose of Dr. Farkas' bankruptcy is to discharge their medical malpractice claims before they become judgments. In November 2004, an amendment to the Florida Constitution was adopted, providing for the revocation of a physician's license after three incidents of medical malpractice are determined to have been committed. Art. 10, § 26 Fla. Const. (2004) (Florida's "Three Strikes" Amendment). For an incident of medical malpractice to be deemed to have been committed, it must culminate in a final judgment in a court of law, final administrative agency decision, or decision of binding arbitration. Id. As such, the Sanguonchittes believe that cause exists to dismiss this bankruptcy as it interferes with the State of Florida's duty to protect the public health by way of circumventing Florida's "Three Strikes" Amendment.
Dr. Farkas counters the argument by asserting that the contentions as to the alleged violations of both the Florida Medical Financial Responsibility Law and Florida's "Three Strikes" Amendment should be directed to the Florida Board of Medicine and not to the Bankruptcy Court. Dr. Farkas further contends that the Florida legislature has specifically authorized the Florida Board of Medicine to adopt rules and to implement the provisions contained in the Florida Constitution and Florida Statutes regarding the practice of medicine and medical malpractice. Therefore, Dr. Farkas believes that any alleged violation relating to his practice as a physician should be directed to the Florida Board of Medicine and should not impact his ability to avail himself of the protection afforded under the Bankruptcy Code.
The Court is persuaded by the argument advanced by Dr. Farkas that a physician against whom a medical malpractice claim is pending has the same right to file a bankruptcy proceeding as any other individual. See Camp v. St. Paul Fire and Marine Ins. Co. (In re Kimbell), 958 F.2d 340 (11th Cir.1992). In Camp, a creditor holding a medical malpractice claim sought to have the automatic stay lifted to liquidate her claim in state court. The bankruptcy court granted stay relief, but ruled that any judgment obtained would not be enforceable against the doctor personally. Id. at 342. Were this Court to agree with the Sanguonchittes' position, a physician faced with pending medical malpractice claims could never file for bankruptcy protection. There does not appear to be any case authority to support the position that a Florida physician with pending malpractice claims is precluded from filing a bankruptcy proceeding. While the Court is sympathetic to the Sanguonchittes' desire to have the merits of their case adjudicated without this bankruptcy case "derailing" their efforts, this Court finds that neither Dr. Farkas, nor the provisions contained in Title 11, interfere with the State of Florida's protection of public health.
The second ground for dismissal raised by the Sanguonchittes is that this case was filed in bad faith pursuant to 11.U.S.C. § 707(a). This Court previously has addressed the issue of whether a Chapter 7 bankruptcy case can be dismissed for cause where there is a showing of bad faith or lack of good faith. In re RIS Inv. Group, Inc., 298 B.R. 848 (Bankr. S.D.Fla.2003). In that case, Indian Spring County Club, Inc., a creditor, moved to dismiss the chapter 7 petition of the debtor pursuant to 11 U.S.C. § 707(a), which provides:
(a) The court may dismiss a case under this chapter only notice and a hearing and only for cause, including —
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees and charges required under chapter 123 of title 28; and
(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521, but only on a motion by the United States trustee.
The Court analyzed 11 U.S.C. § 707(a) and held that there is no implicit good faith filing requirement for chapter 7 petitions. Id. The Court analyzed the three lines of cases relating to dismissal of chapter 7 petitions for bad faith:
(a) The first line of cases holds that there is no good faith requirement to file a chapter 7 bankruptcy. In re Padilla, 222 F.3d 1184 (9th Cir.2000); In re Etcheverry, 242 B.R. 503 (D.Colo.1999).
(b) The second line of cases holds that dismissal based...
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In re Pina
...dismissal under 11 U.S.C. § 707(a)(1)-(3). See generally In re Linehan, 326 B.R. 474 (Bankr.D.Mass.2005). The court in In re Farkas, 343 B.R. 336 (Bankr.S.D.Fla. 2006), highlighted the aspects of Chapter 7 which distinguish the relief afforded under that chapter of the Bankruptcy Code from ......
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In re Piazza
...of a Chapter 7 case under § 707(a). This district has addressed the issue in several cases and has reached conflicting decisions. In re Farkas 13 and In re Isham14 found that there is no good faith filing requirement in a Chapter 7 case. The petitions in those cases were, however, filed bef......
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In re Piazza
...dismissal of a Chapter 7 case under § 707(a). This district has addressed the issue in several cases and hasreached conflicting decisions. In re Farkas13 and In re Isham14 found that there is no good faith filing requirement in a Chapter 7 case. The petitions in those cases were, however, f......