Parkview Adventist Med. Ctr. v. United States
Decision Date | 25 May 2016 |
Docket Number | 2:15-cv-00320-JDL |
Parties | PARKVIEW ADVENTIST MEDICAL CENTER, Appellant, v. UNITED STATES OF AMERICA, Appellee. |
Court | U.S. District Court — District of Maine |
This matter comes before the court on Parkview Adventist Medical Center's appeal taken from the Bankruptcy Court's denial of the Debtor's motion to compel the post-petition performance of an executory contract. For the reasons discussed below, I affirm the decision of the Bankruptcy Court.
Parkview Adventist Medical Center ("Parkview"), a hospital located in Brunswick, Maine, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code ("Bankruptcy Code"), 11 U.S.C.A. § 101 et seq. (2016), on June 16, 2015. ECF No. 13 at 8, 11.1 In a letter dated June 15, 2015 ("Notification Letter"), Parkview informed the Centers for Medicare & Medicaid Services ("CMS"), with which it had a Provider Agreement to provide services and receive payment under the federal Medicare program, that it would close as an inpatient hospital butwould continue to provide outpatient services. Id. at 8, 10-11. Specifically, the letter stated in part:
CMS' response came in a letter dated June 19, 2015 ("Termination Letter"). CMS indicated that it found the termination effective as of June 18, 2015, and that Parkview no longer qualified as a "hospital" for purposes of Medicare:
Also on June 19, 2015, the State of Maine, Department of Health and Human Services issued a Conditional License to Parkview authorizing it to operate a 55-bed acute care facility through December 19, 2015. ECF No. 13 at 11. On June 24, Parkview informed CMS that it was not terminating the Provider Agreement and that CMS' decision to terminate the agreement would adversely affect Parkview's bankruptcy transition plan. Id. at 11, 41; ECF No. 14 at 13. On June 25, CMS responded that it was willing to rescind the termination if Parkview resumed its inpatient admissions. ECF No. 13 at 11, 41; ECF No. 14 at 13-14. Parkview later sought, on July 27, to rescind its June 15 notice of voluntary termination. ECF No. 13 at 41.2
Parkview's motion to compel the post-petition performance of an executory contract ("Motion to Compel") asserted that because the Provider Agreement is an executory contract, it is property of the debtor's estate and, therefore, pursuant to 28 U.S.C. § 1334(e),3 the Bankruptcy Court has exclusive jurisdiction over the ProviderAgreement as property of the estate. Case No. 15-20442 (Bankr. D. Me.), ECF No. 144; Appellant App. at 41-43, ¶¶ 12-16. Parkview further asserted that the doctrine of exhaustion of administrative remedies does not apply to its motion because the motion alleges violations of the Bankruptcy Code, §§ 362, 365, and 525, and not violations of the Medicare Act. Appellant App. at 43, ¶ 17. The motion requested that the Bankruptcy Court issue an order determining that CMS' "Termination Notice" is null and void and that the Provider Agreement remains in effect. Id. at 56. In addition, Parkview asked the court to require CMS to honor the terms of the Provider Agreement, until assumed or rejected by Parkview, and to reimburse Parkview for Part B Medicare services provided from and after June 18, 2015. Id.
In opposition, CMS contended that 42 U.S.C. §§ 405(g) and (h), made applicable to the Medicare Act by 42 U.S.C. §§ 1395ff(b)(1)(A) and 1395ii, respectively, allow judicial review for a claim arising under the Medicare statute only after presentment of the claim to the Secretary of Health and Human Services and exhaustion of administrative remedies. Case No. 15-20442 (Bankr. D. Me.), ECF No. 166; Appellant App. at 85-86, ¶¶ 14-15. Therefore, CMS advanced, the Bankruptcy Court lacked jurisdiction to hear and adjudicate Parkview's motion and could not reinstate the Provider Agreement. Appellant App. at 87, ¶ 17.
CMS also argued that, assuming the Bankruptcy Court had jurisdiction, CMS' acceptance of Parkview's request to voluntarily terminate the Provider Agreement did not violate 11 U.S.C. §§ 362, 365, or 525, and that Parkview rejected the Provider Agreement with its voluntary termination request. Id. at 83, 96, ¶¶ 6, 37. CMS asserted that by its June 19 Termination Letter, CMS "accepted Parkview's June 15, 2015, voluntary termination for its Hospital Medicare Provider Agreement[,]" and that by discharging all inpatients and ceasing to accept new inpatients, Parkview no longer met the definition of "hospital" under Section 1861(e) of the Social Security Act4 and 42 C.F.R. § 482.1, as of June 18, 2015. Id. at 82-83, ¶¶ 4-5. Because Parkview failed to specify a date of termination in the Notification Letter, CMS contended, CMS was required to do so. Id. at 82, ¶ 4. CMS chose June 18, 2015, because as of that date Parkview had closed its inpatient care services, discharged all inpatients, and stopped accepting new inpatients, and the State of Maine had prohibited Parkview from admitting inpatients without prior approval. Id. at 82-83, 97, ¶¶ 4, 40.
CMS further posited that because Parkview's Notification Letter of June 15 preceded the bankruptcy petition of June 16, the termination took place pre-petition.5 Id. at 96-97, ¶ 38.
On July 24, 2015, the Bankruptcy Court issued an oral order denying Parkview's Motion to Compel. See Case No. 15-20442 (Bankr. D. Me.), ECF No. 200; Appellant App. at 203; Appellant App. at 197-202 (Transcript of Hr'g, July 24, 2015). The court explained:
On January 7, 2016, an Administrative Law Judge ("ALJ'), acting for the United States Department of Health and Human Services ("DHHS"), issued a decision on Parkview's administrative appeal of CMS' action with respect to the termination of the Provider Agreement. ECF No. 13 at 15; see also ECF No. 13 at 39-47 (text of ALJ decision). The ALJ concluded that "CMS' determination [of June 19,2015] to impose a retroactive effective date for a voluntary termination based on Parkview's decision to cease providing inpatient services" and Parkview's consequent failure to meet a statutory requirement to be a hospital in the Medicare program, was "an involuntary...
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