Madness in Medicare

Bayou Casts Uncertainty Over the Future of Nursing Facility Bankruptcies

Currently, there is a circuit split between the Ninth and Eleventh Circuits regarding whether bankruptcy courts have jurisdiction over a Medicare or Medicaid dispute under Title 42, § 405(h) of the U.S. Code. If the bankruptcy court does not have jurisdiction over a Medicare provider agreement dispute, as the Eleventh Circuit recently held in In re Bayou Shores SNF, the nursing facility is effectively unable to bring its case before the bankruptcy court and potentially denied an opportunity to reorganize. This Note analyzes the practical effects of the Eleventh Circuit’s In re Bayou Shores SNF decision by considering statistics on rising Medicare costs, projected elderly population growth, increase in the number of people expected to use long-term care, and a recent increase in nursing home Chapter 11 filings. Additionally, this Note examines the potential reorganization hurdles nursing facility debtors may face if their Medicare claims are adjudicated through the HHS’s review process. This Note further argues that In re Bayou Shores SNF is contradictory to many of the congressional policies of bankruptcy law. Lastly, this Note recommends that because the Supreme Court has denied certiorari to resolve the circuit split, bankruptcy courts should exercise jurisdiction over Medicare disputes under 42 U.S.C. § 405(h)—while using discretionary factors to abstain from hearing especially complex Medicare issues. This recommendation places an emphasis on the congressional-endorsed objective of providing an expeditious and efficient bankruptcy process for the debtor, while balancing the interests of the Department of Health and Human Services to process complicated Medicare disputes.

The full text of this Note is available to download as a PDF.