Justia Public Benefits Opinion Summaries

Articles Posted in Bankruptcy
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The First Circuit reversed the order of the district court ruling that the automatic stay provision of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) did not apply to proceedings to determine the amount of federal court-ordered payments that the Commonwealth owed to several federally qualified health centers (FQHCs) per a 2010 injunction, holding that the automatic stay applied in this case.In 2003, several FQHCs sought to enjoin the Secretary of the Department of Health of Puerto Rico from failing to reimburse them for their reasonable costs of providing services to Medicaid patients. In 2018, the Commonwealth filed a motion notifying the district court that the Commonwealth had filed for bankruptcy under Title III of PROMESA and, therefore, the litigation was subject to the automatic stay. The district court ruled that the automatic stay did not apply. The First Circuit reversed, holding that certain provisions of PROMESA did not preclude the automatic stay’s application in this case. View "Migrant Health Center, Inc. v. Commonwealth of Puerto Rico" on Justia Law

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Hernandez filed a voluntary Chapter 7 bankruptcy petition in December 2016, reporting one sizable asset: a pending workers’ compensation claim valued at $31,000. To place that claim beyond the reach of creditors, she listed it as exempt under section 21 of the Illinois Workers’ Compensation Act, 820 ILCS 305/21, applicable via 11 U.S.C. 522(b). Two days after filing for bankruptcy, Hernandez settled the claim. Hernandez owed significant sums to three healthcare providers who treated her work-related injuries. The providers objected to her claimed exemption, arguing that 2005 amendments to the Illinois Act enable unpaid healthcare providers to reach workers’ compensation awards and settlements. The bankruptcy court denied the exemption and the district judge affirmed. The Seventh Circuit certified to the Illinois Supreme Court the question: Whether the Illinois Workers’ Compensation Act, as amended, allows care-provider creditors to reach the proceeds of workers’ compensation claims. The court noted that Section 21 has been interpreted by bankruptcy courts to create an exemption for these assets; 2005 amendments imposed a new fee schedule and billing procedure for care providers seeking remuneration. The Illinois Supreme Court has not addressed the interplay between these competing components of state workers’ compensation law. View "Hernandez v. Marque Medicos Fullerton, LLC" on Justia Law

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The Social Security Administration (SSA) reduced the payment of a back-award that it owed Berg by the amount of an earlier overpayment that Berg owed to SSA. Berg contested this setoff because it was taken during the 90-day period before the filing of her bankruptcy petition. The bankruptcy court concluded that SSA permissibly recovered $17,385 of overpayment but impermissibly improved its position by $2,015. The Seventh Circuit affirmed. Under 11 U.S.C. 553(b)(2), a debtor (Berg) may recover from a creditor (SSA) an amount set off by the creditor in the 90 days preceding the filing of the bankruptcy petition only to the extent that the creditor improved its position during that 90-day period. The bankruptcy court correctly calculated the accrual of Berg’s benefits as occurring on the dates that she had a right to benefits--the last day of each month that she was eligible for benefits and survived to the end of the month. On May 9, 2014, 90 days before the filing of the petition, that amount was $17,385. Because Berg then owed SSA $19,400, the insufficiency on that date was $2,015. On July 30, the date the SSA took the setoff, Berg still owed SSA $19,400, but SSA owed her $20,307; SSA improved its position by $2,015 during the 90-day preference period. That is the amount that Berg may now recover. View "Berg v. Social Security Administration" on Justia Law

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On July 11, 2013, the Idaho Department of Labor (“IDOL”) mailed an eligibility determination for unemployment benefits (the “2013 determination”) to William Wittkopf. This determination found Wittkopf underreported his wages for several weeks, which resulted in an overpayment in unemployment benefits. As a result, Wittkopf was: (1) ordered to repay the overpayment; (2) ineligible for any unemployment benefits for a fifty-two week period; and (3) assessed a civil penalty. Additionally, Wittkopf was told that he would remain ineligible for unemployment benefits until all amounts were repaid. Pursuant to Idaho Code section 72– 1368(3) the last day for Wittkopf to file a protest to the 2013 determination was July 25, 2013, which he failed to do. IDOL attempted to collect on the 2013 determination over the next year without success. Subsequently in early 2016, Wittkopf filed for Chapter 7 bankruptcy. The debt he owed to the state of Idaho was included in his bankruptcy and was discharged by order of the Bankruptcy Court. In September 2016, Wittkopf began filing new claims for unemployment benefits with IDOL because he worked a seasonal job and was not receiving any income in the winter months. After not receiving benefits for several weeks, Wittkopf called IDOL which informed him he was ineligible for unemployment benefits because he had failed to pay back his overpayment, civil penalty, and interest he owed IDOL, even though those amounts were discharged in bankruptcy. Wittkopf mailed a letter to IDOL protesting the denial of his unemployment benefits. Wittkopf claimed in this letter that he was eligible for unemployment benefits because his bankruptcy discharged any amount he owed to IDOL. An Appeals Examiner construed Wittkopf’s 2016 letter as a protest of the 2013 determination. Two days later the Appeals Examiner issued a written decision finding there was no jurisdiction to hear Wittkopf’s protest because it was not filed within fourteen days of when it was issued on July 25, 2013, as required by Idaho Code section 72-1368. On November 3, 2016, Wittkopf appealed the Appeals Examiner’s decision to the Industrial Commission. On January 27, 2017, the Industrial Commission affirmed the Appeals Examiner’s decision. The Idaho Supreme Court determined the Industrial Commission erred in affirming the examiner without having determined first whether: (1) the bankruptcy discharge voided IDOL's 2013 determination; (2) whether the discharge operated as an injunction against any effort to collect, recover or offset the 2013 debt; and if yes, (3) why the Department's denial of current benefits on the basis of the 2013 debt wasn't a violation of the injunction. The matter was remanded back to the Industrial Commission for further proceedings. View "Wittkopf v. Idaho Dept of Labor" on Justia Law

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The Centers for Medicare & Medicaid Services (CMS) terminated its Provider Agreement with Parkview Adventist Medical Center after finding that Parkview was no longer a “hospital” under the Medicare statute. Parkview, which had filed for bankruptcy, attempted to use the Bankruptcy Code to challenge the actions of CMS in terminating the agreement. Parkview filed a motion to compel post-petition performance of executory contracts, arguing that the Provider Agreement was an “executory contract” under 11 U.S.C. 365 and accordingly within the bankruptcy court’s jurisdiction and, as such, CMS’s termination of the agreement was a post-petition termination without court authority in violation of the Bankruptcy Code. Further, Parkview argued that CMS’s termination of the Provider Agreement violated the automatic stay in 11 U.S.C. 362(a)(3) and the non-discrimination provision in 11 U.S.C. 525(a). The bankruptcy court concluded that it lacked jurisdiction over the motion and that CMS had not violated either the automatic stay or the non-discrimination provision. The district court affirmed. The First Circuit affirmed, holding (1) the automatic stay did not bar CMS’s termination of the Provider Agreement; and (2) CMS’s termination of the Provider Agreement was not impermissible discrimination. View "Parkview Adventist Medical Center v. United States" on Justia Law

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Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1, made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals, which held that a rent‐stabilized lease qualified as a local public assistance benefit. Rejecting the Trustee’s argument that “benefits” should be limited to cash payments, the court noted that the rent‐stabilization program had “all of the characteristics of a local 10 public assistance benefit” under the statute and that an exemption was consistent with the purpose of protecting a debtor’s essential needs, including housing. The Second Circuit then reversed and remanded to allow Debtor to claim the exemption from her bankruptcy estate. View "Santiago-Monteverde v. Pereira" on Justia Law

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Debtor lived in a rent-stabilized apartment for over forty years. Debtor filed for Chapter 7 bankruptcy and listed the value of her unexpired rent-stabilized lease as personal property exempt from the bankruptcy estate under N.Y. Debt. & Cred. Law 282(2) as a “local public assistance benefit.” The bankruptcy court struck the claimed exemption, concluding that the value of the lease did not qualify as an exempt local public assistance benefit. The district court affirmed. Debtor appealed, arguing that the value of her lease was a local public assistance benefit that was exempted from her bankruptcy estate. The Second Circuit certified a question to the New York Court of Appeals regarding the issue. The Court of Appeals answered that section 282(2) exempts a debtor-tenant’s interest in a rent-stabilized lease. View "Matter of Santiago-Monteverde" on Justia Law

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Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1 et seq., made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals. View "Santiago-Monteverde v. Pereira" on Justia Law

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Debtor appealed the district court's denial of the confirmation of his proposed Chapter 13 plan on the grounds that it did not accurately reflect his disposable income and that it was unfeasible if debtor's Social Security income was excluded from his "projected disposable income." The court vacated and remanded, holding that the plain language of the Bankruptcy Code excluded Social Security income from the calculation of "projected disposable income," but that such income nevertheless must be considered in the evaluation of a plan's feasibility. View "Ranta v. Gorman" on Justia Law

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Debtor Fred Fausett Cranmer filed a Chapter 13 repayment plan, which excluded Social Security income (SSI) from the projected disposable income calculation. The bankruptcy trustee objected to the plan on that basis. The bankruptcy court denied confirmation of the plan, concluding, inter alia, SSI must be included in the projected disposable income calculation and Cranmer's failure to do so meant he did not propose his plan in good faith. Cranmer appealed and the district court reversed. Upon review, the Tenth Circuit Court of Appeals concluded that SSI need not be included in the calculation of projected disposable income and Cranmer's failure to include it was not grounds for finding he did not propose his plan in good faith. View "Anderson v. Cranmer" on Justia Law