Column:, Intensive Care, Health Care Providers and the Automatic - - PDF document

Column:, Intensive Care, Health Care Providers and the Automatic Stay: Is Medicare Termination Different than Exclusion?

November 2006

Reporter 25-9 ABIJ 32

Length: 5612 words Author: Written by: Nathaniel M. Lacktman, Foley & Lardner LLP; Los Angeles, nlacktman@foley.com Keith C. Owens, Foley & Lardner LLP; Los Angeles 1, kowens@foley.comWritten by: Nathaniel M. Lacktman, Foley & Lardner LLP; Los Angeles, nlacktman@foley.com Keith C. Owens, Foley & Lardner LLP; Los Angeles 1, kowens@foley.comWritten by: Nathaniel M. Lacktman, Foley & Lardner LLP; Los Angeles, nlacktman@foley.com Keith C. Owens, Foley & Lardner LLP; Los Angeles 1, kowens@foley.comWritten by: Nathaniel M. Lacktman, Foley & Lardner LLP; Los Angeles, nlacktman@foley.com Keith C. Owens, Foley & Lardner LLP; Los Angeles 1, kowens@foley.comWritten by: Nathaniel M. Lacktman, Foley & Lardner LLP; Los Angeles, nlacktman@foley.com Keith C. Owens, Foley & Lardner LLP; Los Angeles 1, kowens@foley.com n1 Jonathon E. Cohn, a partner in the LosAngeles office of Foley & Lardner LLP and a member of the firm's Health Industry Team, also contributed to this article. He practices health care litigation and represents clients in matters involving long-term care, licensing and certification, elder abuse, civil and criminal enforcement, and other regulatory and administrative proceedings. Nathaniel Lacktman is an associate in the Los Angeles office of Foley & Lardner LLP and is a member of the firm's Health Industry Team, where he practices health care litigation. Keith Owens is a partner in the Los Angeles office

• f Foley & Lardner LLP and a member of the firm's Business Reorganizations Practice Group, where he focuses

his practice on creditors' rights, bankruptcy and commercial litigation.

Text

[*32]

In recent years, hospitals, physician groups, nursing facilities and other health care providers have experienced a decrease in revenue, particularly as Medicare and Medicaid reimbursements have failed to keep pace with inflation and the increased expense for medical treatment continues to increase. Many of these providers have been forced to seek bankruptcy protection. Due to the proliferation of health care bankruptcies, Congress established various requirements and obligations specifically addressing health care providers in bankruptcy. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the Secretary of Health and Human Services may "exclude" a health care provider's participation in any federal health care program without violating the automatic stay. 2 BAPCPA's new exception to the automatic stay (11 U.S.C. § 362(b)(28)) ostensibly permits the government to exclude a health care provider from participation in the Medicare and Medicaid programs, sometimes referred to

1

Jonathon E. Cohn, a partner in the Los Angeles office of Foley & Lardner LLP and a member of the firm’s Health Industry Team, also contributed to this article. He practices health care litigation and represents clients in matters involving long-term care, licensing and certification, elder abuse, civil and criminal enforcement, and other regulatory and administrative proceedings.

2

11 U.S.C. § 362(b)(28) provides ″the exclusion by the Secretary of Health and Human Services of the debtor from participation in the medicare program or any other federal health care program (as defined in § 1128B(f) of the Social Security Act pursuant to title XI

• r XVIII of such Act).″ BAPCPA also established new rules for the disposal of patient records (11 U.S.C. § 351), requires that the

bankruptcy court must order the appointment of a patient ombudsman within 30 days of the commencement of any health care bankruptcy case (11 U.S.C. § 333(a)(1)) and imposes a new duty on the trustee of a health care bankruptcy case to make ″all reasonable and best efforts″ to transfer patients to nearby facilities with ″substantially similar″ services that maintain ″a reasonable quality of care″

• Id. § 704(a)(12)). The costs to close a health care business are given priority administrative status under the Act. Id. § 503(b)(8).

collectively as "the Program." However, BAPCPA does not discuss termination from the Program. Although bankruptcy courts have not yet determined the scope of the § 362(b)(28) exception, Program termination is not expressly covered. Therefore, the BAPCPA amendments do not appear to prevent a health care provider from employing the automatic stay to enjoin Program termination and termination of Program payments. Because § 362(b)(28) does not refer to "termination," a health care provider in bankruptcy will likely argue that the automatic stay enjoins the government from terminating the provider's Program participation. Unless the government can successfully assert that termination falls within the police or regulatory powers, 3 a health care provider in bankruptcy should continue to receive state and federal monies for its Medicare and Medicaid patients.

4 A brief explanation of the statutory and regulatory background of the Medicare and Medicaid programs sheds

light on this technical, but essential, distinction. Medicare and Medicaid Certification The Medicare program is a federal health insurance program for the aged under which qualified health care providers are reimbursed by the federal government for the care they administer to Medicare program beneficiaries. The Medicaid program is a cooperative state-federal program that provides medical assistance, including nursing facility benefits, to needy persons regardless of age. Both the federal and state governments jointly fund the Medicaid program. The U.S. Department of Health and Human Services (HHS) administers the Medicare program through the Centers for Medicare and Medicaid Services (CMS), which provides health insurance benefits for aged and disabled persons by making payments directly to the institution or individual providing health care (the "provider").

5

In order to receive Medicare and/or Medicaid funds, a provider must be certified as meeting the participation requirements prescribed by the Social Security Act and accompanying regulations. 6 If a provider meets the conditions of participation, it becomes eligible to participate in Medicare and/or Medicaid 7 by signing a contract with CMS (a "provider agreement"), renewable annually. Certification vs. Licensing Program certification is different and distinct from licensing requirements. Licensing regulates the quality of care provided by a health care facility and assures that the facility has the capability of providing a particularized service (e.g., [*70] [EDITOR'S NOTE: The page numbers of this document may appear to be out of sequence; however, this pagination accurately reflects the pagination of the original published documents.] skilled nursing care or

3

See 11 U.S.C. § 362(b)(4).

4

For another view of the impact of § 362(b)(28),see Maizel and Caplan, "Chicken Little Comes to Roost in Bankruptcy," ABI Journal, Vol. XXV, No. 6 (July/August 2006).

5

The CMS is a federal agency within the U.S. Department of Health and Human Services. CMS operates the Medicare and Medicaid programs and maintains oversight of the survey and certifications of health care providers. Prior to 2001, CMS was known as the Health Care Financing Administration or HCFA.See 42 U.S.C. § 1395cc(a).

6

The statutory requirements for participation in the Medicare and Medicaid programs are set forth in Titles XVII and XIX of the Social Security Act and codified at42 U.S.C. §§ 1395 et seq. and 1396 et seq.

7

42 U.S.C. § 1395cc. Providers that wish to receive both federal (Medicare) and state (Medicaid) funds must be certified to participate in both programs. A dually-certified provider signs two contracts: one with CMS and another with the designated state agency responsible for administering the particular state's Medicaid program. In California, for example, that agency is the Department of Health Services.

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hospice care). Licensing is regulated by the states, and a health care facility cannot provide services unless it is

• licensed. 8

The Medicare Survey Process Providers that participate in the Program are periodically surveyed to verify substantial compliance with Program

• requirements. CMS contracts with state agencies to conduct the surveys and issue findings and recommendations

to CMS. 9 These surveys must be conducted using specific procedures, methods and forms prescribed by CMS and found in an informal collection of documents known as CMS' State Operations Manual. 10 Based on the survey recommendations, CMS determines what action, if any, it will take with regard to the provider's Program participation. CMS and state agencies have the authority to impose a variety of remedies, including civil monetary penalties, state monitoring, temporary management, receivership, directed plans of correction, suspension of payments, termination of the provider agreement and exclusion from the Program. 11 Bankruptcy's Automatic Stay One of the most powerful tools in any bankruptcy case is the automatic stay. Upon filing a bankruptcy case, all entities are automatically enjoined from initiating or continuing an action against the debtor or property of the bankruptcy estate. 12 The automatic stay applies to "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." 13 It is worth noting that the automatic stay is not the only way in which the Code protects the process of reorganizing

• r liquidating the debtor. Numerous cases have held that a regulatory action that threatens the reorganization may

8

See, e.g., Cal. Health & Safety Code § 1253 (necessity of license for health facilities).

9

42 U.S.C. § 1395aa. In California, the Department of Health Services' Licensing and Certification Program determines the compliance of health care providers with the applicable licensing and certification requirements through unannounced inspections (surveys). There are several kinds of surveys, including initial certification or licensure surveys that are required before a provider can gain either a license to operate or certification for Program participation; regular surveys conducted on a periodic basis to evaluate compliance; and surveys conducted in response to a complaint. During the survey process, the survey team examines facility records, conducts staff and patient interviews, and makes observations of patient care, staff and management activities, and facility operations.

10

For example, survey procedures for skilled nursing facilities are governed by 42 C.F.R. § 488.305et seq. and Chapter 7 of the State Operations Manual.

11

See, e.g., 42 C.F.R. § 488.408; 22 C.C.R. § 51048.9 (skilled nursing and long-term care facilities).

12

11 U.S.C. § 362(a).

13

• Id. at § 362(a)(3).

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be restrained under § 105. 14 This equitable power gives full respect to the expertise and accountability of an administrative agency (such as CMS) without contravening the policies of the Code. 15 All actions taken in violation of the automatic stay are void. In addition, willful and knowing violations of the automatic stay can be grounds for sanctions. 16 Relief from the stay is a discretionary matter decided on a case-by-case basis. 17 There are, however, statutory exceptions to the automatic stay. Police or Regulatory Power Exception The most relevant exception for health care providers has been the exception permitting actions to enforce the government's police or regulatory powers. 18 Historically, CMS claimed the police or regulatory power exception as the basis to terminate or exclude a provider's Program participation despite the automatic stay, but this approach has not been uniformly successful. 19 Despite some level of disagreement as to the scope of permissible actions, courts generally recognize that a governmental unit's privilege to assert the police or regulatory power exception is not boundless. Courts have

14

See, e.g., NLRB v. Superior Forwarding Inc., 762 F.2d 695 (8th Cir. 1985) (court may enjoin NLRB proceedings that threaten assets of the estate); Securities and Exchange Comm'n v. First Fin. Group, 645 F.2d 429, 444 (5th Cir. 1981) (court could enjoin appointment of a receiver pursuant to SEC regulations to the extent appointment threatened assets of the estate); In re Hunt, 93 B.R. 484 (Bankr. N.D. Tex. 1988) (court may enjoin CFTC action to impose monetary penalties against debtors for violations of Commodity Exchange Act when penalties would disrupt court's ability to effectively manage debtor's reorganization), modified by In re Hunt, No. 388-35725-HCA-11, 1989 WL 67827 (Bankr. N.D. Tex. Jan 31, 1989); In re Chateaugay Corp., 93 B.R. 26, 29 (S.D.N.Y. 1988) (court could enjoin action in another court to determine state tax liability); In re Sam Daily Realty Inc., 57 B.R. 83 (Bankr. D. Haw. 1985) (court could enjoin state agency from enforcing a money judgment for pre-petition violations if injunction was necessary to avoid preferential treatment of agency and to provide for orderly distribution to all creditors).

15

In re Medicar Ambulance Co. Inc., 166 B.R. 918, 923 (Bankr. N.D. Cal. 1994) ("Congress has charged [CMS] with implementing the Medicare Act. However, administrative action against a debtor may proceed after the filing of a bankruptcy petition so long as it does not interfere with the reorganization process"), citing Board of Governors v. Mcorp Fin., 502 U.S. 32 (1991).

16

11 U.S.C. §§ 362(h) and 105.

17

In re The Leisure Corp., 234 B.R. 916, 921 (9th Cir. BAP 1999) (citing 11 U.S.C. § 362(d)). The legal and equitable interests

• f a debtor are determined according to state law. See Butner v. United States, 440 U.S. 48, 55 (1979).

18

11 U.S.C. § 362(b)(4).

19

See Troy, Matthew J., "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: New Provisions," United States Attorneys' Bulletin, Vol. 54 No. 4 at 33 (July, 2006); In re Psychotherapy & Counseling Ctr. Inc., 195 B.R. 522, 532-33 (Bankr. D. D.C. 1996) ("The debtor's rights under the agreement to receive reimbursement payments from government in this program clearly have value to the debtor… The...significant question...is whether [HHS's attempt to dishonor the agreement by excluding the debtor from the Program] is somehow improper such that is should not be excepted from the stay… [I]f HHS had determined that the debtor should be excluded from the program by reason of some improper action, such as fraud or other criminal activity, then the court should not prevent HHS's exclusion of the debtor. In that circumstance, HHS would be properly exercising its regulatory authority over the property of the estate"); but see In re Rusnak, 184 B.R. 459, 465-66 (E.D. Pa. 1995) (holding that a Medicare exclusion action against a practitioner who failed to repay a government-backed student loan did not fall within the police or regulatory exception to the automatic stay. "The legislative history to [the exclusion statute]...[is intended] to protect [the Programs] from fraud and abuse, and to protect the beneficiaries of those programs from incompetent practitioners and from inappropriate or inadequate care." (emphasis in original)); see also In re Richmond Paramedical Servs. Inc., 94 B.R. 881 (Bankr. E.D. Va. 1988), affd, In re Richmond Pharmaceutical Services Inc., No. Civ. A 89-0081-R, 1989 WL 149144 (E.D. Va. 1989) (after balancing the equities, court stayed criminally convicted debtor's Program exclusion for 60 days to permit sale of debtor's assets. The court determined that any harm to CMS from the stay would be short-lived, but denying the stay would force the debtor to convert to chapter 7 and liquidate.); see Chappell v. Inspector General, HHS DAB Dec. No. CR108 at 8 (Nov. 8, 1990) (citing S. Rep. No. 95-989, at 52 (1978), reprinted in 1978 USCCAN 5787, 5838 ("where a governmental unit is suing a debtor to prevent or stop a violation of fraud, environmental protection, consumer protection, safety or similar police or regulatory laws...the action or proceeding is not stayed under the automatic stay").

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denied the police or regulatory power exception when CMS sought to terminate a provider's Program participation where the termination is based on the government's pecuniary interest (rather than protecting the public health, safety or welfare). 20 Similarly, courts are split on whether suspension of Program payments -- different from exclusion or termination and governed by 42 C.F.R. § 405.371 -- falls within the police or regulatory power

• exception. 21 Following that same reasoning, courts have held that despite the automatic stay, a state may revoke

a health care provider's license to operate (if based on non-pecuniary reasons). 22 In order for the government to avail itself of the police or regulatory power exception, its actions must be intended to protect the health, safety or welfare of the public (e.g., by preventing the health care provider from harming patients by [*71] providing substandard medical care). 23 Termination from Program participation does not, by itself, bar a provider from continuing to treat patients because permission to treat patients results from state

• licensure. Unless the state seeks to initiate license revocation proceedings prior to, or concurrently with, the

Program termination proceedings, it is arguably not acting to protect the public interest and should not be permitted to avail itself of the § 362(b)(4) exception. 24 The BAPCPA Exclusion Medicare "exclusion" proceedings are explicitly excepted from the automatic stay. 25 This new exception broadens the power of the government to take action against health care providers in bankruptcy. Despite the automatic stay, the government can use § 362(b)(28) of BAPCPA to initiate Program exclusion proceedings without resorting to the police or regulatory power exception. Although the Social SecurityAct explicitly identifies exclusion from participation in the Program, it does not mention termination from the Program. Program termination and Program exclusion are two different remedies with two

20

See, e.g., In re Corporacion de Servicios Medicos Hospitalarios de Fujardo., 805 F.2d 440, 445-47 (1st Cir. 1986) (although government argued that it sought termination based on alleged threat to health and safety of patients, the court rejected argument because government did not seek to revoke the provider's license before, or concurrent with, Program termination. "This decision by the department to pursue its contractual remedies, rather than exercise its broad police and regulatory power at the outset, suggests to us that the threat to the health and safety of the citizens served by [the hospital] was not as great as [the department] would have us believe."); In re Community Hospice Inc., Adv. Proc. No. 93-1158 (Bankr. D. Ariz. Dec. 6, 1993) (court granted temporary restraining order against termination of Program participation based on alleged quality of care problems).

21

See Troy, Matthew J., at note 19, supra; In re Orthotic Center Inc., 193 B.R. 832, 834 (N.D. Ohio 1996) (reversing bankruptcy court and holding that suspension of provider's future Program payments was exempt from stay under police or regulatory power exception, where suspension was based on health care fraud); but see In re Medicar Ambulance Co., 166 B.R. 918 at 926-27 (holding that suspension of Medicare payments for fraud was not exempted from stay on the grounds that it was an attempt to enforce a monetary claim and not within the scope of the police power exception); In re Allied Home Health Nursing Servs. Inc., Case No. 96-51232 (Bankr. W.D. Tex.Apr. 2, 1996) (granting temporary restraining order against Medicare suspension for alleged fraud).

22

See, e.g., In re Braeview Manor Inc., Adv. Proc. No. 94-1017, 1995 WL 26735 (Bankr. N.D. Ohio, Jan. 17, 1995), (quoting Matter of National Hospital and Institutional Builders Co., 658 F.2d 39 (2nd Cir. 1981) (explaining that it is appropriate for bankruptcy courts to look beyond the surface to determine whether enforcement of a state or municipal law against a debtor passes constitutional muster or whether it conflicts with the automatic stay or other provisions of the Code. The trustee filed an action seeking to enforce the automatic stay against the City of New York's threatened revocation of a certificate of occupancy for the debtor's nursing home. The court found that the city's activities were not undertaken to protect the public health and welfare and granted an injunction)); In re Horizon Air Inc., 156 B.R. 369, 375 (N.D.N.Y. 1993) (government was permitted to revoke a license to operate an airline to protect the public safety notwithstanding its impact on the debtor); 3 Health L. Prac. Guide § 30:6 (2006).

23

See notes 19-21, supra.

24

Id.

25

11 U.S.C. § 362(b)(28).

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different procedures. They are based on different criteria, require different procedural hearings and are governed by different statutes. Notwithstanding this distinction, the government will likely take the position that termination

• f a health care provider from the Medicare and Medicaid programs constitutes "exclusion" under § 362(b)(28) and

is excepted from the automatic stay. Thus, it is essential for health care providers in bankruptcy proceedings to recognize and understand the difference between termination and exclusion. Health care providers contemplating bankruptcy rely on the automatic stay to give them breathing space from creditors. If the government is able to terminate a health care provider's Program participation and, ultimately, stop reimbursing the provider's Medicare expenses, the health care debtor may be forced to convert to chapter 7, resulting in a fire sale liquidation of the provider's assets. This would not only harm the provider and its patients and employees, but will likely result in little or no return to creditors. Because § 362(b)(28) does not refer to "termination," the health care provider should argue that the automatic stay enjoins the government from terminating a provider's Program participation during bankruptcy proceedings. Unless the government can successfully assert the police or regulatory power exception, a health care provider in bankruptcy should continue to receive state and federal monies for its Medicare and Medicaid patients. Medicare Exclusion vs. Medicare Termination Exclusion Exclusion from participation in the Program, governed by 42 U.S.C. § 1320a-7, is a serious remedy typically reserved for only the most egregious violators. Exclusion bars a provider from any participation in the Program for a certain number of years. The period of exclusion varies, with "mandatory exclusions" lasting a minimum of five years, while "permissive exclusions" can last as much as one year. 26 The government may exclude a provider from participation when the provider has a demonstrated lack of trustworthiness (e.g., criminal conviction) and poses a risk to the Program or its beneficiaries. 27 For example, providers convicted of direct criminal violations of the MedicareAct (such as felony health care fraud, patient abuse

• r felony controlled substances) are subject to mandatory exclusion. 28 Another example: a provider whose

professional license (e.g., registered nurse license) has been revoked or suspended because of incompetence or poor professional performance is subject to permissive exclusion. 29 Exclusion proceedings impose on the government a high standard to justify [*72] exclusion from Medicare. 30 An excluded provider is entitled to an administrative hearing before CMS and if desired, a federal court review of CMS' final decision after exhaustion of the provider's administrative remedy. 31 A provider may appeal an exclusion on two grounds: (1) challenging the underlying basis for the exclusion, and (2) challenging the length of the exclusion

26

42 U.S.C. §§ 1320a-7(a), (b).

27

See, e.g., Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992); San Lazaro Ass'n v. Connell, 286 F.3d 1088, 1093 (9th

• Cir. 2002), cert. denied, 537 U.S. 878 (2002) (exclusion based on conviction for filing fraudulent Medicare claims); Sternberg
• v. Secretary of Department of Health and Human Services, 299 F.3d 1201 (10th Cir. 2002) (exclusion based on Medicare mail

fraud conviction).

28

Id.; 42 U.S.C. § 1320a-7(a).

29

• Id. at § 1320a-7(b)(4).

30

See notes 26-27, supra.

31

42 U.S.C. § 1320a-7(f).

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as unreasonable. 32 At the end of the exclusion period, the provider may apply to CMS and request that the exclusion cease. 33 Unless CMS reinstates the provider, the exclusion can have an unlimited duration. Termination Termination from participation in the Program, governed by 42 U.S.C. § 1395cc(b), is a less serious remedy than

• exclusion. Termination is a discontinuation or refusal to renew a provider's Program contract. Unlike exclusion,

termination is not permanent and the provider may immediately reapply for a new contract. CMS should grant a new contract if the reasons for the termination have been remedied and the provider gives reasonable assurance that they will not recur. 34 Unlike the serious criminal convictions required for exclusion, a provider's contract may be terminated for a variety

• f reasons including, for example, failure to maintain substantial compliance with Program requirements. 35 A

provider terminated from the Program is entitled to appeal the termination decision and present its case in an administrative hearing. 36 However, there is no mechanism guaranteeing an emergency hearing, and the provider does not have a right to a pre-termination hearing. 37 In all likelihood, the administrative appeal will not be heard until after the damage has been done (i.e., termination is complete, funding has ceased and the provider's Medicare and Medicaid patients have been forced to relocate). Moreover, the scope of a termination appeal is

• limited. The provider may appeal only the particular allegations of noncompliance that led to the government's

decision to terminate; it may not challenge the reasonableness of the remedy. 38 Termination Is Not Exclusion and Is Thus Not Statutorily Exempted from the Stay by BAPCPA The plain language of § 362(b)(28) supports the view that the automatic stay applies to termination actions unless the termination falls within the police or regulatory powers exception of § 362(b)(4). If CMS had been able to rely solely on the police or regulatory exception to avoid the automatic stay for Program exclusion actions, § 362(b)(28) would have been unnecessary and redundant. 39 In light of BAPCPA, reliance on the police or regulatory power exception to the automatic stay for Program exclusion should no longer be necessary. 40 This, however, is not the case with termination. Section 362(b)(28) only addresses "exclusion." It does not refer to termination. In light of the distinction between termination and exclusion, had Congress intended for termination to be excepted from the automatic stay, Congress would have explicitly included termination when it enacted § 362(b)(28). 41

32

42 C.F.R. § 1001.2007.

33

42 U.S.C. § 1320a-7(g).

34

• Id. at § 1395cc(c)(1).

35

• Id. at § 1395cc(b)(2)(A).

36

• Id. at § 1395cc(h).

37

• Id. at § 1395cc(h)(C)(iii); see O'Bannon v. Town Court Nursing Center, 447 U.S. 773 (1980); see also Schwartzberg v.

Califano, 453 F. Supp. 1042 (C.D.N.Y. 1978).

38

See, e.g., 42 C.F.R. § 498 et seq. (nursing facilities).

39

See notes 16-19, supra.

40

See note 16, supra.

41

In construing a statute, the court "begin[s] with the understanding that Congress 'says in a statute what it means and means in a statute what it says there.'"In re Price, 353 F.3d 1135, 1140-41 (9th Cir. 2004) (quoting Hartford Underwriters Ins. Co. v. Union Planters Bank N.A., 530 U.S. 1, 6, (2000) (quoting Conn. Nat'l Bank v. Germain, 503 U.S. 249, 254 (1992)). If the statutory language is unambiguous, then the court's "judicial inquiry is complete." Rubin v. United States, 449 U.S. 424, 430 (1981). "The general rule of statutory construction is that enumeration of specific exclusions from the operation of a statute is

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It makes sense that exclusion should be excepted from the automatic stay because excluded providers are typically those who have been convicted of crimes directly defrauding the Program and pose a current threat to it. Such providers have already been convicted of improperly taking money from the Program and should not be permitted to use the automatic stay to continue receiving Program funds. Additionally, the grounds for excluding a provider from the Program are generally sufficient to support a state's decision to revoke a provider's license. Exclusion and license revocation often go hand-in-hand. In contrast, the grounds for terminating a provider's Program participation do not necessarily justify license revocation. States commonly permit a terminated provider to retain its license and either re-apply for certification or opt to treat private-pay patients. In that same light, and distinct from the automatic stay analysis, various courts have issued injunctions preventing Program termination of a provider. 42 In light of the substantive and procedural differences between exclusion and termination, despite BAPCPA's changes, Program termination arguably remains subject to the automatic stay. CMS must satisfy the requirements

• f the police or regulatory power exception in order to avoid the automatic stay with regard to termination actions.

43

Conclusion A tension naturally exists between CMS's goal of withdrawing funding for providers that violate health and safety regulations, and bankruptcy's goal of protecting creditors' interests and the debtor's ability to remain in operation during bankruptcy proceedings. The changes introduced by BAPCPA broaden the government's power against health care providers in bankruptcy. Understanding the differences between termination and exclusion is essential when representing health care providers contemplating bankruptcy.

American Bankruptcy Institute Journal an indication that the statute should apply to all cases not specifically excluded." Cash Currency Exch. v. Shine, 762 F.2d 542, 552 (7th Cir. 1985) (citations omitted), cert. denied, Fryzel v. Cash Currency Exch. Inc., 474 U.S. 904 (1985); "One provision

• f a statute should not be interpreted in a manner to render other sections of the same statute inconsistent, meaningless or

superfluous." United States v. Fiorillo, 186 F.3d 1136, 1153 (9th Cir. 1999) (citations omitted), cert. denied, 528 U.S. 1142 (2000); see also In re Fesq, 153 F.3d 113, 115 (3d Cir. 1998). It may be presumed that Congress was aware of the distinction between "termination" and "exclusion" in the Medicare and Medicaid context when it enacted § 362(b)(28) of the Code. Id. at 552, note 12.

42

See, e.g., Frontier Health Inc. v. Shalala, 113 F. Supp. 2d 1192 (E.D. Tenn. 2000) (court gave significant weight to the determination that the public interest militates strongly in favor of granting injunction because the facility was the only hospital in the area capable of treating acutely mentally ill patients. If Program funds were terminated, such patients would be transferred to other facilities and would likely cause harm to the patient populations at those facilities); Pathfinder Healthcare

• Inc. v. Thompson, 177 F. Supp. 2d 895, 896-97 (E.D. Ark. 2001) (court found that the reasons for the proposed termination

(non-immediate jeopardy violations) were relatively minor in comparison to the irreparable harm the residents would suffer if Program funds were terminated and the residents forced to transfer to a different facility). "The court's equitable power to fashion injunctive relief is meant precisely to permit the Court to maintain the status quo pending an administrative decision such as [challenging Program termination], particularly where the failure to do so may result in the eviction of these elderly and infirm residents only days before theALJ makes his decision." Mediplex of Mass. Inc. v. Shalala, 39 F. Supp. 2d 88, 94 (D. Mass. 1999), quoting Int'l Long Term Care Inc. v. Shalala, 947 F. Supp. 15, 20 (D. D.C. 1996).

43

Exclusion from the Medicare program is immune from the automatic stay under § 362(b)(28), but termination from the Medicare program is still governed by § 362(b)(4).

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