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Medicare Entitlement Rulings Help Bankrupt Health Providers

*Article originally published by Law360
With increased financial pressure on the health care delivery system, there is likely to be an increase in health care provider financial restructurings.

Parties to bankruptcy proceedings involving health care providers should be aware of evolving legal treatment of Medicare and Medicaid provider agreements in these proceedings, recognizing that these agreements often are one of the more significant assets of the provider.

Recent decisions reflect a willingness by the courts to conclude that Medicare and Medicaid provider agreements are statutory entitlements that can be assigned to a successor in interest free and clear of prepetition liability such as overpayment and regulatory/False Claims Act exposure.

While it is important to recognize that there is variation in how courts may handle this issue, it is nevertheless an important positive legal trend for debtors and prospective acquirers in health care provider bankruptcy proceedings.

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