Court confirms: Nursing home can't use bankruptcy to preserve Medicare, Medicaid agreements

The 11th U.S. Circuit Court of Appeals ruled against skilled nursing facility operator, Bayou Shores.
The 11th U.S. Circuit Court of Appeals ruled against skilled nursing facility operator, Bayou Shores.

A federal appeals court has overruled a bankruptcy judge's decision to prevent healthcare officials from revoking Medicare and Medicaid reimbursement payments to a Florida nursing home

In a decision announced Monday, the 11th U.S. Circuit Court of Appeals ruled against skilled nursing facility operator, Bayou Shores, which had been previously cited for violating several patient-care regulations. The operator had been in a legal battle since 2014, when the Centers for Medicare & Medicaid Services announced it would terminate a funding agreement with the facility as a result of the infractions.

Bayou Shores filed for Chapter 11 bankruptcy protection shortly after the announcement. It also asked for the bankruptcy court to prevent the agreement from ending.

The court upheld the care facility's request to protect the payments, prompting the U.S. Department of Health and Human Services and the Florida Agency for Health Care Administration to file an appeal in U.S. District Court, which later ruled the bankruptcy court did not have the authority to make a decision on the agreement.

Bayou Shores then took the case to the U.S. Circuit Court of Appeals where it was reviewed by a three-judge panel. In a 66-page ruling, the judges upheld the District Court's decision concluding that the bankruptcy court did not have the jurisdiction to rule over the agreement.

"HHS (the Department of Health and Human Services), not the bankruptcy court, has been charged by Congress with administering the Medicare Act and regulating Medicare providers," the ruling written by Judge Raymond Clevenger III said. “And though charged with broad jurisdiction to deal with issues related to a debtor's bankruptcy estate, bankruptcy courts generally lack the institutional competence or technical expertise of HHS to oversee the health and welfare of nursing home patients or to interpret and administer a 'massive, complex health and safety program such as Medicare.'”