Adam C. Rogoff on Bankruptcy Code Sections Specific to Chapter 11 Cases Involving Hospitals and Health Care Businesses

Adam C. Rogoff on Bankruptcy Code Sections Specific to Chapter 11 Cases Involving Hospitals and Health Care Businesses

In this Emerging Issues commentary, Adam C. Rogoff discusses the new health care provisions in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Some of the regulations concern patient record disposal, patient transfers to other health care facilities, appointment of a patient care ombudsman, and an exception to the automatic stay for the Secretary of Health and Human Services. He writes:

Excerpt:

"While many aspects of the Bankruptcy Code can be affected by policies or applicable nonbankruptcy law relating to hospitals and health care providers, the Bankruptcy Code contains a few, but important, specific sections directly implicated by health care bankruptcy cases. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the "2005 Act") contained a package of amendments to the Bankruptcy Code aimed at increasing protections for patients of nursing homes, hospitals, and other health care entities that file for bankruptcy protection."

"Addressing a perceived need to increase protection of "privacy and confidentiality of a patient's medical records when they are in the custody of a health care business in bankruptcy," section 351 prescribes certain procedures for the disposal of patient records held by a health care business debtor. Typically, the bankruptcy trustee or debtor in possession is required to store patient records according to applicable state and federal law, and pay for such storage out of the assets of the estate as long as there are funds available to do so. However, the length of time required to store such records could be many years."

"Section 704(a)(12) establishes another protection for the patients of failing health care businesses by creating an affirmative duty for bankruptcy trustees and debtors-in-possession to use "all reasonable and best efforts to transfer patients" in the event that the debtor's health care business is in the process of being closed. This duty was created in response to Congress's perception that, prior to the 2005 Act, "patients could just be thrown out and have nowhere to go." Pursuant to section 704(a)(12), the bankruptcy trustee or debtor in possession should strive to transfer its patients to an "appropriate" health care business that is both (i) in the vicinity of the health care business that is closing and (ii) capable of providing services that are substantially similar to the health care business being closed."

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Adam C. Rogoff for more than two decades has focused his practice on complex transactional, litigation and advisory work relating to restructuring, commercial finance, Chapter 11 bankruptcy cases, workouts and "pre-packaged" Chapter 11 matters. He has extensive experience representing a broad range of corporate debtors, creditors (including DIP lenders), creditors' committees, and other parties in Chapter 11 restructurings and out-of-court workouts.