HEALTH CARE BASICS FOR BANKRUPTCY LAWYERS

With respect to the patient care ombudsman, a number of issues must be worked out by the courts and the parties. To whom will the responsibility for monitoring the quality of patient care fall? Does it take a medical professional to adequately serve in this capacity? Is there a higher level of knowledge required to monitor patient care at a hospital than at an assisted living facility? Will the patient care ombudsman be subject to liability if he or she fails to promptly identify material problems in a health care business' patient care? What is the appropriate interface between the patient care ombudsman and state regulatory authorities?

Disposal of Patient Records

Various state and federal regulations address retention of patient records. However, when a health care business liquidates, there often are not sufficient funds to pay for the storage of patient records in accordance with those regulations. Section 351 of the Bankruptcy Code has been added to deal with situation.

The statute requires the trustee to "promptly publish notice, in 1 or more appropriate newspapers, that if patient records are not claimed by the patient or an insurance provider (if applicable law permits the insurance provider to make that claim) by the date that is 365 days after the date of that notification, the trustee will destroy "the patient records...." The trustee must also attempt to directly notify the patients and insurance providers within the first 180 days of the 365 day period by sending notice to the "most recent know address of that patient, or a family member or contact person for that patient" regarding the need to claim records or they will be destroyed. At the end of the 365 day period, the trustee must make a written request sent by certified mail to each appropriate Federal

agency that the agency accept the patient records for deposit. The agencies are not required to grant the request. At that point, the trustee may destroy any unclaimed patient records not accepted for deposit by a Federal agency. The statute explicitly describes appropriate methods for destruction of the patient records.

Modification of the Automatic Stay Provisions to Permit HHS to Exclude the Debtor from Participation in Medicare

The statute also amends section 362 to add yet another exception to the effect of the automatic stay. New section 362(b)(28) provides that the debtor's filing does not act as a stay "of 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 ( [sic]as defined in section 1128B(f) of the Social Security Act pursuant to title XI or XVIII of such Act. Section 1128B (f) defines a Federal health care program as:

(1)

any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or

(2)

any State health care program, as defined in section 1128(h).

Section 362(b)(28) is ambiguous in that it does not define the grounds that the HHS may use for exclusion. Because section 1128 addresses grounds for mandatory and permissive exclusion, all of which relate to patient health and safety issues or fraud issues, one might assume that this is what the drafters intended. However, section 362(b)(28) references section 1128B of the Social Security Act only for the direct purpose of defining the term Federal health care program. HHS could argue that it may exclude a debtor for other reasons and the plain language of the statute appears to support that contention.