Jackson Hospital & Clinic, Inc. v. Blue Cross and Blue Shield of Alabama

CourtUnited States Bankruptcy Court, M.D. Alabama
DecidedJune 17, 2026
Docket26-03013
StatusUnknown

This text of Jackson Hospital & Clinic, Inc. v. Blue Cross and Blue Shield of Alabama (Jackson Hospital & Clinic, Inc. v. Blue Cross and Blue Shield of Alabama) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jackson Hospital & Clinic, Inc. v. Blue Cross and Blue Shield of Alabama, (Ala. 2026).

Opinion

IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF ALABAMA

In re Case No. 25-30256-CLH Chapter 11 JACKSON HOSPITAL & CLINIC, INC., et al., Jointly Administered Debtors. _______________________________________

JACKSON HOSPITAL & CLINIC, INC.,

Plaintiff,

v. Adv. Proc. No. 26-03013

BLUE CROSS AND BLUE SHIELD OF ALABAMA,

Defendant.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF’S EMERGENCY MOTION FOR PRELIMINARY INJUNCTION

On June 16, 2026, this adversary proceeding came before the Court for an expedited evidentiary hearing on the Plaintiff’s Emergency Motion for Preliminary Injunction [Doc. No. 25]1 (the “Motion”) filed by Jackson Hospital & Clinic, Inc. (the “Hospital”). Appearances were as noted in the record. The Court has considered the evidence presented, the arguments and representations of counsel at the hearing, Blue Cross and Blue Shield of Alabama’s Opposition to Plaintiff’s Emergency Motion for Preliminary Injunction [Doc. No. 33] (the “Opposition”), and the Plaintiff’s Reply in Support of Emergency Motion for Preliminary Injunction [Doc. No. 50] (the “Reply”).

1 “Doc. No.” refers to the docket number for a filing in this adversary proceeding, Adversary Proceeding Number 26- INTRODUCTION The evidence presented at the hearing largely tracks with what has been presented to the Court throughout the Hospital’s bankruptcy case. In essence, the Hospital – while providing high- quality essential healthcare services to the River Region – is operating at a loss. The Hospital suffered operating losses before filing its bankruptcy case, and it has sustained operating losses

throughout, notwithstanding the relief afforded by the Bankruptcy Code.2 On April 21, 2026, the Hospital and one of its affiliates, JHC Pharmacy, LLC, presented to the Court for confirmation the Second Amended Joint Plan of Reorganization for Jackson Hospital & Clinic, Inc. and JHC Pharmacy, LLC [Main Case Doc. No. 1547]3 (the “Plan”). The Plan followed a year filled with often contentious hearings related to post-petition financing and the treatment of various creditor constituencies, and it incorporates vigorously negotiated settlements among those same constituencies. At the confirmation hearing, the Hospital disclosed that negotiations and litigation with Blue Cross Blue Shield of Alabama (“BCBSAL”) were ongoing, and that the feasibility of the

Plan depended, in part, on increased reimbursement rates from BCBSAL going forward. The Hospital did not, however, explicitly state that without drastic increases in reimbursement rates from BCBSAL, the Hospital could not emerge from bankruptcy and would be forced to shut down within three months. Not having been informed of the centrality and urgency of this issue, the Court confirmed the Plan. Approximately four weeks later, the Hospital filed the instant adversary proceeding and the Motion, presenting a picture of anything but feasibility.4

2 All references to the “Code” or the “Bankruptcy Code” are to 11 U.S.C. §§ 101-1532. 3 “Main Case Doc. No.” refers to the docket number for a filing in the Hospital’s underlying bankruptcy case, Bankruptcy Case Number 25-30256. 4 Under Bankruptcy Code Section 1129(a)(11), to confirm a plan, the proponent must prove that “confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.” The Hospital now asks the Court to do what the Bankruptcy Code does not permit – the unilateral alteration of the provider agreements between the Hospital and BCBSAL.5 The Hospital seeks relief in a breach of contract action through entry of a preliminary injunction that forces BCBSAL to pay reimbursement rates not on the terms agreed to by the parties, but rather on par with the reimbursement rates paid to the hospital in its closest geographic proximity. While the

Court is not ruling on the merits of the breach of contract claim the Hospital asserts in this adversary proceeding, the Court concludes that the Hospital has not met the extraordinarily high burden required for affirmative injunctive relief, and that the Motion is due to be denied. JURISDICTION AND AUTHORITY TO ENTER FINAL JUDGMENTS The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered by United States District Court for the Middle District of Alabama on April 25, 1985. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The Hospital and BCBSAL do not agree on whether this is a core proceeding under 28 U.S.C. § 157(b)(1), but they have consented to this Court’s entry of final orders and judgments, as contemplated under 28

U.S.C. § 157(c)(2). FINDINGS OF FACT A. Documentary Evidence The relevant facts are largely undisputed and can be derived from either the exhibits admitted into evidence or through judicial notice of the filings in this adversary proceeding and the Hospital’s bankruptcy case.6 The Hospital and BCBSAL are parties to agreements covering

5 See 11 U.S.C. § 365(a); Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1311 (5th Cir. 1985) (“[T]he debtor must accept the contract as a whole[,] mean[ing] that the debtor cannot choose to accept the benefits of the contract and reject its burdens to the detriment of the other party to the agreement.”) 6 The Parties stipulated to the admission into evidence of the exhibits disclosed and exchanged in advance of the hearing. The parties also stipulated to the admissibility of documents of record in this adversary proceeding and the Hospital’s bankruptcy case. the two broad categories of care provided by the Hospital: that certain Participating Hospital Contract for Prospective Payment dated as of July 1, 2003 (as amended from time to time, the “Inpatient Agreement”); and that certain Preferred Outpatient Facility Contract dated as of January 1, 2006 (as amended from time to time, the “Outpatient Agreement,” and, together with the Inpatient Agreement, the “Provider Agreements”). See Plaintiff’s Exhibits 1 and 2. The Inpatient

Agreement contains steps to prospectively establish reimbursement rates for subsequent years through negotiation and mutual agreement. See Plaintiff’s Exhibit 1. The Outpatient Agreement also provides for amendments to reimbursement rates by mutual agreement, although the amendments are to the Outpatient Agreement itself. See Plaintiff’s Exhibit 2. Over the years, the Hospital and BCBSAL (together, the “Parties”) have entered into formal letters of agreement amending the Provider Agreements to reset reimbursement rates. See Defendant’s Exhibits 3, 4, 5, 7, and 8. During some years, the Hospital requested – and BCBSAL agreed to – off-cycle mid-year increases to the reimbursement rates, including reimbursement rates for 2026. See Defendant’s Exhibits 5 and 13. Moreover, in 2023, the Hospital requested and

received from BCBSAL a $1.5 million advance payment of future reimbursements. See Defendant’s Exhibit 6.

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Jackson Hospital & Clinic, Inc. v. Blue Cross and Blue Shield of Alabama, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jackson-hospital-clinic-inc-v-blue-cross-and-blue-shield-of-alabama-almb-2026.