Nurses' Registry & Home Health Corp. v. Burwell (In re Nurses' Registry & Home Health Corp.)

533 B.R. 590, 2015 Bankr. LEXIS 2337, 61 Bankr. Ct. Dec. (CRR) 87
CourtUnited States Bankruptcy Court, E.D. Kentucky
DecidedJuly 9, 2015
DocketCASE NO. 15-51278; ADV. NO. 15-5074
StatusPublished
Cited by2 cases

This text of 533 B.R. 590 (Nurses' Registry & Home Health Corp. v. Burwell (In re Nurses' Registry & Home Health Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nurses' Registry & Home Health Corp. v. Burwell (In re Nurses' Registry & Home Health Corp.), 533 B.R. 590, 2015 Bankr. LEXIS 2337, 61 Bankr. Ct. Dec. (CRR) 87 (Ky. 2015).

Opinion

MEMORANDUM OPINION AND ORDER

Gregory R. Schaaf, Bankruptcy Judge

This matter is before the Court on Defendants’ Motion to Stay Pending Appeal [AP Doc. 11] and the United States’ Motion for Stay Pending Appeal of Order Allowing Interim Use of Cash Collateral [Bk Doc. 68].1 On July 1, 2015, this Court, in an oral ruling, granted Plaintiffs Emergency Motion for a Preliminary Injunction or Temporary Restraining Order [AP Doc. 2] in part and granted Plaintiffs Expedited Motion for Interim Use of Cash Collateral [Bk. Doc. 7] in full,' setting Plaintiffs Motions for a final hearing on July 30, 2015, and enjoining the Defendants from suspending payments up until the date of that final hearing. On July 2, 2015, the Court entered a written order memorializing its oral ruling on the injunction and supplementing its oral findings of fact and conclusions of law with an additional discussion of authorities cited by Defendants for the first time in closing argument. [AP Doc. 5.] It also entered a written order granting the motion for interim use of cash collateral. [Bk Doc. 55.] Defendants appealed both orders. [AP Doc. 7; Bk Doc. 58.]

In entering the preliminary, 28-day injunction, the Court did not make a finding on Plaintiffs likelihood of success on the [592]*592merits of its claims. As it noted at the hearing, likelihood of success on the merits would become a greater consideration at the final hearing on Plaintiffs Motion, at which Plaintiff must satisfy a heavy burden to show a likelihood of success. Instead, the injunction was based on the irreparable harm Plaintiff would suffer in absence of the injunction, the balance of the harms to Plaintiff and Defendants, and whether the injunction would serve the public interest.

The Defendants’ motion to stay pending appeal, however, focuses almost entirely on their likelihood of success on appeal, giving only perfunctory discussion to irreparable harm to Defendants, harms to third parties, and the public interest.2 This ignores the central focus of the appealed order, which relied on those three prongs and found they weighed overwhelmingly in favor of granting the injunction. Moreover, Defendants do not persuade the Court that they are likely to succeed on appeal. As this Court explained last week and will explain again in greater detail below, its jurisdiction under 28 U.S.C. § 1334 is unaffected by Medicare’s jurisdictional bar on judicial review of unexhausted Medicare disputes under 28 U.S.C. §§ 1331 and 1346.

1. Motion For Stay of Appeal of Preliminary Injunction.

A. Standard of Review.

In determining whether a stay should be granted pending appeal, the Sixth Circuit has instructed lower courts to consider four factors: (1) the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay. Russell v. Lundergan-Grimes, 769 F.3d 919, 921 (6th Cir. 2014) (per curiam). These factors, notably, are essentially the same factors that a court must consider to grant a preliminary injunction, and that this Court considered last week in entering the appealed orders.

B. Likelihood of Success.

Defendants primarily argue they are entitled to a stay because they are likely to ' succeed on appeal. [AP Doc. 11 at 6-15.] As noted above, the Court did not rely on Plaintiffs likelihood of success on the merits in granting injunctive relief. It did, however, hold that it had subject-matter jurisdiction to enter its order. Defendants challenge that conclusion and argue that they are likely to succeed on appeal, primarily because they assert this Court’s jurisdictional holding is likely to be reversed.

Before considering Defendants’ arguments, the Court notes that Defendants will have to overcome a substantial jurisdictional hurdle of their own making in order to succeed on appeal: namely, showing that the Court’s preliminary injunction is “final” (and thus appealable) within the meaning of 28 U.S.C. § 158(a). Precedent on the finality of bankruptcy courts’ preliminary injunctions is mixed, and appears to largely turn on whether the bankruptcy court manifests an intention to revisit the preliminary injunction at a later date.3 The District Court will make its own decision on jurisdiction, but the uncertain ap-pealability of this Court’s order makes it [593]*593extremely difficult to find Defendants are likely to succeed on appeal.

1. Bankruptcy Jurisdiction over Unexhausted Medicare Act Disputes.

Defendants principally argue that they are likely to succeed because this Court erred in holding it had subject-matter jurisdiction over an unexhausted Medicare Act dispute. In so arguing, they only address one of the three rationales this Court gave for its exercise of jurisdiction' — -the additional rationale given in its written order.

In its oral ruling, the Court held that it had jurisdiction because, by declining to evaluate Plaintiffs likelihood of success on the merits, it was not adjudicating the merits of Medicare Act claims. The Defendants’ arguments on the merits are not relevant at this time; they will become relevant when the Court again takes this matter up on a final hearing in late July.

The Court further held that Plaintiffs claims fit an exception to the bar on federal jurisdiction over Medicare Act claims that was announced in Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986). As the Supreme Court subsequently explained, Michigan Academy held that there was an exception to the statutory bar where applying it “would not lead to a channeling of review through the agency, but would mean no review at all.” Shalala v. Ill. Council on Long Term Care, 529 U.S. 1, 17, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000). Had this Court waited for the Medicare process to play itself out while Medicare continued to suspend payments, the Debtor would have become defunct, and the Debtor would never have been heard on its request for turnover. Thus, channeling the Debtor’s claims through the agency would mean no judicial review of its claims at all. Defendants do not address these points, and for that reason alone the Court is unable to find Defendants are likely to succeed on their jurisdictional arguments on appeal.

Defendants do, however, address the Court’s supplemental reasoning in its written order. The Court, following two courts of appeal and several bankruptcy courts,4

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Bluebook (online)
533 B.R. 590, 2015 Bankr. LEXIS 2337, 61 Bankr. Ct. Dec. (CRR) 87, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nurses-registry-home-health-corp-v-burwell-in-re-nurses-registry-kyeb-2015.