Bankruptcy Sales of Health Care Provider Assets Free and Clear of FCA Liabilities:
Some Untested and Novel Arguments
An asset sale is an important strategic option for hospitals and other health care facilities in financial distress. Whether pursuant to § 363 of the Bankruptcy Code or a confirmed reorganization plan under § 1123(b)(4), a sale in chapter 11 can offer great benefits, including the potential ability to sell assets free and clear of interests. When a hospital is faced with significant False Claims Act (FCA) liabilities, a sale to a new provider is often the only viable option to keep the hospital operating as a going concern.
How the government’s claims are to be treated in the sale process will determine such important issues as potential cure obligations and successor liability issues, which in turn often impact key deal terms such as price and feasibility. Although the government will often favor (or force) a sale of a distressed hospital to a new provider in this context, the government has taken the position, on at least one occasion in a bankruptcy case and outside the bankruptcy context, that a successor is liable for FCA liabilities of the predecessor/seller.
This year's Winter Leadership Conference offers attendees up to 19.5 hours of CLE, a plethora of networking opportunities each day, and dozens of top-notch educational sessions. Friday's luncheon will feature Dean Erwin Chemerinsky of the University of California, Irvine School of Law; and Friday's Final Night Dinner will feature comedian Sebastian Maniscalco!
On Saturday morning the Heath Care Committee will hold a joint presentation with the Real Estate Committee to present a session titled Fuse, Sever and Heal: Issues Impacting Healthcare Facilities in Bankruptcy. Speakers for this session will include Thomas R. Califano (DLA Piper; New York); Patricia B. Jefferson (Miles & Stockbridge P.C.; Baltimore); Shawn M. Riley (McDonald Hopkins LLC; Cleveland); and Frank P. Terzo (GrayRobinson, P.A.; Fort Lauderdale, Fla.).