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The Affordable Care Act was among the likely factors that assisted with a big decrease — nearly 50 percent — in personal bankruptcy filings over the last six years, according to a Consumer Reports analysis, MarketWatch reported yesterday. Other factors, including new bankruptcy laws, a rebounding economy and tighter credit requirements, also likely helped with the reduction, with filings dropping from 1.54 million in 2010 to 770,846 last year. There’s no way to know what made the biggest difference in that drop, since those filing for personal bankruptcy do not state a specific reason for it. Still, the health care law in all likelihood played a major role. Richard Gaudreau, a consumer bankruptcy lawyer in New Hampshire, says he sees far fewer clients who do not have health insurance now. “I think before the ACA there were a lot of medically-driven costs” in personal bankruptcies, he said. Medical bills, which are famously costly and unpredictable, in the past have been estimated as the leading cause of bankruptcy filings. Other reasons include a lost job, reduced income and divorce, Gaudreau said. Yet even if the health care law has contributed to a decline in personal bankruptcies, there is still evidence of its financial difficulties. Health care premiums have gone up substantially in certain areas, and the high-deductible plans expose those on them to large out-of-pocket expenses. Moreover, it’s possible premiums could increase even more next year.

 

The U.S. House of Representatives will vote Thursday on a controversial Republican bill that would repeal and replace key parts of Obamacare, CNBC reported yesterday. "We will pass this bill," Majority Leader Kevin McCarthy (R-Calif.) said. "I feel great about the [vote] count." The expected vote will come a day after two leading Republicans, Reps. Billy Long and Fred Upton, agreed to switch their expected “no” votes to “yes.” Both had come out against the bill because of a change made to it last week that would, in their view, weaken price protections for private individual plan insurance customers with pre-existing health conditions. But Long and Upton reversed their opinions after getting another amendment that would provide $8 billion in federal funding that would supposedly protect such customers from higher premiums. Their reversal added momentum to the push for the vote. Another factor that may have played a role in the scheduling of the vote is a scheduled recess for the House at the end of this week, and the desire by GOP leaders that members not face lobbying against the bill from constituents. The bill would reform the way that the federal government subsidizes purchases of individual health plans, and also how it funds Medicaid, the joint federal-state program that provides health coverage to primarily poor people. It would also eliminate Obamacare taxes.

The U.S. government and coal companies will be required to pay out health care to retired coal miners, guaranteeing benefits to workers even as coal companies face bankruptcy, after Congress on Sunday reached a fiscal spending agreement for 2017, Reuters reported yesterday. The provision to secure the United Mine Workers' health care benefits was included in a deal that lawmakers reached for around $1 trillion in federal funding that would avert a government shutdown later this week. Around 22,600 coal miners and their families were on the brink of losing their health care benefits, which were at risk of default as the industry struggled, with companies trying to recover from bankruptcies. Members of the UMWA have made several visits to Washington over the last few months to urge lawmakers to protect their benefits, which they say is a government obligation. Lawmakers from both parties still hope to pass the Miners Protection Act, which would transfer funds from the Abandoned Mine Land fund to the union's pension plan to prevent its insolvency. If Congress cannot transfer those funds, the financially strained $5 billion federal Pension Benefit Guaranty Corp. would be responsible for covering the plans.

If physicians didn't have enough to worry about with governmental enforcement of Stark law, the anti-kickback statute and other fraud, waste and abuse laws, many physicians are now finding their doors darkened by a new menace in the form of bankruptcy trustees seeking "clawbacks,” Diagnostic Imaging reported yesterday. In Aetna Life Insurance Company v. Humble Surgical Hospital LLC, Aetna won a $51 million judgment against Humble, alleging, in part, that Humble illegally paid 103 doctors up to 30 percent of its technical fee in exchange for referrals. Humble immediately filed for bankruptcy protection. Aetna then sued each of the 103 doctors, claiming that Aetna, as a judgment creditor of Humble, should be allowed to claw back the illegal payments. A similar scenario occurred when Health Diagnostics Laboratory paid physicians processing and handling fees of $10 to $17 per referral as inducements for the physicians to refer patients to them for blood tests. HDL filed for bankruptcy protection and the trustee began notifying physicians that the transfers were fraudulent under the Bankruptcy Code, and the trustee expected the payments to be returned to the bankruptcy estate. It can be argued that the trustee didn't do anything wrong and wasn't even around when the bad acts occurred. The trustee merely acts as an agent seeking to recover for the innocent creditors of the debtor, often those who were the real victims of the fraud. In many cases, the judge may be called upon to rule whether or not the doctors were innocent victims too. The good news is that the bankruptcy trustee will offer that the physician can settle without being sued, and is not required to agree that he did anything wrong in the settlement papers. Further, because the rules of court encourage settlements, the offer in compromise or actual settlement, is usually inadmissible in any subsequent case. If there is to be a governmental enforcement action, the trustee's claim is independent, and has nothing to do with the work of the OIG or DOJ.

 

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore.

An adviser to Puerto Rico Governor Ricardo Rossello said yesterday that the distressed U.S. territory would not necessarily file for bankruptcy if it failed to reach a debt-restructuring deal with creditors before Monday's negotiating deadline, Reuters reported yesterday. "It depends on legal actions, if (creditors) go after our officials,” said Elias Sanchez, Rossello’s liaison to Puerto Rico’s federal financial oversight board. Sanchez’s comments were the latest indication that Puerto Rico's leadership does not view bankruptcy as the immediate certainty that many experts and people involved in the talks expect. Under the federal Puerto Rico rescue law, PROMESA, Puerto Rico has until Monday to negotiate with stakeholders on a plan to reduce its crushing $70 billion debt load, or else open itself to lawsuits from creditors. But there may be key political reasons for Rossello to delay bankruptcy until the end of the fiscal year on June 30 — even if forbearance efforts fail, and the island must defend a swarm of lawsuits in the short term: Bankruptcy could sabotage Rossello’s top-priority efforts to secure federal funding for the island’s near-insolvent Medicaid system.