Saint Catherine Hospital of Indiana, LLC v. Indiana Family & Social Services Administration, 800 F.3d 312

St. Catherine Hospital (Debtor) was assessed a single Hospital Assessment Fee (HAF) under Indiana Public Law 229 (Section 281), covering a fee period July 1, 2011–June 30, 2013; the total HAF was calculated once from cost reports and financial data available before Feb. 28, 2012.
CMS approved the program May 21, 2012; FSSA issued a bulletin and began assessing the HAF retroactive to July 1, 2011 and sending bills for fiscal year 2012 and fiscal year 2013 installments.
St. Catherine filed a Chapter 11 petition on June 19, 2012. FSSA withheld Medicaid reimbursements both pre- and post-petition to satisfy the 2012 and 2013 HAFs.
St. Catherine sued in bankruptcy court seeking recovery of withheld funds and an injunction against further collection; bankruptcy court granted summary judgment for St. Catherine, treating both the 2012 and 2013 HAFs as pre-petition claims subject to the automatic stay.
The district court reversed as to the 2013 HAF (concluding it was post-petition), and St. Catherine appealed to the Seventh Circuit.
The Seventh Circuit reversed the district court, holding the 2013 HAF arose pre-petition under the conduct test and thus was subject to the automatic stay; case remanded.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2013 HAF is a pre-petition "claim" subject to the automatic stay under 11 U.S.C. § 362(a)(6)	The conduct giving rise to the 2013 HAF (legislation, CMS approval, fee calculation based on pre‑petition cost reports) all occurred before the petition, so the claim is pre-petition	The critical conduct was the debtor’s continued eligibility/operation into July 1, 2012 (the start of FY2013), so the 2013 HAF arose post-petition	The 2013 HAF arose from pre-petition conduct (statute, CMS approval, and cost-report data); it was a contingent pre-petition claim and is subject to the automatic stay

Watson v. Parker (In re Parker), 313 F.3d 1267 (10th Cir. 2002) (adopts the conduct test: claim date = date of conduct giving rise to claim)
Grady v. A.H. Robins Co., 839 F.2d 198 (4th Cir. 1988) (use of conduct test for determining when claim arose)
In re Grossman's Inc., 607 F.3d 114 (3d Cir. 2010) (discusses limits and concerns with conduct test and prepetition-relationship requirement)
Matter of Chicago, Milwaukee, St. Paul & Pac. R. Co., 974 F.2d 775 (7th Cir. 1992) (policy favoring treating claims as arising at earliest possible point to bring creditors into bankruptcy)
In re Rosteck, 899 F.2d 694 (7th Cir. 1990) (pre-petition contractual obligations can make later assessments pre-petition claims)
In re Davis, 638 F.3d 549 (7th Cir. 2011) (de novo review standard for district court findings on whether a claim is pre- or post-petition)