12 B.R. 17 | D. Mass. | 1981
ORDER PARTIALLY DISMISSING PROCEEDING
On April 15, 1980, (as amended August 14, 1980), the Commonwealth of Massachusetts (the “Commonwealth”) filed a complaint against the above-named defendants. The complaint seeks inter alia
Briefly stated, the underlying dispute herein involves the potential liability of the Commonwealth to repay the United States the federal portion of Medicaid overpay-ments that the Commonwealth previously paid to the debtors. The United States, having reimbursed the Commonwealth for a percentage of the total Medicaid payments made to the debtors, has asserted a right to have the full federal portion of any over-payments repaid to it. The Commonwealth, however, argues that the United States is not entitled to recover the full federal share of such overpayments made to the debtors; rather it is the Commonwealth’s position that the Medicaid statute requires that it repay to the United States only the federal portion of overpayments actually recovered by the Commonwealth from the debtors. The Commonwealth thus maintains that in light of this Chapter XI proceeding, its liability to the United States is limited to the federal portion of funds received by the Commonwealth under the debtors’ plan of arrangement. Therefore, in addition to
Subsequent to filing its answer, the United States, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure and Rule 712 of the Rules of Bankruptcy Procedure filed a motion for judgment on the pleadings. In the motion the United States seeks to dismiss the Commonwealth’s complaint insofar as it requests any type of relief against the United States.
This Court agrees with the United States that the Court lacks jurisdiction to grant the relief requested by the Commonwealth insofar as it relates to the United States. The dispute between the Commonwealth and the United States is in essence simply a conflict between an alleged creditor of the debtors and a third-party which has no impact on the debtors or on the Chapter XI proceeding. In such circumstances, despite the fact that the proceeding raises several significant issues of law involved in the relationship between Medicaid law and bankruptcy law generally, the Bankruptcy Act does not grant this Court the jurisdictional authority to resolve these issues in this proceeding.
Moreover, a case recently decided in this district In re Fredette, Bankruptcy No., 4-80-188-G, (December 17, 1980, Glennon, B. J.), presented a jurisdictional issue similar to the one confronted by this Court and is instructive herein. In Fredette the Bankruptcy Court held that it was without jurisdiction to resolve a dispute between the Commonwealth of Massachusetts and the United States involving liability for Medicaid overpayments which was collateral to and had no impact on the bankruptcy proceeding. Furthermore, it should be noted that the Fredette case, a Chapter 7 proceeding, was decided under the more expansive jurisdictional boundaries created by the Bankruptcy Reform Act of 1978 (P.L. 95-598), while the present proceeding is governed by the more limited jurisdiction of the Bankruptcy Act.
Since this Court lacks jurisdiction over that part of the Commonwealth’s complaint which requests relief against the United States, it would be appropriate to simply dismiss that part of the proceeding. Rule 915(b) of the Rules of Bankruptcy Procedure, however, allows this Court to transfer
Accordingly, it is
ORDERED:
That the Commonwealth’s complaint insofar as it seeks relief against the United States (as more fully described in this Order) is hereby transferred to the civil docket of the United States District Court for the District of Massachusetts.
. The Commonwealth’s complaint also seeks various relief against the debtors and the Receivers in this proceeding. That aspect of the complaint, however, is not relevant to the present discussion and is not affected by this order.
. Subsequent to the filing of the complaint by the Commonwealth, the United States Department of Health, Education and Welfare ceased to exist and its functions insofar as relevant to this proceeding were transferred to the United States Department of Health and Human Services.
. Specifically, the motion for judgment on the pleadings seeks dismissal of paragraphs 1 through 3 of the Commonwealth’s prayers for relief contained in the original complaint and, in addition, that portion of the amended complaint which seeks relief against the United States.
. In light of this Court’s determination that it lacks jurisdiction over that portion of the Commonwealth’s complaint relating to the United States, the Court makes no determination as to the validity of the other arguments raised by the United States in its motion for judgment on the pleadings.
.The underlying Chapter XI proceeding was commenced on July 5, 1979 and thus is unaffected by the Bankruptcy Reform Act of 1978 which became effective on October 1, 1979. (Section 402(a) of the Bankruptcy Reform Act.)