MEMORANDUM OPINION AND ORDER
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].
In entering the preliminary, 28-day injunction, the Court did not make a finding on Plaintiffs likelihood of success on the
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.
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,
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.
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,
Defendants do, however, address the Court’s supplemental reasoning in its written order. The Court, following two courts of appeal and several bankruptcy courts,
Defendants acknowledge that the plain language of § 405(h) does not bar bankruptcy jurisdiction over unexhausted Medicare Act disputes. They argue, however,
The legislative history of § 405(h) is recounted well in the Sixth Circuit’s opinion in BP Care, Inc. v. Thompson,
In 1948, however, Congress re-codified Title 28 and separated § 41’s twenty-eight subsections into new sections 1331 through 1359. This caused no substantive change in the coverage of the SSA’s jurisdictional bar; courts simply referred to § 41 as it existed in 1939. See Weinberger v. Salfi,
In 1976, however, only one year after the Supreme Court held that § 405(h)’s reference to § 41 continued to operate, the Office of Law Revision Counsel decided to revise § 405(h)’s reference to § 41, and replaced it in the U.S.Code with a reference to §§ 1331 and 1346. These provisions, respectively, grant subject-matter jurisdiction over federal questions, and over suits against the United States. See 28 U.S.C. §§ 1331, 1346. Clearly the Office of Law Revision Counsel believed that these grants of jurisdiction were the only ones relevant to SSA or Medicare Act claims. The Office’s revision had no effect, as the Statutes at Large enacted by Congress prevail over the U.S.Code in cases of inconsistency.
But in 1984, Congress enacted the Office’s revision in the Deficit Reduction Act of 1984 (“DRA”) under the heading of “Technical Corrections,” along with 219 other such technical corrections to the SSA. Pub.L. No. 98-369, 98 Stat. 1162 (1984), § 2663(a)(4)(D). Congress wrote that none of the 220 technical corrections should “be construed as changing or affecting any right, liability, status, or interpretation which existed (under the provisions of law involved) before that date.” Id., § 2664(b).
First, the power of courts to correct Congress’s apparent drafting errors is sharply limited. The Supreme Court has written that “[i]f Congress enact[s] into law something different from what it intended, then it should amend the statute to conform it to its intent. It is beyond our province to rescue Congress from its drafting errors-” Lamie v. United States Tr.,
The Court is reluctant to hold that a reading of § 405(h) embraced by two circuits
The other reason Defendants’ legislative history argument fails is that at least several of the technical amendments Congress enacted in the DRA made undeniably substantive changes to Social Security and Medicare, belying Congress’s blanket’ as
The first example is a DRA amendment to 42 U.S.C. § 1307, which at the time made it a crime to impersonate, inter alia, a “former wife divorced” of a Social Security beneficiary for purposes of obtaining the beneficiary’s Social Security number or information about his benefits, to also make it a crime to impersonate a “divorced husband, surviving divorced wife, surviving divorced husband, surviving divorced mother, [or] surviving divorced father.” Pub.L. No. 98-369, § 2663(e)(2)(g). If Defendants were correct that the DRA’s technical amendments made no substantive changes and should be disregarded, it would' follow that thirty-one years after the DRA’s enactment it is still only a crime to impersonate a divorced wife of a Social Security beneficiary — not a divorced husband or surviving divorced father or mother.
Second, Congress amended 42 U.S.C. § 422(b)(4), since repealed, which mandated deductions from Social Security benefits on account of refusal to accept rehabilitation services, to not apply to “full-time elementary or secondary school students” between the ages of eighteen to twenty-two, whereas § 422(b)(4) previously carved out all “full-time students” of the same ages. Pub.L. No. 98-369, § 2663(a)(15)(C). If Defendants were right about the ineffectiveness of the DRA’s technical amendments, college students between the ages of eighteen to twenty-two would have continued to be exempt from § 422(b)(4) until its repeal in 1999.
Third, and most remarkably, a “technical amendment” in the DRA repealed an entire title of the SSA, Title XIII, which provided a program of unemployment benefits for federal seamen. See Pub.L. No. 98-369, § 2663(f) (“Title XIII of such Act is repealed.”); 42 U.S.C. §§ 1331-1336 (1982) (repealed). If the DRA’s technical amendments truly did not “chang[e] or affect[ ] any right,” the Reconversion Unemployment Benefits for Seamen program is still federal law.
In view of the foregoing, the Court is convinced that some of the DRA’s technical amendments to the SSA did make substantive changes to the Act, and that its amendment to § 405(h), wise or unwise, was one of them. Defendants’ jurisdictional arguments are not likely to succeed on appeal.
2. MCorp and its Applicability to this Action.
Defendants next argue they are likely to succeed on appeal because this Court dis
3. The Applicability of § 512 to Disputes about Title to Property.
On the merits, Defendants argue that they are likely to succeed on appeal because 11 U.S.C. § 542, the turnover'provision of the Bankruptcy Code, cannot be used to seek turnover of disputed property. Section 542(b) provides that any entity in possession of property that a trustee may use, sell, or lease under § 363 of the Code must deliver such property to the trustee. 11 U.S.C § 542(a). Section 363(b)(1) gives trustees the power to use, sell, or lease property of the estate. 11 U.S.C. §. 363(b)(1). Section 1107 gives a chapter 11 debtor in possession (the Plaintiff herein) the powers of a trustee. 11 U.S.C. § 1107(a). Tt therefore follows that § 542 authorizes courts to order the turnover of property of the estate to chapter 11 debtors. Nothing in § 542 limits this authority to uncontested estate property.
Nevertheless, Defendants cite some authority that “a debtor cannot use the turnover provisions [of the Code] to ... demand assets whose title is in dispute.” United States v. Inslaw, Inc.,
Whatever the theoretical basis for In-slaw ’s judicial gloss on § 542, authorities that do bind this Court hold that debtors can invoke § 542 where title is in dispute. Chief among them is the Supreme Court itself. The Supreme Court has interpreted § 542 to apply to a turnover dispute in which the Internal Revenue Service (IRS) claimed it, not the debtor, owned property it seized prior to bankruptcy. See United States v. Whiting Pools, Inc.,
4. Whether This Court Afforded Debtor “a Haven for Wrong-Doers. ”
Defendants argue at some length [AP Doc. 11 at 11-13] that they are likely to succeed on appeal because this Court “disregard[ed] the fundamental principle that bankruptcy court is not intended to serve as a haven for wrong-doers.” [Id. at 11.] The Court is well aware of this fundamental principle, and numerous provisions of the Code applicable in this case put it into practice by allowing parties in interest to seek appointment of a trustee and/or conversion or dismissal for bad faith. See 11 U.S.C. §§ 1104, 1112. But Defendants have sought none of these remedies, and Debtor’s alleged wrong-doing has not been proven in this Court, nor in the False Claims Act action currently pending in the District Court, or even in the pending administrative investigation of Debtor’s practices. Absent some proof of wrongdoing, this Court cannot' deny Debtor the relief it is entitled to under the Code. Defendants are not likely to succeed on this ground on appeal.
The Court has carefully considered the Defendants’ remaining arguments that they are likely to prevail on appeal and finds them without merit. Defendants may succeed on appeal. But their likelihood of success is far too uncertain for this Court to grant a stay in spite of Defendants’ perfunctory arguments on the other stay factors.
C. Harm, to the Defendants, and Harms to the Debtor and Third Parties.
In entering its preliminary injunction last week, the Court previously considered the harm of its order to Defendants, and the balance of harm to the parties and affected third parties. It ruled that “the harm to the Defendants pales in comparison to the irreparable harm” to the Debt- or. Failing to issue an injunction, the Court found, would cause the Debtor’s business to “fail immediately” and “wreak havoc on the lives of 1,348 patients that are medicated, bathed, clothed, and otherwise cared for by the Debtor’s caregivers.” Issuing the injunction, the Court found, would only harm Medicare insofar as it would cause a “potential loss of funds over which it could assert offset or recoupment,” an amount limited both by the short length of the Court’s injunction and by the Court’s finding that much of the suspended payments were likely “not tainted by the ... allegations of fraud.”
Defendants offer no arguments to displace these findings. They merely argue that Medicare’s interests are categorically stronger than those of the Debtor in continued survival. [AP Doc. 11 at 15.] Even if this were so, the argument overlooks the interests of the patients who would be harmed by a stay of the Court’s injunction. See Lundergarir-Grimes,
In any event, the Court has previously considered and rejected Defendants’ argu
D. The Public Interest.
Finally, Defendants argue that the public interest would be served by a stay. This Court found last week that the public interest would be served by its injunction, reasoning that the public interest was served by protecting “the fragile patients served by the Debtor,” and “by the rehabilitation of a troubled company,” which would save approximately two hundred jobs. Defendants provide little to cause the Court to change that assessment. They do - argue that, having released $500,000.00 to the Debtor already, the Debtor now has sufficient time and capital to transition its patients to other providers. This is conclusory guesswork which ignores the impact a sudden stay would have on a Debtor that has budgeted on the basis of the Court’s temporary injunction. It also contradicts the Court’s findings that enjoining suspension of the July payments in toto was necessary to protect the Debtor and its patients.
For the foregoing reasons, the Court denies Defendants’ Motion for a Stay Pending Appeal.
II. Motion for Stay Pending Appeal of Interim Cash Collateral Order.
The motion for stay, pending appeal of this Court’s interim cash collateral order, which allowed Debtor to spend cash collateral until a final hearing on July 30, 2015, relies almost entirely on the arguments in the motion to stay the Court’s preliminary injunction, which the Court has already rejected supra. [See Doc. 68 at 1.] The United States does add that “the cash collateral at issue ... consists of Medicare funds that are not the property of the Debtor.” [Id.] The Court, however, has found that the evidence at this time shows most of the suspended payments are likely untainted by Defendants’ allegations of fraud, and thus property of the Debtor’s estate. Further, enjoining Defendants from suspending payments only to prohibit the Debtor from spending those payments on payroll and vital services would render the Court’s injunction a practical nullity, causing the same harms that make stay of the injunction inappropriate. Having declined to stay its injunction, the Court will not destroy it. The United States’ Motion for Stay Pending Appeal of the Interim Cash Collateral Order is denied.
III. Conclusion.
Based on the foregoing reasons, it is ORDERED:
(1) The Defendants’ Motion to Stay Pending Appeal [AP Doc. 11] is DENIED; and
(2) The United States’ Motion for Stay Pending Appeal of Order Allowing Interim Use of Cash Collateral [Bk Doc. 68] is DENIED.
Notes
. References to the docket in this adversary proceeding appear as [AP Doc. —]. Refer-enees to the docket in the Debtor's main bankruptcy case appear as [Bk. Doc. -].
. Defendants’ motion to stay the interim cash collateral order incorporates its motion to stay the injunction by reference, making no additional arguments.
. The final hearing is set for July 30, 2015, one day after the District Court will rule on dispositive motions in the False Claims Act action.
. Defendants argue that the bankruptcy court decisions on which the Court relied have been reversed or vacated. The recently reversed decision, In re Bayou Shores SNF, LLC,
. Despite Defendants’ protestations to the contrary [see AP Doc. 11 at 10-11], footnote 11 in BP Care expressly left open the issue of whether § 405(h) applied to bases -for federal jurisdiction unmentioned in its text, and acknowledged that both the plain-language reading and Defendants’ broader reading were arguable positions. After writing that "[b]oth the Supreme Court and this circuit have avoided deciding whether § 405(h) bars mandamus jurisdiction under 28 U.S.C. § 1361, in the same way that it bars jurisdiction under §§ 1331 and 1346,”
. Congress also enacted sixty-five technical corrections to the Medicare Act in the DRA, providing the same disclaimer. See id., § 2354(e)(1).
. The majority opinion in Burwell, which did not rely on a drafting error theory, is not to the contrary.
. Coatoam, for example, corrected a “simple drafting error when ... [Congress] designated the mandatory condition for domestic violence offenders as subsection (a)(4) instead of (a)(5)" that led to absurd results. Coatoam,
.The Ninth Circuit, while holding in Kaiser v. Blue Cross of California,
. The amended § 422(b)(4) cross-referenced a provision in 42 U.S.C. § 402(d) defining a full-time elementary or secondary school student to not include students receiving "education ... beyond grade 12.” 42 U.S.C. § 402(d)(7)(C)(ii). Prior to amendment, § 422(b)(4) referenced a definition in § 402(d) defining a “full-time student” as one enrolled in "a school or college or university,” 42 U.S.C. § 402(d)(7)(C) (1976) (repealed).
. At least one of the DRA's sixty-five "technical amendments” to the Medicare Act, while minor, is likewise unmistakably substantive. This amendment amended 42 U.S.C. § 1395y’s exclusion of certain benefits during the period from when an individual becomes eligible under Medicare to "the month in which such individual attains the age of 70,” 42 U.S.C. § 1395y(b)(3)(A)(iii) (1982), to an exclusion of benefits during the period from eligibility to "the month before the month in which such individual attains the age of 70.” 42 U.S.C. § 1395y(b)(3)(A)(iii) (Supp.1985) (repealed) (emphasis supplied); see Pub.L. 98-369, § 2354(b)(31). In other words, this "technical amendment,” which Congress claimed did not "affect[] any right,” abbreviated a benefits exclusion by a month.
. The Defendants’ letter suspending payments [AP Doc. 1, Ex. A] cites only four alleged cases of abuse over ten months that would make up 0.2% of the patients treated and funds paid by Medicare during that period.