postings by John Pottow

The Chimerical Medicare Bar on Bankruptcy Jurisdiction

posted by John Pottow

Statutory interpretation enthusiasts: prepare to nerd out on an issue on which the Court has a cert petition pending.  The question involves the federal jurisdictional bar to Medicare challenges.  Let’s start with the text:

 “No action against the United States, the [Secretary of Health and Human Services, see 42 U.S.C. § 1395ii], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under [the Medicare Act, see § 1395ii].”

Bankruptcy types—and quite frankly, all lucid readers of English—might well think that this jurisdictional bar does not apply to bankruptcy jurisdiction under section 1334.  Not so, say a surprising number of courts.

What could possibly justify reading what’s clearly only a bar of federal question jurisdiction (1331) and federal officer jurisdiction (1346) as a bar to bankruptcy jurisdiction (1334) as well?  In In re Bayou Shores, the subject of the pending cert petition, the Eleventh Circuit offered an argument based on congressional intent.  Until 1984, the precursor to the above-quoted statute did bar bankruptcy jurisdiction.  But it did so obliquely, by way of a statutory cross-reference to a subsequently dismantled omnibus jurisdictional grant in the Judicial Code.  So for a few decades after the dismantlement, the Medicare bar was a cross-reference to a no-longer-existing passage of the Judicial Code that formerly encompassed virtually all grants of jurisdiction to the district courts, including bankruptcy.

When Congress finally got around to updating the bar in the 1980s, it enacted the text above.  Without more, that would just be Congress changing the law from a broad bar cross-referencing all jurisdictional grants to a specific bar covering only two grants.  But there was more: Congress did so as part of a package of self-styled “technical corrections.”  And of these corrections, Congress wrote a proviso that “none . . . shall be construed as changing or affecting any right, liability, status or interpretation which existed (under the provisions of law involved) before [their effective] date.”  To read the amended bar as written would appear to violate this admonition.  The Eleventh Circuit (and others) thus read the proviso to justify junking the statute’s text in favor of the perceived congressional intent not to change anything.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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