In re Nicolescu
In re Nicolescu
Opinion of the Court
MEMORANDUM OF DECISION
I.
Before the court is an “Application to Pay Secured Creditor” (“the application”) filed by Neal Ossen, the Chapter 7 trustee (“the trustee”). The application asserts that Anthem Blue Cross & Blue Shield (“Anthem”), the alleged secured creditor, has a “Medicaid lien” in the amount of $2,563.09 on proceeds received by the trustee in settlement of a personal injury claim of Rica Nicolescu (“the debtor”). The trustee seeks an order to pay said amount to Anthem. For reasons that follow, the court denies the application.
II.
The debtor and Eniko Nicolescu on September 11, 2002, filed a joint Chapter 7 petition. Amended schedules filed on November 1, 2002, listed as an asset the debtor’s personal injury claim arising out of an accident in August 2002, and a $700
III.
Conn. Gen.Stat. § 17b-93(a) provides that the state shall have a priority claim over all other unsecured claims on any property,
In the case of causes of action of beneficiaries of aid ... the claim of the state shall be a lien against the proceeds therefrom in the amount of the assistance paid ... and shall have priority over all other claims except attorney’s fees for said causes, expenses of suit, costs of hospitalization connected with the cause of action by whomever paid over and above hospital insurance or other such benefits, and, for such period of hospitalization as was not paid for by the state, physicians’ fees for services during any such period as are connected with the cause of action over and above medical insurance or other such benefits; and such claim shall consist of the total assistance repayment for which claim may be made under said programs.
Bankruptcy Code § 545, entitled “Statutory Liens,”
IV.
CONCLUSION
Bankruptcy Code § 545 is derived in large part from former § 67b and § 67c
The Medicaid lien asserted by Anthem clearly falls within the definition of a statutory lien as it arose solely by force of Conn. Gen.Stat. § 17b-94(a). The Medicaid lien is facially avoidable by a trustee pursuant to § 545(2) unless the lien has been perfected and is enforceable against a bona fide purchaser.
An early ruling in this district, In re Leach (State of Connecticut v. Leach), 15 B.R. 1005 (Bankr.D.Conn. 1981) (Shiff, J.), concluded that Conn. Gen.Stat. § 17-83f (presently codified as § 17b-94) is silent regarding perfection and, accordingly, the lien provided by that statute is voidable under Bankruptcy Code § 545(2). Although the facts of Leach are not on all fours with the present proceeding,
This ruling does not address whether any of the medical bills paid may qualify as administrative expenses, and, in the absence of an adversary proceeding, does not avoid any lien. It is
SO ORDERED.
. Medicaid is a jointly funded state and federal assistance program designed to pay the medical expenses of individuals whose income and resources are insufficient. Because Congress intended Medicaid to be the "payor of last resort,” the state agency that administers Medicaid must seek reimbursement from any third party responsible for the patient's medical expenses.... As part of its recoupment power, ... the agency administering Medicaid may place a lien on the Medicaid recipient’s personal injury claims against a tortfeasor in order to recover the agency’s medical expenditures. Sullivan v. County of Suffolk, 174 F.3d 282, 285 (2d Cir. 1999) (citations omitted).
. Subject to certain restrictions not relevant here.
. 11 U.S.C. § 101(53) defines "statutory lien” as a "lien arising solely by force of a statute on specified circumstances or conditions, or lien of distress for rent, whether or not statutory, but does not include security interest or judicial lien, whether or not such interest or lien is provided by or is dependent on a statute and whether or not such interest or lien is made fully effective by statute."
. Although In re Leach concerned assistance provided under the Aid to Families with Dependent Children Program, the lien thereunder arose pursuant to the same state statutes (since renumbered) as the instant Medicare lien.
Reference
- Full Case Name
- In re Rica NICOLESCU, Eniko Nicolescu, Debtors
- Status
- Published