United States District Court, M.D. Georgia, Macon Division
DEBORAH L. BLOCK and JEFFERY D. BLOCK, Plaintiffs,
OCONEE REGIONAL MEDICAL CENTER, INC., et al., Defendants.
ORDER REFERRING CASE TO BANKRUPTCY COURT
E. SELF, III, JUDGE UNITED STATES DISTRICT COURT
the Court for consideration is the Amended Motion to Refer
Case to Bankruptcy Court (“Motion”) [Doc. 32]
filed by Defendants Navicent Health, Inc.; Navicent Health
Oconee, LLC; and Oconee Regional Healthcare Foundation, Inc.
(“Defendants”). Defendants contend that the
above-captioned case should be referred, in its entirety, to
the Bankruptcy Court for the Middle District of Georgia
(“Bankruptcy Court”) because “it is a case
arising under Title 11 of the United States Code or arising
in or related to a case under Title 11 of the United States
Code.” [Doc. 32, at 2]. Having considered the Motion
[Doc. 32], Plaintiffs' Response [Doc. 41],
Defendants' Reply [Doc. 45], and the applicable law, the
Court makes the following determination:
Regional Medical Center, Inc.; Oconee Regional Health
Systems, Inc.; Oconee Regional Health Ventures, Inc.; Oconee
Internal Medicine, LLC; Oconee Orthopedics, LLC; Oconee
Regional Health Services, Inc.; Oconee Regional Emergency
Medical Services, Inc.; ORHV Sandersville Family Practice,
LLC; and Oconee Regional Senior Living, Inc.
(“Defendant Debtors”) are debtors in bankruptcy
in Bankruptcy Case Number 17-51005, currently pending in the
Bankruptcy Court. Pursuant to 11 U.S.C. § 363 and via
the Bankruptcy Court's Sale Order [Doc. 32-1], Navicent
Health Oconee, LLC (“Purchaser”) acquired
substantially all of the Defendant Debtors' assets in the
pending bankruptcy case free and clear of all liens, claims,
case, Plaintiffs assert claims against Purchaser seeking a
declaration, among other things, that Purchaser is obligated
“to make [Continuation Omnibus Budget Reconciliation
Act (“COBRA”)] continuation coverage available to
Plaintiffs . . .” [Doc. 1, at 31; ¶ 166].
Bankruptcy Court's Sale Order [Doc. 32-1] provides,
“[a]ll persons having Liens of any kind or nature
whatsoever . . . are and shall be . . . permanently enjoined
from pursuing, asserting, enforcing, or exercising such Liens
. . .” [Doc. 32-1, at 13]. Purchaser contends that the
Bankruptcy Court granted the injunction pursuant to its
authority under § 363 of the Bankruptcy Code, the
injunction relates to a bankruptcy case, and any potential
counterclaims as a result of this civil action arise from
interpretations of the Sale Order [Doc. 32-1]. Therefore,
according to Defendants, Plaintiffs' case clearly arises
under the Bankruptcy Code and relates to a bankruptcy case.
Eleventh Circuit has indicated:
District courts have jurisdiction over “all civil
proceedings arising under title 11, or arising in or related
to cases under title 11.” 28 U.S.C. § 1334(b). In
order to determine whether a matter is “related
to” a bankruptcy case, we ask “whether the
outcome of the proceeding could conceivably have an effect on
the estate being administered in bankruptcy.” In re
Lemco Gypsum, 910 F.2d at 788 (quoting Pacor, Inc.
v. Higgins (In re Pacor, Inc.), 743 F.2d 984,
994 (3d Cir. 1984), overruled on other grounds by Things
Remembered, Inc. v. Petrarca, 516 U.S. 124, 116 S.Ct.
494, 133 L.Ed.2d 461 (1995)). A matter that is “related
to” a bankruptcy case “need not necessarily be
against the debtor or against the debtor's
property.” Id. (quoting Pacor, 743
F.2d at 994). “An action is related to bankruptcy if
the outcome could alter the debtor's rights, liabilities,
options or freedom of action (either positively or
negatively) and which in any way impacts upon the handling
and administration of the bankrupt estate.”
Id. (quoting Pacor, 743 F.2d at 994).
In re Brickell, 142 Fed.Appx. 385, 388-89 (11th Cir.
civil action “could conceivably have an effect on the
estate being administered in bankruptcy.” Id.
Specifically, if Plaintiffs prevail on their claims and the
Purchaser is ultimately forced to provide COBRA continuation
coverage to Plaintiffs (and conceivably others similarly
situated), less money could be available for distribution to
the creditors involved in the bankruptcy case. Hence, the
relief sought in this proceeding is clearly “related
to” the bankruptcy case, and the district court has
jurisdiction over them. The narrow question at issue is
whether COBRA coverage is a lien within the meaning of the
Sale Order [Doc. 32-1]. As Defendants point out, “[a]
bankruptcy court plainly ha[s] jurisdiction to interpret and
enforce its own prior orders.” Travelers Indem. Co.
v. Bailey, 557 U.S. 137, 151 (2009).
shown above, this Court clearly has jurisdiction over these
claims. Accordingly, the Court may refer this action because
“[e]ach district court may provide that any or all . .
. proceedings arising under title 11 or arising in or related
to a case under title 11 shall be referred to the bankruptcy
judges for the district.” 28 U.S.C. § 157(a);
see also 2012-01 Order of Reference (Title 11
found that this civil action relates to a case arising under
title 11, the Court REFERS this case, in its
entirety, to the Bankruptcy Court for the Middle District of
Georgia. In light the foregoing referral, Defendants Navicent
Health, Inc. and Navicent Health Oconee, LLC's Amended
Motion to Dismiss [Doc. 31] and Defendant Oconee Regional
Healthcare Foundation, Inc.'s Motion to Dismiss [Doc. 27]
are TERMINATED as moot.