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Medical Bankruptcy Reform Will Likely Lead to Abuses According to New ABI Law Review Article

Contact: John Hartgen
             703-894-5935
             jhartgen@abiworld.org

“MEDICAL BANKRUPTCY” REFORM WILL LIKELY LEAD TO ABUSES, ACCORDING TO NEW ABI LAW REVIEW ARTICLE


 
May 18, 2011, Alexandria, Va. — An analysis in the forthcoming Spring 2011 edition (Volume 19, No. 1) of the ABI Law Review finds that legislative proposals to create preferential rules for individuals with medical debt will likely lead to abuse of the relief afforded under the Bankruptcy Code. Authors Prof. Amy Landry of the University of Alabama and Assistant U.S. Bankruptcy Administrator Robert J. Landry III (N.D. Ala.; Birmingham) wrote that recent legislative proposals addressing “medical bankruptcy” are based on a premise that most consumer bankruptcy cases are “medical bankruptcies.” The “assertion that health care costs are the cause of consumer bankruptcy has been repeated over and over again, to such an extent that it is accepted as fact without any qualification or context placed on the assertion,” according to the article.
 
The authors examined legislation introduced in the 111th session of Congress, primarily the “Medical Bankruptcy Fairness Act of 2009.” “Assuming medical debts are the cause of the majority of consumer bankruptcies, the reform does not address the root cause of unpaid medical debt,” the Landrys wrote. “Even if medical debt is not the root causal factor, but rather a factor among many others, such as divorce and unemployment, of consumer bankruptcy filings, medical bankruptcy reform does nothing to mitigate the incidence of consumer filings.”
 
The authors urge policymakers to confront other policy domains that are connected to bankruptcy and that play a significant role in debating a reform of the health care finance system. “Regardless of the disagreement on to what extent health care costs actually cause bankruptcy, if we step back from the rhetoric and assume that half of bankruptcies are caused by illness or medical bills, bankruptcy law is not the problem,” the Landrys article concluded.
 
The ABI Law Review, published in conjunction with St. Johns University School of Law is among the most-cited and respected scholarly publications in the bankruptcy community. In addition to the article on medical bankruptcy reform and two student notes, the Spring 2011 edition of the ABI Law Review also includes the following feature articles:
 
'The Loss Mitigation Program Procedures for the United States Bankruptcy Court for the Southern District of New York' written by Bankruptcy Judge Cecelia G. Morris (S.D.N.Y.) and Mary K. Guccion, Law Clerk to Judge Morris.
 
'Befuddlement Betwixt Two Fulcrums: Calibrating the Scales of Justice to Ascertain Fraudulent Transfers in Leveraged Buyouts,' written by Washington, D.C., bankruptcy attorneys John H. Ginsberg, Daniel R. Czerwonka and M. Katie Burgess, and Georgetown Law student and CPA Zachary R. Caldwell.
 
'Bankruptcy Avant-Garde' written by bankruptcy attorney Jeremy Murphy (Lincoln, Neb.) addresses a previous bankruptcy study that found going-concern sales recover less than the value that could be recovered through reorganizations. Murphy, however, hypothesizes that the study was incorrect because firms sold as going-concerns enter bankruptcy in worse condition than firms that reorganize.
 
To obtain a copy of the Spring 2011 edition of the ABI Law Review, please contact John Hartgen at 703-894-5935 or via email at jhartgen@abiworld.org

 
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.