§ 89.2     Medical Providers
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 89.2, at ¶ ____, LundinOnChapter13.com (last visited __________).

On the right facts, there is much emotional appeal to a separate class of medical providers.


When the debtor or a family member has a medical problem that requires an extended course of treatment, separate classification of the prepetition debt to the providers of continuing care is rational, if not compelling, for the debtor not financially able to pay all unsecured claims in full. Some medical providers refuse to continue to treat the debtor once they receive a bankruptcy notice. Proof that medical care is needed and can be provided more safely or effectively by continuing a relationship with the prepetition provider is strong evidence in support of the fairness of discrimination in favor of the prepetition medical provider. Several reported decisions have permitted separate classification of prepetition medical debts.1


A prepetition medical provider must negotiate carefully (if at all) for more favorable treatment. There is a fine line between a refusal to provide further medical treatment unless the debtor pays the prepetition debt and a demand for payment of a prepetition claim in violation of the automatic stay.2 Of course, nothing in the Bankruptcy Code prevents the medical provider from refusing to provide further treatment unless it receives cash at the time of delivery of services. However, conditioning postpetition services on full payment of the prepetition claim becomes a collection effort.


An unsecured claim holder disadvantaged by the classification in favor of a medical provider can argue that the classification is unfair in the absence of proof that future medical care cannot be accomplished without the classification. It would be the debtor’s burden to prove that other health care cannot be substituted. It is only in the rare situation in which the debtor is in the midst of a continuing course of treatment that protection of the relationship with the prepetition provider can be factually justified.


1  In re Hill, 4 B.R. 694 (Bankr. D. Kan. 1980); In re Sutherland, 3 B.R. 420 (Bankr. W.D. Ark. 1980). Contra In re Hosler, 12 B.R. 395 (Bankr. S.D. Ohio 1981).


2  See § 73.1 [ Termination of Services to Debtor and Discrimination against Debtor ] § 58.13  Termination of Services to Debtor and Discrimination against Debtor.