#### In re HEALTH AMERICA OF FLORIDA, INC. d/b/a Union General Hospital, Debtor. HEALTH AMERICA OF FLORIDA, INC. d/b/a Union General Hospital, Plaintiff, v. BLUE CROSS-BLUE SHIELD OF FLORIDA, INC. and United States of America, Internal Revenue Service, Defendants.

Bankruptcy No. 82-544-BK-J-GP.

Adv. No. 82-346.

United States Bankruptcy Court, M. D. Florida, Jacksonville Division.

July 29, 1982.

Lansing J. Roy, P. A., Keystone Heights, Fla., for plaintiff.

Jane Dickinson, Dist. Counsel, Jacksonville, Fla., for United States of America I.R.S.

Gerald B. Leedom, Atty., Tax Div., U. S. Dept, of Justice, Washington, D. C., for Blue-Cross/Blue-Shield of Florida, Inc.

FINAL JUDGMENT

GEORGE L. PROCTOR, Bankruptcy Judge.

This case came before the Court on the debtor’s request for a preliminary injunc*269tion and turnover against Blue Cross-Blue Shield, of Florida, Inc. (“Blue Cross”) and the United States of America and the Internal Revenue Service. The debtor seeks an order restraining the defendants from honoring a notice of levy served on “Blue Cross” on June 25, 1982. 26 U.S.C. § 6331. The debtor also requests the Court to order “Blue Cross” to surrender and turn oyer to the debtor all funds which are otherwise subject to the levy. 11 U.S.C. § 542. The debtor’s petition seeking reorganization under Chapter 11 Title 11 of the Bankruptcy Code was filed on July 26, 1982.

An evidentiary hearing was held on July 29, 1982. The Court has considered the memoranda and arguments of counsel, the testimony given on behalf of the debtor and the Government parties, and the exhibits introduced at the hearing, and hereby finds and concludes as follows:

1. As of the date of the June 25, 1982 notice of levy (Government Exhibit # 1) the debtor had unpaid employment taxes for the fourth quarter of 1981 in the amount of $26,993.28.

2. The proceeds of subsequent levies, honored prior to the date on which the petition was filed reduced the unpaid balance to $18,816.46.

3. The levy served on “Blue Cross” on June 25, 1982 (Government Exhibit 1) directed “Blue Cross” to surrender to the Internal Revenue Service all sums owed to the debtor, the so-called PIP funds.

4. On July 26, 1982, prior to “Blue Cross’ ” honor of the levy, the debtor filed its petition for reorganization under Chapter 11 and, on the same date sought and obtained an *ex parte*temporary restraining order, barring any turnover to the debtor or the Internal Revenue Service pending a hearing.

CONCLUSIONS OF LAW

The Court adopts the decision in the case of *United States v. Whiting Pools, Inc.,*674 F.2d 144 (2d Cir. 1982). Further the Court rejects the distinction proffered by the United States, as between tangible and intangible property upon which levy has been made. The Court also rejects the argument set forth by the United States, that *Phelps v. United States,*421 U.S. 330, 95 S.Ct. 1728, 44 L.Ed.2d 201 (1975), has continuing viability under the Bankruptcy Code. Accordingly, the Court finds that the full amount of the accounts receivable covered by the “Blue Cross” levy is subject to turnover under 11 U.S.C. § 542. Therefore, we must determine, as a condition to any turnover under § 542, whether “Adequate Protection” can be offered, 11 U.S.C. §§ 363, 361, and if so, what such adequate protection shall consist of.

The Court finds that the PIP funds being held by “Blue Cross” subject to the Internal Revenue Service § 6331 levy should be turned over by “Blue Cross” to the Internal Revenue Service, in part, and to Health America of Florida, Inc. d/b/a Union General Hospital, in part, as follows:

1. The Court hereby modifies the § 362 stay to allow the Internal Revenue Service to file a notice of tax lien in the amount of $8,816.46, covering 941 taxes for the fourth quarter tax period 1981.

2. Of the PIP funds presently being held by “Blue Cross” in the approximate amount of $27,000.00, “Blue Cross” is hereby directed to turnover to the United States of America, Internal Revenue Service the sum of $10,000.00 less the $1,795.74 check issued July 26, 1982, i.e., a net sum of $8,204.26. Thereafter the balance of the PIP funds being held by “Blue Cross” shall be turned over to Health America of Florida, Inc. d/b/a Union General Hospital forthwith which turnovers are to be completed on or before 5:00 P.M. on July 29, 1982.

3. The United States of America, Internal Revenue Service shall be allowed to retain and cash the check dated July 26, 1982, payable to Internal Revenue Service from “Blue Cross” in the amount of $1,795.74.

4. Health America of Florida, Inc., d/b/a Union General Hospital is directed to pay off the unpaid balance owing Internal Revenue Service of $8,816.46 in four equal installments. The first installment will be *270due on August 30, 1982. The second, third and fourth installments shall be due respectively, on September 29, 1982, October 29, 1982 and November 29, 1982. Interest on the unpaid balances shall accrue at the rate of 20 percent per annum, from the date of this order, which interest shall be paid, in lump sum, on November 29, 1982.