Court Opinion

ID: 4102990
Source: CourtListenerOpinion
Date Created: 2016-11-29 20:00:32.723806+00
Date Added: 2024-06-11T14:36:35.390528
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 16-1731

                PARKVIEW ADVENTIST MEDICAL CENTER,

                            Appellant,

                                v.

 UNITED STATES OF AMERICA, on behalf of the Department of Health
  and Human Services, Centers for Medicare & Medicaid Services,

                             Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF MAINE

              [Hon. Jon D. Levy, U.S. District Judge]

                              Before

                     Lynch, Stahl, and Barron,
                          Circuit Judges.

     George J. Marcus, with whom Jennie L. Clegg, David C. Johnson,
Andrew C. Helman, and Marcus Clegg were on brief, for appellant.
     Jeffrey Clair, with whom Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Thomas E. Delahanty II, United States
Attorney, and Michael S. Raab were on brief, for appellee.
     John A.E. Pottow and Asher Steinberg on brief as amicus
curiae.

                         November 29, 2016
              LYNCH, Circuit Judge.       This is an important case resting

at the intersection of the Bankruptcy Code and Medicare law.                  It

concerns the efforts of the Parkview Adventist Medical Center

("Parkview") in Brunswick, Maine, which filed for bankruptcy on

June 16, 2015, to use the Bankruptcy Code to challenge the actions

of appellee United States, through the Centers for Medicare &

Medicaid Services ("CMS"), in terminating its "Provider Agreement"

with Parkview and declining to reimburse Parkview for certain

services provided after the effective date of that termination.

              After receiving a letter from Parkview, CMS concluded

that Parkview's Provider Agreement was to be terminated, because

CMS found that Parkview was no longer a "hospital" under the

Medicare statute.        See 42 U.S.C. § 1395x(e)(1).         An administrative

law   judge    ("ALJ")     has   issued   a   determination     upholding    the

termination but adjusting the effective date.

              Both   the   bankruptcy     court   and   the    reviewing     U.S.

district court, see Parkview Adventist Med. Ctr. v. United States,

No. 2:15–cv–00320–JDL, 2016 WL 3029947 (D. Me. May 25, 2016),

denied Parkview's "Motion to Compel Post Petition Performance of

Executory       Contracts,"       which       sought,    inter       alia,      a

"[d]etermin[ation] that the Termination Notice [from CMS] is null

and void and that the Provider Agreement [governing Parkview's

eligibility for Medicare reimbursement] remains in full force and

effect."      It also sought relief "requiring CMS to honor the terms

                                     - 2 -
of the Provider Agreement and [to] reimburse [Parkview] for Part

B Services provided by [Parkview] from and after June 18, 2015, in

accordance with the terms of the Provider Agreement," as well as

"such other and further relief as is just and equitable."1

          In   this   motion,   Parkview   argued   that   the   Provider

Agreement was an "executory contract" under 11 U.S.C. § 365, and

accordingly within the bankruptcy court's jurisdiction.          As such,

Parkview contended, CMS's termination of the Provider Agreement

was "a post-petition termination . . . without court authority,

and prior to the Debtor having exercised its right to assume or

reject the Provider Agreement," in violation of "[11 U.S.C.]

§§ 365, 362 and 525 of the Code."        Parkview further argued that

CMS's termination of the Provider Agreement violated (1) the

"automatic stay" in 11 U.S.C. § 362(a)(3), which stays "any act to

obtain possession of property of the estate or of property from

the estate or to exercise control over property of the estate,"

and (2) the non-discrimination provision in 11 U.S.C. § 525(a),

     1    At oral argument for this appeal, Parkview attempted to
reframe the relief it sought. It claimed it was not seeking the
continuation of any immediate payment, but rather the effective
reinstatement of the Provider Agreement for the period from July
5, 2015 to August 20, 2015. Parkview conceded at oral argument
that, despite its claim that it was not seeking immediate payment,
the reinstatement of the Provider Agreement for the stated period
would lead to reimbursement payments totaling several million
dollars.   Later at oral argument, Parkview characterized the
relief it seeks somewhat differently -- namely, as an annulment of
CMS's termination letter.

                                 - 3 -
which provides that governmental agencies may not revoke a license

or a similar grant solely on account of a party's insolvency or

the fact that a party has filed a bankruptcy petition.

          The    bankruptcy    court     concluded    that     it     lacked

jurisdiction    over   the   motion    until   Parkview's    claims    were

administratively exhausted and that CMS had not violated either

the automatic stay or the non-discrimination provision.                 The

district court affirmed, reasoning that 42 U.S.C. §§ 405(g) and

405(h) "[t]ogether . . . require the exhaustion of administrative

remedies through the agency review process before judicial review

takes place."   Parkview, 2016 WL 3029947, at *5.          Section 405(g)2

provides in part that:

     Any individual, after any final decision of the
     [Secretary] made after a hearing to which he was a party,
     irrespective of the amount in controversy, may obtain a
     review of such decision by a civil action commenced
     within sixty days after the mailing to him of notice of
     such decision or within such further time as the
     [Secretary] may allow.

42 U.S.C. § 405(g).    Section 405(h)3 further provides that:

     The findings and decision of the [Secretary] after a
     hearing shall be binding upon all individuals who were
     parties to such hearing.     No findings of fact or
     decision of the [Secretary] shall be reviewed by any
     person, tribunal, or governmental agency except as
     herein provided. No action against the United States,
     the [Secretary], or any officer or employee thereof

     2    Section 405(g) is made applicable           to     the    Medicare
statute via 42 U.S.C. § 1395ff(b)(1)(A).
     3    Section 405(h) is made         applicable   to     the    Medicare
statute via 42 U.S.C. § 1395ii.

                                 - 4 -
     shall be brought under section 1331 or 1346 of Title 28
     to recover on any claim arising under this subchapter.

42 U.S.C. § 405(h).          The district court concluded that Parkview's

claims arose under the Medicare statute and that the final sentence

of      § 405(h)      bars         bankruptcy      jurisdiction     over      such

administratively unexhausted claims.               Parkview, 2016 WL 3029947,

at *6–8.       The district court also affirmed the bankruptcy court's

holding that CMS had not violated the automatic stay, see 11 U.S.C.

§ 362(a)(3), nor the non-discrimination provision, see 11 U.S.C.

§ 525(a).       Parkview, 2016 WL 3029947, at *8.

               We acknowledge that there is a circuit split on the lack-

of-jurisdiction holding pertaining to § 405(h), as described by

the district court.4          As the district court correctly observed,

the majority of circuits have adopted the view -- based on previous

versions of the statute and its legislative history -- that even

though § 405(h) specifically mentions a bar to jurisdiction under

only 28 U.S.C. §§ 1331 (federal question jurisdiction) and 1346

(jurisdiction       when     the    United   States    is   a   defendant),   its

jurisdictional bar "applies to other grants of jurisdiction under

Title    28,     including    bankruptcy        jurisdiction    under   § 1334."   5

     4    We also acknowledge the amicus brief of Professor John
Pottow.    As Professor Pottow himself recognizes, his brief
presents arguments on the jurisdictional question not advanced by
the parties, and generally "an amicus cannot introduce a new
argument into a case." United States v. Sturm, Ruger & Co., Inc.,
84 F.3d 1, 6 (1st Cir. 1996).
     5         See In re Bayou Shores SNF, LLC, 828 F.3d 1297, 1314

                                        - 5 -
Parkview, 2016 WL 3029947, at *5.            Only the Ninth Circuit has

clearly adopted a contrary position.         See Do Sung Uhm v. Humana,

Inc., 620 F.3d 1134, 1141 n.11 (9th Cir. 2010) (citing In re Town

& Country Home Nursing Servs., Inc., 963 F.2d 1146, 1155 (9th Cir.

1991)); cf. In re Univ. Med. Ctr., 973 F.2d 1065, 1073 (3d Cir.

1992)    (holding   that    § 405(h)   did    not   preclude   bankruptcy

jurisdiction over an action to bar the offset of reimbursement of

post-petition services against pre-petition overpayments because

the claim did not "arise under" the Medicare statute).            Rather

than add our voice to the circuit split on this difficult issue,

we choose to resolve this case on narrower grounds evident from

the record.6   We affirm.

(11th Cir. 2016) (concluding that § 405(h)'s jurisdictional bar
applies to 28 U.S.C. § 1344); Nichole Med. Equip. & Supply, Inc.
v. TriCenturion, Inc., 694 F.3d 340, 346–47 (3d Cir. 2012)
(concluding that § 405(h) "continues to bar virtually all grants
of jurisdiction under Title 28," and holding specifically that it
bars diversity jurisdiction under 28 U.S.C. § 1332); Midland
Psychiatric Assocs., Inc. v. United States, 145 F.3d 1000, 1004
(8th Cir. 1998) (holding that § 405(h)'s jurisdictional bar
applies to 28 U.S.C. § 1332); Bodimetric Health Servs., Inc. v.
Aetna Life & Cas., 903 F.2d 480, 488–90 (7th Cir. 1990) (same).
     6    Parkview argues that we already decided in In re Slater
Health Center, Inc., 398 F.3d 98 (1st Cir. 2005), that § 405 does
not bar bankruptcy jurisdiction. But Slater said nothing about
this jurisdictional issue, and "[w]hen a potential jurisdictional
defect is neither noted nor discussed in a federal decision, the
decision does not stand for the proposition that no defect
existed." Ariz. Christian Sch. Tuition Org. v. Winn, 131 S. Ct.
1436, 1448 (2011). Slater does not settle the question.

                                  - 6 -
           Since only statutory jurisdiction is at stake in the

§ 405(h) jurisdictional question and not Article III jurisdiction,

we assume hypothetical jurisdiction.         We have done so before when

confronted with the same § 405(h) question, and we do so again

here, because of the difficulty of the jurisdictional issue and

because   Parkview's    merits    claims    under   the    Bankruptcy      Code

obviously fail. See In re Ludlow Hosp. Soc., Inc., 124 F.3d 22, 25

n.7 (1st Cir. 1997) ("As the [§ 405(h)] jurisdictional question is

problematic, and the merits of the Trustee's appeal are not, we

elect to bypass the jurisdictional issue at this time." (citations

omitted)).7

           Assuming    arguendo    that    this   case    arises   under    the

Bankruptcy Code, we affirm the denial of relief to Parkview.                We

do so because the record is clear that CMS did not violate the

automatic stay provision.         The statutory "police and regulatory

power" exception to the automatic stay under 11 U.S.C. § 362(b)(4)

plainly applies.      It follows, then, for this and other reasons,

that the non-discrimination provision of the Code is not offended.

     7    See also, e.g., Telles v. Lynch, 639 F. App'x 658, 659
(1st Cir. 2016) (unpublished opinion) ("Because the petitioner's
claims easily fail on the merits, we assume hypothetical
jurisdiction."); Alvarado v. Holder, 743 F.3d 271, 276 (1st Cir.
2014) ("[U]nlike Article III jurisdiction, which we may never
dodge, we may occasionally bypass statutory jurisdiction."); McBee
v. Delica Co., Ltd., 417 F.3d 107, 127 (1st Cir. 2005) (discussing
appropriateness of bypassing jurisdictional question where Article
III jurisdiction is not in doubt and merits claim clearly fails).

                                   - 7 -
As to the arguments Parkview makes on appeal regarding the § 365

executory contract provision of the Code, we find that Parkview's

sparse briefing amounts to waiver of the issue.8                    See Aponte v.

Holder, 683 F.3d 6, 10 n.2 (1st Cir. 2012).

                                            I.

            In the interests of brevity, we recite only the facts

necessary to this opinion.             Before its petition for bankruptcy,

Parkview    operated       as   a   fifty-five-bed      hospital    in   Brunswick,

Maine.     It "provided emergency services, inpatient services, and

a variety of outpatient, ambulatory clinics and other medical

services" to the community.             It maintained a Provider Agreement

with CMS that specified the conditions to which Parkview had to

agree and adhere in order to participate in Medicare and receive

reimbursements for both Part A (inpatient) and Part B (outpatient)

services.       See    generally       42    U.S.C. §§ 1395cc(a)(1)       (listing

requirements     of    a    Provider        Agreement    with   a   "provider    of

services"), 1395x(u) ("The term 'provider of services' means a

hospital, critical access hospital, skilled nursing facility,

comprehensive    outpatient         rehabilitation      facility,    home   health

agency, hospice program, or, for purposes of section 1395f(g) and

section 1395n(e) of this title, a fund."), 1395x(e) (defining

     8    This obviates the need to discuss the date of the
termination.

                                        - 8 -
"hospital"      as    an   institution    primarily   engaged    in    providing

specified inpatient services, and listing other conditions).

               Parkview sent CMS a letter dated June 15, 2015, stating

that Parkview was ending its participation in Medicare.                      The

letter stated that Parkview would be filing a voluntary chapter 11

petition on June 16, 2015 and that it would be "closing as a

hospital effective upon the order of the Bankruptcy Court and will

no longer participate in the Medicare Program . . . as an acute

care       hospital   provider."     It    further    stated    that    Parkview

"expect[ed] the Bankruptcy Court to enter its order within sixty

(60) to ninety (90) days of the date of this letter."                   Parkview

would "begin to transition acute care services to Mid Coast

Hospital beginning June 18, 2015," but would "continue to provide

outpatient services."          Parkview filed its voluntary chapter 11

petition on June 16, 2015.9

               In a letter dated June 19, 2015, CMS replied that it

would terminate the Provider Agreement as of June 18, 2015:

       9  The government argues that because "Parkview's plan of
'reorganization' was, from the outset intended to liquidate all
its assets, there is a substantial question as to whether this
case was properly filed under chapter 11 rather than chapter 7."
The question is significant, the government suggests, because
under chapter 7, an executory contract that is not assumed within
sixty days of the commencement of the bankruptcy is deemed
rejected, an action the government contends Parkview "never had
any intention of taking and had no practical ability to complete
after selling its inpatient hospital assets."      See 11 U.S.C.
§ 365(d)(1). Because Parkview's legal arguments fail even if its
chapter 11 petition was proper, we need not reach this argument.

                                     - 9 -
     Based upon information from your hospital's website,
     your statements to CMS, and your emergency motion filed
     in the District of Maine bankruptcy case 15-20442, CMS
     has determined that the date of voluntary termination of
     your Part A Medicare Provider Agreement is June 18, 2015.
     See 42 C.F.R. § 489.52(b)(1).

     According to the information reviewed by CMS, the
     hospital has closed its inpatient care services on June
     18, 2015, and discharged all inpatients on or about
     4:00pm on June 18, 2015. Additionally, the hospital is
     not accepting new inpatients, and does not plan to accept
     new inpatients in the future. Therefore, the hospital
     no longer meets the definition of "hospital," as
     outlined in Section § 1861(e) of the Social Security
     Act. See also 42 C.F.R. § 482.1. More specifically, a
     Medicare-participating hospital must be an institution
     which is primarily engaged in providing care to
     inpatients.    Additionally, you have also requested
     voluntary termination of your participation in the
     Medicare program.

     Therefore, under the provisions of Federal regulations
     at 42 C.F.R. § 489.52(b)(1, 3), your Part A Medicare
     Provider Agreement with the Secretary of Health and
     Human Services is terminated, effective June 18, 2015.
     No payment under this agreement can be made under the
     Medicare program for services rendered on or after June
     18, 2015.

            On June 19, 2015, the Maine Department of Health and

Human Services "issued a conditional license for Parkview to

operate outpatient services during the pendency of the bankruptcy

proceedings,"      but   "did     not     authorize     Parkview          to   admit

inpatients."       Parkview     then    "informed     CMS   that     it    was   not

terminating the Provider Agreement and that CMS'[s] decision to

terminate    the    agreement     would     adversely       affect    Parkview's

                                   - 10 -
bankruptcy transition plan."10       In response, CMS stated that it

would rescind the termination if Parkview resumed admission of

inpatients.    Parkview then filed its motion to compel in the

bankruptcy court on July 9, 2015, and this litigation ensued.11

                                   II.

          We   turn   to   the   merits    of   the   claims   Parkview   has

preserved for appeal.      Parkview argues that CMS's termination of

the Provider Agreement violates the Code's automatic stay.                See

11 U.S.C. § 362(a)(3).      And it contends that the termination was

an impermissible discrimination against a debtor in bankruptcy,

within the meaning of 11 U.S.C. § 525(a).              These claims raise

     10   On July 27, 2015, Parkview informed CMS that it
considered CMS's termination an involuntary termination "because
CMS based the effective date of termination on Parkview's failure
to meet a requirement to be a hospital in the Medicare program"
and sought to rescind its notice of voluntary termination.
     11   On August 17, 2015, Parkview requested a hearing before
an ALJ to dispute CMS's termination of the Provider Agreement. As
already described above, the ALJ found, after briefing, that CMS
had involuntarily terminated the Provider Agreement and that it
had had a legitimate basis to do so, because Parkview had
permanently closed its inpatient services on June 18, 2015. Due
to the notice requirements of the relevant regulations, the ALJ
adjusted the effective date of the termination to July 4, 2015.
The ALJ also rejected Parkview's argument for equitable estoppel
because CMS had allegedly provided -- through an employee of the
Maine Department of Health and Human Services -- false information
to Parkview while Parkview was preparing its transition plan for
bankruptcy.

                                  - 11 -
issues of law subject to de novo review.                  Barbosa v. Soloman, 235
F.3d 31, 35 (1st Cir. 2000).          Both arguments fail on the merits.

A.           Automatic Stay

             Parkview argues that CMS's termination of the Provider

Agreement violated the automatic stay in § 362(a)(3).                    The statute

provides that counterparties may not take "any act to obtain

possession of property of the estate or of property from the estate

or to exercise control over property of the estate."                         11 U.S.C.

§ 362(a)(3).         Parkview    contends         that,    because     the       Provider

Agreement is an executory contract, CMS may not involuntarily

terminate it.       It cites a number of cases for the proposition that

a    counterparty    may   not   involuntarily            terminate    an    executory

contract post-petition.          See In re Mirant Corp., 440 F.3d 238,

251–53 (5th Cir. 2006); In re Comput. Commc'ns, Inc., 824 F.2d
725, 728–31 (9th Cir. 1987).

             The    government   does       not    dispute      that   the       Provider

Agreement is an executory contract within the meaning of the

Bankruptcy    Code. 12     But   it   contests       on     a   number      of    grounds

Parkview's     assertion    that      the    termination         of    the       Provider

       12 "The Bankruptcy Code furnishes no express definition of
an executory contract, see 11 U.S.C. § 365(a) (1982 ed.), but the
legislative history of § 365(a) indicates that Congress intended
the term to mean a contract 'on which performance remains due to
some extent on both sides.'" N.L.R.B. v. Bildisco & Bildisco, 465
U.S. 513, 522 n.6 (1984) (quoting H.R. Rep. No. 95-595, p. 347
(1977)).

                                      - 12 -
Agreement violates § 362(a)(3).             It argues that the Provider

Agreement is not "property of the estate" under the meaning of

§ 362(a)(3); that that automatic stay does not expand Parkview's

contractual rights under the automatic stay, and that "Parkview

. . . has never had a cognizable property or contractual interest

in participating in Medicare without meeting Medicare's conditions

of participation"; and that the automatic stay does not apply to

the termination because it is a "nonfinal agency action[]."            The

government further asserts that even if Parkview had a property

interest in the Provider Agreement and the stay applied on its

face    to   the   termination,   the   "police   and   regulatory   power"

exception to the stay in 11 U.S.C. § 362(b)(4) would apply. 13

Without reaching the other arguments, we agree that the police and

regulatory power exception to the stay applies to CMS's termination

of the Provider Agreement.

             The exception provision in § 362(b)(4) provides that the

automatic stay of actions against the debtor does not apply to "an

action or proceeding by a governmental unit . . . to enforce such

governmental unit's . . . police and regulatory power."          In turn,

       13 Parkview also disputes the bankruptcy court's suggestion
that CMS's termination of the Provider Agreement is exempt under
11 U.S.C. § 362(b)(28), which allows the Secretary of Health and
Human Services to exclude debtors from participating in Medicare
in certain circumstances. Because the police and regulatory power
exception applies and because the government does not argue for
the "exclusion" exception, we do not reach this issue.

                                   - 13 -
under In re McMullen, 386 F.3d 320, 325 (1st Cir. 2004), we make

two    inquiries.    We   ask    whether     the    governmental     action   "is

designed primarily to protect the public safety and welfare."                 Id.

If so, the government action -- here the termination of the

Provider Agreement -- is exempt.           Id.      But if the action is an

attempt by the government to recover property from the estate, it

has a pecuniary purpose and so remains subject to the stay.                   Id.;

see also In re Nortel Networks, Inc., 669 F.3d 128, 140 (3d Cir.

2011) ("If the purpose of the law is to promote public safety and

welfare or to effectuate public policy, then the exception to the

automatic stay applies.       If, on the other hand, the purpose of the

law is to protect the government's pecuniary interest in the

debtor's property or primarily to adjudicate private rights, then

the exception is inapplicable.")

             Parkview argues that the CMS termination was not based

on findings of a threat to the health or safety of patients.                  The

premise of this argument is true, but largely irrelevant, as it is

based on too circumscribed a view of the public interest.                      Our

precedents     distinguish      between    "actions     enforcing     generally

applicable regulatory laws governing the behavior of debtors,"

which   fall   within   the   exception,      and    actions    by   "government

agencies to enforce contractual rights against debtors," which do

not.     In re Corporacion de Servicios Medicos Hospitalarios de

Fajardo, 805 F.2d 440, 445 (1st Cir. 1986).                    The question is

                                    - 14 -
whether     CMS's   termination      enforces     a    generally     applicable

regulatory law or furthers a public policy interest beyond the

contractual rights in the Provider Agreement.

            CMS has a strong public policy interest in seeing that

Medicare-program dollars are not spent on institutions that fail

to meet qualification standards.          In this instance, the standards

are those for "hospitals."          See 42 U.S.C. § 1395l(t); 42 C.F.R.

§ 419.     Reimbursing Parkview pursuant to the Provider Agreement

after it had taken actions to disqualify itself from the Medicare

program, rendering it unable to provide services required by that

program, would have been a waste of public monies.14               And unlike a

dispute over a contractual agreement between the government and a

single    private   party,   such    as   the    one    at   issue   in     In   re

Corporacion, applying the stay against CMS here would threaten

CMS's     ability   to   enforce    generally     the    Medicare        statute's

carefully     articulated    regulatory         structure.         See     In    re

     14   Parkview does not concede that it ceased to be a hospital
under the Medicare statute. But the substantive correctness of
CMS's determination that Parkview ceased to be a hospital under
the Medicare statute does not affect the analysis of whether the
police and regulatory power exception to the stay applies to the
decision, nor does it affect the analysis of whether the decision
was discriminatory under § 525(a). In any event, Parkview in its
briefing makes a point of not contesting any substantive issue of
Medicare law, including whether its actions disqualified it as a
"hospital" under the relevant provisions, and so the point is
waived.   United States v. Richardson, 225 F.3d 46, 52 n.2 (1st
Cir. 2000) (explaining that issues raised for the first time at
oral argument are waived).

                                    - 15 -
Corporacion, 805 F.2d at 445–46 & n.5 (contrasting actions to

enforce    contractual   rights   with   actions   "to   enforce    specific

provisions of general regulatory schemes," and noting that the

government had not tried to revoke the debtor hospital's license

until after filing an action to rescind its contract with the

hospital, as well as the fact that the hospital had passed a

"Medicare   compliance   inspection").      The    termination     here   was

plainly the exercise of a regulatory power provided in the Medicare

statute.     See 14 U.S.C. § 1395cc(b)(2)(B) (explaining that the

Secretary may terminate a Provider Agreement when the provider

"fails substantially to meet the applicable provisions of section

1395x of this title," which includes the statutory definition of

"hospital").

            Further, it is clear that the termination of the Provider

Agreement does not meet the pecuniary test.        The government is not

seeking recovery from Parkview, nor is it demanding any payment.

Rather, one could reasonably view Parkview's petition as being

made for the purpose of evading CMS's efforts to secure compliance

with the Medicare statute -- exactly the kind of action the police

and regulatory power exception is meant to prevent.                See In re

McMullen, 386 F.3d at 324-25.        Because CMS's termination of the

Provider Agreement enforced the generally applicable framework of

the Medicare statute and advanced a significant public policy

                                  - 16 -
interest, the police and regulatory power exception applies, and

the automatic stay does not bar the termination.

          We do not reach the other arguments raised by the

government as to the stay's application.

B.        Non-Discrimination Provision

          Parkview   also   argues   that   CMS's   termination     of   the

Provider Agreement violates the "non-discrimination" provision in

11 U.S.C. § 525(a), which states that:

     [A] governmental unit may not deny, revoke, suspend, or
     refuse to renew a license, permit, charter, franchise,
     or other similar grant to, condition such a grant to,
     [or] discriminate with respect to such a grant against,
     . . . a person that is or has been a debtor under this
     title.

11   U.S.C.   § 525(a).     Parkview     argues   that,   because    CMS's

termination letter "came only two days after Parkview filed its

chapter 11 petition and expressly stated that CMS's termination of

the Provider Agreement followed CMS's review of court filings in

this chapter 11 case," we should conclude that CMS terminated the

Provider Agreement because of Parkview's insolvency.

          We see nothing in the termination decision that depended

upon Parkview's insolvency or bankruptcy petition.         CMS stated in

its June 19 letter that it was terminating the Provider Agreement

because Parkview had decided to close its inpatient facilities and

thereby had ceased to qualify as a hospital under the Medicare

                                - 17 -
statute.      That   termination      decision    involved     no    forbidden

discrimination based on insolvency.

           Parkview's argument that CMS discriminated against it,

because CMS took notice of the filing of the bankruptcy petition

in its termination decision, fails on its face.                That CMS used

information   from    that   filing    in   considering      the    termination

question is admirable and not discrimination.15

           CMS's     termination      of    the   Provider     Agreement     is

distinguishable from the cases Parkview cites in its favor.                  In

In re Psychotherapy & Counseling Center, Inc., the Department of

Health and Human Services ("HHS") attempted to exclude a mental

health hospital from participation in Medicare and state health

care programs after the hospital defaulted under a settlement plan

with HHS and filed for chapter 11 bankruptcy.          195 B.R. 522, 524–

27 (Bankr. D.D.C. 1996).        The bankruptcy court rejected HHS's

argument that the police and regulatory power exception applied

     15   Parkview claims that "CMS did not base its termination
decision on any order of the Bankruptcy Court, any deficiency in
the provision of services by Parkview, or any claimed breach of
the provisions of the Provider Agreement itself." This assertion
seems intended to suggest that CMS had no basis for its decision
other than the fact of Parkview's filing for bankruptcy. CMS may
not have based its decision on an order by the bankruptcy court,
but it did consult Parkview's papers in the bankruptcy court to
determine the termination date for the Provider Agreement. And
CMS did base its termination decision on Parkview's decision to
cease inpatient services, which is clearly a "deficiency in the
provision of services" with respect to the Medicare statute, as
well as a clear breach of the Provider Agreement.

                                   - 18 -
and concluded that HHS's action violated § 525(a) because the

record suggested that "HHS [was] seeking to exclude the debtor

from a government program for non-payment of a dischargeable

prepetition debt."    Id. at 533.     There is no basis for such an

inference   here.    Quite   the   opposite   --   CMS   has   maintained

throughout this litigation that its reason for terminating the

Provider Agreement was Parkview's decision, announced in its June

15 letter, to disqualify itself as a hospital under the Medicare

statute, and there is no evidence to the contrary.

            Similarly, in In re Sun Healthcare Group, Inc., the

Health Care Financing Administration ("HCFA"), a division of HHS,

refused to reinstate the subsidiary of a debtor corporation as a

Medicare and Medicaid participant, even after the subsidiary had

"met all compliance conditions and applied for reinstatement,"

because the subsidiary owed pre-petition debts to HCFA.          No. 00-

986-GMS, 2002 WL 2018868, at *1 (D. Del. Sept. 4, 2002).             The

district court affirmed the bankruptcy court's finding that HCFA's

action had violated § 525(a) because, although the subsidiary had

"provided reasonable assurance that its health services w[ould]

meet HCFA regulations," it had discriminated against the debtor on

account of its pre-petition debts.        Id. at *7-8.         Here, the

termination had nothing to do with Parkview's pre-petition debts,

and Parkview cannot assure CMS that Parkview will bring itself

                               - 19 -
back into compliance with the Medicare statute.   CMS's termination

of the Provider Agreement was not impermissible discrimination.16

                                 III.

     The district court's denial of relief is affirmed.17    Costs

are awarded against Parkview.

     16   As part of its discrimination argument, Parkview notes
that CMS's termination decision led to the State of Maine's
termination of Parkview's MaineCare Provider Agreement and that
CMS's termination of the Medicare Provider Agreement will also
terminate Parkview's Medicare Advantage Agreement and TriCare
Agreement. These consequences of CMS's termination decision say
nothing about the legal question of whether the decision was
discriminatory under § 525(a).
     17   To be clear, the government has represented that
physicians at Parkview's remaining facilities may seek Medicare
Part B reimbursement for non-hospital outpatient services.

                                - 20 -