Business & Corporate
Circuit Split Deepens: Bankruptcy Court’s Jurisdiction over Social Security and Medicare Claims
Under 42 U.S.C. § 405(h), no plaintiff may bring a claim arising under the Social Security Act under 28 U.S.C. §§ 1331 and 1346 until they have exhausted administrative appeal remedies (the Exhaustion Requirement). The latter provisions provide federal jurisdiction for district courts related to federal questions and contract claims against the United States, respectively. But bankruptcy courts exercise federal jurisdiction under 28 U.S.C. § 1334. Thus, relying on the plain text of section 405(h) in a bankruptcy adversary proceeding, the Fifth Circuit held that bankruptcy courts are not barred from exercising their jurisdiction under section 1334 to hear Social Security claims. Benjamin v. United States (In re Benjamin), No. 18-20185, 2019 WL 3334653 (5th Cir. July 25, 2019). Given that this bar applies to healthcare companies operating in the Medicare Program pursuant to 42 U.S.C. § 1395ii, the In re Benjamin decision is important for healthcare entities filing for bankruptcy protection.