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6500 Cherrywood Ln - Greenbelt, MD 20770 - Main Tel: 301-344-8018 map
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Adversary proceeding by health care provider and debtor in possession against HMO with which the plaintiff contracted to administer Medicare plans. The complaint sought the disallowance of the defendant’s claim against the estate in the amount of $29,796,049.37, and for breach of contract, including improper draws of letters of credit, that caused the debtor to file bankruptcy. The defendant HMO counterclaimed that it was excused from performance because the debtor’s prior breach that entitled the defendant to draw down the letters of credit.
Held, (1) the bankruptcy court had subject matter jurisdiction because the complaint concerned the disallowance of a claim against the estate pursuant to 28 U.S.C. § 157; (2) the contract was executory and could properly have been assumed by the debtor; (3) the defendant anticipatorily breached the contract; (4) Court disallowed the defendant’s claim in its entirety because the HMO was party ultimately liable under state law to pay the amounts asserted; and (5) the plaintiff was entitled to damages in the amount of $21.3 million as consequential damages arising from breach of contract. Judgment for the plaintiff.

James F. Schneider