True Health Says Medicare Withholding Violates Ch. 11 Stay

Law360, Wilmington (August 22, 2019, 9:27 PM EDT) -- Bankrupt medical testing company True Health Diagnostics LLC told a Delaware judge Thursday that a withholding of Medicare reimbursement payments by the federal government breached the automatic stay triggered by Chapter 11 filings, and it asked the court to enjoin the holdback.

During a hearing in Wilmington, True Health attorney Eric Walker of Perkins Coie LLP said the Centers for Medicare & Medicaid Services suspended payments to the debtor back in 2017 and renewed that suspension two months ago, when the parties were on the verge of settling the first suspension, because of allegations of ongoing fraud by the debtor....

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