By Katherine M. Flett
Under the Bankruptcy Code, “lien stripping” allows a debtor to void a property lien “[t]o the extent that [the] lien secures a claim against the debtor that is not an allowed secured claim.” Lien stripping is based on the concept that a second claim must actually be secured by collateral of sufficient value to equal or exceed the amount of the secured claim. Section 506(a) of the Bankruptcy Code provides that claims which are only partially secured, or “underwater,” are to be split into two claims – one fully secured and one fully unsecured.
In 1992, the U.S. Supreme Court addressed an important question about lien stripping in Dewsnup v. Timm (1992). In Dewsnup, a Chapter 7 debtor sought to strip the unsecured portion of an underwater lien on her residence under Section 506(d). Specifically, the debtor wanted to reduce her debt of approximately $120,000 to $39,000, the value of the collateral securing her debt at that time. Relying on the statutory definition of “allowed secured claim” in Section 506(a), the debtor argued that her creditor’s claim was “secured only to the extent of the judicially determined value of the real property on which the lien [wa]s fixed.”
The Court rejected this argument, relying on policy considerations and pre-Code practice. The Court concluded that if a claim has been “allowed” under Section 502 and is secured by a lien with recourse to the underlying collateral, it does not come within the scope of Section 506(d). As such, the Court held that the debtor could not strip down the creditor’s lien to the value of the property because the creditor’s claim was secured by a lien and had been fully allowed under Section 502.
The Dewsnup Court defined the term “secured claim” in Section 506(d) as a claim supported by a security interest in property, irrespective of whether the value of the property would be sufficient to cover the claim. Under this definition, lien stripping is limited to “voiding a lien whenever a claim secured by the lien itself has not been allowed.” Dewsnup has been widely criticized as being contrary to the plain language of Section 506(a). Continue reading »
01/25/17 2:50 PM
Bankruptcy, Litigation | Comment (0) |
Lien Stripping in Bankruptcy after Caulkett
By Katherine M. Flett
On May 25, 2016, Missouri Senate Bill 608 was passed by the Missouri House and Senate. The Bill adds new requirements to the provision known as the “Health Care Cost and Transparency Act.” Beginning July 1, 2017, the new law requires all licensed health care providers, facilities, and imaging centers to provide an estimate on the cost of a particular health care service or procedure within three business days of a written request from the patient, along with a medical treatment plan from the patient’s health care provider. The estimate must only include those services within the direct control of the health care provider and the amount that will be charged to a patient if all of the charges are paid in full by the patient, without a public or private third-party paying for any portion of the charge. Further, these provisions do not apply to charges for hospital emergency departments.
If health care providers provide publicly available links to the estimated costs or post such costs on a publicly available website, they are not required to provide cost estimates to patients upon written request.
Beginning also July 1, 2017, hospitals will be required to make publicly available the amount that would be charged, without discounts, for each of the 100 most prevalent diagnosis-related groups, as defined by Medicare. Continue reading »
11/29/16 9:43 AM
Health Care | Comments Off on New Requirements for Health Care Providers Under Missouri’s Health Care Cost and Transparency Act |
New Requirements for Health Care Providers Under Missouri’s Health Care Cost and Transparency Act
By Katherine M. Flett
In Symphony Diagnostic No. 1, Inc. d/b/a/ MobilexUSA v. Greenbaum, the Eighth Circuit Court of Appeals recently addressed the question of whether a successor company in Missouri may enforce a predecessor company’s non-compete agreements in situations where the successor company purchases the predecessor company’s assets. Missouri law already provides that assignment is allowed in situations where there is an acquisition of stock. Alexander & Alexander, Inc. v. Koelz, 722 S.W. 2d 311, 312 (Mo. Ct. App. 1986).
In MobilexUSA v. Greenbaum, Kimberly Greenbaum and Josephine Tabanag worked for Ozark Mobile Imaging as X-ray technicians. Both employees signed non-compete agreements. The non-compete agreement prohibited the employees from “directly or indirectly engaging in the mobile diagnostic business in any manner” for two years after their employment terminated and within a specified 100-mile radius geographical area.
In December 2012, Mobilex acquired Ozark Mobile Imaging through an Asset Purchase Agreement. Mobilex offered Greenbaum and Tabanag employment, but they both refused. In January 2013, they each accepted new positions as mobile X-ray technicians at Biotech X-ray, Mobilex’s competitor. Continue reading »
08/31/16 2:47 PM
Employment Law | Comments Off on Eighth Circuit Interprets Missouri Law: Non-Compete Agreements May Be Transferred to Subsequent Employer |
Eighth Circuit Interprets Missouri Law: Non-Compete Agreements May Be Transferred to Subsequent Employer
By Katherine M. Flett
The Americans with Disabilities Act Amendments Act of 2008 (ADAAA) was enacted for the purpose of broadening the scope of the American with Disabilities Act (ADA). The ADAAA expanded the definitions of “major life activities” and “substantially limits,” while also increasing protection for those who are “regarded as” having a disability. Over the years, the ADAAA has been criticized for being too broad. However, three circuits have now rejected the idea that obesity, without an underlying physiological disorder or condition, is a disability under the ADA.
In Morriss v. BNSF Ry. Co, Case No. 14-3858 (8th Cir. April 5, 2016), the Eighth Circuit Court of Appeals affirmed a Nebraska district court’s decision, ruling that for obesity to constitute an “impairment” under the ADA, one must prove that the obesity is the result of a physiological disorder or condition.
In March 2011, Melvin Morriss, applied for a machinist position with BNSF Railway Company (“BNSF”). Morriss was extended an offer of employment contingent on a satisfactory medical review. A subsequent physical examination indicated that Morriss was 5’10”, 285 pounds, with a BMI of 40.9. BNSF’s policy was to not hire obese (defined as having a BMI of 40 or higher) applicants for safety sensitive positions. Therefore, Morriss was notified that he would not qualify for the safety sensitive machinist position due to his obesity. Continue reading »
05/20/16 11:53 AM
Employment Law | Comments Off on Eighth Circuit Rejects Obesity as an Impairment Under the ADA: Morriss v. BNSF Railway Company |
Eighth Circuit Rejects Obesity as an Impairment Under the ADA: Morriss v. BNSF Railway Company