Emergency Medical Debt NOT Consumer Debt

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO EASTERN DIVISION
In re: : Case No.
19-53347
:
William Sijan : Chapter 7
:
Debtor. : Judge Preston
MEMORANDUM OPINION AND ORDER GRANTING DEBTOR’S MOTION FOR SUMMARY JUDGMENT DENYING UNITED STATES
TRUSTEE’S MOTION TO DISMISS (Doc. #20)

This cause came on for consideration of William Sijan’s (the “Debtor”) Motion for Summary Judgment
Denying United States Trustee’s Motion to Dismiss (Doc. #20) (the “Motion for Summary Judgment”),
filed on October 18, 2019; the United States Trustee’s Response to Debtor’s Motion for Summary
Judgment on Issue Concerning Nature of Medical Debts (Doc.

21), filed by the United States Trustee (the “UST”) on November 1, 2019; and the Debtor’s

Reply to Response of United States Trustee to Debtor’s Motion for Summary Judgment (Doc.
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.

IT IS SO ORDERED.
Dated: February 12, 2020

22), filed on November 8, 2019. The Court having considered the record and the arguments of the

parties, makes the following findings and conclusions.
I. Jurisdiction

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and Amended General Order
05-02 entered by the United States District Court for the Southern District of Ohio, referring all
bankruptcy matters to this Court. This matter is a core proceeding pursuant to 28 U.S.C. §
157(b)(2). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
II. Factual Background and Procedural History

The facts relevant to this matter are without serious dispute and may be summarized as follows: In
January 2018, the Debtor arrived at the emergency room at Broward Health Medical Center in Florida
with a fever and breathing difficulty. There, he was diagnosed with severe pneumonia, and after
initially refusing admission to the hospital, the medical care providers informed the Debtor that
he would die within hours if not hospitalized. He agreed to be admitted to the hospital and was
treated in the intensive care unit (the “ICU”) for a total of six weeks. For two weeks, he was
intubated and placed on a breathing machine; he remained in the ICU for another three weeks, and
then was isolated for an additional week. Following the ICU stay, the Debtor underwent physical
therapy for 10-12 weeks to regain his strength so that he could attempt to return to work. As a
result of the ICU stay, the Debtor was billed $300,550.99.
The Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on May 21,

  1. The schedules reflect total liabilities of $409,527.25, of which $34,193 is described as
    secured debt and $375,334.25 as nonpriority unsecured debt. The debts consist of

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an automobile loan ($34,193), credit card debts (approximately $43,248.03), a tax lien ($290),
business debt (approximately $6,319.25), and various medical bills (approximately
$324,605.97). The medical bills make up nearly three-fourths of the total debt owed; of that, the
Debtor owes $300,550.99 for emergency medical treatment. In the Voluntary Petition (Part 6, section
16), the Debtor classified his debts as primarily “medical.”1
On August 5, 2019, the UST filed its Motion of the United States Trustee to Dismiss Pursuant to 11
U.S.C. §§ 707(b)(2) or 707(b)(3) with Memorandum and Affidavit in Support Thereof (Doc. #15) (the
“Motion to Dismiss”). The UST sought dismissal of this case on the basis that the Debtor’s debts
are primarily consumer debts, and that a presumption of abuse arises in this case and/or the
totality of the circumstances of the Debtor’s financial situation demonstrates abuse. The Debtor
argued in his Objection and Response to Trustee’s Motion to Dismiss (Doc. #17) and his Motion for
Summary Judgment, that 11 U.S.C. § 707(b) does not apply in this case because the majority of his
total debt is not consumer debt as defined under 11
U.S.C. § 101(8), because he did not voluntarily incur the majority of his debt, the emergency
medical bills.
III. Standard of Review for Motions for Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable to contested matters by Federal
Rule of Bankruptcy Procedure 9014, provides that the Court “shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the
initial burden of “informing the . . . court of the basis for its

1 The Voluntary Petition (Part 6, section 16) allows debtors to describe their debts as primarily
consumer, primarily business or another “type.”

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motion, and identifying those portions of the [record] which it believes demonstrate the absence of
a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548
(1986). See also Fed. R. Civ. P. 56(c)(3).
If the movant satisfies this burden, the nonmoving party must then assert that a fact is genuinely
disputed and must support the assertion by citing to particular parts of the record. Fed.
R. Civ. P. 56(c)(1). The mere allegation of a factual dispute is not sufficient to defeat a motion
for summary judgment; to prevail, the nonmoving party must show that there exists some genuine
issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S. Ct. 2505
(1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a
light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986); Anderson, 477 U.S. at 255.
The Sixth Circuit Court of Appeals has articulated the following standard to apply when evaluating
a motion for summary judgment:
[T]he moving [party] may discharge its burden by “pointing out to the . . . court . . . that there
is an absence of evidence to support the nonmoving party’s case.” The nonmoving party cannot rest
on its pleadings, but must identify specific facts supported by affidavits, or by depositions,
answers to interrogatories, and admissions on file that show there is a genuine issue for trial.
Although we must draw all inferences in favor of the nonmoving party, it must present significant
and probative evidence in support of its [position]. “The mere existence of a scintilla of evidence
in support of the [nonmoving party’s] position will be insufficient; there must be evidence on
which the jury could reasonably find for the [nonmoving party].”

Hall v. Tollett, 128 F.3d 418, 422 (6th Cir. 1997) (citations omitted). A material fact is one
whose resolution will affect the determination of the underlying action. See Tenn. Dep’t of Mental
Health & Mental Retardation v. Paul B., 88 F.3d 1466, 1472 (6th Cir. 1996). An issue is
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genuine if a rational trier of fact could find in favor of either party on the issue. See Schaffer
v.

A.O. Smith Harvestore Prods., Inc., 74 F.3d 722, 727 (6th Cir. 1996). “The substantive law
determines which facts are ‘material’ for summary judgment purposes.” Hanover Ins. Co. v. Am. Eng’g
Co., 33 F.3d 727, 730 (6th Cir.1994). In determining whether each party has met its burden, the
court must keep in mind that “[o]ne of the principal purposes of the summary judgment rule is to
isolate and dispose of factually unsupported claims or defenses . . . .” Celotex, 477 U.S. at
323–24.
IV. Discussion

One of the primary goals of Chapter 7 relief is to offer debtors a “fresh start” through discharge
“in exchange for liquidation of the debtor’s assets for the benefit of his creditors.” In re Krohn,
886 F.2d 123, 125 (6th Cir. 1989). The remedy of bankruptcy is intended to relieve honest debtors
from indebtedness and provide a “fresh start.” Id. The bankruptcy system balances the goal of
providing a “fresh start” with the desire to prevent abuse. In re Hardigan, 490 B.R. 437, 458
(Bankr. S.D. Ga. 2013).
For this reason, the Bankruptcy Code includes provisions, such as 11 U.S.C. § 707(b), which is
intended to prevent debtors from obtaining Chapter 7 shelter if they have an ability to pay their
creditors, and § 727, which is intended to keep unscrupulous debtors from obtaining bankruptcy
relief. In re Krohn, 886 F.2d 123, 126 (6th Cir. 1989); Wise v. Wise (In re Wise), 590
B.R. 401, 429 (Bankr. E.D. Mich. 2018) (citing Robin Singh Educ. Servs., Inc. v. McCarthy (In re
McCarthy), 488 B.R. 814, 825 (B.A.P. 1st Cir. 2013)); see also H.R. REP. NO. 109-31, pt. 1, at 2
(2005) (stating that the provisions Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
were enacted to deter abuse in consumer bankruptcy filings).

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A. Dismissal under 11 U.S.C. § 707(b)

The Debtor moves for summary judgment denying the UST’s Motion to Dismiss brought under 11 U.S.C. §
707(b)(2) or (3), on the grounds that § 707(b) does not apply. Section 707(b)(1) states in
pertinent part:
After notice and a hearing, the court, on its own motion or on a motion by the United States
trustee . . . may dismiss a case filed by an individual debtor under this chapter whose debts are
primarily consumer debts . . . if it finds that the granting of relief would be an abuse of the
provisions of this chapter.

11 U.S.C. § 707(b)(1) (emphasis added).

A pre-trial conference was held in this matter on September 18, 2019. At the pre-trial, the parties
agreed that the debts for the Debtor’s emergency medical treatment are higher than all other types
of debts and are the Debtor’s primary type of debt. See In re Hlavin, 394 B.R. 441, 446-47 (Bankr.
S.D. Ohio 2008) (stating that “primarily consumer debts” means the aggregate dollar amount of
consumer debts exceeds 50% of the debtor’s total liabilities). Thus, the critical determination
here is whether the Debtor’s emergency medical debts are considered consumer debts for purposes of
11 U.S.C. § 707(b).
B. Definition of “consumer debts” under 11 U.S.C. § 101(8)

The term “consumer debt” is defined as “debt incurred by an individual primarily for a personal,
family, or household purpose.” 11 U.S.C. § 101(8). The Bankruptcy Code refers to “consumer debt” in
various sections. See, e.g., 11 U.S.C. § 1301(a) (staying creditor actions against codebtors to
collect consumer debts); 11 U.S.C. § 524(c)(6)(B) (providing that court approval is not required
for reaffirmation agreements with an individual debtor not represented by an attorney, to the
extent the debt is a consumer debt secured by real property). “[T]here is a

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natural presumption that identical words used in different parts of the same act are intended to
have the same meaning.” Swartz v. Strausbaugh (In re Strausbaugh), 376 B.R. 631, 636 (Bankr.
S.D. Ohio 2007) (quoting Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct.
607, 76 L.Ed. 1204 (1932)). Therefore, to determine the meaning of “consumer debt” for the purposes
of applying 11 U.S.C. § 707(b), the Court may look to the use or interpretation of the term
“consumer debt” in other contexts within the Code. See IRS v. Westberry (In re Westberry), 215 F.3d
589, 592 (6th Cir. 2000); Strausbaugh, 376 B.R. at 636.
The term “consumer debt” must be narrowly construed. See In re White, 49 B.R. 869, 872 (Bankr.
W.D.N.C. 1985) (stating that the sparse legislative history on the definition of consumer debt
implies that a more narrow interpretation is favored).2 In Westberry, the 6th Circuit Court of
Appeals interpreted the term “consumer debt,” as defined in 11 U.S.C. § 101(8), to require
“volition.” Westberry, 215 F.3d at 591. That is, the individual must have voluntarily intended to
incur the debt for a personal, family, or household purpose. See id. The court posited that debts
not incurred voluntarily, such as tax liens and tort judgments, are not classified as consumer
debts. Id. The court cited to Marshalek, which asserted that a civil “judgment resulting from a
vehicular accident, per se, is not a ‘consumer debt’ . . . . Implicit in the Code’s definition of
consumer debt is the element of volition.” In re Marshalek, 158 B.R. 704, 707 (Bankr. N.D. Ohio
1993). In Westberry, the 6th Circuit concluded that the debtor’s tax debt was not “consumer debt.”
It reasoned that: (1) tax debt is “incurred” differently than consumer debt, in

2 Many cases cited herein were decided prior to passage of the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (“BAPCPA”). Prior to BAPCPA, § 707(b) permitted the dismissal of a
Chapter 7 case filed by an individual with primarily consumer debts if found that the granting of
relief would be a “substantial abuse” of Chapter 7. BAPCPA reduced “substantial abuse” to “abuse,”
and included a presumption of abuse when the debtor’s current monthly income exceeds the formula in
§ 707(b)(2). The definition of “consumer debt” remains unchanged, so these cases are still
relevant.

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that the indebtedness is involuntary; (2) tax debt, unlike consumer debt, is created for a public
purpose; (3) taxes arise from income, while consumer debt arises from consumption; and (4) consumer
debt normally involves the extension of credit. Westberry, 215 F.3d at 591. So, this Court must
determine whether the Debtor’s emergency medical debts were voluntarily incurred within the meaning
of 11 U.S.C. § 101(8) and the 6th Circuit’s interpretation of “consumer debt” in Westberry.
C. The Debtor’s emergency medical debts are not consumer debts

There is no doubt that most medical debts are considered consumer debts, as most are incurred
voluntarily. See In re Martinez, 171 B.R. 264, 267 (Bankr. N.D. Ohio 1994) (finding that the
debtors’ medical debts were consumer debts). Medical debts incurred through routine doctor’s visits
and cosmetic surgery would be examples of medical debts that are consumer debts. A patient walks
into a doctor’s office with a treatment plan, that is usually discussed prior to the visit, and
discussions of cost and/or payment plans are tended to before treatment. Moreover, if a patient has
past due bills for treatment, the doctor may turn that patient away until her payments become
current. This is not so when it comes to emergency medical treatment.
Emergency medical services are differentiated from ordinary medical services. Congress viewed
emergency medical services differently than ordinary medical services when it enacted the Emergency
Medical Treatment & Active Labor Act (“EMTALA”), which requires hospital emergency departments to
provide treatment regardless of an individual’s ability to pay. 42
U.S.C. § 1395dd (2011). Similarly, the Florida legislature also enacted a law ensuring that
emergency medical services and care are available to the public; section § 395.1041 of the Florida
Statutes states, “[T]he provision of emergency services and care . . . [shall not] be based

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upon, or affected by, the person’s . . . insurance status, economic status, or ability to pay for
medical services . . . .” FLA. STAT. ANN. § 395.1041 (West 2017). Broward Health Medical Center was
required to treat the Debtor for his pneumonia regardless of his ability to pay, as he was hours
from death. The UST argues that the Debtor incurred this debt because he voluntarily consented to
treatment. And, indeed he did; however, an act that leads to indebtedness may be undertaken
voluntarily but the attendant debt may result involuntarily and is not the type of debt that a
debtor would expect to incur in his daily affairs. In re Peterson, 524 B.R. 808, 813 (Bankr.
S.D. Ind. 2015) (finding that an intentional tort judgment was not consumer debt because it arose
involuntarily); In re White, 49 B.R. 869, 872 (Bankr. W.D.N.C. 1985) (stating that an automobile
accident liability was not consumer debt because it occurred incidental to and not first and
foremost to achieving a personal aim). As such, the Debtor’s medical debts arising from emergency
medical services cannot be included in the limited class of consumer debts within the meaning of 11
U.S.C. § 101(8) that individuals willingly incur in their daily affairs.
The UST also argues that medical debts are consumer debts because, by their very nature, they are
incurred for a personal purpose, and suggests that civil judgments and tax liens are
distinguishable from the Debtor’s medical debts. The UST’s argument is unpersuasive. The fact that
this medical debt is not a civil judgment or tax lien (or even business debt) does not mean it per
se fits the definition of “consumer debt.” Cf. Peterson, 524 B.R. at 812-13 (“The mere fact that
the [civil] [j]udgment is not a ‘business’ debt does not mean it per se fits the definition of a
‘consumer debt.’”). Nearly all debts have some kind of personal, family, or household purpose, even
those incurred with an eye for profit (an individual increases his personal wealth for the benefit
of his family or household when making a profit or advancing his business), but this does

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not make it a “consumer debt” as defined in 11 U.S.C. § 101(8). In re Stovall, 209 B.R. 849, 854
(Bankr. E.D. Va. 1997) (stating that taxes are not the only kind of liability that fall into the
“interstitial” area of debts that are not consumer debts, but are also not business debts); see
also In re Venegas Munoz, 73 B.R. 283, 285 (Bankr. D.P.R. 1987) (finding that professional fees are
not consumer debt); In re Alvarez, 57 B.R. 65, 66 (Bankr. S.D. Fla. 1985) (finding tort liability
from a car accident was not consumer debt). Although the “consumer debt” requirement of 11
U.S.C. § 707(b) was not at issue, the court in Hiller stated in passing, that it was doubtful a
judgment awarded on the basis of unjust enrichment to recover the value of time and money invested
to improve the debtor’s property was a consumer debt within the meaning of the Code. In re Hiller,
482 B.R. 462, 469 (Bankr. D. Mass. 2012). Likewise, the Debtor’s emergency medical debt benefitted
the Debtor, but because his life was on the line, the service provided cannot be considered
consumer simply because saving his life bestowed a “personal” benefit.
Furthermore, the Debtor did not voluntarily incur the debt arising out of his emergency medical
treatment at Broward Health Medical Center. The Debtor did not intend to have a near death
experience and be subjected to six weeks of medical treatment after visiting the emergency room.
This is more akin to judgment from a tort action, in which some sort of accident occurs and the
debtor is found liable for the unforeseen damages.
V. Conclusion

For the reasons set forth above, the Court finds that there are no genuine issues of material fact
and that the Debtor is entitled to judgment as a matter of law. The debt arising out of the
Debtor’s emergency medical treatment at Broward Health Medical Center is not a consumer debt in
nature as defined under 11 U.S.C. § 101(8), because he did not voluntarily

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incur the debt. The Debtor’s Chapter 7 case will not be dismissed pursuant to 11U.S .C. § 707(b)
because his debt is not primarily consumer debt. Accordingly,
IT IS ORDERED that the Comi hereby GRANTS the Debtor’s Motion for Summary Judgment Denying United
States Trustee’s Motion to Dismiss (Doc. #20). The Comt shall enter a separate final order on the
Motion of the United States Trustee to Dismiss Pursuant to 11 US.C.
§§ 707(b)(2) or 707(b)(3) with Memorandum and Affidavit in Support Thereof (Doc. #15) in accordance
with this Memorandum Opinion and Order.
IT IS SO ORDERED.

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