Are Provider Agreements Executory Contracts?

Two recent rulings have challenged whether or not provider agreements are executory contracts requiring assumption and cure.

The Hahnemann and Verity decisions “analogized the transfer of the provider agreements to the sale of government licenses in holding that the provider agreements were property of the estate capable of transfer.”

Despite the outcomes of these two cases, which appear to give healthcare debtors significantly more leverage over CMS and state Medicaid agencies in bankruptcy, the answer to whether or not provider agreements are executory contracts remains uncertain. CMS has appealed the Hahmemann decision, and the California bankruptcy court refused to include all of Verity’s requests in the sale.

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