Verdicts

On Oct. 9, 2012, Anderson sued Jackson Hospital, Dr. Stephen K. Kwan, and Capital Cardio-Thoracic P.C. for medical malpractice in state court. On May 28, 2013, the defendants moved for summary judgment, arguing that Anderson was judicially estopped from pursuing her claim because she had not disclosed the potential cause of action in her bankruptcy schedules. That same day, Anderson moved the bankruptcy court to reopen her bankruptcy case to amend her schedules to include her medical malpractice claims against the malpractice defendants, while the trustee who had overseen her bankruptcy moved to be reappointed. The bankruptcy court granted the motions and, over the defendant hospital's objection, reopened the bankruptcy case.

In November 2013, the bankruptcy trustee moved the state court to allow intervention in the medical malpractice case. The court held a hearing, after which it granted the malpractice defendants' motion for summary judgment as against Anderson because judicial estoppel barred her from bringing the suit. However, the court ' after certifying the question whether it was authorized by Alabama law to allow intervention by the trustee to the State Supreme Court ' permitted the bankruptcy trustee to intervene as the real party in interest in the malpractice case, allowing the trustee to pursue “Anderson's claims against the [malpractice defendants] for a recovery up to the amount necessary to pay the claims of Anderson's creditors and expenses associated with the related bankruptcy proceedings.”

On Jan. 6, 2014, Anderson's medical insurance carrier, BCBS, filed a proof of claim with the bankruptcy court seeking the $215,650 it had paid for her medical care. Jackson Hospital then sent a letter to the bankruptcy trustee, demanding that the trustee object to BCBS's proof of claim because the hospital considered the claim not to be part of the bankruptcy estate. The trustee did not object, and the bankruptcy court could not be moved either; on Oct. 16, 2015, it entered an order overruling Jackson Hospital's objection and allowing BCBS's proof of claim. This prompted the appeal to the district court.

The hospital made several arguments on appeal, one of which was that because Anderson had been barred from bringing her suit for medical malpractice, BCBS could not recover from her, so the insurer was not a creditor of hers. BCBS countered that the insurance contract between BCBS and Anderson gave it the right to recover from third parties any payments it made on Anderson's behalf. The contract language in question stated: “[BCBS has] a separate right to be reimbursed or repaid from any money you recover for an injury or condition for which we have paid plan benefits. ' [I]f you recover money as a result of a claim or a lawsuit, whether by settlement or otherwise, you must repay us.”

The court noted that the bankruptcy code defines a creditor as an “entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor[.]” 11 U.S.C. ' 101(10)(A). A “ claim” is defined as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]” 11 U.S.C. ' 101(5)(A). So, to be a creditor with a valid claim, BCBS would have to have a right to receive payment from Anderson prior to her filing her petition, which it did. Stated the court, “ When Anderson filed her bankruptcy petition, all her assets and liabilities became part of the bankruptcy estate. See 11 U.S.C. ' 541(a)(1) (providing that the bankruptcy estate includes 'all legal or equitable interests of the debtor in property as of the commencement of the case'). As of the filing of her bankruptcy petition, Anderson's potential malpractice cause of action against Jackson Hospital became an asset of the bankruptcy estate.” Therefore, the court concluded that BCBS was a creditor with a cognizable claim.

The hospital also argued that BCBS was barred from recovering due to judicial estoppel. The court, however, found that that issue had already been decided by the Alabama Supreme Court. Therefore, the district court could not entertain the question. Still, if it were authorized to offer a decision, the court said it would have sided with BCBS because “judicial estoppel of the nature involved here would not bar the trustee from recovering.” The court based this opinion on the teachings of Parker v. Wendy ' s Int ' l, Inc., 365 F.3d 1268, 1271 (11th Cir. 2004), which says that a debtor has a duty to file a list of creditors and a schedule of assets and liabilities, but a failure to do so does not extinguish the bankruptcy estate's interest in an asset; such asset is still a part of the bankruptcy estate and the trustee (who is the real party in interest) may pursue a claim based upon it.

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