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Primary Care Providers Win Challenge of CMS Interpretation of Enhanced Payment Law

With the help and support of the Tennessee Medical Association, 21 Tennessee physicians of underserved communities joined together and retained Bass, Berry & Sims to file suit against the Centers for Medicare & Medicaid Services to stop improper collection efforts. Our team, led by David King, was successful in halting efforts to recoup TennCare payments that were used legitimately to expand services in communities that needed them. Read more

Tennessee Medical Association & Bass, Berry & Sims

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Healthcare Private Equity Compliance Checklist

The complex and ever-changing healthcare regulatory and enforcement environment, including increased focus on the role of private equity firms in their portfolio companies, make compliance a top priority for private equity firms investing in healthcare companies. The best way to limit your exposure as a private equity firm is to avoid a compliance misstep in the first place. Additionally, an effective and robust compliance program for your portfolio healthcare company makes it much more attractive to potential buyers and helps you avoid an unexpected and costly investigation or valuation hit down the road. Download the Healthcare Private Equity Compliance Checklist to assess whether your portfolio company's compliance program is up-to-date.

Click here to download the checklist.

Delaware Bankruptcy Court Vindicates AutoZone in Four-Year Litigation by Chapter 7 Trustee

June 22, 2011

Significant Win for Memphis Company as Federal Court Condemns Trustee’s Case Administration

Memphis, Tenn., (June 22, 2011) - On June 9, 2011, a Delaware bankruptcy court ruled in favor of Memphis-based AutoZone, rejecting approximately $7 million in claims asserted by Montague S. Claybrook, the Chapter 7 Trustee for the estates of American Remanufacturers, Inc. (ARI).

Montague S. Claybrook, as Chapter 7 Trustee of the estates of American Remanufacturers, Inc., et al. v. AutoZone Texas, L.P. et al. 07-51597 (PJW) was the lead case in a series of related adversary proceedings filed by the Trustee against ARI’s former customers. All of the other adversary proceedings were stayed pending disposition of the Trustee’s action against AutoZone.

The Trustee originally sought over $12 million from AutoZone for claims related to alleged accounts receivable remaining on the Debtors’ books after the automotive parts remanufacturing companies ceased operations in 2005.

After four years of litigation that included a $100,000 discovery sanction against the Trustee, and the Trustee's abandonment of some of his original claims, the United States Bankruptcy Court for the District of Delaware ruled that AutoZone was entitled to recoup approximately $9 million in credits owed to it by the Debtors. The ruling extinguishes the Trustee’s claims against AutoZone in their entirety.

"This case is a significant one because it moves the needle toward creditors' rights in bankruptcy disputes," said Kristen Wright, AutoZone's lead trial counsel and a member in the Memphis office of Bass, Berry & Sims. "Because it is a pronouncement of the Bankruptcy Court in Delaware, it has national implications."

In a two-day trial before Judge Peter J. Walsh, AutoZone established that account credits arose from certain deductions and allowances to which AutoZone was entitled under the parties’ vendor agreements, as well as credit for rejected product returns that, as AutoZone successfully claimed, ARI was obligated to accept both before and after the date the company converted from a Chapter 11 to a Chapter 7 bankruptcy.

Significantly for creditors, the Court found "no strict requirement that credits must 'match' accounts receivable for those credits to be recouped against the open accounts." Instead, said the Court, "the credits issued by the [Debtors] were an integral part of the parties' overall relationship and constituted a component of an integrated transaction between the parties."

Also significant, the Court permitted AutoZone to recoup its claimed credits collectively against the Debtors’ estates as a whole, even though the accounts receivable and credits claimed involved three debtor entities. Condemning the Trustee’s case administration, the Court stated that the "Trustee’s attempt to segregate the Debtors assets solely for purposes of setoff and recoupment in this accounts receivable case simply does not reflect the reality of his own case administration for the past five years." The Court ruled that, as a matter of equity, because the Trustee had administered the companies as a single entity, no artificial distinction between the three was justified.

AutoZone was represented at trial by Kristen C. Wright and Russell E. Stair of Bass, Berry & Sims PLC and Sommer L. Ross of Duane Morris LLP. The Plaintiff was represented at trial by Fox Rothschild LLP and Alan L. Frank Law Associates, P.C.

Click here to read the Judge's Order.


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