Greater Southeast Community Hospital Cor and Doctors Community Healthcare Corporation

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GREATER SOUTHEAST COMMUNITY
HOSPITAL CORPORATION I, et
al.,
Debtors.
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Case No. 02-02250
(Chapter 11)
(Jointly Administered)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER OVERRULING TRUSTS
OBJECTION TO CERTAIN PATIENT REFUND CLAIMS FOR
WHICH CLAIMANTS DID NOT PROVIDE SUPPORTING EVIDENCE BUT
ALLOWING CERTAIN CLAIMS THAT THE TRUST IS SATISFIED ARE OWED
This order addresses the DCHC Liquidating Trust's Objection
And Request To Disallow Patient Refund Claims For Which The
Claimants Did Not Provide Sufficient Evidence Of Such Claims As
Required By The Court-Approved Patient Refund Claim Objection
Procedures (Docket Entry (“DE”) No. 3335) filed April 11, 2008,
and elaborates on the reasons for overruling the Objection as set
forth in the court’s oral ruling at the hearing of this date.
The patient refund claims at issue were not individually
scheduled by the debtors, and, accordingly, 11 U.S.C. § 1111(a)
did not give rise to a proof of claim being deemed to have been
filed by each creditor holding such a claim. 	The debtors
The Memorandum Decision and Order below is hereby
signed. Dated: May 14, 2008.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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scheduled only the aggregate amounts of patient refund claims
without identifying the claimants. 	Although the debtors later
identified individual claimants, they did not do so in schedules
executed under penalty of perjury, and the schedules that were
filed earlier do not acknowledge the validity of each individual
creditor’s claim (or even that the creditor’s claim had been
included in the aggregate amount listed, as the aggregate amount
may have been only an estimate or have included claims of
creditors later determined not to exist).
The debtors nevertheless notified each such creditor that
the creditor need not file a proof of claim if the creditor
agreed with the amount listed on the notice as being the amount
the debtors believed they owed the creditor. 	That was error,
because the failure to schedule each claim individually meant
that, as to each such claim, § 1111(a) was not triggered to give
rise to a proof of claim being deemed to have been filed.
Nevertheless, the debtors’ notice to each such creditor
misled the creditor into thinking that no proof of claim needed
to be filed. 	Accordingly, such creditors were entitled to obtain
an order permitting them to file proofs of claim out of time.
When, as to each such creditor, the Trust evaluated the
amount that the debtors had told the creditor would not require a
proof of claim, the Trust concluded that in the vast majority of
such claims, the amounts were likely in error. 	The Trust thus
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filed a motion to set procedures for obtaining a ruling that such
claims be disallowed. 	This led to a procedural order entered on
December 20, 2007 (DE No. 3311) that effectively granted the
affected creditors additional time to file proofs of claim, and
set a deadline for each creditor to submit a proof of claim.
Although the order setting a deadline for the submission of
a proof of claim also directed each creditor to include any
supporting documentation, that directive was intended to
facilitate the Trust’s evaluation of the claims, and the order
did not provide that failure to submit supporting documentation
would result in disallowance of the claim. 	Nor has the Trust
shown that the order could have properly done so. 	The Trust’s
Objection has not shown that the patient refund claims were
“based on a writing” within the meaning of F.R. Bankr. P.
3001(c). 	Moreover, even when a creditor’s claim is based on a
writing, and was thus required by Rule 3001(c) to include
supporting documentation, that would not suffice as a ground to
disallow the claim. 	It would only rob the claim of its
evidentiary effect under Rule 3001(f), and not constitute a
ground, in and of itself, for disallowance.
Because the Trust’s Objection was based solely on the lack
of documentation, the Objection does not state an adequate basis
for disallowance of the claims. 	The Trust will be permitted to
object anew to the claims, and in so doing may attempt to
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demonstrate that any particular claim was based on a writing. 	It
seems doubtful at this juncture, however, that any patient refund
claim was based on a writing within the meaning of Rule 3001(c).
The overpayments here could have been made in cash or via a check
or via some other means. 	The overpayments fundamentally arise
from the debtors receiving more than they were owed, and do not
depend on the fact that the payments may have been in writing.
If no writing was required to create the liability, the claim is
not based on a writing. 	State Board of Equalization v. Los
Angeles Int’l Airport Hotel Assocs. (In re Los Angeles Int’l
Airport Hotel Assocs.), 106 F.3d 1479, 1480 (9th Cir. 1997).
The Trust has conceded in its Objection that four claims are
proper as shown by documentation supporting those claims, and has
requested allowance of those claims.
In accordance with the foregoing, it is
ORDERED that, as requested by the Trust, the claims of the
following holders are allowed in the following stated amounts:
Irene Taubenhein in the amount of $827.28; Kathleen Jacinto in
the amount of $810.00; Jimmie Mitchell in the amount of $20.00;
and Fannie Ford in the amount of $50.00; and it is
ORDERED that the Trust’s Objection (DE No. 3335) is
otherwise OVERRULED without prejudice to filing a new objection
to the disputed claims. 	It is further
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ORDERED that within 14 days of entry of this order, the
Trust shall file a certificate reciting that it has mailed a copy
of this Memorandum Decision and Order to each of the affected
creditors.
[Signed and dated above.]
Copies to:
Sam J. Alberts, Esq.
Jeffrey E. Schmitt, Esq.
Joshua M. Hantman, Esq.
White & Case LLP
701 Thirteenth St., N.W.
Washington, D.C. 20005
Dennis Early, Esq.
Office of the U.S. Trustee
115 S. Union Street
Alexandria VA 22314
Andrew Troop, Esq.
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Ted Berkowitz, Esq.
Patrick Collins, Esq.
Farrell Fritz, P.C.
EAB Plaza
Uniondale, NY 11556-0120
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