4th Cir.: Ford v. Sandhills Medical- Data Breach not Related To Protections for the Provision of Medical Services Ed Boltz Mon, 04/15/2024 - 22:20 Summary: Ford brought claims against Sandhills for negligence, breach of implied contract, invasion of privacy, and breach of confidentiality due to the mishandling of her personally identifying information (PII). This information was stolen from a third-party computer system used by Sandhills in a cyberattack. Ford's lawsuit stemmed from her concerns about the misuse of her stolen data, which was used to fraudulently apply for a loan in her name. Sandhills argued that they were immune from the lawsuit under 42 U.S.C. § 233(a), which provides immunity for entities performing “medical, surgical, dental, or related functions.” They claimed that the storage and protection of PII were part of these related functions because the data was collected as a condition of providing medical treatment. The district court accepted this argument and granted immunity to Sandhills, substituting the United States as the defendant, which led Ford to appeal the decision. The United States Court of Appeals vacated and remanded the district court's decision. The appellate court concluded that Sandhills' data security practices did not constitute a "related function" under the law because these functions must be closely associated with the delivery of medical, surgical, or dental services. Since the mishandling of PII occurred in a data breach by a third party and was not directly related to the provision of healthcare services, § 233(a) did not apply. The court noted that treating data security as a related function would overly broaden the scope of the statute and could lead to misuse of the immunity provision. Commentary: While most of the medical creditors in North Carolina (and hopefully nationwide)  seem to have learned the sometimes costly lesson that the disclosure of PII,  medical or otherwise,  in Proofs of Claim filed in bankruptcy cases is improper,  this case does reject the immunity argument.  By looking at whether data security practices are a "related function"  to providing  protected medical services,  this decision could also be used to narrow the "learned profession" to North Carolina debt collection restrictions.   To read a copy of the transcript, please see: Blog comments Attachment Document ford_v._sandhills.pdf (191.96 KB) Category 4th Circuit Court of Appeals

Research Paper: Murto, Michael, Student Loans and College Majors- The Role of Repayment Plan Structure (February 22, 2024). Consumer Financial Protection Bureau Office of Research Working Paper No. 24-01 Ed Boltz Mon, 04/15/2024 - 21:11 Abstract:   This paper highlights the role loan repayment plan structure has in students’ human capital investments. I link academic records from a major public university to credit records to assess the empirical evidence for shifting major selection. After an expansion in Income Driven Repayment (IDR) options increased generosity and use, borrowers are more likely to select majors with worse initial labor market outcomes but higher wage growth, consistent with theoretical predictions. These results are robust to specifications that account for nonrandom selection into borrowing status as well as compositional shifts in borrowers over time. This sheds light on how changes in student loan repayment plans affected major selection and, given the new SAVE plan, how students may respond in future human capital investments. Commentary: As something of a mathematical Casca (which discloses my English Literature degree),  I cannot really comment on or even understand much of the statistical analysis here as "it was Greek to me".  Here''s a short one (which hopefully survives into Google group and Listserv emails):             2019 Yi,c =  ∑         γcLoanP cti,c + ϕc + βcXi,c + εi,c             c=2009 My Sigma ignorance aside, This research does indicate that IDR plans "offer insurance against low monetary returns and offer the flexibility to trade off these initially low income realizations with higher income growth."  This does not,  however, support the recurring rants in the media regarding the humanities, especially the Gender Studies  Straw-person,  that student loan relief encourages  pursuit of degrees that have perpetually low income and low income growth. To read a copy of the transcript, please see: Blog comments Category Student Loan Debt

N.C. Ct. of App.: Dan King Plumbing v. Harrison- New Jury Trial following Appellate Remand Ed Boltz Mon, 04/15/2024 - 19:36 Summary: The dispute originated from plumbing and HVAC services provided by Dan King  at  Harrison's  home. After services were rendered, Dan King filed a small claims action for unpaid monies, which was dismissed, leading to an appeal and a counterclaim by Harrison alleging misrepresentation and contractual breaches, among other issues. The case escalated to a trial where the jury found in favor of Harrison, awarding damages for breach of contract and unfair and deceptive trade practices (UDTP). Upon that first appeal, the NCCOA affirmed some parts of the trial court's decisions but found errors in others, particularly concerning the jury's findings on the UDTP claims. The case was remanded for further proceedings, specifically to explore whether Harrison's reliance on Dan King's misrepresentations about duplicate warranties was reasonable and whether expert testimony was required to support claims of substandard workmanship. Subsequent hearings involved interpreting the appellate court's remand orders. The trial court, under a new judge, interpreted the orders to necessitate a new trial for the duplicate warranties claim under the UDTP action and for the workmanship claim under the breach of contract action. The Court of Appeals affirmed the trial court’s decisions, finding no abuse of discretion in ordering a new trial for the specified issues. This decision was based on the need for further exploration of facts not sufficiently addressed in the original proceedings, particularly the lack of evidence on whether the Defendant's reliance on the Plaintiff’s misrepresentations was reasonable and the absence of expert testimony on the workmanship quality.Commentary: This case highlights the complexities of appellate remands and the discretionary powers of trial courts in interpreting and implementing higher court directives. The decision reaffirms the trial court's role in seeking additional evidence and clarifications to resolve legal disputes comprehensively.  An unmentioned but likely basis for conducting a completely new trial  would also seem to be that the new trial judge,  supported by the Court of Appeals,  expected that it would be difficult and an unfair burden to reconvene the same jury a second time.   To read a copy of the transcript, please see: Blog comments Attachment Document dan_king_plumbing_v._harrison.pdf (134.5 KB) Category NC Court of Appeals

Research Paper: The Effects of Medical Debt Relief: Evidence from Two Randomized Experiments Raymond Kluender, Neale Mahoney, Francis Wong, and Wesley Yin NBER Working Paper No. 32315 Ed Boltz Mon, 04/15/2024 - 18:39 Abstract: Two in five Americans have medical debt, nearly half of whom owe at least $2,500. Concerned by this burden, governments and private donors have undertaken large, high-profile efforts to relieve medical debt. We partnered with RIP Medical Debt to conduct two randomized experiments that relieved medical debt with a face value of $169 million for 83,401 people between 2018 and 2020. We track outcomes using credit reports, collections account data, and a multimodal survey. There are three sets of results. First, we find no impact of debt relief on credit access, utilization, and financial distress on average. Second, we estimate that debt relief causes a moderate but statistically significant reduction in payment of existing medical bills. Third, we find no effect of medical debt relief on mental health on average, with detrimental effects for some groups in pre-registered heterogeneity analysis. Commentary: Relief for medical debt alone  perpetuates the assumption that there are some debtors who are innocent and deserving of relief and others,  whether for student loans,  credit cards, etc.,  that are not. The minimal benefits of medical debt relief on financial outcomes,  credit scores or mental health demonstrates the limits of piecemeal debt forgiveness.  A likely reason being that people burdened with medical debt likely have substantial other financial burdens (with those other debts often resulting from the same health issues as the medical debt).  This should be remembered for other targeted debt relief,  including student loans,  which might merely divert a debtor's financial resources to other creditors.  Bankruptcy remains,  with the most glaring exception being automatic relief for student loans,  the only real and complete form of debt relief.   While it would be obviously self-interested to suggest that charities such as RIP Medical Debt  hire private consumer debtor attorneys to file bankruptcies for those in serious financial distress,  it would certainly be reasonable for those to support Legal Aid organizations,  where a $100  contribution could relieve far more than $10,000 in debt. To read a copy of the transcript, please see: Blog comments Attachment Document the_effects_of_medical_debt_relief_evidence_from_two_randomized_experiments-1-64_compressed.pdf (429.44 KB) Document the_effects_of_medical_debt_relief_evidence_from_two_randomized_experiments-65-126_compressed.pdf (804.05 KB)

Bankr. E.D.N.C.: In re Billy Haddock & Son Farms- Approval of Settlement Ed Boltz Mon, 04/15/2024 - 17:55 Summary: The United States Bankruptcy Court, Eastern District of North Carolina, considered a Motion to Approve Compromise where defendants Brian  and June Haddock agreed to pay $25,000 to the Trustee in satisfaction of all claims held against them by the bankruptcy estate. Nutrien Ag Solutions, Inc. opposed the motion. The court held a hearing to consider the reasonableness of the proposed settlement. Overruling the objection, the court analyzed the case under  the following factors:  Complexity of the matter;  Likely expense of trial and collection;  Estimated time or duration of trial;   Possible difficulties of collection;  The amount of the objecting parties' claim; and Deference  to a trustee's business judgment. See Protective Comm. for Indep. S'holders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) and  In re Health Diagnostic Lab'y, Inc., 588 B.R. 154, 168 (Bankr. E.D. Va. 2018).  Given the financial circumstances of the defendants and the potential difficulties in collecting a larger judgment,  the court found that the proposed settlement was reasonable,  but given that Nutrien Ag Solutions'  claim accounted for 77% of all claims,  the  court stayed a final decision  pending the resolution of an objection to its claim. Commentary: While it may seem that this opinion,  which delays its own finality pending the resolution of the objection to Nutien Ag Solutions's claim this summer,  puts the cart before the horse and is something of an advisory opinion (which may be perfectly permissible from bankruptcy courts in the 4th Circuit following Kiviti v Bhatt),  this may in reality have been a judicial thumb on the scale to encourage settlement of that claims objection. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_billy_haddock_and_son_farms_a_nc_general_partnership_debtor_john_c_bircher_iii_trustee_billy_h.pdf (144.3 KB) Category Eastern District

 How to Compromise an SBA Defaulted Loan that has been transferred to Treasury Offset Program (TOP)   In a prior blog post we discussed “How to Recall Defaulted SBA Loan from Treasury Offset Program TOP” which blog post can be found at https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.html If you have a defaulted SBA loan that has been transferred to the Treasury Offset Program (TOP) and you are unable to recall the loan from TOP to the SBA, your options are: 1. Do nothing, 2. Close the business, 3. Negotiate a Compromise with TOP, or 4. File for bankruptcy and halt the TOP offset with the automatic stay provided by Section 362 of the Bankruptcy Code. In this blog post we will discuss how to Compromise an SBA Defaulted Loan that has been transferred to TOP. Please note that the forms required to be submitted to TOP to Compromise the claim are different from the offer in compromise forms submitted to the SBA for an offer in compromise. Documents Required: 1  Provide a letter on your letterhead explaining the reasons for the default on the SBA loan, why it should be reduced or compromised, the original amount of the defaulted SBA loan, the proposed amount to compromise the defaulted SBA loan, the source of funds for this settlement, and a detailed explanation of the financial hardship involved for you or your business. 2  A Financial Statement for Business or Individual (which can be obtained online from TOP, Department of Treasury Compromise Forms) must be completed and submitted. 3   Submit the last 2 years of the Business or Individual tax returns. 4   The proposed payment should be a lump sum payment. 5   Submit 2 Months of  bank statements for the individual or the business & 6   Submit 2 utility bills for for the individual or the business. Then  call TOP at 800-676-5737 to determine who the documents should be faxed or emailed to.  Please note that compromising a claim with TOP is difficult to do! For those clients or advisors who would like to discuss compromising their  SBA Defaulted Loan (that has been transferred to TOP)  with Jim Shenwick, Esq. please call Jim Shenwick, Esq  at 917 363 3391 or email him at  jshenwick@gmail.com Or please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min We held individuals & businesses with too much debt!---How to Recall Defaulted SBA Loan from Treasury Offset Program TOP https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.htmlTreasury Offset Program (TOP) and SBA EIDL Loanshttps://shenwick.blogspot.com/2024/04/treasury-offset-program-top-and-sba.htmlU.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loanshttps://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.htmlSBA EIDL Loan Charge Offshttps://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.htmlSBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILING Shttps://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.htmlDefaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loanshttps://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.htmlSBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.htmlSBA EIDL Penalties if an SBA EIDL Loan is Not Repaidhttps://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.htmlMisuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filingshttps://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.htmlSBA EIDL HARDSHIP PROGRA Mhttps://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.htmlDefaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Codehttps://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.htmlOffers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.htmlEIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.htmlEIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.htmlEIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlEIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlNew Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.htmlEIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.htmlPPP & EIDL Fraudhttps://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.htmlBetter to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loanshttps://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html  

The initial meeting with a prospective bankruptcy client is the most important work I do as a bankruptcy lawyer. It’s also the hardest. The results of that meeting lay the groundwork for the entirety of the case. The challenge is establishing rapport with an utter stranger, who’s in distress, and persuading them to spill all […] The post Why listening is a bankruptcy lawyer’s superpower appeared first on Bankruptcy Mastery.

4th Cir.: Harrell v. DeLuca- Summary Judgment regarding Fraud Ed Boltz Mon, 04/15/2024 - 08:59 Summary: The Harrells alleged that DeLuca made false representations about the property and sued for fraudulent inducement, constructive fraud, breach of contract, and violations of the Virginia Consumer Protection Act. The district court granted summary judgment favoring DeLuca on the fraud claims related to certain misrepresentations, but found in favor of the Harrells on a breach-of-contract claim related to uncompleted work specified in the Construction Agreement. The Fourth Circuit found the district court's grant of summary judgment on the fraud claims inappropriate, highlighting that there was a genuine dispute of material fact regarding the materiality of the misrepresentations. The appellate court vacated and remanded the summary judgment on these claims. The appellate court also addressed the Harrells' claim for constructive fraud based on DeLuca's alleged misrepresentation about obtaining necessary permits. It determined that the district court improperly applied the source-of-duty rule without clearly establishing whether DeLuca's statements were about current facts or future promises. Consequently, this part of the summary judgment was also vacated and remanded for further proceedings. Lastly, the appellate court agreed with the Harrells that the district court did not make clear findings on whether DeLuca breached the Sales Contract, which was important because this contract contained a provision for recovering attorney's fees, unlike the Construction Agreement. The court remanded this issue for explicit findings. To read a copy of the transcript, please see: Blog comments Attachment Document harrell_v._deluca.pdf (191.65 KB) Category 4th Circuit Court of Appeals

E.D.N.C.: In re Sugar- Dismissal with Prejudice for Willful Violation of Local Rules Ed Boltz Thu, 04/11/2024 - 15:56 Summary:   This district court reviewed the dismissal of Ms.  Sugar's  Chapter 13 bankruptcy case, based on Sugar's sale of her property without seeking permission from the bankruptcy court, in violation of Local Bankruptcy Rule 4002-1(g)(4), and further  barring her from filing future petitions. Sugar filed  Chapter 13 bankruptcy and her plan allowed her homestead exemption of $32,348.81, valued at $150,000. Subsequently, the bankruptcy administrator filed a motion for a status conference upon learning that Sugar was in the process of selling her property without court approval, with the Bankruptcy Court finding that Sugar intentionally violated Local Bankruptcy Rule 4002-1(g)(4) by selling her property without prior court approval. This rule prohibits the sale of non-exempt property valued over $10,000 without court and trustee approval. On appeal, Sugar argued that her property had been claimed as exempt from the bankruptcy estate, that Local Bankruptcy Rule 4002-1(g)(4) exceeded the bankruptcy court’s rulemaking authority, and that the dismissal was improper. The District Court held that the property did indeed form and remain part of the bankruptcy estate subject to the Bankruptcy Code, Local Rules, and the confirmed plan's terms. It ruled that the Local Bankruptcy Rule 4002-1(g)(4) was procedural and consistent with the Bankruptcy Code, and thus valid. The court also found no basis for Sugar's argument that she had an objectively reasonable basis for selling the property without court approval, and it rejected the claim that no harm was done by her actions. Commentary: This decision by the district court does not appear to have been appealed further to the Fourth Circuit Court of Appeals.  Whatever the merits of the underlying issues regarding vesting,  post-petition appreciation, etc.,  this case,  with the record showing rather flagrant disregard by the debtor,  is certainly not the best vehicle to advance those arguments. Procedurally,  perhaps a better argument in this case (whether at the bankruptcy court  or on appeal at the district court)  is whether this bar from refiling is truly a dismissal under 11  U.S.C.  §1307  or more accurately denial of discharge under 11 U.S.C.   §1328 (akin to 11 U.S.C. 727), as this  (or any?) bar to refiling a bankruptcy under any Chapter has the effect of prohibiting the discharge.  The latter process would have,  pursuant to Rule 7001(4),  required an Adversary Proceeding with its heightened due process protections,  perhaps not changing the outcome. The bankruptcy court order sanctioning the debtor's attorney is still on appeal and pending decision, 5:23-cv-00411-FL,  where hopefully he has independent counsel. To read a copy of the transcript, please see: Blog comments Attachment Document 130125029780.pdf (128.39 KB) Category Eastern District

E.D.N.C.: In re Fanning- Local Rules regarding Incurring Debt In Chapter 13/ Denial of Direct Appeal Ed Boltz Thu, 04/11/2024 - 15:41 Summary: The Fannings  sought direct appeal to the 4th Circuit of the bankruptcy court's denial of their motion for authorization to incur debt to purchase a home,  which also sought to abrogate local bankruptcy rules  requiring such  authorization. The district court declined to certify the case for direct appeal, determining that the issues raised did not meet the standard required for such certification. The court found that the bankruptcy court's orders did not involve questions of law without controlling decisions or matters of public importance, nor did they require resolution of conflicting decisions. Additionally, the court did not find that an immediate appeal would materially advance the progress of the case. The court also noted that related appeals were pending, and maintaining the appeal in the district court would conserve judicial resources. Regarding the appeal of the bankruptcy court's order denying the motion to abrogate, the district court affirmed the bankruptcy court's decision. It found that the local bankruptcy rules in question were procedural rather than substantive and did not abridge the appellants' rights or violate the Constitution's uniformity requirement.  Commentary: In a case that sought direct appeal to the 4th Circuit,  it is odd that no "normal"  appeal to the 4th Circuit has been sought,  particularly as this is a persistent issue being raised by the attorney and this is a comparatively clean case,  lacking the problematic facts in others. Also,  for what it's worth,  Judge Flanagan's opinion has a typo on page 4,  misspelling Logan in its citation  "Crosiner v. Locan et al., Nos. 5:20-cv-654, 20-cv-656 (E.D.N.C. Feb. 9, 2022)". To read a copy of the transcript, please see: Blog comments Attachment Document 130125030064.pdf (108.38 KB) Category Eastern District