Health Law & Business

Lab’s Chapter 7 Trustee Gets Suit Against Shareholders Renewed

Feb. 23, 2021, 7:31 PM

Atherotech Inc.'s Chapter 7 trustee can rely on a federal bankruptcy rule to sue the blood lab’s institutional shareholders to recover dividends paid out during a Medicare overbilling investigation, the Eleventh Circuit ruled.

Rule 7004(d) of the Federal Rules of Bankruptcy Procedure allows trustee Thomas Reynolds to sue the Alabama-based lab’s shareholders even though he wouldn’t have been able to under the state’s law, the U.S. Court of Appeals for the Eleventh Circuit said Tuesday.

That rule allows plaintiffs in bankruptcy-related lawsuits to serve defendants anywhere in the the U.S., and that creates a basis for federal court jurisdiction over...

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