Can the IRS wrongfully levy Medicare/Medi-Cal funds designated to my healthcare facility? What can a healthcare facility do about it?
A recent case successfully resulting in the return of Medicare/Medi-Cal funds to the healthcare facility will illustrate the typical challenge posed.
The prior operator of a long-term care skilled nursing facility (the “Healthcare Facility”), became insolvent, defaulted on its lease payments, and simultaneously defaulted on its tax obligations to the state of California and the IRS. In the subsequent sale of that Healthcare Facility, the buyer(s), who did not engage healthcare transactional counsel, purchased the Healthcare Facility, and inadvertently assumed certain statutory successor liabilities (here the taxes due to California and the IRS). The buyer, currently undergoing the change of ownership process, began to bill Medicare/Medi-Cal for services provided to its residents. The buyers then noticed that there Medicare/Medi-Cal funds were being levied against for the back-taxes not paid by the prior operator.
Unfortunately, due to the IRS and California FTB not understanding the legal intricacies of typical healthcare transactions, many of our clients inadvertently see their Medicare/Medi-Cal funds levied due to the prior operator’s defaults and unpaid taxes. A levy by the IRS constitutes a significant action and can have severe consequences to healthcare facilities, up to and including bankruptcy and the eventual eviction of residents.
Luckily for our client’s, the attorneys at KAY GHAD have extensive experience litigating Internal Revenue Code §6343(b) actions for the immediate release of Medicare designated funds wrongfully levied by IRS against healthcare facilities. We have successfully fought and won against the IRS for wrongfully levying our client’s designated Medicare/Medi-Cal funds.
Please note that it is critically important that Healthcare Facilities subject to such levys engage competent attorneys immediately as the timeframe to submit such actions and demands must be made within the two (2) years of the first levy date. Otherwise, such healthcare facilities risk being barred by certain statute of limitations.
At KAY GHAD LLP, we are dedicated to and have a successful track record in recovering Medicare funds wrongfully levied by the IRS from healthcare facilities and their operators. For help with your healthcare facility and any wrongful levy’s against, please contact us at [email protected] or (213) 529-2900.
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