Filing Bankruptcy Draws a Line in the Sand

140.2.3 - Filing Bankruptcy Draws a Line in the Sand (Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26) The petition date (i.e., the date the debtor files its petition in bankruptcy with the Bankruptcy Court) draws a line in the sand between pre-petition and post-petition actions. Events that occur before the petition date are pre-petition. Events that occur on or after the petition date are post- petition. The automatic stay governs many actions that Contractors may take concerning a debtor post-petition. Contractors shall therefore consult with the servicing CMS Office before taking action, concerning the debtor post-petition. Medicare's right to recover overpayments in a bankruptcy case can depend on whether the overpayment relates to pre-petition or post-petition periods. The CMS Office directs its Contractors on the procedures for recovering both pre-petition and post-petition overpayments to ensure that Medicare maximizes its recovery in accordance with the Bankruptcy Code. The distinction between pre-petition and post-petition overpayments is based on the date of service, not the date of the demand for repayment. Additionally, the ability of Medicare to recover overpayments may vary depending on the district in which the bankruptcy is filed, as courts in different jurisdictions can interpret and apply bankruptcy and Medicare recovery rules differently.