Crushed by COVID-19 Medical Bills, Coronavirus Victims Need Debt Relief Under the Bankruptcy Code and Workers’ Compensation Laws

Abstract

After the U.S. declared COVID-19 a pandemic, cracks in the U.S.’s fragile privatized healthcare system were exposed. At the start of the pandemic, 74 million U.S. residents were already uninsured or underinsured. To date, over 7.7 million recently terminated employees have lost their employer-provided health insurance, while over 24.6 million individuals have been infected with COVID-19 and 800,000 have been hospitalized. As a result, coronavirus survival often comes with astronomical medical bills like the $1.1 million hospital bill received by Michael Flor, a 70-year-old survivor who spent 62 days in the hospital for treatment.This Article examines how the U.S.’s flawed healthcare system and federal bankruptcy law may work together to unfairly penalize debtors burdened with medical debts arising from treatment for an infectious disease, like COVID-19. The financial fate of many burdened with infectious-disease medical bills will depend on whether a court characterizes such bills as “consumer” debts. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individuals with “primarily consumer debts” are subject to a complex calculation known as the “Means Test.” Debtors who have their massive medical bills characterized as non-consumer debts are allowed to wipe out those bills quickly in a Chapter 7 case. Debtors who have such bills characterized as consumer debts and who fail the Means Test are forced into a five-year repayment plan in a Chapter 13 case, where they pay down their unsecured debts, including medical bills. As a result, courts are effectively penalizing debtors who lack adequate health insurance and who involuntarily contract a contagious disease.To prevent such perverse results, this Article proposes that bankruptcy law be amended to exclude infectious-disease medical bills from the definition of consumer debt. Also, to obviate the need for some individuals to file for bankruptcy relief, this Article proposes that workers’ compensation (“workers’ comp”) laws be amended to include COVID-19 as an occupational disease for any “essential worker,” as defined in each state, so that infected essential workers can have their medical bills paid from workers’ comp funds. If a former U.S. president infected with COVID-19 was considered essential for the nation’s survival and, therefore, entitled to taxpayer-funded medical care in state-of-the-art facilities, then front-line employees—who are required to work for the benefit and survival of us all—should absolutely receive COVID-19 treatment at no cost to them. Legislative action is especially needed due to the current spread of new, highly contagious mutations of COVID-19 in the U.S. With the proposed legislative amendments in place, the U.S. would ensure that survivors are protected from financial devastation due to involuntarily contracting an infectious disease.