In re Ridgecrest Healthcare, Inc.

MEMORANDUM DECISION ON OBJECTION TO CLAIM

I. Factual Background

Ridgecrest Healthcare, Inc. (the “Debt- or”) filed a chapter 11 petition on September 16, 2013. The case was converted to chapter 7 on September 4, 2014. Howard Ehrenberg is the duly appointed chapter 7 trustee (the “Trustee”). Pre-petition, the Debtor operated a skilled nursing facility in Ridgecrest, California. On March 31, 2014, the California Department of Health Care Services (“DHS”) filed a proof of claim asserting a general unsecured claim of $192,793.85. On February 12, 2015, DHS filed an amended proof of claim asserting a priority unsecured claim for $446,609.20. The amended proof of claim asserted that DHS’s claim was a priority claim under section 507(a)(8). 1 On September 2, 2015, *840 DHS filed a second amended claim reducing the amount of the claim to $432,250.01 but still asserting that the claim was a priority claim pursuant to section 507(a)(8) (the “Second Amended Proof of Claim”).

DHS’s claim is based on quality assurance fees (“QA Fees”). QA Fees are imposed based on DHS’s administration of California’s Medicaid program, Medi-Cal. The Medi-Cal program must comply with the federal Medicaid Act,…