In re Wierzbicki

506 B.R. 935

In re: Timothy Joseph Wierzbicki, Debtor.

Case No.: 3:12–bk–7617–JAF

United States Bankruptcy Court, M.D. Florida. Jacksonville Division

Signed March 18, 2014

Scott Bomkamp, Elena L. Escamilla, Charles R. Sterbach, Office of the United States Trustee, Orlando, FL, for U.S. Trustee.

Isaac L. Levy, Isaac L. Levy, P.A., Jacksonville, FL, for Debtor.

Jerrett M. McConnell, Friedline & McConnell, P.A., Jacksonville, FL, for Trustee.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JERRY A. FUNK, United States Bankruptcy Judge

This case came before the Court upon Acting United States Trustee's (the “Trustee”) Motion to Dismiss Pursuant to 11 U.S.C. [§§] 707(b)(1) and 707(b)(3) and Request for Clerk to Hold Discharge Pending Hearing (Doc. 43) (the “Motion to Dismiss”). The Court conducted an evidentiary hearing at which the parties entered into a detailed factual stipulation, which was admitted as the Trustee's Exhibit 5. The Trustee also introduced other exhibits at the hearing. Additionally, Debtor testified at the hearing. In lieu of oral argument, the Court directed the parties to submit memoranda in support of their respective positions. Upon the evidence and the applicable law, the Court makes the following Findings of Fact and Conclusions of Law.

Findings of Fact

On November 27, 2012, Debtor filed a voluntary chapter 7 bankruptcy petition, along with Schedules and a Statement of Financial Affairs to initiate the instant case. (Tr.'s Ex. 2). On May 3, 2013, the Trustee filed the Motion to Dismiss, which seeks dismissal of the instant case for bad faith and totality of the circumstances pursuant to 11 U.S.C. §§ 707(b)(3)(A) and (B).

Debtor's debts are primarily consumer debts. (Tr.'s Ex. 5, ¶ 4). Debtor is 48 years old and is a practicing neurologist. (Tr.'s Ex. 5, ¶¶ 7, 8). Debtor was previously married. (Tr.'s Ex. 5, ¶ 7). His first marriage produced two children, who are 15 and 17. ( Id.) Debtor and his former wife divorced in 2005. (Tr.'s Ex. 5, ¶ 5).

Debtor is required to pay his former wife $10,000.00 per month as permanent periodic alimony. (Tr.'s Ex. 5, ¶ 30). In 2012 Debtor made alimony payments in the amount of $120,000.00. ( Id.) Debtor has not made an alimony payment since January of 2013. ( Id.)

Debtor is required to pay $2,800.00 per month in child support. (Tr.'s Ex. 5, 29). Debtor has not made any child support payments since January of 2013. ( Id.) Debtor received a Notice of Deficiency from the clerk of Circuit Court stating that as of May 31, 2013 he was $14,000.00 in arrears in child support payments. (Tr.'s Ex. 5, ¶ 31). Debtor's child support payments will be reduced when Debtor's oldest child turns 18 in June, 2014. (Tr.'s Ex. 5, ¶ 29).

Debtor remarried in 2006. (Tr.'s Ex. 5, ¶ 5). Debtor and his wife have a 4 year old son who was born in 2009. (Tr.'s Ex. 5, ¶¶ 6, 25). Debtor's 4 year old son was diagnosed prenatally with multiple congenital heart defects which required specialized medical services including delivery and heart surgery following delivery. (Tr.'s Ex. 5, ¶ 25). Debtor and his wife travelled to Boston, Massachusetts in 2009 to prepare for the delivery of their son at a specialty hospital. ( Id.) A team of surgeons was prepared to do heart surgery on him the moment he was born. ( Id.) Debtor's son's condition was life threatening and extremely medically complex. ( Id.) Debtor did not receive a salary from January 1, 2009 to June, 2009 while he was in Boston with his wife and son. (Tr.'s Ex. 5, ¶ 26).

Debtor's son was admitted to the specialty hospital in Boston for three weeks in January of 2011 to complete surgical repairs to his heart. (Tr.'s Ex. 5, ¶ 27). Debtor's son has not been admitted to a hospital or had surgery since 2011, but has required emergency care for possible infections. (Tr.'s Ex. 5, ¶ 28). Debtor's son's cardiac conditions will affect him for the rest of his life and will result in continuing medical expenses, not all of which are covered by insurance. (Tr.'s Ex. 5, ¶ 27). Debtor's son is currently enrolled in regular preschool. (Tr.'s Ex. 5, ¶ 28).

As of the petition date, Debtor was a neurologist at Neurology Associates of Ormond Beach (“Neurology Associates”), where he had been a partner for 13 years. (Tr.'s Ex. 5, ¶ 12). Neurology Associates is a neurology practice comprised of six shareholder neurologists and two non-shareholder neurologists. ( Id.) Debtor earned $537,052.00 from Neurology Associates in 2012 and $595,422.00 in 2011. (Tr.'s Ex. 5, ¶¶ 13, 15). Approximately 50% of Debtor's income from Neurology Associates was from ancillary services such as MRI services, physical therapy and brain wave and sleep institute income. (Tr.'s Ex. 5, ¶ 16).

Debtor voluntarily left his employment at Neurology Associates on March 7, 2013, to form his own practice, the Brain and Spine Institute of Port Orange (the “Brain Institute”) (Tr.'s Ex. 5, ¶ 19) where he operates as a sole practitioner. (Tr. at 36). The Factual Stipulation does not set forth a specific reason as to why Debtor left his position at Neurology Associates but provides that “Debtor left Neurology Associates due to philosophical and ethical differences with his partners. The Debtor felt that he could no longer in good faith continue [practicing] at Neurology Associates.” (Tr.'s Ex. 5, ¶ 19). Debtor testified that he began contemplating leaving his employment at Neurology Associates within weeks before he left. (Tr. at 21). In Debtor's opening statement, counsel for the Debtor stated that Debtor became aware of conduct at Neurology Associates that was “unethical and possibly immoral [and] illegal.” (Tr. at 9–10). Debtor did not testify at the evidentiary hearing as to the circumstances surrounding his leaving Neurology Associates.

Prior to leaving Neurology Associates, Debtor did not look for other employment opportunities beyond opening a new practice in Volusia County. (Tr.'s Ex. 5, ¶ 20). Debtor testified that hospitals in the area where he lives do not employ neurologists. (Tr. at 21). Debtor testified that he believes physicians who are employed by hospitals earn $150,000.00–$200,000.00 annually. (Tr. at 37).

Neurology Associates is the only neurology group in Debtor's geographical vicinity. (Tr. at 47–48). Debtor testified that he did not consider looking for a job with another neurologist group outside of that area. (Tr. at 22). Debtor further testified that it is uncommon in his geographic area for sole practitioner neurologists to partner with other sole practitioners. (Tr. at 37). Additionally, Debtor testified that he would not have felt comfortable joining any of the sole practitioners in his area because two of them practice pain management, which is not his style and not the area of neurology in which he was trained, and the third has a poor reputation because of his interactions with patients. (Tr. at 37, 39–40).

In response to a question asked by the Court, Debtor testified that he was not interested in looking for a position beyond the Daytona Beach/Ormond area because his children live in that area. (Tr. at 42). Debtor also testified that it would not make sense to relocate beyond that area because he had a patient base from Neurology Associates that could rejoin him in a location which was proximal to where they live and where they previously saw him. (Tr. at 46).

On April 10, 2013, Debtor obtained a loan from family members in the amount of $30,000.00 to assist with startup expenses for the Brain Institute. (Tr.'s Ex. 5, ¶ 21; Tr. at 31). The funds have not been repaid. Debtor is required to repay the $30,000.00 when he has funds available. (Tr.'s Ex. 5, ¶ 21).

Debtor began seeing patients at the Brain Institute on May 6, 2013. (Tr. at 29). Most of Debtor's patients from Neurology Associates are now seeing him at the Brain Institute. (Tr.'s Ex. 5, ¶ 24). Debtor testified that within one to two years, he expects to be earning approximately $200,000 per year, which is the average annual salary for a neurologist in the Southeast Region of the United States. (Tr. at 36–37, 39; Tr.'s Ex. 5, ¶ 23). Debtor does not believe his salary will ever be as high as his prior salary with Neurology Associates because he does not have the ancillary sources of income (Tr.'s Ex. 5, ¶ 23) and does not anticipate earning more than $200,000. (Tr. at 41). Additionally, Debtor testified that as a result of the Affordable Care Act, which became effective in January of 2013, any procedure that he performs which is billed to Medicare or Medicaid will be subject to a 25% reduction. (Tr. at 47).

Debtor's wife is a critical care registered nurse who has not been employed since the birth of their son based upon his medical issues. (Tr.'s Ex. 5, ¶ 9). She is currently working at the Brain Institute, but has not received a salary since the business began. (Tr.'s Ex. 5, ¶ 10). Debtor's wife has a 17 year old daughter for whom she does not receive child support. (Tr.'s Ex. 5, ¶ 11).

As of the date of the hearing, Debtor did not have health insurance and was informed that in order to reinstate the health insurance he previously held with Neurology Associates, he was required to make a payment of $8,044,00. (Tr.'s Ex. 5, ¶ 33). Debtor's monthly premium after the lump sum payment is made will be $2,008.44. ( Id.) Debtor's out of pocket medical expenses are normally $1,363.00 per month. (Tr.'s Ex. 5, ¶ 34).

Debtor currently resides at 810 Pheasant Run Ct. W., Port Orange, Florida (the “Pheasant Run Property”), which the Debtor's Schedule A values at $666,956.00 and which is encumbered by a mortgage of $1,476,934.43. (Tr.'s Ex. 5, ¶ 41). Debtor's contractually due monthly payment on the Pheasant Run Property is $9,500.00. ( Id.) Debtor is not presently making payments on the Pheasant Run Property and has not made a mortgage payment on the property since December of 2012. ( Id.) Debtor stopped making mortgage payments because he could no longer afford the payment. (Tr. at 23). At the time of the...