Migrant Health Center, Inc. v. Commonwealth of Puerto Rico

United States Court of Appeals
For the First Circuit

No. 18-1783

MUNICIPALITY OF SAN JUAN; TOA ALTA COMPREHENSIVE URBAN/RURAL
ADVANCED HEALTH SERVICES, INC.; RIO GRANDE COMMUNITY HEALTH
CENTER, INC.,

Plaintiffs,

MIGRANT HEALTH CENTER, INC.; CORP. DE SERVICIOS INTEGRALES DE
SALUD INTEGRAL DE LA MONTANA, INC.; MOROVIS COMMUNITY HEALTH
CENTER, INC.; CORPORACION DE SERVICIOS DE SALUD Y MEDICINA
AVANZADA, INC. (COSSMA); HEALTHPROMED FOUNDATION, INC., f/k/a
Dr. Jose S. Belaval, Inc.; CONCILIO DE SALUD INTEGRAL DE LOIZA,
INC. (CSILO); NEOMED CENTER, INC., f/k/a Gurabo Community Health
Center, Inc.; CIALES PRIMARY HEALTH CARE SERVICES, INC.;
CORPORACION DE SERV. MEDICOS PRIMARIOS Y PREVENCION DE HATILLO,
INC.; COSTA SALUD, INC., f/k/a Rincon Health Center, Inc.; CAMUY
HEALTH SERVICES, INC.; ATLANTIC MEDICAL CENTER, INC.; CENTRO DE
SALUD FAMILIAR DR. JULIO PALMIERI FERRI, INC.; HOSPITAL GENERAL
CASTANAR, INC.; EL CENTRO DE SERVICIOS PRIMARIOS DE SALUD DE
PATILLAS, INC.; EL CENTRO DE SALUD DE LARES, INC.,

Plaintiffs, Appellees,

v.

COMMONWEALTH OF PUERTO RICO,

Defendant, Appellant,

DEPARTMENT OF HEALTH OF COMMONWEALTH OF PUERTO RICO; DEPARTMENT
OF HEALTH AND HUMAN SERVICES; RAFAEL RODRIGUEZ-MERCADO,
Secretary of the Department of Health for the Commonwealth of
Puerto Rico; ALEX MICHAEL AZAR, II, Secretary of Health and
Human Services,

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
 [Hon. Gustavo A. Gelpí, Jr., U.S. District Judge]

Before

Lynch, Thompson, and Barron,
Circuit Judges.

Carlos Lugo-Fiol, with whom Isaías Sánchez-Báez, Solicitor
General of Puerto Rico, was on brief, for appellant.
James L. Feldesman, with whom Nicole M. Bacon, Khatareh S.
Ghiladi, and Feldesman Tucker Leifer Fidell LLP were on brief, for
appellees Atlantic Medical Center, Inc., Camuy Health Services,
Inc., Centro de Salud Familiar Dr. Julio Palmieri Ferri, Inc.,
Ciales Primary Health Care Services, Inc., Corp. de Serv. Médicos
Primarios y Prevención de Hatillo, Inc., Costa Salud, Inc., Centro
de Salud de Lares, Inc., Centro de Servicios Primarios de Salud de
Patillas, Inc., and Hospital General Castañer, Inc.
Robert A. Graham, with whom Iyen A. Acosta and Reno &
Cavanaugh PLLC were on brief, for appellees HealthproMed, Salud
Integral en la Montaña, Migrant Health Center, COSSMA, Morovis
Community Health Center, NeoMed Center, and Concilio de Salud
Integral de Loiza.

March 21, 2019

 BARRON, Circuit Judge. This appeal concerns the

automatic stay provision of the Puerto Rico Oversight, Management,

and Economic Stability Act ("PROMESA"), see 48 U.S.C. §§ 2101-

2241, a statute that Congress enacted in June 2016 to address the

Commonwealth of Puerto Rico's financial crisis. The question

presented is whether that automatic stay applies to certain

proceedings to determine the amount of federal court-ordered

payments (which the parties refer to as "prospective wraparound

payments") that the Commonwealth owes to several federally

qualified health centers ("FQHCs") per a 2010 injunction. Those

proceedings arise out of Medicaid litigation that has been ongoing

against the Commonwealth for sixteen years in the United States

District Court for the District of Puerto Rico.

The litigation began in June of 2003, when several FQHCs

sought to enjoin the Secretary of the Department of Health of

Puerto Rico from failing to reimburse them -- through what are

known as "wraparound payments" -- for their reasonable costs of

providing services to Medicaid patients, as required under the

Medicaid Act, 42 U.S.C. § 1396a(bb).

This appeal arises from a motion that the Commonwealth

filed in that litigation on May 30, 2018. The motion notified the

District Court that the Commonwealth, through the Financial

Oversight and Management Board for Puerto Rico (the "Oversight

- 3 -
Board"),1 had filed for bankruptcy under Title III of PROMESA in

May of 2017. The motion stated that, in consequence, the

litigation was subject to the automatic stay that Title III

imposes. The District Court entered an order on July 11, 2018, in

which it ruled that the automatic stay did not apply. We now

reverse.

I.

We begin by recounting the following undisputed facts.

They concern, in the main, the travel of the litigation that has

led to the present dispute over whether the Title III automatic

stay applies to the wraparound payment litigation.

The parties to this appeal are the Commonwealth, which

is the appellant, and a number of FQHCs, which are the appellees.

The parties are connected to one another because the Commonwealth

contracts managed care organizations ("MCOs") to run its Medicaid

program. The MCOs, in turn, contract with FQHCs to provide medical

assistance to Medicaid patients.

1The Oversight Board is the Commonwealth's representative in
any case filed under Title III of PROMESA. 48 U.S.C. § 2175(b).
We recently held that the process for appointing the Oversight
Board members was unconstitutional under the Appointments Clause
of the United States Constitution, U.S. Const. art. 2, U.S.C. § 2,
cl. 2. Aurelius Inv., LLC v. Puerto Rico, 915 F.3d 838, 862 (1st
Cir. 2019). However, we did not order the dismissal of the
Oversight Board's Title III petitions, nor did our ruling nullify
any otherwise valid actions of the Oversight Board that were taken
prior to the issuance of mandate in that case. Id.

- 4 -
 Under the Medicaid Act, the Commonwealth is a state, 42

U.S.C. § 1301(a)(1), and thus must reimburse the FQHCs' total

"reasonable" costs for providing Medicaid services, id.

§ 1396a(bb). Because the Commonwealth operates its Medicaid

program through MCOs, the Medicaid Act requires the Commonwealth

to cover the difference between what the FQHCs receive from the

MCOs directly and the "reasonable" costs that the FQHCs would

receive under the Medicaid Act's default payment scheme. Id.

§ 1396a(bb)(5)(A).

Such "supplemental payment[s]" -- known as "wraparound

payments" -- are due to the FQHCs "in no case less frequently than

every 4 months." Id. § 1396a(bb)(5)(B). In 1997, Congress

provided that states must make these wraparound payments via a

detailed calculation scheme, known as the prospective payment

system ("PPS"). See id. § 1396a(bb)(2)-(3). Congress made the

PPS effective after fiscal year 2000. Id.

The longstanding litigation at issue in this case began

in June 2003, when several FQHCs sued the Secretary of the

Department of Health of Puerto Rico in the District of Puerto Rico

under 42 U.S.C. § 1983. Concilio de Salud Integral de Loiza, Inc.

v. Pérez-Perdomo, 551 F.3d 10, 11 (1st Cir. 2008). The FQHCs

alleged that the Commonwealth had failed both to implement a PPS

and to issue the wraparound payments required under the Medicaid

Act. Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56,

- 5 -
65 (1st Cir. 2005). The FQHCs sought declaratory relief,

injunctive relief for the establishment of a PPS and interim

emergency wraparound payments, and attorney's fees and costs. Id.

On January 7, 2004, the FQHCs moved for a preliminary injunction,

which the District Court granted on November 1, 2004. Concilio de

Salud Integral de Loiza, Inc., 551 F.3d at 12.

In consequence of the 2004 preliminary injunction, the

Commonwealth began to make wraparound payments to the FQHCs

pursuant to a series of orders that calculated the required

payments according to a "rough methodology" that the District Court

had adopted. Id. The methodology that the District Court adopted

differed from the ones proposed by the FQHCs (whose proposed

methodology would have resulted in higher payments) and by the

Commonwealth (whose proposed methodology would have resulted in

lower payments). Id. at 12-14.

In 2007, however, the Commonwealth's payments under that

methodology stopped, when the District Court vacated the

preliminary injunction based on the Commonwealth's establishment

of a permanent PPS Office. Id. at 14. The FQHCs appealed that

order, and, in 2008, we reversed. Id. at 19. In doing so, we

suggested that the District Court appoint a Special Master to

assist in addressing the complex Medicaid payment calculations at

issue in this case. Id.

- 6 -
 The District Court appointed a Special Master in May of

2009. The Special Master began assisting the District Court with

the process of updating the rates and formulas for the wraparound

payments owed by the Commonwealth -- a process known as "rebasing."

The Special Master issued a series of reports and recommendations

as to the amount due to each FQHC for the period from June 2006 to

July 2009.

The District Court adopted the Special Master's

recommendations in a preliminary injunction that it issued on

November 8, 2010 ("2010 Injunction"). See Preliminary Injunction,

Consejo de Salud Playa Ponce v. Pérez-Perdomo, No 06-1260 (D.P.R.

Nov. 8, 2010), ECF No. 743; Consejo de Salud de la Comunidad de la

Playa de Ponce, Inc. v. González-Feliciano, 695 F.3d 83, 90 (1st

Cir. 2012). That preliminary injunction required the Commonwealth

to make prospective wraparound payments to the FQHCs from that

point going forward.2 Id.

In consequence of the 2010 Injunction, the Commonwealth

makes some payments to the FQHCs based on the Special Master's

2006 to 2009 calculations. Although there have been some

adjustments to the payment amounts (e.g. for fluctuation in the

2
The District Court found that the Eleventh Amendment barred
the full payment of the amounts calculated by the Special Master
and therefore ordered only the payment of prospective payments as
of the date of its order. See Preliminary Injunction, Consejo de
Salud, No. 06-1260 (D.P.R. Nov. 8, 2010), ECF No. 743.

- 7 -
total federal Medicaid population) over the course of the eight

years that the 2010 Injunction has been in effect, the rebasing

process must be completed before the final amount of the wraparound

payments due to the FQHCs can be determined.

In order to facilitate the completion of that process,

the Special Master held a series of meetings and issued three

separate rebasing reports, to which the FQHCs objected. On April

12, 2017, the Special Master issued a fourth rebasing report that

proposed changes to the formulas and procedures used to calculate

the wraparound payments.3

Alongside this ongoing litigation in federal court -- in

which FQHCs are seeking what are referred to by the parties as

prospective wraparound payments -- a nearly identical group of

FQHCs is involved in related litigation against the Commonwealth

in the Commonwealth's local courts. See Rio Grande Cmty. Health

Ctr., Inc., 397 F.3d at 64. The FQHCs involved in this parallel

litigation sued the Commonwealth on May 10, 2002, about a year

before the federal suit commenced. In that suit, the FQHCs sought

3 We note that, in continuing to make its quarterly payments
using the 2006 to 2009 calculations, the Commonwealth has not
adjusted its payments to account for the revised formula that the
Special Master has set forth in these recent reports. For example,
the Special Master's understanding of the term "visit" -- which is
a foundational component of the calculation -- has changed since
the issuance of the 2010 injunction.

- 8 -
to require the Commonwealth to make retroactive wraparound

payments to the FQHCs dating back to 1997.4

Amidst this ongoing litigation in the federal and Puerto

Rico courts, the Commonwealth, on May 3, 2017, through the

Oversight Board, filed for bankruptcy under Title III of PROMESA.

As relevant here, PROMESA incorporates sections of the United

States Bankruptcy Code, including a provision imposing an

automatic stay of

the commencement or continuation . . . of a
judicial, administrative, or other action or
proceeding against the debtor that was or
could have been commenced before the
commencement of the case under this title, or
to recover a claim against the debtor that
arose before the commencement of the case
under this title[.]

11 U.S.C. § 362(a)(1) (incorporated in 48 U.S.C. § 2161(a)). The

filing of the Title III petition prompted proceedings in both the

District of Puerto Rico and the Commonwealth's local courts about

whether the automatic stay applied to the wraparound payment

litigation.

In the litigation in the Puerto Rico courts, the Court

of Appeals of Puerto Rico took notice of the Title III petition

and decided, on June 30, 2017, that the automatic stay applied to

the wraparound litigation over which it had jurisdiction. See

4
The FQHCs were barred from pursuing the retroactive payments
in federal court under the Eleventh Amendment. See id. at 64-65;
see also Consejo de Salud, 695 F.3d at 102-05.

- 9 -
Asociación de Salud Primaria de Puerto Rico, Inc. v. Estado Libre

Asociado de Puerto Rico, 2017 WL 3842832 (P.R. Cir. June 30, 2017).

The FQHCs did not seek review or challenge the applicability of

the stay to the litigation in the Puerto Rico courts. See Motion

for Abstention, In re Financial Oversight and Management Board for

Puerto Rico, No. 17-0227 (D.P.R. Nov. 14, 2017), ECF No. 29 at 8.

The FQHCs instead filed a notice of removal to the Title III Court

on August 2, 2017. See Notice of Removal, In re Financial Oversight

and Management Board, No. 17-0227 (D.P.R. Aug. 2, 2017), ECF No.

1 at 7.

The Title III Court, on July 10, 2018, modified the

automatic stay to allow the local court litigation to proceed to

judgment but maintained the stay as to the execution or enforcement

of a final judgment. See Memorandum Order, In re Financial

Oversight and Management Board, No. 17-0227 (D.P.R. July 10, 2018),

ECF No. 64.5 Relatedly, on November 27, 2018, the Title III Court

5 The Commonwealth had first filed a motion for abstention on
November 14, 2017, seeking to continue moving the case forward in
the local Puerto Rico courts and proposing to modify the automatic
stay such that it would apply only to the execution or enforcement
of a judgment. See Motion for Abstention, In re Financial Oversight
and Management Board, ECF No. 29. In opposing the Commonwealth's
motion on December 5, 2017, the FQHCs argued (for what appears to
be the first time) that the automatic stay did not apply to the
litigation at issue. See Opposition to Request for Abstention, In
re Financial Oversight and Management Board, No. 17-0227 (D.P.R.
December 5, 2017), ECF No. 38. On April 2, 2018, the Magistrate
Judge recommended that the Title III Court grant the Commonwealth's
motion for abstention and that the Title III Court modify the

- 10 -
found that the issue of whether the FQHCs' claims would ultimately

be nondischargeable was not yet ripe for review. See Memorandum

Order, In re Financial Oversight and Management Board for Puerto

Rico, No. 17-0278 (D.P.R. Nov. 27, 2018), ECF No. 65 at 5-8.

In the parallel prospective federal court litigation

from which this appeal arises, however, things have not been so

straightforward. On May 10, 2017, a week after the Title III

petition was filed, the District Court entered an order adopting

the Special Master's fourth rebasing report (issued on April 27,

2017). Rio Grande Comm. Ctr., Inc. v. Puerto Rico, No. 03-1640

(D.P.R. May 10, 2017), ECF No. 1007. The FQHCs then appealed that

order on June 21, 2017, without making any mention of the Title

III petition.

In the course of the FQHCs' appeal from the District

Court's order adopting the Special Master's fourth rebasing

report, our Court issued an order in December of 2017 directing

automatic stay to allow the litigation to proceed to judgment, as
the Commonwealth proposed in its motion. See Report and
Recommendation, In re Financial Oversight and Management Board,
No. 17-0227 (D.P.R. April 2, 2018), ECF No. 55. The FQHCs opposed
the Magistrate Judge's recommendation but did not again raise their
argument in the Title III Court that the stay did not apply. See
Plaintiffs' Objections, In re Financial Oversight and Management
Board, No. 17-0227 (D.P.R. April 30, 2018), ECF No. 60. However,
the FQHCs recently appealed the Title III Court’s order granting
the Commonwealth’s motion for abstention and modifying the
automatic stay. See Centro de Salud Familiar J.P.F.
v. Commonwealth of Puerto Rico, No. 19-1189 (1st Cir. Feb. 25,
2019), ECF No. 1.

- 11 -
the FQHCs to show cause whether PROMESA's Title III automatic stay

applied to any part of their appeal of the District Court's May

10, 2017 order. See Atl. Med. Ctr., Inc. v. Dep't of Health of

Puerto Rico, No. 17-1812 (1st Cir. Dec. 21, 2017), ECF No. 13.

The FQHCs responded by arguing that the automatic stay did not

apply, by pointing to specific provisions of PROMESA. The

Commonwealth argued in response that the stay applied under the

plain language of Section 362(a)(1) of the Bankruptcy Code, as

incorporated by Section 301(a) of PROMESA.

On March 1, 2018, we entered an "abeyance-and-deferral"

order holding that appeal in abeyance "pending further proceedings

in the Commonwealth of Puerto Rico's Title III case for the

protective lifting of the automatic stay (to the extent that it

applies)." Atl. Med. Ctr., Inc., No. 17-1812 (1st Cir. Mar. 1,

2018), ECF No. 23. At that point, the Commonwealth filed a motion

before the District Court on May 30, 2018. Rio Grande Comm. Ctr.,

Inc. v. Puerto Rico, No. 03-1640 (D.P.R. May 30, 2018), ECF No.

1107. In that motion, the Commonwealth notified the District Court

of the Commonwealth's Title III bankruptcy proceedings and of the

status of the appeal of the District Court's May 10, 2017 order in

the prospective wraparound payment litigation.

The Commonwealth stated in its motion that it would

continue to deposit the Quarterly Interim
Wraparound payments as they stand, in
compliance with the Court's injunctive order

- 12 -
 as it has consistently done in the past few
years. Nothing in PROMESA disturbs the
Government of Puerto Rico’s public policy
regarding the services provided under Medicaid
and the compliance with the prospective
payment to assure the service is rendered.

Id. (emphasis in original). Nevertheless, the Commonwealth

asserted in its motion that this "pre-petition claim" is subject

to the automatic stay. Id. The FQHCs opposed the Commonwealth's

position in a motion arguing that the application of the automatic

stay would impermissibly impair their rights.

The District Court entered an order on July 11, 2018, in

which it ruled that the automatic stay did not apply and thus that

the proceedings regarding the rebasing calculations could

continue. The Commonwealth now appeals from that order.

II.

We begin with the jurisdictional issues that this appeal

presents. We start with a question concerning our appellate

jurisdiction. We then consider the Commonwealth's contention that

the District Court lacked subject matter jurisdiction to decide

whether the automatic stay applies.

A.

The Commonwealth asserts that we have appellate

jurisdiction because the District Court's order denying the

applicability of the PROMESA automatic stay, like an order granting

relief from the automatic stay in the ordinary bankruptcy context,

- 13 -
is a final, appealable order. 28 U.S.C. § 1291. The FQHCs do not

dispute the point. We nevertheless address the issue, because it

is jurisdictional and because we have not previously had occasion

to do so.

The Commonwealth relies for its assertion about our

appellate jurisdiction on Tringali v. Hathaway Machinery Co., 796

F.2d 553, 558 (1st Cir. 1986), in which we reviewed an order of a

district court sitting in bankruptcy. There, we held, in the

context of an ordinary bankruptcy, that a district court's order

granting relief from the automatic stay established by Section 362

of the Bankruptcy Code was a final appealable order under 28 U.S.C.

§ 1291.6 And, all other circuits to have addressed that issue have

ruled similarly. See 1 Collier on Bankruptcy ¶ 5.09 (collecting

cases). Moreover, the only circuits that have addressed the issue

have treated a ruling as to whether the Section 362 automatic stay

applies in the ordinary bankruptcy context as being no different

-- for purposes of 28 U.S.C. § 1291 -- from an order as to whether

to grant or deny relief from such a stay. See Rajala v. Gardner,

709 F.3d 1031, 1034 (10th Cir. 2013) ("[T]he district court's

order, which deemed § 362 inapplicable to the judgment proceeds,

6 We note that 28 U.S.C. § 158(d) is the statute that
establishes the federal courts of appeals' jurisdiction to review
bankruptcy appeals. Because the appeal now before us arises from
nonbankruptcy litigation in district court, it falls within the
scope of 28 U.S.C. § 1291, a statute of general appealability.
See Tringali, 796 F.2d at 558.

- 14 -
was essentially an order granting relief from the automatic

stay."); In re Quigley Co., 676 F.3d 45, 51 (2d Cir. 2012) (holding

that a decision on the automatic stay's applicability is "the

equivalent of a decision . . . on a motion seeking relief from a

stay").

We have not previously had occasion to address whether

the equation between these types of orders concerning the automatic

stay is apt even in the ordinary bankruptcy context, let alone

whether such an equation would be apt in the PROMESA context. We

note that we recently held that a district court's denial of relief

from PROMESA's Section 405 automatic stay, 48 U.S.C. § 2194(a)-

(b), the precursor to PROMESA's Title III automatic stay, is not

necessarily a final, appealable order under 28 U.S.C. § 1291 in

every circumstance. See Peaje Invs. LLC v. García-Padilla, 845

F.3d 505, 510-11 (1st Cir. 2017). And we did so by referencing

our similar caselaw in the analogous bankruptcy context.

In particular, we explained in Peaje Investments that

"in the analogous bankruptcy context, we have held that the denial

of relief from a stay is not necessarily a final decision

sufficient to confer appellate jurisdiction. But such a decision

is final where it 'conclusively decide[s] the fully-developed,

unreviewable-elsewhere issue that triggered the stay-relief

fight.'" Id. (citing In re Atlas IT Exp. Corp., 761 F.3d 177, 185

(1st Cir. 2014)). And, in In re Atlas, we further explained that

- 15 -
appellate jurisdiction "depends on the circumstances[,]" including

the "particular order's reasoning and effect." 761 F.3d at

185. For example, we clarified that we would not have appellate

jurisdiction over a denial that was "based on circumstances that

[were] rapidly changing and on [a] record[] that [was] not fully

developed." Id.

Nevertheless, here, there are no rapidly changing

circumstances, and the record is fully developed in the relevant

respects. Thus, our reasoning in Peaje Investments and In re Atlas

does appear to accord with the conclusion of the other circuits

that treat an order like the one at issue here as final and

appealable under 28 U.S.C. § 1291.

In so concluding, we recognize that, although the order

at issue here is -- consistent with Tringali, Peaje Investments,

and In re Atlas -- "final" in the "more flexible . . . bankruptcy

context," Rajala, 709 F.3d at 1036, it does not "end the litigation

on the merits," but rather "ensures that litigation will continue

in the District Court." Gulfstream Aerospace Corp. v. Mayacamas

Corp., 485 U.S. 271, 275 (1988) (internal quotation marks and

citations omitted). But, even if that feature of this order might

be thought to raise a question as to whether it is "final" within

the meaning of 28 U.S.C. § 1291, it is still appealable under the

collateral order doctrine. See Cohen v. Beneficial Indus. Loan

Corp., 337 U.S. 541, 546 (1949).

- 16 -
 There is no question that the order denying the

applicability of the statutorily-prescribed, automatic stay

"conclusively determine[s] the disputed question," Gulfstream

Aerospace Corp., 485 U.S. at 276 (quoting Coopers & Lybrand v.

Livesay, 437 U.S. 463, 468 (1978)), and that it was "made with the

expectation that [it would] be the final word on the subject

addressed," Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 12 n.14 (1983). Cf. Gulfstream Aerospace Corp., 485

U.S. at 278 (holding that an order denying a motion to stay an

order under Colorado River abstention because "the district court

may well have determined only that it should await further

developments before concluding that the balance of factors to be

considered . . . warrants a . . . stay"). In addition, the order

"resolve[s] an important issue completely separate from the merits

of the action." Gulfstream Aerospace Corp., 485 U.S. at 276

(quoting Coopers & Lybrand, 437 U.S. at 468). Finally, the

Commonwealth's protection from litigation under the automatic stay

is "effectively unreviewable on appeal from a final judgment."

Id.

B.

Having established our appellate jurisdiction, we now

consider the Commonwealth's contention that the District Court did

not have jurisdiction to entertain the FQHCs' motions opposing the

applicability of the stay. "Where pertinent facts are not in

- 17 -
dispute, we review the district court's determination of subject

matter jurisdiction de novo." Ortiz-Espinosa v. BBVA Sec. of

Puerto Rico, Inc., 852 F.3d 36, 42 (1st Cir. 2017).

The basis for the Commonwealth's jurisdictional argument

is our March 1, 2018 order in which we held the FQHCs' appeal of

the District Court's May 10, 2017 order in abeyance. Specifically,

the Commonwealth contends that "a federal district court and a

federal court of appeals should not attempt to assert jurisdiction

over a case simultaneously," Griggs v. Provident Consumer Discount

Co., 459 U.S. 56, 58 (1982), and that, in consequence, the District

Court lacked jurisdiction to issue its order finding that the

automatic stay did not apply.

But, our March 1, 2018 order did not purport to divest

the District Court from ruling on whether the automatic stay

applied. That order expressly contemplated that, while we held

the "appeals" pending before us in abeyance, there would be

litigation below concerning precisely that issue. In fact, the

order included, in referring to litigation over the lifting of the

automatic stay, the parenthetical phrase: "to the extent that [the

automatic stay] applies." See Atl. Med. Ctr., Inc., No. 17-1812

(1st Cir. Mar. 1, 2018), ECF No. 23 (emphasis added). The

Commonwealth has misread and misunderstood our March 1, 2018 order.

It is not clear that the Commonwealth's argument is based

on anything other than the March 1, 2018 order. Even if it is, we

- 18 -
still reject the argument. In the ordinary bankruptcy context, a

district court has concurrent jurisdiction with a bankruptcy court

to decide whether the automatic stay provision of Section 362

applies to its own proceedings. See In re Baldwin-United Corp.

Litig., 765 F.2d 343, 347 (2d. Cir. 1985). And we see no basis

for concluding that the rule is otherwise with respect to the

District Court, the Title III Court, and the PROMESA automatic

stay.

To be sure, the Second Circuit in In re Baldwin-United

Corp. Litig. did hold that, although the district court in that

litigation "had jurisdiction to determine the scope of the stay,

its issuance of the injunction challenged on . . . appeal was a

misuse of its equitable power." 765 F.2d at 347. But, the misuse

there arose from "the injunction's prohibition of the debtor's

opportunity to apply to the Bankruptcy Court for any relief under

[11 U.S.C. § 105]," the possibility that the applicability of the

stay would be "determined in various district courts throughout

the country," and other factors regarding the particular filings

in that case. Id. at 348-49.

Those circumstances are not present here. Nor does

either party argue that, insofar as the District Court had

jurisdiction to decide whether the automatic stay applies, as we

hold that the District Court did, the District Court nonetheless

misused its equitable authority by deciding that issue. See In re

- 19 -
Mid-City Parking, Inc., 332 B.R. 798, 805 (Bankr. N.D. Ill. 2005)

("[S]tate and federal courts handling nonbankruptcy litigation

that is somehow tied to the filing of a federal bankruptcy case .

. . [have] concurrent jurisdiction to initially determine whether

§ 362(a)-(b) stays the proceeding, but the federal bankruptcy forum

may entertain a collateral attack on that ruling."). We turn,

then, to the merits of the District Court's ruling concerning the

stay's applicability.

III.

The Commonwealth asserts that the District Court's

determination that the Title III stay does not apply to this case

was erroneous as a matter of law. The District Court based its

determination on two provisions of PROMESA: Section 304(h), 48

U.S.C. § 2164(h), and Section 210(c), 48 U.S.C. § 2150(c).

The FQHCs contend that the District Court was correct in

both respects. They add, however, that, even if we do not agree,

we still may affirm the District Court's ruling based on either of

two other provisions of PROMESA -- Section 7, 48 U.S.C. § 2106,

and Section 204(d)(1), 48 U.S.C. § 2144(d)(1) -- which they argue

also establish exceptions to the application of the automatic stay

in this case. Finally, the FQHCs argue that PROMESA and other

provisions of federal law, when read together, reveal that the

Title III automatic stay has no application here.

- 20 -
 "We review pure questions of statutory interpretation de

novo." United States v. Tobin, 552 F.3d 29, 32 (1st Cir. 2009)

(citing United States v. Jaca-Nazario, 521 F.3d 50, 56 (1st Cir.

2008)). Because we are "not confined to a consideration of the

grounds relied on by the district court," United States v. Werra,

638 F.3d 326, 346 (1st Cir. 2011) (internal citations omitted), we

consider not only the two provisions of PROMESA that the District

Court relied upon for its ruling, but also the two provisions

raised by the FQHCs, as well as the FQHCs' more holistic contention

as to why the automatic stay does not apply.

A.

We start with the provision in PROMESA that indicates

that this litigation is subject to an automatic stay. That

provision is Section 301(a) of PROMESA, 48 U.S.C. § 2161(a).

Section 301(a) expressly incorporates Section 362 of the

Bankruptcy Code, which requires that, as soon as a bankruptcy

petition is filed, pending litigation against the debtor is stayed

automatically. 11 U.S.C. § 362(a)(1); see 3 Collier on Bankruptcy

¶ 362.03 (16th ed. 2018). Neither Section 362 of the Bankruptcy

Code nor Section 301(a) of PROMESA -- whether considered on their

own or together -- provide any indication that the automatic stay

is not fully applicable here. Certainly, none of the enumerated

exceptions to the stay's application that are set forth in the

- 21 -
Bankruptcy Code itself apply to this circumstance. See 11 U.S.C.

§ 362(b). Nor do the parties suggest otherwise.7

Furthermore, there is no indication that the automatic

stay in Section 362 does not apply to injunctions. See 3 Collier

on Bankruptcy ¶ 362.03 (16th ed. 2018) ("The stay includes actions

seeking injunctive relief or similar relief as well as actions

seeking money judgments . . . . The stay provision of subsection

(a)(1) is drafted so broadly that it encompasses all types of legal

proceedings, subject only to the exceptions provided in section

362(b)."); see also Nat'l Tax Credit Partners, L.P. v. Havlik, 20

F.3d 705, 707-08 (7th Cir. 1994) (holding that the automatic stay

applied to an injunction compelling payment that exercised control

7 The FQHCs do contend that this case does not fall within
the scope of the automatic stay because it "is an action seeking
return of [the FQHCs'] own property." They argue in this regard
that they are simply seeking payments from the Commonwealth that
would cover the payments that they themselves have had to make,
using the federal funding they receive under Section 330 of the
Public Health Service Act, in consequence of the Commonwealth's
failure to make its required wrapround payments. However, this
argument provides no basis for the conclusion that the case that
the FQHCs have brought against the Commonwealth is not an "action
or proceeding against the debtor that was or could have been
commenced before the commencement of the case under" Title III.
11 U.S.C. § 362(a)(1) (incorporated in 48 U.S.C. § 2161(a)). The
FQHCs also state that the First Circuit "has recognized that
federal funds are excluded from a bankruptcy estate where the
debtor possesses no equitable interests in the funds." See In re
LAN Tamers, Inc., 329 F.3d 204, 209-15 (1st Cir. 2003). But, the
case upon which the FQHCs rely for this argument applies a
provision of the Bankruptcy Code that PROMESA does not incorporate,
id. (applying 11 U.S.C. § 541); see 48 U.S.C. § 2161(a)
(incorporating specific provisions of Chapter 11, not including
Section 541).

- 22 -
over the property of the debtor's estate); Matter of Mahurkar

Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969,

977 (N.D. Ill. 1992) (Easterbrook, J., sitting by designation)

(holding that the automatic stay applied to a request for an

injunction against a debtor who was illegally using intellectual

property rights). Rather, the text of 11 U.S.C. § 362(a)(1)

"addresses all actions within the judicial power." Merrill Lynch,

Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1052 & n.3

(4th Cir. 1985).

We note, too, that, in the ordinary bankruptcy context,

the automatic stay is a "fundamental protection" that is meant to

offer the debtor "breathing room during the period of financial

reshuffling" and "protect[] the debtor's assets from disorderly,

piecemeal dismemberment outside the bankruptcy proceedings." In

re Smith, 910 F.3d 576, 580 (1st Cir. 2018) (internal quotation

marks, citations, and alterations omitted). "And it enables the

bankruptcy court to centralize all disputes concerning property of

the debtor's estate so that reorganization can proceed

efficiently, unimpeded by uncoordinated proceedings." Id.

(internal quotation marks, citations, and alterations omitted).

Nothing about those purposes is -- inherently -- at odds with the

application here of the automatic stay that Section 301(a)

expressly incorporates.

- 23 -
 Thus, if we were to confine our analysis only to Section

301(a) and the provision of the Bankruptcy Code that it

incorporates, it would be clear that the automatic stay does apply.

Nevertheless, the FQHCs assert that, Section 301(a)

notwithstanding, a number of provisions in PROMESA preclude the

automatic stay's application to the wraparound payment litigation.

In particular, they point to Sections 304(h), 210(c), 204(d)(1),

and 7.8 We thus address each of these provisions in turn.

B.

Section 304(h), on which the District Court relied for

its ruling that the automatic stay does not apply here, states:

(h) Public safety
This chapter may not be construed to permit
the discharge of obligations arising under
Federal police or regulatory laws, including
laws relating to the environment, public
health or safety, or territorial laws
implementing such Federal legal provisions.
This includes compliance obligations,
requirements under consent decrees or judicial
orders, and obligations to pay associated
administrative, civil, or other penalties.

48 U.S.C. § 2164(h) (emphasis added).

This provision directly references the Commonwealth's

"obligations arising under Federal . . . laws," of which the

Medicaid Act is certainly one. The District Court thus concluded

that Section 304(h) operates as an exception to the automatic stay

8 These four sections of PROMESA are codified at 48 U.S.C.
§§ 2164(h), 2150(c), 2106, and 2144(d)(1), respectively.

- 24 -
provision that precludes its application to this case, given the

Commonwealth's obligation to make the Medicaid wraparound payments

that have been imposed by the 2010 Injunction that is in place.

But, by its terms, Section 304(h) bars only the

"discharge" -- not the "stay" -- of "compliance obligations." And,

looking at the context of this provision within PROMESA, which

incorporates not only Section 362 of the Bankruptcy Code, but also,

among others, 11 U.S.C. § 524 ("Effect of discharge"), 48 U.S.C.

§ 2161(a), the term "discharge" cannot mean, in all cases, "stay."

After all, a discharge in bankruptcy "permanently

enjoins creditor actions to collect discharged debts." Internal

Revenue Serv. v. Murphy, 892 F.3d 29, 38 (1st Cir. 2018) (quoting

Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439, 444 (1st Cir.

2000)). By contrast, an "automatic stay is similar to a temporary

restraining order." Grella v. Salem Five Cent Sav. Bank, 42 F.3d

26, 33 n.8 (1st Cir. 1994) (quoting H.R. Rep. No. 95-595, at 344

(1977), as reprinted in U.S.C.C.A.N. 5787, 6300).

The FQHCs do argue that, because the federal obligation

at issue is continuing in nature, it differs from a lump sum debt,

such that even a stay of it amounts "effectively" to a discharge.

However, the FQHCs' use of the word "effectively" reflects the

fact that, on this record, a discharge -- which is what Section

304(h) precludes by its terms -- is not at issue here, only a stay

is. After all, precisely because the compliance obligation is

- 25 -
continuing, the stay will not bring it to an end permanently. It

will suspend it only temporarily. A discharge of that continuing

obligation, by contrast, would bring an end to it altogether. For

these reasons, we conclude that Section 304(h) cannot help the

FQHCs, without purporting in doing so to address questions on other

facts about what the term "discharge" may encompass.9

C.

We consider, next, the second PROMESA provision that the

District Court relied on for its ruling, Section 210(c):

(c) Funding
No Federal funds shall be authorized by this
chapter for the payment of any liability of
the territory or territorial instrumentality.

48 U.S.C. § 2150(c) (emphasis added).

The FQHCs assert that this provision bars application of

the stay here. They contend that, if the stay were to apply, then

"at least some [federal] funds might, through the reach of

9We note that, if the federal government itself chose to
enforce the Commonwealth's compliance obligations under the
Medicaid Act, such an enforcement action would be excepted from
the automatic stay. See 11 U.S.C. § 362(b)(4); Parkview Adventist
Med. Ctr. v. United States, 842 F.3d 757, 763 (1st Cir. 2016) ("The
exception provision in § 362(b)(4) provides that the automatic
stay of actions against the debtor does not apply to 'an action or
proceeding by a governmental unit . . . to enforce such
governmental unit's . . . police and regulatory power.' . . .
[If] the governmental action is designed primarily to protect the
public safety and welfare . . ., the government action . . . is
exempt." (internal quotation marks and citations omitted)).

- 26 -
incorporated provisions of federal bankruptcy law or otherwise,

wind up paying for the Commonwealth's liabilities[.]"

It is true that Medicaid is supported by both federal

funds and the Commonwealth's own funds. Thus, it is true that, if

the stay applies, the Commonwealth might not make complete payments

to the FQHCs. But, the speculative possibility that the

Commonwealth's failure to do so could, in turn, lead federal funds

-- Medicaid or otherwise -- to be used to cover the FQHCs' costs

provides no support for the contention that the application of the

stay here would contravene this provision of PROMESA. The

provision clearly bars the use of federal funds to be "authorized"

by "this chapter" to cover the Commonwealth's liability. The

provision is thus not implicated by the possibility that, in

consequence of the application of the automatic stay, federal funds

may "wind up" -- as the FQHCs put it -- covering a portion of the

amount which the Commonwealth owes the FQHCs. Whether "federal

funds" will ever be "authorized" is at best a hypothetical.

D.

We turn, then, to Section 204(d)(1), which provides:

(d) Implementation of Federal programs
In taking actions under this chapter, the
Oversight Board shall not exercise applicable
authorities to impede territorial actions
taken to--
(1) comply with a court-issued consent
decree or injunction, or an administrative
order or settlement with a Federal agency,
with respect to Federal programs.

- 27 -
48 U.S.C. § 2144(d)(1) (emphasis added).

This provision could apply here, by its terms, only if

the application of the automatic stay in and of itself could be

understood to constitute an instance of the Oversight Board "taking

action[]" or "exercis[ing] applicable authorities." However, the

FQHCs have not explained to us why, exactly, the imposition of the

automatic stay would constitute the Board "taking action[]" or

"exercis[ing] applicable authorities." Instead, they simply

suggest that the stay would "amount to an exercise of powers

conferred through PROMESA." Without a clearer explanation of the

basis for applying this exception, we cannot deny the application

of the automatic stay, as it is, after all, automatic under Section

301(a) of PROMESA and the provision of the Bankruptcy Code that it

incorporates.

Nor does an explanation clearly present itself from the

text. We note that the operation of the automatic stay set forth

in Section 362 of the Bankruptcy Code, per its incorporation by

Section 301(a) of PROMESA, is merely the default consequence that

follows from the Board's filing of a Title III petition. Thus, it

is by no means obvious that the stay's application constitutes the

Oversight Board "taking" a prohibited "action[]" or "exercis[ing]"

a prohibited "authorit[y]" within the meaning of this provision.

Rather, it would appear that the stay follows automatically,

- 28 -
without the Board taking any action or exercising any authority,

from the filing of the Title III petition itself. It would be

nonsensical, however, to read this provision to bar the Oversight

Board from making that filing. Accordingly, we conclude that

Section 204(d)(1), too, has no bearing on the applicability of the

stay in this case.

E.

That leaves one last provision in PROMESA for us to

consider, Section 7, which reads as follows:

Except as otherwise provided in this chapter,
nothing in this chapter shall be construed as
impairing or in any manner relieving a
territorial government, or any territorial
instrumentality thereof, from compliance with
Federal laws or requirements or territorial
laws and requirements implementing a federally
authorized or federally delegated program
protecting the health, safety, and environment
of persons in such territory.

48 U.S.C. § 2106 (emphasis added).

The FQHCs seize on the fact that the effect of the

automatic stay would be to relieve the Commonwealth from

"compliance with Federal laws and requirements," insofar as the

stay would free the Commonwealth -- albeit temporarily -- from the

preliminary injunction to which it is now subject in the wraparound

litigation. But, in pressing this contention, the FQHCs make no

mention of the opening words of the provision -- "[e]xcept as

otherwise provided in this chapter[.]" Nor do they attempt to

- 29 -
grapple with the words that immediately follow -- "nothing in this

chapter shall be construed[.]" Instead, they direct all of their

attention to the remaining words of the provision.

Because the FQHCs make no serious argument about the

meaning or import of any of the opening words that we have just

quoted, we conclude that they have failed to explain why Section

7 provides an exception to the otherwise automatic application of

the stay here. Nor is this a case in which the omission may be

excused because it is clear that the unaddressed text supports the

FQHCs' position. If we consider the entirety of the provision's

language, the text does not clearly require the FQHCs' desired

construction, nor do the other indicia of statutory meaning clearly

favor that result. See In re Weinstein, 272 F.3d 39, 40 (1st Cir.

2001) (noting that courts must consider the text, context,

legislative history, and underlying policies when interpreting a

bankruptcy statute).

After all, the text comfortably bears a reading in which

the phrase "[e]xcept as otherwise provided" means simply that

nothing in PROMESA should be "construed" to impair any rights or

obligations imposed by federal laws or requirements other than

those that PROMESA itself "provides." This reading would mean

that where PROMESA expressly includes a provision that, by its

plain terms, operates to "impair[] or in any manner reliev[e]" the

Commonwealth "from compliance with Federal laws or requirements,"

- 30 -
then PROMESA controls, but that no provision in PROMESA should be

"construed" to have such an effect if it would not have such an

effect by the simple operation of its terms. Cf. McNely v. Ocala

Star-Banner Corp., 99 F.3d 1068, 1074 (11th Cir. 1996) (noting

that the ADA includes the language, "Except as otherwise provided

in this chapter, nothing in this chapter shall be construed . . .

," in 42 U.S.C. § 12201(a), and concluding that the introductory

clause of that provision "direct[ed] [the court] not to" apply the

second half of the provision to other sections of the statute when

it was "not warranted . . . under the plain language" of those

other sections).

This reading of "[e]xcept as otherwise provided" would,

of course, except the automatic stay provision from Section 7's

scope. PROMESA, by virtue of Section 301(a), expressly

incorporates 11 U.S.C. § 362, and the default operation of Section

362 in this case is to stay -- or temporarily "relieve" -- the

Commonwealth's compliance with its federal obligations under the

Medicaid Act.

In addition to the fact that this reading gives effect

to all of the words of the statute, see United Sav. Assn. of Tex.

v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988)

("A provision that may seem ambiguous in isolation is often

clarified by the remainder of the statutory scheme . . . because

only one of the permissible meanings produces a substantive effect

- 31 -
that is compatible with the rest of the law."), it is also not

precluded by the surrounding statutory context. See In re

Weinstein, 272 F.3d at 43-45. The provision appears, after all,

in the introductory section of PROMESA, and not in the more

detailed sections that address adjustment of debts or

responsibilities of the Oversight Board. Thus, Section 7 would

appear to be designed to have a general application to the entire

statute, rather than one that would specifically direct the

circumstances in which to apply or not to apply Section 362 of the

Bankruptcy Code, which is included in Section 301(a) of PROMESA.

The legislative history of the statute may be read to

support this reading, too. See id. The House Committee Report to

PROMESA states clearly that "[t]his section requires territories

to continue compliance with all other Federal laws or requirements

protecting health, safety, and the environment, as well as those

territorial laws implementing Federally-authorized and delegated

programs." H.R. Rep. No. 114-602, pt. 1, at 42 (2016) (emphasis

added). Thus, Section 7 may be understood to have been intended

to ensure that PROMESA would not supersede those federal

requirements that PROMESA does not, by its terms, address. And,

the inclusion of such a provision would seem prudent, given the

novel federal statutory intervention into the Commonwealth's

affairs that PROMESA represents.

- 32 -
 Thus, the FQHCs have failed to explain why we should

read this provision to indicate that PROMESA exempts from its scope

a provision -- namely, Section 362 of the Bankruptcy Code -- that

PROMESA expressly incorporates in Section 301(a) and that takes

effect here by only the default operation of its terms. We thus

conclude that Section 7, like the other provisions discussed, does

not preclude the automatic stay's application in this case.

F.

The FQHCs' final contention is that all four of the

above-mentioned PROMESA provisions must be considered in

connection with the Medicaid Act and Section 330 of the Public

Health Service Act. Specifically, the FQHCs contend that, by not

making its required wraparound payments, the Commonwealth is in

violation of the FQHCs' right to payment under the Medicaid Act,

42 U.S.C. § 1396a(bb)(5)(B), which is enforceable under 42 U.S.C.

§ 1983. Additionally, they argue, "if further proceedings in this

case are stayed, this Court would be effectively allowing the

illegal use of federal funds from one program (Section 330) to

subsidize another (Medicaid)." The FQHCs contend that these

clearly impermissible outcomes would not occur if the provisions

of PROMESA that we have just reviewed are understood to support

the conclusion reached by the District Court -- that the automatic

stay that Section 301(a) of PROMESA incorporates does not apply

here.

- 33 -
 But, Section 362 of the Bankruptcy Code, and PROMESA by

incorporation, does except from the stay an action brought by the

federal government itself to enforce the Commonwealth's

obligations under the Medicaid Act or otherwise. See 11 U.S.C.

§ 362(b)(4) (incorporated in 48 U.S.C. § 2161(a)). In addition,

the FQHCs themselves may seek prompt relief from the stay in the

Title III Court. In fact, as we have already mentioned, in the

parallel wraparound litigation in the Puerto Rico local courts,

the Title III Court modified the automatic stay to allow the

litigation to proceed to the point of judgment. Considering that

the Commonwealth itself proposed the granting of such relief to

the Title III Court in that litigation, we have no reason to think

that the Commonwealth would not be similarly supportive here. See

Motion for Abstention, In re Financial Oversight and Management

Board for Puerto Rico, No. 17-0227 (D.P.R. Nov. 14, 2017), ECF No.

29 at 8. In fact, during oral argument, the Commonwealth expressed

its desire not to delay the proceedings. Instead, it asserted

that it wanted to make sure that the automatic stay was in effect

only so that the FQHCs would not be able to collect on an ultimate

judgment without guidance from the Title III Court -- once relief

from the stay has been sought and obtained. The Commonwealth

expressed no interest in bringing to a halt the pre-judgment

proceedings concerning rebasing.

- 34 -
 IV.

The District Court's holding that the PROMESA stay does

not apply is reversed, and the matter is remanded for proceedings

consistent with this opinion.

- 35 -