Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SENTARA HAMPTON GEN. HOSP. v. SULLIVAN

May 23, 1991

SENTARA HAMPTON GENERAL HOSPITAL, Plaintiff,
v.
LOUIS W. SULLIVAN, M.D., Secretary, Department of Health and Human Services, Defendant



The opinion of the court was delivered by: LAMBERTH

 This case comes before the court on the parties' cross-motions for summary judgment.

 The controversy here involves plaintiff hospital's 1984 claim for Medicare reimbursement for interest incurred as a result of borrowing $ 14,675,000.00 for a capital project without using the $ 3,480,575.00 fund designated for spending on capital projects. The court finds that the hospital must forfeit most of its claim for interest expense reimbursement for 1984 since it failed to use the designated capital fund account first.

 I. Background

 A. The 1982 ICU/CCU construction plan

 Plaintiff Sentara-Hampton General Hospital ("Hampton") is a non-profit acute care hospital in coastal Virginia. The hospital enjoys certification to participate in the Medicare program. *fn1" Defendant's Statement of Material Facts ("Def. Stmt.") at para. 1 (Jan. 16, 1990); see 42 U.S.C. § 1395cc (1988) (certified hospitals must agree to charge Medicare patients only for services rendered and notify HHS Secretary of administrative changes).

 In 1979-80 Hampton's Board of Trustees approved a long-term capital improvement plan, which included construction of an intensive care unit and a critical care facility. Plaintiff's Statement of Material Facts ("Pltf. Stmt.") at 4, para. 14 (Nov. 27, 1989). When the Board was ready to begin construction in April 1982, it expected the project to cost $ 15,681,002.00. Pltf. Stmt. at 15.

 Like any consumer planning a large purchase, the Hampton Board needed to minimize its interest costs while keeping installment payments manageably low. Hampton here could plan its construction to maximize Medicare reimbursement for all of their "necessary and proper expenses incurred in furnishing services, such as administrative costs, maintenance costs, and premium payments" that they incur in serving Medicare patients. 42 C.F.R. § 413.13(c)(3) (1989). See also 42 U.S.C. § 1395ww(a) (1988). Since Congress requires the Health Care Financing Administration ("HCFA") *fn2" to avoid both subsidization of expenses that non-Medicare patients incur and non-Medicare patient shouldering of Medicare expenses, HCFA will reimburse the cost of new construction to the extent that Medicare patients will occupy the new building just as it will pay traditional medical bills. *fn3"

 Since hospitals like Hampton frequently must renovate their old buildings and buy new equipment simply to maintain their state accreditation, the Medicare program includes special construction financing incentives. Among them is a regulation permitting hospitals to create funded depreciation accounts ("FDAs"), which are savings accounts that a hospital must spend exclusively for replacement and renovation of capital assets. 42 C.F.R. § 413.143(e). *fn4" In return for the hospital spending the FDA exclusively upon capital projects, HCFA omits the interest that the funds accumulate from the hospital's annual earnings since the earnings reduce the hospital's total annual cost which then reduces Medicare reimbursement, as follows:

 Total cost of routine services x Medicare = Annual

 Total number of inpatient days inpatient days reimbursement

 St. Mary of Nazareth Hospital Center v. Heckler, 760 F.2d 1311, 1314 (D.C. Cir. 1985) (Interest earned on all accounts but FDAs reduce the fraction's numerator - "cost of routine services" - which in turn reduces annual reimbursement).

 Not only must the hospital spend the FDA exclusively upon capital projects, but, to minimize the Medicare program's liability for interest expense reimbursement, the hospital also must use the fund to reduce ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.