reduce the medical expenses of a group based on management and we're here today because the terms and conditions of the demonstration agree under which texas tech agreed to perform were not honor and by c m s we're here today because in reviewing that practically thirty page to suit it certainly cites to a lot of cases it's certainly analyzes a lot of facts so what are we complaining about this is what we're complaining about the da be analyze these issues as though it could simply look at the terms of the financial protocol that's the part of our demonstration agreeing that explained how one though it only needed to look at that financial protocol so what's the what's the big deal about that i'm going to use an exaggerated example of what i think the d n a analysis could have allowed to have happen the this is a test group there's a intervention group texas tech is responsible for their care and we assume the risk that if our management of those services didn't reduce the had put five thousand twenty five year olds who didn't drink and didn't smoke in our control group and we didn't achieve a five percent savings we didn't assume that risk and it wasn't as exaggerated is that but that's we're complaining about that when c m s constituted the it's in in science experiments it's called a control group under our demonstration agreement it's  called a comparison group and in that come the significance of that comparison it provides the benchmark i think i understand all that and that's helpful when i read your brief i jump to about page thirty nine to see where is the alleged breach of the grant agreement thank you your honor and so but at that at that point i noticed you cited a record for thirty six for the proposition that h h s had agreed to ensure that the comparison group would match the intervention group but it is true is they point out that the language directly in front of the and sure says they would pay attention to ensuring yes so it's hard to see a breach if the only agreement was that they would pay attention to ensuring it just as presumably you could have paid attention to it and if there were huge disparity you would just have chosen not to enter into this arrangement you are  construing i think we construe that's exactly the language but in deciding whether that's an undertaking an undertaking says to require that the government honor it in the context of the supreme and the operative word is insure and the other part of it is we have to look at what's going on in this demonstration agreement texas tech was involved in the methodology for constituting the group but not for actually we had no participation we don't have access to c m s is database and that's the magic to constitute in the control room looking at all the information that's in the c m s database and so when when they undertake the responsibility to pay attention or i think ensure is the operative verb pay attention is i mean as a driver i have a duty to pay attention and that's a pretty safe if i don't do it i'm negligent and i think you know the c m s had a duty to pay attention to i think pay attention modifies ensure and it sure is the operative operative verb here and it is an undertaking in the context of this agreement and for for a couple of reasons one texas tech has no no ability to populate that comparison group and in fact we asked for in for once we saw the problems we asked for information about that group and we were denied access so that attention to ensuring when the other side unilaterally controls that in the context of the i mean that does seem concerning but their answer to that one is multi level they say the record actually doesn't bear out that you were denied access and then they claim that any delay has to do with hipaa and privacy concerns i guess furthermore they're saying the grant agreement itself you didn't negotiate to have in there the right to all the data that to there's a control group in fact the d a p criticizes our consultant because we had to you know to do its modeling it had the same pull from outside information the we had certain high level information about the about the control group but not not the details of it and not at the time when it could have saved the project and and  so i think we've got to make a distinction between our control group data and intervention group are you going to press that this is a procurement contract or are you content to it except that this is a grant agreement we're not positive keep keep going ok thank you ron of the the government cites to our participation in approving the methodology as though that somehow we were left with but so the distinction is you before you did have the opportunity to review and accept the entire arrangement and then the money that began to flow with access to the methodology thing the comparison group but your point is you didn't have the access to the data correct so you thought you knew the methodology you knew they were going to refer was at r t i and so but the point is that they had to give you data is there something in the grant that says that or you think that's just a good faith well you asked where the breach occurred and yes it's occurred in the implementation the breach occurred in the fact that the control group is not an appropriate comparison group in this in this project and it's you know it's it's we hate it sounds callous but there are unfortunately there outside consultant who studies c m s programs as qualifications who documented these are drivers that escalate costs and our group was higher on all of those and here's an and they're making adjustments but one of the things we emphasize is there's a difference between amarillo and lubbock amarillo has a higher socioeconomic by either ten or seven percent depending on  that drove up health care costs and i think nothing speaks more clearly than if we look at the simple statistics when they when the program even before the when when the solicitation was going on back in zero four and zero five even before the program started they were evaluating eligibility at that time the difference in the control group in the universe group was four percent then when we take the year before the program even starts  difference between the two groups is five point eight percent texas texas intervention group is already almost six percent higher at that point and then finally you look at the first six months you know in the first six months  outreach we're telling people about the program we're starting in the health care cost of that group escalate to four thousand and that's that's the bridge we had to have an appropriate comparison group and we didn't and the r t i i mean this isn't disputed the government doesn't this these are complaints about the group i'm going to read just from the november eleventh and you know the die is cash we're not we're not trying to solve the problem at this point we're throwing stones at it well we weren't we were never going to you know we weren't trying to fix the problem at this point so the government's november eleven reports we found intervention group beneficiaries did differ from  comparison group and having fewer medicare age and it goes to the statistics and then he writes it is possible that systematic differences in beneficiary mix coupled with the side effects on her beneficiary per month cost could explain the higher rate of cost incurred but am i over simplifying that they'll say we have a really generous program around the country we're trying to reduce costs so we're making these stimulant demonstration agreements available to any hospital but you bear the risk and then of course of course that comparison groups got to be as matched to your intervention group but it may not be perfect and i don't see anything in this record that suggests why would they have any interest in not getting to the perfect closest match because they want this to work too so would you have to establish bad faith or are you accepting that it may just not have been the best comparison group and then their responses you took on that risk how do you unpack that i think there's a rough world of magnitude very simply if they can't make an adjustment to even that out so it is quantifiable that it's then we know where that with a where does it say that in the agreement it seems that seems intuitive but ishant because they've got to be able to measure our savings and they can't measure the savings that there's a failure of on the part of the government the last question what's what's the best case out there because i'm sure these grand arrangements with sort of the sort of discordant thing must occur all the time and then this would be the natural objection hey we couldn't be there benchmarks what's your best circuit authority on in a grant context well you know the good look at brown at the circuit decision you could look at thermal on i mean what they say is look at the grant agreement what are the undertaking they abide by them you know the thermal on has has one thing that i and then just because your time's running out the where you're telling us to look in the grant agreement is their duty to ensure a match well  has to look at all of the undertaking and included in the comparison group they've got to be able to measure what our savings was and they have to provide claims data to us so there and there are a number  mr stoltz thank you your honor may it please the court i'd like to first address this distinction that council is attempting to draw between c m s is working preparing a methodology for preparing a control group and then the what they call the implementation of the control group and i'd like to highlight a few items in the record that talk about this because the record is pretty clear that actually there was information in the background is after the demonstration agreement is signed in january of two thousand and six it's not actually going to start for several months and there's an enormous back and forth between the parties and trying to essentially create an populate these groups now on april for of two thousand and six at page seven fifty in the  record r t i which is the contractor has a memo that they send out that they give to texas tech that has all kinds of information about their proposed control group for comparison group and that memo talks about for example that the control group the most recent data was about eight hundred fourteen dollars per person per month in medicare spend whereas the texas type group was seven hundred dollars and thirty three cents at seventeen thirty three one thousand seven hundred thirty three dollars so they have some very granular information about the relative costs the r t i memo on page seven fifty of the record at page seven fifty three actually says there's five thousand one hundred seventeen comparison medicare beneficiaries in this control over so and again this is before texas tech agrees to this methodology so the control group has already in a sense been created and texas tech has been given information not only about the exact number of people that's in this group the exact dollar amount to the dollar of how much this group costs compared to texas has group if you look at that memo on page seven fifty there's also a bunch of tables and other information about specific characteristics of this group including you know how many of them are on dial assess how many them are in hospice all kinds of factors so this is a memo on april for now what happens next texas tech actually comes back and requests more data they've reviewed this and they want more data so there's a second memo from  page seven fifty nine of the record where they actually give more statistics and they provide their pages and pages of the statistical tables about all kinds of information how many of these people have had hip fractures all these drivers that may increase the cost so all of this information was provided to texas tech and they had an opportunity and they did in fact ask for more information on selected topics that they they then presumably satisfied themselves that they had received enough information to enter into this agreement knowingly and only after receiving these multiple memo on april twenty fourth that page six eighty of the record is going to texas tech formally gives their written acceptance of the control group so at the time they accept it they've already received all this information and they've had the opportunity to ask for more information now there were some questions about what did the demonstration agreement require in terms of data that c m s was going to provide and i would direct the court to around page four twenty lists or item is ations of what kind of data would be provided and would be available to texas and for the most part it's all data about the intervention or its data about the group that texas tech is going to be providing the service i think a page for twenty five or as part of that protocol there is a reference to what data texas tech would be receiving about the control group and what the agreement says is they would get these monitoring reports that would come out periodic lee during the course of the per formance and they would receive monitoring reports about sort of big picture of how the control group is doing versus the interview but the contrast is protocol three you know it has many many many items of specific data that will be available but the intervention there's no similar commitment to provide that data you know about the other groups and again this is texas tech knew this going into the agreement at the front so i think that the you know that the notion that there was some sort of breach in costs they would naturally want to know more so just your brief response is they didn't negotiate for that information well who are there is no evidence that it was withheld or it was withheld because they had to be under hipaa there's a there's a of what kind of data they could receive and the record is very very sparse on this point five eighty in the record is an email exchange in toward the end of two thousand and six where apparently there was some request for data and so c m s sends an e mail and says ok we understand your request data you know the rule was specified in the agreement is to the extent you want data you need a data use agreement to cover it and they set out basically what needs to happen the response texas te response is on page five eighty of the record and they basically said we haven't received any data that would require an additional data use agreement and that's it so the records doesn't reflect that that there was some request of the time what if instead of anxiety about data matching their concern had been there is mismanagement h h s has got mismanagement as to the comparison group they have no recourse or and overs let's say there really was put aside bad faith but mismanagement under this grand arrangement how would they be able to correct that i guess i'm not i'm not sure what the court means by the well some flawed h h s r t i that was the abbreviation is that some flawed construction and assessment of this somewhat difficult to penetrate comparison group so the government just gives reports saying your numbers are much worse than ours but in fact there's someone inside the government that's just not calculating correctly how do they how do they verify state see what i mean i do understand your i think that the departmental appeals board addressed this issue at least somewhat it wasn't directly raise i think but what they said is that texas tech there was a provision in the agreement for a reconciliation after the term him and the reconciliation would go in and look at all the costs of the intervention group and all the cost of the control going ok in the end the reconciliation was performed by a contractor and when the reconciliation report came out the reconciliation report tallied up and found essentially that the control group ended up being less expensive than the intervention group now as that the right appeals board mentioned texas tech  challenge any of the mathematics of that city reconciliation what they did challenges they said it turns out that you know two years into this agreement it turns out that our group is actually more expensive than the control group and what they centrally said is there must have been something wrong or inappropriate about the control group the way it was constructed at the beginning because you know we thought that our group would be you know i hope the court can see how you know there was a number of these demonstration projects across the country every contractor essentially came out on the the wrong end of their risks sharing arrangement could make a similar argument they could say well since it's not our fault you know it's just like to take so long to get the second demand letter right wasn't about four years from the first of the second i think that's correct your honor so the reconciliation agreement contemplated that the reconciliation would actually take a long time to do after the remit terminated because they'd have to essentially wait for the claims to come in and make sure they captured all the data  demand we don't think we should pay and then you're correct that it was two thousand and thirteen when c m s then said no we are you know we're sticking with especially what we what we said earlier now the record does not reflect what was going on and two thousand and eleven two thousand twelve i can't say they cited two cases are brown and arthur milan case do you have any thoughts on their reference to those as being supportive of i do your honor i think the the brown case which is institute for technology development versus brown i think it's actually a very good case and it's on point review of a grant agreement dispute very similar to this one and if you read the court's opinion brown the grant agreement and that case was constructed much in the way this one was it was an agreement there was terms and conditions and it was essentially a document and what the court said it is although this document has a contractual aspect to it and it imposes obligations on both parties it's not exactly the same as a contract because of this notion of brandt's are a little bit different in the sense that the government is bound by its express undertakings and what the court did though is it analyze that contract in the terms and conditions of that contract to find out whether you know what what the agency had done was authorized and i think what's also interesting about the brown case is in brown the court relied on this line of cases that the sort of leading case is kentucky versus bennett versus the kentucky department of education and that's a supreme court case in which the court said you know centrally grant agreements are contractual but they're also a little bit different and so in brown the court actually cited the kentucky department of education case and sort of relied on those notions and again that's exactly the same thing what the department appeals board did here and in fact i'd like to highlight in the in the briefing in the record on page thirty seven of texas texas brief texas tech makes its argument that essentially the agency board ignored authority that a grant agreement can create binding obligations for the government and in fact texas tech sites to t institute for technology development versus brown case at that section of the brain they claim that the d a b ignored that authority in fact though if you go to page one of seven of the record in the da b s decision the d a b cites the  brown case in their decision from this court and they cite the language where the fifth circuit says that grant agreements are binding on both the grand tour and the grantee but the dispute needs to be resolved by looking at the actual binding agreements including any incorporated documents so again i think the record is clear that the board did in fact follow the circuits press and other precedents and it certainly the board did not act in an arbitrary and capricious manner and following  because of this case that they cite the brown case also if you look at page around want to wait of the record the board goes through a very detailed analysis of the terms and conditions of the agreement with respect to what sort of guarantee if any c m s was making about the control group and that's and protocol five of the of the demonstration agreement and the the board spend several i think several paragraphs of up pages specifically those obligations were with respect to creating the control group and their decision was well they did not have this obligation to sort of unilaterally guarantee that the control group would turn out to your liking as measured by sort of an after fact judgment about whether your group so the issue is the board essentially applied its analysis look to relevant presidents and ruled against texas tech now i understand why they don't like that this is just it doesn't meet the very high tech had had access to information that somehow i would direct the court to table for on that memo seven fifty seven it's simply another explaining the concept of the methodology and when it finally summarized in the last page of that document how the comparison group should look at how the intervention group according to r t i it's very very similar but of course we already knew that they weren't similar at that point so i don't think that the april for two thousand and six supports this notion that we were given access in fact the table that one would rely on after reviewing this information about methodology suggests that the comparison in a group of actually going to quite comparable to the references to hospice  dialysis there was some what there was some back and forth about the methodology and here's an example if you were on hospice or die dialysis you didn't pay so that's what that reference was texas tax there was a maritime law that was the rules of engagement you knew that you weren't going to have yes just asking but by the same token our partner in this program was trailblazer which is a fiscal intermediary for our own data meaning our you know we were working with texas trailblazer and that we could use their claims data that they had in their possession it's in our proposal it's in a diagram and for  you know it's laid out in the proposal and so at some point in december of two thousand and six texas tech says you know i need to get access to the we asked for access to the intervention group and  says no texas tech says well i want to create my own pseudo comparison group because there are problems with and so we can see so i have an appropriate benchmark for whether or not i'm i'm saving cause and see mrs you cannot create your own pseudo and they said in fact if trailblazer has given you any inference you better destroy and certify that was going to say i did i wouldn't have thought trailblazers could give you that information well within the context of this program he proposed using that information and we believed we would be able to use it under this under you know we had a day to use agreement as a in the program c m s does not agree with that but that was our understanding that was what we proposed and our proposal was accept and that was our understanding and we didn't learn until december of two thousand and six i want to make one comment about we heard the record we heard the determining what things are the review in court looks at the documents and and finds an abuse of discretion if they narrowly focus on one thing and ignore the other terms and conditions that govern the relationship that's what happened in brown a member of the secretary hadn't looked at me look at it thank you very much thank you