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Nature of Suit Code: 151
Nature of Suit: Overpayments under the Medicare Act
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 7, 2010 Decided July 6, 2010

No. 09-5352

ST. LUKE’S HOSPITAL,

APPELLANT

v.

KATHLEEN SEBELIUS, SECRETARY OF 

HEALTH AND HUMAN SERVICES,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-cv-00883-JR)

Robert E. Mazer argued the cause for the appellant. Leslie

DeMaree Goldsmith was on brief. James P. Holloway entered

an appearance.

Joel McElvain, Attorney, United States Department of

Justice, argued the cause for the appellee. Ronald C. Machen,

Jr., United States Attorney, and Michael S. Raab, Attorney,

David S. Cade, Acting General Counsel, and Janice Hoffman,

Associate General Counsel, United States Department of Health

and Human Services, were on brief. R. Craig Lawrence,

Assistant United States Attorney, entered an appearance.

Before: GINSBURG, HENDERSON and GARLAND, Circuit

Judges.

USCA Case #09-5352 Document #1253301 Filed: 07/06/2010 Page 1 of 14
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Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Appellant St.

Luke’s Hospital (St. Luke’s), a non-profit hospital located in

Bethlehem, Pennsylvania, submitted to the Centers for Medicare

and Medicaid Services (CMS)1 a claim for reimbursement

regarding a $2.9 million loss allegedly incurred by Medicare

provider Allentown Osteopathic Medical Center (Allentown)

when it merged with St. Luke’s through a “statutory merger.” 

St. Luke’s claimed as its loss the difference between the portion

of the merger consideration ($4,848,188.60 in debt assumption)

allocable to its depreciable assets and those assets’ net book

value. CMS disallowed the claim on the ground the merger

lacked “reasonable consideration” and was therefore not a “bona

fide” transaction as required for revaluation and loss

reimbursement under 42 C.F.R. § 413.134(f) and (l).2

 St.

Luke’s sued the HHS Secretary in district court challenging the

denial of its reimbursement claim. The district court granted

summary judgment to the Secretary holding, inter alia, the

Secretary had reasonably interpreted her own regulation to

require that reasonable consideration be paid before depreciable

assets may be revalued and the resulting losses reimbursed. St.

Luke’s Hosp. v. Sebelius, 662 F. Supp. 2d 99 (D.D.C. 2009). 

We affirm.

1

CMS, formerly the Health Care Financing Administration

(HCFA), administers the Medicare program on behalf of the Secretary

of the United States Department Health and Human Services (HHS). 

St. Elizabeth's Med. Ctr. of Boston, Inc. v. Thompson, 396 F.3d 1228,

1230 (D.C. Cir. 2005).

2

The statutory merger provisions appeared in subsection (l) of 42

C.F.R. § 413.134 at the time of the merger in January 1997 and we

therefore cite thereto. The subsection has since been redesignated

without change as subsection (k). See 65 Fed. Reg. 8660, 8662 (Feb.

22, 2000).

USCA Case #09-5352 Document #1253301 Filed: 07/06/2010 Page 2 of 14
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I.

A Medicare provider is entitled to compensation for the

“reasonable cost” of Medicare services, 42 U.S.C. § 1395f(b)(1),

which, pursuant to the Secretary’s depreciation regulation,

includes an “appropriate allowance for depreciation on buildings

and equipment.” 42 C.F.R. § 413.134(a). The depreciation

allowance for an asset is generally based on its “historical cost,”

id. § 413.134(a)(2)—i.e., “the cost incurred by the present owner

in acquiring the asset,” id § 413.134(b)(1)—“[p]rorated over the

estimated useful life of the asset.” Id. § 413.134(a)(3). The

resulting annual allowance is reimbursable to the extent the asset

is used to provide Medicare services. In other words, the annual

reimbursable allowance is equal to the actual cost divided by the

number of years of its useful life and then multiplied by the

percentage of the asset’s use devoted to Medicare services in the

given year. 

In addition to an annual depreciation reimbursement,

historically, a provider could receive a credit (or debit) upon

disposition of the asset if the disposition resulted in a gain (or

loss).3

 Under the depreciation regulation, an asset’s gain or loss

is equal to the difference between the consideration received

upon disposition and its “net book value,” which consists of the

Medicare depreciable basis (generally the historical cost) less

past Medicare depreciation allowances, 42 C.F.R.

§ 413.134(b)(9). See Lake Med. Ctr. v. Thompson, 243 F.3d

568, 569 (D.C. Cir. 2001). If the disposition of an asset before

December 1, 1997 result[ed] in a gain or loss under this regime,

3

In 1997, the Congress amended the Medicare Act to eliminate

depreciation adjustments for assets after December 1, 1997, Balanced

Budget Act of 1997, Pub. L. No. 105-33, § 4404, 111 Stat. 251, 400

(1997), and the Secretary amended the regulation accordingly, 63 Fed.

Reg. 1379, 1380-82 (Jan. 9, 1998).

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“an adjustment is necessary in the provider’s allowable cost.” 

42 C.F.R. § 413.134(f)(1). 

Under subsection (f) of the depreciation regulation, the

“treatment of the gain or loss depends upon the manner of

disposition of the asset.” Id. § 413.134(f)(1). If an asset is

disposed of through a “bona fide” sale, the treatment is

straightforward: If there is a gain, the selling provider must

compensate Medicare therefor; if there is a loss, Medicare

reimburses the provider. Id. § 413.134(f)(2). If the sale of the

assets is not a bona fide transaction, the regulation does not

provide for any adjustment.4

 Under subsection (l), if the

disposition is through a “statutory merger”—i.e., “a combination

of two or more corporations under the corporation laws of the

State, with one of the corporations surviving”—the merged

corporation “is subject to the provisions of paragraph[] . . . (f) of

[section 413.134] concerning . . . the realization of gains and

losses.” Id. § 413.134(l) (1997) (now § 413.134(k)). According

to the preamble to the proposed rule, subsection (l)(2) “points

out that a statutory merger is treated as a sale of assets.” Fed.

Health Ins. for the Aged and Disabled, Establishment of Cost

Basis on Purchase of Facility as an Ongoing Operation, and

Transactions Involving Provider’s Capital Stock, 42 Fed. Reg.

17,485, 17,485 (proposed Jan. 17, 1977). This case involves

such a statutory merger.

Allentown and St. Luke’s, each a Medicare provider, signed

a merger agreement on October 16, 1996, under which the

4

Under subsection (f)(2), an asset disposed of by “scrapping” is

treated like one disposed of in a bona fide sale. Other provisions of

subsection (f) govern disposal of assets by sale within one year

following termination of the provider’s Medicare participation,

exchange, trade-in or donation, demolition or abandonment,

involuntary conversion and sale of a replacement or restored asset. 42

C.F.R. § 413.134(f)(3)-(8).

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former was to merge with the latter effective January 1, 1997,

with St. Luke’s as the surviving entity.5

 For its part, St. Luke’s

agreed to (1) continue operating an acute inpatient services

hospital at Allentown’s campus for a minimum of two years

(provided that a specified operating loss was not incurred) and

indefinitely thereafter (provided that a cumulative operating

surplus was maintained) and (2) invest in the Allentown

“campus plant, equipment, programs, and services based on a

well-defined plan that meets community needs and is

economically responsible and feasible.” Confidential Merger

Agreement § 2.5, JA 188-89.

The merger went through as planned and all of Allentown’s

assets totalling approximately $25.1 million were transferred to

St. Luke’s. As consideration to Allentown, St. Luke’s assumed

Allentown’s debt in the amount of approximately $4.8 million.

After allocating the consideration among all of the transferred

assets, St. Luke’s filed a Medicare reimbursement claim

totalling approximately $2.9 million for fiscal year 1996,

treating the difference between the net book value of the

5

The “statutory merger” was effected pursuant to Pennsylvania

state law which provides: “Any two or more domestic nonprofit

corporations . . . may, in the manner provided in this subchapter, be

merged into one of such domestic nonprofit corporations, hereinafter

designated as the surviving corporation . . . .” 15 Pa. Cons. Stat.

§ 5921. Once merged, “the several corporations parties to the merger

or consolidation shall be a single corporation” and “[t]he separate

existence of all corporations parties to the merger . . . shall cease,

except that of the surviving corporation.” Id. § 5929(a). “Except as

otherwise provided by order, if any, obtained pursuant to section

5547(b) (relating to nondiversion of certain property), all the property,

real, personal and mixed, and franchises of each of the corporations

parties to the merger or consolidation, and all debts due on whatever

account to any of them . . . shall be deemed to be vested in and shall

belong to the surviving or new corporation . . . .” Id. § 5929(b). 

USCA Case #09-5352 Document #1253301 Filed: 07/06/2010 Page 5 of 14
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depreciable assets and their allocated consideration as a loss.

The Medicare fiscal intermediary denied St. Luke’s claim and

St. Luke’s filed an appeal with the Provider Reimbursement

Review Board (PRRB).6

In October 2000, while the appeal was pending, the

Secretary issued a guidance document to determine if a statutory

merger triggers a revaluation of the merged entity’s depreciable

Medicare assets. Clarification of the Application of the

Regulations at 42 CFR 413.134(l) to Mergers and

Consolidations Involving Non-profit Providers, Program

Memorandum A-00-76 (Oct. 19, 2000) (PM A-00-76)

(republished as PM A-00-96 (2001)). The document clarified

that subsection (l)’s cross reference to subsection (f) requires

that for “mergers and consolidations involving non-profit

providers[,] . . . as with transactions involving for-profit entities,

in order for Medicare to recognize a gain or loss on the disposal

of assets, the merger or consolidation must occur between or

among parties that are not related as described in the regulations

at 42 CFR 413.17 and the transaction must involve one of the

events described in 42 CFR 413.134(f) as triggering a gain or

loss recognition by Medicare (typically, a bona fide sale, as

defined in the [Provider Reimbursement Manual (PRM)] at

§104.24[)].” PM A-00-76 at 1 (emphasis added); see also id. at

6

A Medicare provider submits a yearly cost report to a fiscal

intermediary (typically a private insurance company acting on the

Secretary’s behalf), which determines the reimbursement amount

owed the hospital for the cost reporting year. Baptist Mem’l Hosp. v.

Sebelius, 603 F.3d 57, 60 (D.C. Cir. 2010) (citing 42 C.F.R.

§ 405.1803). A provider dissatisfied with the determination may

appeal to the PRRB. Id. (citing 42 U.S.C. § 1395oo(a), (f)). The

Secretary, on her own motion, may reverse, affirm or modify the

PRRB’s decision within 60 days. 42 U.S.C. § 1395oo(f)(1). The

provider may then seek review of the PRRB’s or the Secretary’s

decision in district court. Id. 

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3 (“Notwithstanding the treatment of the transaction for

financial accounting purposes, no gain or loss may be

recognized for Medicare payment purposes unless the transfer

of the assets resulted from a bona fide sale as required by

regulation 413.134(f) and as defined in the PRM at §104.24.”). 

PRM § 104.24, referenced in PM A-00-76, provides that a “bona

fide sale” includes, inter alia, payment of “reasonable

consideration” for the depreciable assets: “A bona fide sale

contemplates an arm’s length transaction between a willing and

well informed buyer and seller, neither being under coercion, for

reasonable consideration. An arm’s-length transaction is a

transaction negotiated by unrelated parties, each acting in its

own self interest.” PRM § 104.24 (emphasis added). PM A-00-

76 elaborates on what constitutes reasonable consideration:

As with for-profit entities, in evaluating whether a

bona fide sale has occurred in the context of a merger

or consolidation between or among non-profit entities,

a comparison of the sales price with the fair market

value of the assets acquired is a required aspect of such

analysis. As set forth in PRM § 104.24, reasonable

consideration is a required element of a bona fide sale.

Thus, a large disparity between the sales price

(consideration) and the fair market value of the assets

sold indicates the lack of a bona fide sale. With regard

to non-profit mergers or consolidations, often the sales

price consists of assumed debt only, but may also

include cash and/or new debt. Non-monetary

consideration, such as a seller’s concession from a

buyer that the buyer must continue to provide care for

a period of time or to provide care to the indigent, may

not be taken into account in evaluating the

reasonableness of the overall consideration (even

where such elements may be quantified in dollar

USCA Case #09-5352 Document #1253301 Filed: 07/06/2010 Page 7 of 14
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terms). These factors are more akin to goodwill than

to consideration.

PM A-00-76 at 3. 

In January 2008, the PRRB issued its decision which

reversed the Medicare fiscal intermediary and allowed St.

Luke’s claim. Shortly thereafter, CMS, reviewing the PRRB

decision pursuant to 42 U.S.C. § 1395oo(f)(1), supra note [6],

issued a final agency decision reversing the PRRB and denying

the claim. Allentown Osteopathic Med. Ctr. v. Blue Cross Blue

Shield Ass’n, Review of PRRB Dec. No. 2008-D15, 2008 WL

2550557 (Mar. 24, 2008) (CMS Decision). CMS noted that

Allentown did not obtain an appraisal to ascertain the assets’ fair

market value—although “a comparison of the sale price with the

fair market value of the assets acquired is . . . required,” id. at

20, 2008 WL 2550557, at *14—indicating that “factors other

than receiving the best price for its assets were motivations in

the transaction,” id. at 22, 2008 WL 2550557, at *14. In

addition, CMS found the value of the non-depreciable current

assets ($5.8 million) together with the non-current long-term

investments ($2.6 million) “well exceeded the value of the debt

assumed” ($4.8 million), which was the sole consideration for

the assets. Id. at 23, 2008 WL 2550557, at *15. Thus, CMS

observed: “As a practical matter the depreciable assets were

transferred for essentially no consideration.” Id. at 22-23, 2008

WL 2550557, at *15. “Accordingly,” CMS concluded, “as the

transaction did not involve an arm’s length transaction, the

transaction was not a bona fide sale as required under the

regulations and PRM for the recognition of a loss on the

disposal of assets.” Id. at 23, 2008 WL 2550557, at *15. 

St. Luke’s sued the Secretary in district court, challenging

the denial of its claim. The district court granted summary

judgment to the Secretary on September 30, 2009, concluding

CMS did not act arbitrarily or capriciously in denying the claim

on the ground the merger was not a bona fide transaction

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because St. Luke’s did not tender reasonable compensation for

Allentown’s assets. St. Luke’s filed a notice of appeal on

October 16, 2009.

II.

“Because we apply the same standard of review as the

district court, we proceed de novo, as if [the plaintiff] had

brought the case here on direct appeal.” Tenet HealthSystems

HealthCorp. v. Thompson, 254 F.3d 238, 244 (D.C. Cir. 2001).

Accordingly, we review the CMS Decision under the

Administrative Procedure Act to determine whether it is

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law,” 5 U.S.C. § 706(2)(A). See 42 U.S.C.

§ 1395oo(f)(1) (district court action “shall be tried pursuant to

the applicable provisions under chapter 7 of Title 5”). In so

reviewing, we “give substantial deference to an agency’s

interpretation of its own regulations,” according the agency’s

interpretation thereof “controlling weight” unless it be “plainly

erroneous or inconsistent with the regulation.” Thomas Jefferson

Univ. v. Shalala, 512 U.S. 504, 512 (1994). Our “broad

deference is all the more warranted when, as here, the regulation

concerns ‘a complex and highly technical regulatory program,’

in which the identification and classification of relevant ‘criteria

necessarily require significant expertise and entail the exercise

of judgment grounded in policy concerns.’ ” Id. (quoting Pauley

v. BethEnergy Mines, Inc., 501 U.S. 680, 697 (1991)).

According the requisite deference, we uphold the Secretary’s

interpretation of subsections (f) and (l) of 42 C.F.R. § 413.134.

Subsection (l) by its express terms makes the merged

provider “subject to the provisions of paragraph[] . . . (f) of this

section concerning . . . the realization of gains and losses.” The

Secretary reasonably read this unrestricted cross-reference to

subsection (f) as incorporating subsection (f)(2)’s requirement

that a transaction be “bona fide” if the provider is to revalue the

assets it transfers therein. See 42 C.F.R. § 413.134(f)(2) (rules

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for recognizing gains and losses upon “the bona fide sale . . . of

depreciable assets before December 1, 1997”). The Secretary

then interpreted “bona fide” to encompass only transactions

involving “reasonable consideration” that reflects the fair market

value of the assets transferred. This too was reasonable. Fair

market value is a hallmark of a bona fide transaction, as the

Secretary has long acknowledged. See United States v. Huber,

603 F.2d 387, 398 (2d Cir. 1979) (defining “ ‘fair market

value’ ” for Medicare asset depreciation as “ ‘price that the asset

would bring by bona fide bargaining between well-informed

buyers and sellers at the date of acquisition’ ”) (quoting 20

C.F.R. § 405.415(b)(2) (now 42 C.F.R. § 413.134(b)(2))

(emphasis added); see also Black’s Law Dictionary 534 (5th ed.

1979) (same definition); Ellis v. Mobil Oil, 969 F.2d 784, 787

(9th Cir. 1992) (“It is settled law that a bona fide offer under the

[Petroleum Marketing Practices Act] is measured by an

objective market standard. To be objectively reasonable, an

offer must approach fair market value.”) (internal quotation and

alteration omitted); accord LCA Corp. v. Shell Oil Co., 916 F.2d

434, 440 (8th Cir. 1990); and Slatky v. Amoco Oil Co., 830 F.2d

476, 483-84 (3d Cir. 1987). It is logical then to infer, as the

Secretary has done in PM A-00-76, that a “large disparity”

between the assets’ purchase price and their fair market value

indicates the underlying transaction is not in fact bona fide.

Indeed, not only is the Secretary’s a reasonable interpretation

but, unlike St. Luke’s, it leads to a reasonable result as well.

Requiring a “reasonable” sale price, which reflects real market

value, yields a gain or loss figure that approximates the actual

gain or loss the provider has incurred since acquiring the asset.

By contrast, the consideration paid in a transaction such as the

merger here—an amount that simply reflects the level of debt

the merged provider happens to carry at the time of the merger

regardless of the assets’ value—yields a figure unrelated to the

actual change in the assets’ value. Cf. St. Luke’s Hosp., 662 F.

Supp. 2d at 103 (“ ‘[I]t would be mere happenstance if the fair

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market value of the merged entity’s assets was equal to its

known liabilities for which the surviving entity would become

responsible.’ ” (quoting Pl.’s Mot. Summ. J. 17-18 (filed Oct. 8,

2008))) (alteration in original). As a consequence, using St.

Luke’s approach, Medicare would reimburse costs the provider

has not in fact incurred—in contravention of the statutory goal

to provide reimbursement only for the “reasonable cost” of

healthcare services. 42 U.S.C. § 1395f(b)(1); see id.

§ 1395x(v)(1)(A) (“The reasonable cost of any services shall be

the cost actually incurred . . . .”); see also Depreciation:

Allowance for Depreciation Based on Asset Costs, 44 Fed. Reg.

3980, 3980 (Jan. 19, 1979) (adding provisions to 42 C.F.R. pt.

405 governing gain/loss upon disposal of depreciable assets

“intended to assure that depreciation allowed under Medicare

accurately reflects providers’ costs of using assets for patient

care”). For these reasons, we uphold the Secretary’s

interpretation of 42 C.F.R. § 413.134(f) and (l), memorialized in

PM A-00-76, because it is not “plainly erroneous or inconsistent

with the regulation.” Thomas Jefferson Univ., 512 U.S. at 512.7

Nonetheless, we address two arguments St. Luke’s makes

against applying the interpretation to the Allentown merger.8

First, St. Luke’s contends that the “reasonable

consideration” requirement is inconsistent with various HHS

authorities in existence before PM A-00-76 issued in 2000,

7

In so doing, we join the three other circuits that have addressed

the issue. See Albert Einstein Med. Ctr., Inc. v. Sebelius, 566 F.3d

368, 378 (3d Cir. 2009); Robert F. Kennedy Med. Ctr. v. Leavitt, 526

F.3d 557, 562 (9th Cir. 2008); Via Christi Reg’l Med. Ctr. v. Leavitt,

509 F.3d 1259, 1275-76 (10th Cir. 2007).

8

St. Luke’s offers a host of other arguments against the

Secretary’s application of the depreciation regulation, which we

summarily reject for the reasons stated by the district court. See 662

F. Supp. 2d at 104-05.

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including a guidance document, opinion letters and individual

adjudications—none of which, St. Luke’s asserts, includes the

reasonable consideration requirement. We perceive no

inconsistency. While none of St. Luke’s’s authorities

affirmatively establishes a reasonable consideration

requirement, neither do they authorize reimbursement where the

consideration falls far short of fair market value. Some of the

cited documents simply recognize that depreciable assets may

be revalued under the proper circumstances, without addressing

what consideration may be required. See, e.g., Medicare

Intermediary Manual § 4502.6 (1987) (providing generic

example of merger where “gain/loss to the seller and a

reevaluation of the acquired assets to the buyer are computed”);

Letter from William Goeller, Director of the Division of

Payment and Reporting Policy, HCFA, to Irwin Cohen,

Fulbright & Jaworski, at 1 (May 11, 1997) (“[m]ergers and

consolidations of nonstock, nonprofit providers may give rise to

revaluations of assets . . . and/or adjustments to recognize

realized gains and losses” and “[i]f the transaction . . . meets the

definition of either a statutory merger or consolidation as set

forth in the regulations section . . . , then a revaluation of assets

and/or an adjustment to recognize realized gains and losses may

occur”); Letter from Charles R. Booth, Director, Office of

Payment Policy, HCFA, to Michael Maher, Partner, Coopers &

Lybrand, at 1 (Aug. 24, 1994) (agreeing transaction “appear[ed]

to be a consolidation as defined in §4.133.134(k)(3)(i) requiring

a determination of gain and loss” and addressing proper

methodology for apportioning lump sum sales price among

assets).9

 The cited adjudications, on the other hand,

acknowledge, at least implicitly, the importance of bona fide

transactions and reasonable consideration, setting out

affirmative, individualized findings that the parties involved

9

Booth’s letter noted in passing that the “fair market value

exceed[ed] the sales price” but did not indicate by how much.

USCA Case #09-5352 Document #1253301 Filed: 07/06/2010 Page 12 of 14
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bargained in good faith and that the consideration tendered

reasonably reflected fair market value. See, e.g., Broadway Unit

of Vallejo Gen. Hosp. v. Blue Cross & Blue Shield Ass’n,

Medicare & Medicaid Guide (CCH) ¶ 34,529, at 9581-82

(HCFA Dec. 19, 1984) (noting PRRB finding that “contract met

the definition of FMV set forth in 42 CFR 405.415(b)(2)” and

“was the best evidence of FMV” and “sale was bona fide”),

aff’d, Vallejo Gen. Hosp. v. Bowen, 851 F.2d 229 (9th Cir.

1988); Ashland Regional Med. Ctr. v. Blue Cross & Blue Shield

Ass’n, 1998 WL 102268, at *12 (PRRB Feb. 27, 1998) (finding

“transaction was in fact a bona fide sale” and “parties negotiated

in good faith to establish a fair market value or sales price”); Lac

Qui Parle Hosp. v. Blue Cross, 1995 WL 933980, at *9 (PRRB

May 10, 1995) (finding “sale was an arm’s length transaction

and . . . negotiated in good faith” and upon inquiring of potential

buyers, hospital was informed, “[w]ith respect to the fair market

value of the facility, . . . the facility had very little value and

little suitability for alternative uses”); Edgecombe Gen. Hosp. v.

Blue Cross & Blue Shield Ass’n, Dec. No. 93-D87, Medicare &

Medicaid Guide (CCH) ¶ 41,704 at 37,404 (PRRB Sept. 9,

1993) (reconciling difference between repurchase price of

abandoned hospital and fair market value of functioning hospital

at time of original sale on ground each amount “recognize[d] the

reality and use of assets as of each transaction date”).10

Second, St. Luke’s contends the Secretary’s application of

the reasonable consideration requirement to the Allentown

merger was an impermissible retroactive imposition of a new

standard as set out in PM A-00-76. Again, we disagree. Within

the context of an agency adjudication, the Secretary generally

may lawfully interpret a regulation notwithstanding its

10In any event, the PRRB’s decisions do not bind CMS or the

Secretary. See Community Care Found. v. Thompson, 318 F.3d 219,

226-27 (D.C. Cir. 2003).

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retroactive effect; as for PM A-00-76, which memorialized the

Secretary’s interpretation, any potential retroactive effect “was

completely subsumed in the permissible retroactivity of the

agency adjudication.” Health Ins. Ass’n of Am., Inc. v. Shalala,

23 F.3d 412, 424 (D.C. Cir. 1994) (citing Clark-Cowlitz Joint

Operating Agency v. FERC, 826 F.2d 1074, 1081-86 (D.C. Cir.

1987) (en banc)). Accordingly, there was no impermissible

retroactivity.

For the foregoing reasons, the judgment of the district court

is affirmed.

So ordered.

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