Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01360/USCOURTS-caed-2_06-cv-01360-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: Civil Miscellaneous Case

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DAMERON HOSPITAL ASSOCIATION,

a non-profit California

corporation, 

NO. CIV. S-06-1360 FCD/KJM

Plaintiff,

v. MEMORANDUM AND ORDER

MICHAEL O. LEAVITT, Secretary

of the Department of Health

and Human Services and the

Centers for Medicare and

Medicaid Services,

Defendant.

----oo0oo----

This matter is before the court on plaintiff Dameron

Hospital Association’s (“plaintiff”) appeal, pursuant to 42

U.S.C. § 1395oo(f)(1), of the final decision of defendant Michael

O. Leavitt, Secretary of Health and Human Services (“defendant”

or the “Secretary”), disallowing plaintiff’s claim for Medicare

reimbursement of uncollected Medicare patient deductible and

///

/// 

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1 Because the court finds that oral argument will not be

of material assistance, the court orders this matter submitted on

the briefs. E.D. Cal. L.R. 78-230(h).

2 The specific actor authorized by statute to review and

overturn decisions by the PRRB is the CMS Administrator (the

Administrator of the Department of Health and Human Services

Centers for Medicare and Medicaid Services [“CMS”]). 42 U.S.C. §

1395oo(F).

3 A Medicare Intermediary is an agent hired by CMS to

audit annual cost reports submitted by Medicare providers in

support of their claim for reimbursement for healthcare services

provided to Medicare beneficiaries. The Intermediary in this

case is United Government Services, LLC, a subsidiary of the Blue

Cross and Blue Shield Association of Independent Blue Cross and

Blue Shield Plans, Chicago, Illinois.

4 As explained below, reimbursable Medicare bad debt

results from beneficiaries’ non-payment of Medicare deductibles

and co-insurance.

5 Compl., filed June 19, 2006, ¶ 8 (describing the amount

in controversy as $38,000.00, which is derived by multiplying the

total bad debt amount of $64,220 by 0.60, which is the bad debt

reduction factor applicable to 1999).

2

co-insurance obligations for its 1999 cost year.1

 In said final

decision, defendant2 reversed “PRRB Decision 2006-D16,” wherein

the Provider Reimbursement Review Board, Department of Health and

Human Services (“PRRB”) overruled the findings of the Medicare

Intermediary3 that denied plaintiff’s claim for reimbursement of

142 “bad debt”4 accounts, totaling $38,000.00.5

The PRRB found, contrary to the Intermediary, that all

audited accounts were “actually uncollectible” and “worthless”

within the meaning of Code of Federal Regulations § 413.89(e) and

thus, reimbursable as bad debt accounts; in so ruling, the Board

held: (1) that the “presumption of collectibility” arising from

the “active” status of a bad debt account at an outside

collection agency is not conclusive, as the presumption may be

rebutted by evidence that the account is “actually uncollectible”

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and “worthless” despite its status at a collection agency; and

(2) plaintiff’s policy of writing off active collection accounts

as Medicare bad debt was accepted by the Intermediary prior to

August 1, 1987, and thus, under Section 6023 of the Omnibus

Budget Reconciliation Act of 1989 (commonly referred to as the

“Bad Debt Moratorium”) (OBRA, 1989, Pub.L. No. 101-239 (Dec. 19,

1989), 42 U.S.C. § 1395f note) (hereinafter, “OBRA” or the

“moratorium”), defendant is statutorily barred from denying

plaintiff’s reimbursement claim.

Defendant’s decision overturned both of these critical

findings, resulting in the ultimate denial of plaintiff’s

reimbursement claim. Defendant found that (1) no amount of

evidence can overcome the presumption of collectibility that

arises from the active status of a bad debt account at an outside

collection agency and (2) the statements of plaintiff’s Chief

Financial Officer (“CFO”) did not prove by a preponderance of the

evidence that the Medicare Intermediary had timely accepted

plaintiff’s practice of writing off bad debt while it was still

in collection at an outside agency, and thus, OBRA was not a

statutory bar to the denial of reimbursement in this case.

On this latter issue, the court finds defendant’s decision

“contrary to law,” because plaintiff met its burden of proof to

demonstrate OBRA’s applicability, and thus, this court must

reverse defendant’s decision pursuant to the Administrative

Procedures Act. As this court finds a statutory bar to the

denial of plaintiff’s reimbursement claim, it does not reach

defendant’s alternative basis for denial of plaintiff’s claim

(namely, that the debts’ “active” status at an outside collection

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agency alone precludes a finding of uncollectibility). For the

reasons set forth below, the court reverses in part defendant’s

final decision and directs therefore that defendant reimburse

plaintiff’s 1999 Medicare bad-debt submission in full.

BACKGROUND

The Medicare Act establishes a system for payment of health

services provided to the elderly and disabled. 42 U.S.C. § 1395

et seq. CMS administers the program for the Secretary. 

Plaintiff is a hospital located in Stockton, California and is a

participating Medicare provider. Pursuant to 42 U.S.C. § 1395h,

fiscal intermediaries under contract to the Secretary serve as

claims managers for the Medicare program, making the initial

determination of the amount of payment to be made to a health

care provider. At the close of the fiscal year (the cost

reporting period), a provider submits a cost report to its fiscal

intermediary showing the costs it incurred during the fiscal year

and the proportion of the costs to be allocated to Medicare. 42

C.F.R. § 413.20. The fiscal intermediary audits the report and

determines the final amount of Medicare reimbursement due to the

provider, 42 U.S.C. § 1395g, and then issues a Notice of Program

Reimbursement (“NPR”), 42 C.F.R. § 405.1803. A provider that is

dissatisfied with the intermediary’s determination, as set forth

in the NPR, is entitled to a hearing before the PRRB and,

following discretionary review by the Secretary of the PRRB’s

decision, may seek judicial review of the Secretary’s final

decision. 42 U.S.C. § 1395oo(f).

Among other costs, Medicare reimburses providers for bad

debts that are attributable to amounts unpaid by beneficiaries of

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the Medicare program for Medicare deductibles and co-insurance. 

42 C.F.R. § 413.89(a). In this case, the NPR for Financial Year

Ending (“FYE”) 1999 was issued by the Intermediary on July 22,

2003. Therein, the Intermediary disallowed plaintiff’s claimed

Medicare bad debts based on an audit of 58 of the 142 accounts

submitted for reimbursement.

Bad debts are defined at 42 C.F.R. § 413.89(b)(1) as

follows:

[A]mounts considered to be uncollectible from accounts

and notes receivable that were created or acquired in

providing services. ‘Accounts receivable’ and ‘notes

receivable’ are designations for claims arising from

the furnishing of services, and are collectible in the

relatively near future.

While the regulation states that payment for deductibles and

coinsurance amounts are the responsibility of the beneficiaries,

it also recognizes that the inability of providers to collect

said amounts could result in part of the costs of Medicare

covered services being borne by individuals who are not

beneficiaries (such as providers like plaintiff). 42 C.F.R. §

413.89(d). Thus, to prevent such cross-subsidization, Medicare

reimburses providers for allowable bad debts. Although, to

prevent windfalls for hospitals that might otherwise have strong

incentives to simply “write off” unpaid Medicare obligations as

bad debts rather than pursue collection of the amounts, the

Secretary’s regulation establishes several criteria that an

unpaid Medicare obligation must meet to be allowed as “bad debt.” 

The criteria are:

(1) The debt must be related to covered services and

derived from deductible and coinsurance amounts;

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(2) The provider must establish that reasonable collection

efforts were made;

(3) The debt was actually uncollectible when claimed as

worthless; and

(4) Sound business judgment established that there was no

likelihood of recovery at any time in the future.

42 C.F.R. § 413.89(e).

CSM publishes the Provider Reimbursement Manual (“PRM”),

which contains interpretative guidelines and policies to

implement the Medicare regulations. Relevant to this case, the

PRM provides:

To be considered a reasonable collection effort, a 

Provider’s effort to collect Medicare deductible and

coinsurance amounts must be similar to the effort

the Provider puts forth to collect comparable amounts

from non-Medicare patients.

PRM § 310 (Administrative Record [“AR”], filed Nov. 28, 2006,

220). A provider’s collection effort may include “the use of a

collection agency in addition to or in lieu of subsequent

billings, follow-up letters, telephone and personal contacts . .

. .” Id. at § 310(A). 

If after reasonable and customary attempts to collect a

bill, the debt remains unpaid more than 120 days from 

the date the first bill is mailed to the beneficiary,

the debt may be deemed uncollectible.

Id. at § 310.2 (AR 221). This provision is known as the

“presumption of uncollectibility.” 

The Secretary’s Medicare Intermediary Manual (“MIM”) also

explains and clarifies the application of the reimbursement

regulations. Relevant to this action, the MIM provides:

If the bad debt is written-off on the provider’s books

121 days after the date of the bill and then turned over

to a collection agency, the amount cannot be claimed as

a Medicare bad debt on the date of the write-off. It can

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6 Plaintiff’s in-house collection department applies and

documents collection efforts on Medicare accounts sufficient to

establish that an account is actually uncollectible and worthless

before plaintiff writes off the account as bad debt. (AR 99-102,

103-05, 840-975, 864-868, 1053-1294.) Per an agreement with an

outside collection agency that receives all of plaintiff’s

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be claimed as a Medicare bad debt only after the collection

agency completes its collection effort.

MIM, Part 1B, § 13-2 (AR 33). This provision is known as the

“presumption of collectibility.”

Finally, the Department of Health and Human Services issued

a policy memorandum, dated June 11, 1990, to further clarify the

bad debt policy. It states:

[U]ntil a provider’s reasonable collection has been 

completed, including both in-house efforts and the 

use of a collection agency, a Medicare bad debt may not 

be reimbursed as uncollectible. This is in accord with 

the fourth criterion in section 308 which provides that 

an uncollected Medicare account cannot be considered an

allowable Medicare bad debt unless sound business judgment

established that there is no likelihood of recovery at any

time in the future. We have always believed that, clearly,

there is a likelihood of recovery for an account sent to 

a collection agency and that claiming a Medicare bad debt

at the point of sending the account to the agency would

be contrary to the bad debt policy in section 308 and 310.

(AR 32-33.)

Here, relying on the “presumption of collectibility” and the

corollary guidelines, the Intermediary disallowed plaintiff’s bad

debt reimbursement claim for 1999, finding that plaintiff had not

demonstrated the debts were “actually uncollectible” when claimed

as worthless or that “sound business judgment” established that

there was no likelihood of recovery in the future. Prior to

claiming the debts, plaintiff engaged in an internal collection

effort, which was variable in the length of time, and then turned

the accounts over to a collection agency.6 After some number of

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worthless collection accounts, plaintiff forwards uncollectible

Medicare and non-Medicare accounts to the collection agency, as

Medicare regulations require that plaintiff treat Medicare-bad

debts the same as non-Medicare bad debts. (AR 229.) The

collection agency then works the worthless Medicare accounts in

the same manner as all other accounts. 

Plaintiff explains that by requiring its outside

collection agency to work worthless Medicare accounts, plaintiff

tests its “business judgment” regularly to confirm that it is

“sound.” (AR 102, 107.) In this case, plaintiff asserts the

collection agency’s efforts prove that its judgment was sound as

no money has been collected on any of the 58 audited accounts,

despite the efforts by the collection agency. (AR 102, 104-05,

122.) Also, plaintiff asserts that by deferring bad debt writeoffs during early outside collection efforts, it keeps worthless

accounts positioned for unforseen “direct response” by the

beneficiary. When that is not forthcoming, the account is

written off to bad debt. (AR 122.)

7 In this case each audited account was worked in excess

of 120 days prior to write-off (the accounts ranged from 134 days

from opening to write-off to 1793 days from opening to writeoff). (AR 864-868.)

8

days, typically 30 to 60 days, had passed from the date the

accounts were turned over to the collection agency, plaintiff

considered the uncollected debt to reimbursable for Medicare cost

reporting purposes.7

 Critical to the Intermediary’s decision to

deny the claim was that plaintiff claimed as “bad debts,” debts

that were at least 120 days old at the close of the fiscal year

but were pending, or in “active” status, with an outside

collection agency (said debts had not been returned by the agency

to plaintiff as uncollectible). Of the Intermediary’s random

sample of 58 accounts, 30 of those accounts were assigned to a

collection agency that determined the accounts to be

uncollectible in 2003. (AR 1447-48.) Yet, plaintiff wrote the

debts off as bad debt, i.e., claimed the bad debts on its cost

report for 1999, regardless of whether the collection agency had

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8 The affidavit of plaintiff’s CFO and the testimony at

the hearing established that: (1) prior to August 1, 1987,

plaintiff wrote off Medicare accounts as bad debt at or about the

time that they were assigned to an outside collection agency; and

(2) until the NPR for FYE 1999 was published in July 2003, the

Intermediary had always accepted this collection practice; the

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completed its collection efforts on the accounts. The

Intermediary concluded that plaintiff had no documentation to

support that it determined that each Medicare bad debt was

actually worthless as of any specified date. (AR 1026.) As

such, the Intermediary found that plaintiff could not claim any

debt as bad debt until collection activities had ceased by the

agency and the account returned to plaintiff as uncollectible. 

For these reasons, among others not pertinent herein, the

Intermediary denied plaintiff’s bad debt reimbursement claim.

Plaintiff appealed the disallowance to the PRRB, who

reversed the decision of the Intermediary, holding that the mere

“active” status of an account with an outside collection agency,

while suggestive of collectibility of that account, is not in and

of itself proof of value or collectibility. The Board found that

neither the presumption of uncollectibility in the PRM nor the

presumption of collectibility of collection agency accounts in

the MIM are conclusive presumptions. Ultimately, the four

criteria of Section 413.89(e) must control, and thus, the

presumption of collectibility arising from an account’s status at

a collection agency may be rebutted by evidence that the account

is “actually uncollectible” and “worthless.” The Board also

found that the Intermediary’s present rejection of plaintiff’s

bad debt policy, after having accepted it in prior years, was

statutorily barred, pursuant to OBRA.8 (AR 44-55.)

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July 2003 NPR was the first time the Intermediary had rejected a

bad debt submission solely because an account was listed as

active at an outside collection agency. (AR 102-103, 175-184,

1300-1301.)

10

The Secretary, exercising his discretionary review,

overturned the PRRB’s decision. (AR 2-12.) The Secretary found

that no amount of evidence could overcome the presumption of

collectibility arising from the active status of a bad debt

account at an outside collection agency because where a provider

continues to attempt to collect a debt via a collection agency,

it is reasonable to assume that the provider still considers the

debt to have value. According to the Secretary, to permit a

provider to deem a debt uncollectible after 120 days for Medicare

reimbursement purposes, but to continue its efforts to collect

the debt via an outside collection agency would be inconsistent

with the requirements that the debt was actually uncollectible

and there was no likelihood of future collection. Such an

interpretation, the Secretary found, would impermissibly

transform the four-requirements of Section 413.89(e) into two

requirements: (1) The debt must be related to covered services

and derived from deductible and co-insurance amounts; and (2) the

provider must be able to establish that reasonable collection

efforts were made for 120 days. The Secretary further found that

there was no statutory bar to the Intermediary’s present

rejection of plaintiff’s bad debt policy since the record failed

to show that the Intermediary “accepted” plaintiff’s policy

within the meaning of OBRA. (Id.)

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STANDARD

Judicial review of the Secretary’s final decision in a

Medicare reimbursement dispute is conducted in accordance with

the standards set forth in the Administrative Procedures Act

(“APA”), 5 U.S.C. § 701 et seq. 42 U.S.C. § 1395oo(f)(1). Under

this standard, the court may set aside a final decision only if

it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law,” or is “unsupported by

substantial evidence.” 5 U.S.C. § 706(2)(A), (E); Cmty Hosp. of

the Monterey Peninsula, 323 F.3d 782, 792 (9th Cir. 2003). The

United States Supreme Court defined the “arbitrary and

capricious” standard under Section 706 as follows:

The scope of review is a narrow one. A reviewing court

must consider whether the decision was based on a 

consideration of the relevant factors and whether there 

has been a clear error of judgment . . . although this

inquiry into the facts is to be searching and careful,

the ultimate standard of review is a narrow one. The

court is not empowered to substitute its judgment for 

that of the agency . . . The agency must articulate a

rational connection between the facts found and the choice

made . . . While we may not supply a reasoned basis for

the agency’s action that the agency itself has not given 

. . . we will uphold a decision of less than ideal clarity

if the agency’s path may be reasonably discerned.

Bowman Transp. v. Arkansas-Best, Freight Sys., 419 U.S. 281, 285-

86 (1974) (citations omitted).

The court must defer to the agency’s reading of its own

regulations, unless the reading is “plainly erroneous or

inconsistent with the regulation[s].” Auer v. Robbins, 519 U.S.

452, 461 (1997); K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 292

(1988) (“If the agency regulation is not in conflict with the

plain language of the statute, a reviewing court must give

deference to the agency’s interpretation of the statute.”) Thus,

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if the Secretary defines a regulation in a reasonable way, the

court must give the reading controlling weight, even if it is not

the answer, “‘the court would have reached if the question had

initially arisen in a judicial proceedings.’” Regions Hosp. V.

Shalala, 522 U.S. 448, 457 (1998) (quoting Chevron, U.S.A., Inc.

v. Natural Resources Defense Council, 467 U.S. 837, 843 n. 11

(1984)).

ANALYSIS

Plaintiff contends that the Secretary’s decision, finding 

that plaintiff had not sustained its burden to demonstrate the

applicability of OBRA’s moratorium, is contrary to law and thus,

subject to reversal under the APA’s “arbitrary and capricious”

standard. 5 U.S.C. § 706. In OBRA, Congress provided:

The Secretary may not require a hospital to change its

bad debt collection policy if a fiscal intermediary,

in accordance with the rules in effect as of August 1,

1987, with respect to criteria for indigence, determination

procedures, record keeping, and determining whether to

refer a claim to an external collection agency, has

accepted such policy before that date, and the Secretary

may not collect from the hospital on the basis of an

expectation of a change in the hospital’s collection policy.

Thus, this “moratorium prohibits the Secretary from imposing new

or different bad debt criteria on a provider after August 1,

1987, if the intermediary had ‘accepted’ the provider’s policies

before that date in accordance with the rules then in effect.” 

University Health Servs., Inc. v. Health & Human Servs., 120 F.3d

1145, 1151 (11th Cir. 1997). 

In this case, the parties dispute only whether there was

“acceptance” of plaintiff’s bad debt write-off policy prior to

August 1, 1987. The parties do not dispute that any such

acceptance was in “accordance with the rules then in effect.” 

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9 These debts were at least 120 days old; plaintiff’s

internal collection department had worked the accounts and

determined the debts were uncollectible and worthless but the

debts were turned over to an outside collection agency, with

plaintiff’s other uncollectible, non-Medicare accounts, as a

matter of course. 

10 As set forth below, the Intermediary did not challenge

the admissibility of Dah’s statement at the PRRB hearing and

defendant does not do so herein; rather, the Intermediary argued

then and defendant argues now only that said statement and the

other evidence proffered by plaintiff is insufficient.

13

Id. As set forth above, it was plaintiff’s policy during 1999 to

write off accounts as bad debt shortly after referral of the

accounts to an outside collection agency; the referral was made

only after plaintiff’s internal collection department had worked

the accounts and determined them to be uncollectible; written-off

accounts, pending with the collection agency, were at least 120

days old. Plaintiff borne the burden to demonstrate, by a

preponderance of the evidence, that its policy prior to August 1,

1987 was the same and that the Intermediary had accepted said

policy. See Hennepin County Med. Ctr. v. Shalala, 81 F.3d 743

(8th Cir. 1996). 

In that regard, plaintiff offered at the PRRB hearing, the 

statement (titled a “certification of facts”) of its CFO, Cyrus

Dah, provided to the Intermediary in 2003, who declared: (1) that

he has been employed by plaintiff since 1983; and (2) during said

time through August 2003, it was plaintiff’s policy to write off

Medicare accounts as bad debt at or about the time the accounts

were assigned to an outside collection agency.9 (AR 1301.)10

Plaintiff also established at the PRRB hearing, via documentary

evidence and the testimony of its in-house Credit and Collections

Department Manager, that the Intermediary has audited plaintiff’s

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bad debts accounts annually, and until the FYE 1999 audit in

2003, the Intermediary never objected. In other words, the FYE

1999 audit was the first time the Intermediary rejected

plaintiff’s bad debt submissions because accounts remained

“active” with an outside agency. (AR 53-55 [citing hearing

transcript], 142-144, 871-884.) 

The Intermediary provided no evidence in rebuttal. Nor did

the Intermediary challenge the reliability or admissibility of

CFO Dah’s testimony. Instead, the Intermediary simply argued

that plaintiff’s documentation was insufficient proof of its preAugust 1987 acceptance of plaintiff’s bad debt collection writeoff policy. The Intermediary asserted that plaintiff must

produce the Intermediary’s pre-1988 audits to prove that it

accepted plaintiff’s pre-August 1, 1987 policy of writing off

accounts as bad debt at or about the time the debts were assigned

to an outside collection agency. Contrary to the PRRB, the

Secretary, in his final decision, found the Intermediary’s

argument persuasive.

The Secretary’s decision is “not in accordance with the law”

and therefore this court must reverse the decision pursuant to

the APA. The Secretary does not cite (nor did the Intermediary)

any law or regulation requiring a provider to retain the

Intermediary’s audit reports or NPRs for prior years,

particularly such reports from some 15 years prior, or that such

reports are the only acceptable documentation of the

Intermediary’s acceptance of pre-August 1987 collection policies. 

“The term ‘acceptance’ is not defined [in OBRA] and the statute

includes no specific requirements for acceptance.” Harris County

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Hospital Dist. v. Shalala, 64 F.3d 220, 222 (5th Cir. 1995). 

However, courts have recognized that an Intermediary’s “previous

repayment of a provider’s claim for Medicare reimbursement of bad

debt following an investigation and audit constitutes

‘acceptance’ for purposes of triggering the moratorium.” 

University Health Servs., 120 F.3d at 1152; accord Harris County

Hospital District, 64 F.3d at 220; see also Hennepin County Med.

Ctr., 81 F.3d at 749 (recognizing that in the majority of cases,

allowance of a bad debt claim, via issuance of the NPR and the

repayment that flows from it, functions as proof of acceptance of

the provider’s bad debt practices). 

Here, plaintiff offered unrefuted evidence that its bad debt

collection policy in place in 1999 was the same as the policy in

place prior to August 1987, and that only until 2003, during the

audit of the FYE 1999, did the Intermediary reject plaintiff’s

bad debt submissions. Indeed, CFO Dah’s certification of facts

was presented to the Intermediary in August 2003, some 20 months

before the PRRB hearing. Yet, the Intermediary, despite apparent

access to pertinent files, failed to offer any evidence to rebut

plaintiff’s showing. (AR 142-144.) Where “an intermediary’s

allowance of a claim remains unchallenged and undisturbed [as is

the evidence in this case for years prior to August 1987 up to

1999] . . . [the allowance(s)] serves as the functional

equivalent of acceptance of the provider’s claim [or policies] in

those cases.” University Health Servs., 120 F.3d at 1153; see

also Hennepin County Med. Ctr., 81 F.3d at 749 (“A notice of

program reimbursement, and the reimbursement that flows from it,

are the only tangible forms of acceptance a provider can expect

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from an intermediary.”). 

In sum, as the only evidence proffered on the issue,

plaintiff’s evidence, specifically, its CFO’s statement and the

testimony and documents offered into evidence at the PRRB

hearing, preponderates. The “preponderance of the evidence”

standard requires that the trier of fact decide whether the

existence of a fact is more probable than its nonexistence. 

Concrete Pipes & Prods. of Cal., Inc. v. Construction Laborers

Pen. Turst for So. Cal., 508 U.S. 602, 622 (1993). Here, only

one party, plaintiff, produced evidence regarding application of

the moratorium, and neither the Intermediary nor defendant 

objected to the evidence as either unreliable or inadmissible. 

Under the above case law, plaintiff’s evidence is plainly

sufficient to establish entitlement to the moratorium’s

protections. The court therefore finds that the Secretary’s

decision finding that plaintiff had not met its burden of proof

on the issue contrary to law as the decision violated OBRA. See

Harris County Hospital Dist., 64 F.3d at 222 (affirming the

district court’s decision that the “Secretary’s action was

contrary to law because it violated the OBRA”).

Because violation of OBRA provides a sufficient basis for

reversing the Secretary’s decision and ordering payment of

plaintiff’s FYE 1999 bad debt submission in full, the court does

not consider the Secretary’s alternative finding that

reimbursement is impermissible based on the debts’ “active”

status, at the time, at an outside collection agency. Id. at

222-23 (holding that the court need not address the issue of

whether the provider complied with all Medicare regulations

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because violation of OBRA provides a sufficient basis to affirm

the district court’s judgment in favor of the provider). As the

court finds that OBRA provides a statutory bar to the denial of

plaintiff’s subject reimbursement claim, it is irrelevant whether

plaintiff otherwise complied with the applicable bad debt

collection regulations in seeking reimbursement for the FYE 1999.

CONCLUSION

For the foregoing reasons, the court reverses the final

decision of the Secretary and directs that the Secretary

reimburse plaintiff’s FYE 1999 Medicare bad debt submission in 

full.

IT IS SO ORDERED.

 DATED: August 8, 2007

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