UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA PINNACLE HEALTH HOSPITALS, : : Plaintiff, : Civil Action No.: 09-0186 (RMU) : v. : Re Document Nos.: 18, 19 : KATHLEEN SEBELIUS, : Secretary of Health and Human Services, : : Defendant. :
MEMORANDUM OPINION
G RANTING T HE D EFENDANT ’ S M OTION FOR S UMMARY J UDGMENT ; D ENYING THE P LAINTIFF ’ S C ROSS -M OTION FOR S UMMARY J UDGMENT I. INTRODUCTION This matter comes before the court on the pa rties’ cross-motions fo r summary judgment. The plaintiff is a non-profit hospital system created in 1995 by the consolidation of two independent hospitals. Through this action, br ought under the Administ rative Procedure Act (“APA”), 5 U.S.C. §§ 553 et seq. , the plaintiff challenges a deci sion by the Administrator of the Centers for Medicare and Medicaid Services (“ the Administrator”) disa llowing the plaintiff’s claim for the recovery of “losses” on deprecia ble assets that allegedly resulted from the consolidation that created the pl aintiff. The Administrator deni ed the claim on two independent grounds: first, because the consolidation did not eff ect a bona fide sale of the depreciable assets, and second, because the consolidation was a tran saction between related parties. The court concludes that the Administrato r’s imposition of a bona fide sale requirement was not arbitrary or capricious and that substantial evidence suppo rted the Administrator’s conclusion that the2 consolidation did not result in a bona fide sale. Accordingly, the court grants the defendant’s motion for summary judgment a nd denies the plaintiff’s cro ss-motion for summary judgment.

II. BACKGROUND A. The Statutory and Regulatory Framework Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payment made on their behalf for the care a nd services rendered by hospitals, termed “providers.” See 42 U.S.C. §§ 1395 et seq. Providers, in tu rn, are reimbursed by insurance companies, known as “fiscal intermedia ries,” that have contra cted with the Centers for Medicare and Medicaid Services (“CMS”) to aid in administering the Medicare program.
See id. § 1395h. Fiscal intermediari es determine the amount of reimbursement due to providers under the Medicare Act and a pplicable regulations. See id

. Providers obtain Medicare reimbursement by submitting an annual co st report to their fiscal intermediary demonstrating their costs fr om the previous year and the portion of those costs allocable to Medicare. 42 C.F.R. § 413.20. After receiving a provid er’s cost report, the fiscal intermediary is authorized to audit th e report before determining the total amount of reimbursement to which the hospital is entitled. Id. § 405.1803. If the provider disagrees with the intermediary’s determination, it may a ppeal that determination to the Provider Reimbursement Review Board (“PRRB”). 42 U. S.C. § 1395oo(a). The PRRB’s determination may, in turn, be appealed to the Administrator. Id. § 1395oo(f)(1). The Administrator’s ruling constitutes a final agency decision subject to review in a federal district court. Id. At the time of the consolidation at issue in this case, CMS regulati ons authorized fiscal intermediaries to reimburse Me dicare providers based on the co sts they incurred in providing3 services to beneficiaries. Id. § 1395f(b). Included among these reimbursable costs was “depreciation on buildings and equipment used in the provision of patie nt care.” 42 C.F.R. § 413.134(a) (1995). 1 Depreciation was reimbursed annually and calculated by ta king the cost of acquiring the asset and dividing th at amount first by the asset’s es timated useful life and second by the portion of its use attributable to Medica re beneficiaries. Id. § 413.134(a)-(b). The initial cost of the asset minus any depreciation was referre d to as the “net book valu e” of the asset, and represented an estimate of its current value. Id. § 413.134(b)(iii)(9). Medicare regulations recognize d, however, that an asset’ s “net book value” represented only an estimate of that asset’s current value an d that if the provider sold the asset before it reached the end of its useful lif e, the sale price would provide a more accurate indication of the asset’s current value. See id. § 413.134(f). Accordingly, the re gulations provided that if a provider disposed of an asset in a bona fide sale before the end of its useful life, an adjustment would be made in the amount of depreciation for which the provider had been reimbursed. Id. § 413.134(f)(2). Specifically, the re gulations provided that if the sale price of the asset was higher than the asset’s “net book value,” this would establish that Medicare had excessively reimbursed the provider for depreciation, and th e provider would be required to repay the difference to Medicare. Id. Conversely, if the sale price of the asset was lower than the asset’s “net book value,” this would indi cate that Medicare had insuffi ciently reimbursed the provider

1 The Medicare regulations discussed in the remai nder of this decision have undergone substantial revision since 1995, when the consolidation at issue here took place. Via Christi Reg’l Med. Ctr. v. Leavitt , 509 F.3d 1259, 1262 n.2 (10th Cir. 2007). Thus, all citations to these regulations in the remainder of this decision refer to the 1995 vers ion of the Code of Federal Regulations, unless otherwise indicated.4 for depreciable losses, and Medi care would provide an adjustment payment to make up the difference. 2 Id. B. Factual & Procedural Background In 1995, Harrisburg Hospital/Seidle Memorial Hospital 3 (“Harrisburg/Seidle”) and Polyclinic Medical Center (“Polyclinic”) (collec tively with Harrisburg/Seidle, “the consolidating hospitals”), two non-profit hospitals in Harrisbur g, Pennsylvania, consolidated to form the plaintiff, a new non-profit hospital system. A.R.P. 4 at 2156. Prior to the consolidation, Harrisburg/Seidle and Polyclinic were independ ent entities and were not subject to common ownership or control. Id. at 2157. As a result of the consolid ation, the plaintiff acquired title to all of the consolidating hospitals’ assets and assumed responsib ility for all of their liabilities. Id. at 2156. Each consolidating hospital appointed ha lf of the plaintiff’s initial governing board. A.R.H. at 895. Both Harrisburg/Seidle and Polyclinic in cluded a claim for depr eciation losses incurred as a result of the consolida tion on their 1995 cost reports fi led with the Medicare fiscal intermediary. A.R.P. at 2158-59. After the fi scal intermediary denied these claims for depreciation losses, both consolidating hospitals appealed to the PRRB. Id. The PRRB

2 Medicare has since revised its reimbursement sch eme, such that reimbursement now turns on patient diagnoses rather than actual costs incurred. See Social Security Amendments of 1983, Pub. L. No. 98-21, 97 Stat. 65; Omnibus Budge t Reconciliation Act of 1987, Pub. L. No. 100- 203, 101 Stat. 1330. As a result, between 1990 and 2000, depreciation gradually ceased to be directly reimbursable. See generally 42 C.F.R. §§ 412.324 et seq. (2010).

3 Harrisburg Hospital and Seidle Memorial Hospita l shared a single hospital license, medical staff and Medicare provider number and were controlled by the same non- profit parent corporation. A.R.P. at 2155.

4 This case represents a consolidated review of two administrative proceedings: the first involving Harrisburg/Seidle and the second involving Polyclinic. Accordingly, there are two administrative records before the court. Citations to the administrative record in the Harrisburg/Seidle proceeding will be noted as “A.R.H.” Citations to the administrative reco rd in the Polyclinic proceeding will be noted as “A.R.P.”5 determined that the payments were proper and orde red the fiscal intermedia ry to pay the claims.
See A.R.P. at 92-113; A.R.H. at 94-115. The Administrator reversed the PRRB’s rulings. See A.R.P. at 2-36; A.R.H. at 2-38. More specifically, the Administrator conclude d that the claims were not proper for two independent reasons. First, the Administrator ruled that because many of the consolidating hospitals’ board members continued to control th e plaintiff upon consolidat ion, the consolidation constituted a transaction between related entiti es for which Medicare re gulations do not require adjustment payments. A.R.P. at 26-33; A.R.H at 26-35. Second, the Admini strator ruled that the consolidation did not effect a bona fide sale of the hospitals’ assets as required by the Medicare regulations. A.R.P. at 33-35; A.R.H. at 35-36. The plaintiff filed separate suits on behalf of each consolidating hospital to challenge the Administrator’s determinations. See generally Compl., Pinnacle Health Hosps. v. Sebelius , Civil Action No. 09-00186 (D.D.C. Jan. 30, 2009); Compl., Pinnacle Health Hosps. v. Sebelius , Civil Action No. 09-00187 (D.D.C. Jan. 30, 2009). The court subsequently consolidated the separate suits into the present action. Minute Order (July 30, 2009). In September 2009, the plaintiff filed the motion for summary judgment presently before the court. See generally Pl.’s Mot. The plaintiff challenges the Administrator’s determina tions that the claims were properly denied, arguing both that the tran saction was between unrelated partie s and that there is no requirement that a consolidation effect a bona fide sale of assets for a depreciation adjustment to be paid. 5
See id. at 20, 32. In October 2009, the defendant f iled her cross-motion for summary judgment.

5 The court need not reach the related parties i ssue because, as discussed below, the bona fide sale issue was a sufficient independent ground for th e Administrator’s decision and is, as a result, dispositive of the case. See Albert Einstein Med. Ctr. v. Sebelius , 566 F.3d 368, 376 (3d Cir. 2009) (declining to reach the related parties issue because the bona fide sale issue was a “sufficient independent basis” to sustain the Administrator’s action).6 See generally Def.’s Mot. With these cross-motions now fully briefed, the court turns to the applicable legal standards and the parties’ arguments.

III. ANALYSIS A. Legal Standard for a Motion for Summary Judgment Summary judgment is appropriate when “t he pleadings, the discovery and disclosure materials on file, and any affidav its show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” F ED
. R. C IV
. P. 56(c); see also Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986); Diamond v. Atwood , 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are “m aterial,” a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). A “genuine issue” is one whose resolution could es tablish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex , 477 U.S. at 322; Anderson , 477 U.S. at 248. In ruling on cross-motions for summary judgment, the court shall grant summary judgment only if one of the partie s is entitled to judgment as a matter of law upon material facts that are not genuinely disputed. Citizens for Responsibility & Ethi cs in Wash. v. U.S. Dep’t of
Justice , 658 F. Supp. 2d 217, 224 (D.D.C. 2009) (citing Rhoads v. McFerran , 517 F.2d 66, 67 (2d Cir. 1975)). To prevail on a motion for summa ry judgment, the moving party must show that the opposing party “fail[ed] to make a showing suffi cient to establish the ex istence of an element essential to that party’s case.” Celotex , 477 U.S. at 322. By pointing to the absence of evidence proffered by the opposing party, a moving party may succeed on summary judgment. Id. The opposing party may defeat summary judg ment through factual representations made in a sworn affidavit if he “support[s] his al legations . . . with f acts in the record,” Greene v.7 Dalton , 164 F.3d 671, 675 (D.C. Cir. 1999) (quoting Harding v. Gray , 9 F.3d 150, 154 (D.C. Cir. 1993)), or provides “direc t testimonial evidence,” Arrington v. United States , 473 F.3d 329, 338 (D.C. Cir. 2006). B. Legal Standard for Review of CMS Administrator Decisions Pursuant to the Medicare stat ute, the court reviews decisi ons of the Administrator in accordance with standard of review set fort h in the APA. 42 U.S.C. § 1395oo(f)(1); Thomas Jefferson Univ. v. Shalala , 512 U.S. 504, 512 (1994); Mem’l Hosp./Adair County Health Ctr.,
Inc. v. Bowen , 829 F.2d 111, 116 (D.C. Cir. 1987). The AP A requires a reviewing court to set aside an agency action that is “arbitrary, capriciou s, an abuse of discreti on, or otherwise not in accordance with law” or “unsupporte d by substantial evidence in a ca se . . . otherwise reviewed on the record of an agency hearing provided by statute.” 5 U.S.C. § 706(2)(A), (E). The “arbitrary and capricious” standard and the “substantial evidence” standard “require equivalent levels of scrutiny.” 6 Adair County , 829 F.2d at 117. Under both stan dards, the scope of review is narrow and a court must not substitute its judgment for that of the agency. Motor Veh. Mfrs. Ass’n v. State Farm Mutual Ins. Co. , 463 U.S. 29, 43 (1983); Gen. Teamsters Local Union No. 174 v. Nat’l Labor Relations Bd. , 723 F.2d 966, 971 (D.C. Cir. 1983). As long as an agency has “examined the relevant data and articulated a satisfactory explanation for its action including a rational connection between the facts found and th e choice made,” courts will not disturb the agency’s action. Md. Pharm., Inc. v. Drug Enforcement Admin. , 133 F.3d 8, 16 (D.C. Cir. 1998). The burden of showing that the ag ency action violates the APA st andards falls on the provider.

6 This Circuit has explained that the substantial ev idence standard is a subset of the arbitrary and capricious standard. Sithe/Indep. Power Partners v. Fed. Energy Regulatory Comm’n , 285 F.3d 1, 5 n.2 (D.C. Cir. 2002). “While the substantia l evidence test concerns support in the record for the agency action under review, the arbitrary and capricious standard is a broader test subsuming the substantial evidence test but also enco mpassing adherence to agency precedent.” Mem’l Hosp./Adair County Health Ctr., Inc. v. Bowen , 829 F.2d 111, 117 (D.C. Cir. 1987).8 Diplomat Lakewood Inc. v. Harris , 613 F.2d 1009, 1018 (D.C. Cir. 1979); St. Joseph’s Hosp. (Marshfield, Wis.) v. Bowen , 1988 WL 235541, at *3 (D.D.C. Apr. 15, 1988). In reviewing an agency’s interpretation of its regulations, the court must afford the agency substantial deference, giving the agency’s interpretation “controlling weight unless it is plainly erroneous or incons istent with the regulation.” 7 Thomas Jefferson Univ. , 512 U.S. at 512 (internal quotations omitted); Presbyterian Med. Ctr. of Univ. of Pa. Health Sys. v. Shalala , 170 F.3d 1146, 1150 (D.C. Cir. 1999); see also Qwest Corp. v. Fed. Commc’ns Comm’n , 252 F.3d 462, 467 (D.C. Cir. 2001) (stating that the court would reverse an agency’s reading of its regulations only in cases of a clear misinterpretation). “So long as an agency’s in terpretation of ambiguous regulatory language is reasona ble, it should be given effect.” Wyo. Outdoor Council
v. U.S. Forest Serv. , 165 F.3d 43, 52 (D.C. Cir. 1999). Wher e the regulations involve a complex, highly technical regulatory program such as Medicare, broad deference is “all the more warranted.” Thomas Jefferson , 512 U.S. at 512 (internal quotations omitted); Presbyterian Med.
Ctr. , 170 F.3d at 1151. As for interpretive guides, they are without the force of law but nonetheless are entitled to some weight. Furlong v. Halala , 156 F.3d 384, 393 (2d Cir. 1998). C. The Court Grants the Defendant’s Moti on for Summary Judgment and Denies the Plaintiff’s Cross Motion for Summary Judgment 1. The Administrator’s Imposition of a Bona Fide Sale Requirement Represented a Reasonable Interpretation of the Medicare Regulations In its motion, the plaintiff argues, inter alia , that the Administrator erred in ruling that the regulations required that the c onsolidation amount to a bona fide sale of the consolidating hospitals’ assets. Pl.’s Mot. at 32. In response, the defendant ma intains that the Administrator’s imposition of a bona fide sale requirement was proper under the applicable regulations, Def.’s

7 “[A court’s] review in such cases is ‘more deferential . . . than that afforded under Chevron .’” Wyo. Outdoor Council v. U.S. Forest Serv. , 165 F.3d 43, 52 (D.C. Cir. 1999) (quoting Nat’l Med. Enters. Inc. v. Shalala , 43 F.3d 691, 697 (D.C. Cir. 1995)).9 Mot. at 14, and that substan tial evidence supported the Admini strator’s conclusion that the consolidation was not a bona fide sale, id. at 19. 42 C.F.R. § 413.134(l)(3) governs the effect of consolida tions between providers on Medicare reimbursement. Unlike § 413.134(l)(2), which governs mergers between providers, § 413.134(l)(3) does not explic itly authorize depreci ation adjustment payments when providers consolidate. Compare id. § 413.134(l)(2) (specifying that “[i] f the merged corporation was a provider before the merger, then it is subject to the provisions of paragraphs . . . (f) of this section concerning . . . th e realization of gains a nd losses” on depreciation) with id. § 413.134(l)(3) (governing the effect of a consol idation and omitting the previously quoted sentence or other comparable provision); see also Via Christi Reg’l Med. Ctr. v. Leavitt , 509 F.3d 1259, 1275 (10th Cir. 2007) (noting the disc repancy between the two provisions and concluding that the absence of any reference to depreciation adjustment payments in § 413.134(l)(3) would support an interpretation “precluding any adjustment to depreciation payments for providers th at consolidate”). Neither party asserts that the omission of an explicit provision for depreciation adjustment payments in § 413.134(l)(3) means that such payments are never permitted in the consolidation context. See generally Pl.’s Mot.; Def.’s Mot. Th e parties do, however, dispute the significance of this omission. The defendant asserts that the applicable regulation permits depreciation adjustment payments to consolida ting providers only to the extent that they are permitted by § 413.134(f), see Def.’s Mot. at 14, which is “the only section expressly permitting depreciation adjustments,” Via Christi Reg’l Med. Ctr. , 509 F.3d at 1274. Accordingly, under the defendant’s interpretation, c onsolidating providers can recove r depreciation adjustments only10 if the consolidation amounts to a bona fide sale. 8 See Def.’s Mot. at 14. Conversely, the plaintiff argues that the regulations re quire depreciation adjustment payments whenever unrelated providers consolidate. See Pl.’s Mot. at 17. As noted, the defendant’s interpretation is en titled to substantial deference and may not be displaced unless it is “plainly erroneous or inconsistent with the regulation.” Thomas Jefferson Univ. , 512 U.S. at 512 (internal quotations omitte d). The defendant’s interpretation of § 413.134(l)(3) to permit depreciation adjustment pa yments only if there has been a bona fide sale is consistent with the text of the regulations and has been repeatedly upheld by the courts.
See Via Christi Reg’l Med. Ctr. , 509 F.3d at 1274 (concluding that “the ‘bona fide sale’ requirement is a reasonable cons truction” of the Medicare regul ations governing consolidating providers); accord Provena Hosps. v. Sebelius , 662 F. Supp. 2d 140, 152 (D.D.C. 2009) (applying Via Christi and affirming the Secretary’s imposition of a bona fide sale requirement for consolidating providers); see also Albert Einstein Med. Ctr. v. Sebelius , 566 F.3d 368, 376 (3d Cir. 2008) (concluding that the bona fide sale requirement is a “reasonable inte rpretation” of the regulations for merging providers); Robert F. Kennedy Med. Ctr. v. Leavitt , 526 F.3d 557, 562 (9th Cir. 2008) (concluding that the bona fide sale requirement “is a reasonable construction of the Medicare regulations” for merging providers); St. Luke’s Hosp. v. Sebelius , 662 F. Supp. 2d 99, 102 (D.D.C. 2009) (concluding, in the merger c ontext, that “the Secr etary’s interpretation [imposing a bona fide sale requirement] is s upported by the text of the regulations and by common sense”).

8 42 C.F.R. § 413.134(f) lists a number of situ ations in which depreciation adjustments are recoverable, but the only one which is argua bly applicable here is a bona fide sale under § 413.134(f)(2). See Via Christi Reg’l Med. Ctr. v. Leavitt , 509 F.3d 1259, 1274 (10th Cir. 2007) (concluding that only the bona fide sale pr ovision could apply in a consolidation case).11 The plaintiff argues that th e imposition of a bona fide sale requirement on consolidating providers was not consistent with the interpretati on in effect at the time of the transaction and thus represents an abrupt and impermissi ble reversal of position by the defendant. 9 See Pl.’s Mot. at 33. Yet the interpretive materials cited by the plaintiff in support of this argument do not carry the force of law. Furlong , 156 F.3d at 393. Moreover, courts have repeatedly rejected the plaintiff’s argument that th e imposition of a bona fide sale requirement on consolidating providers reflects a reversal of position. See Via Christi Reg’l Med. Ctr. , 509 F.3d at 1275 (rejecting the plaintiff’s argum ent regarding an impermissible reversal of position by CMS and concluding that the letters from CMS officials cited by the plaintiff were consistent with the imposition of a bona fide sale requirement b ecause they explicitly referenced § 413.134(f)); see also Robert F. Kennedy Med. Ctr. , 526 F.3d at 563 (concluding that evidence of a regulatory reversal on the bona fide sale requirement was unconvincing); Provena Hosps. , 662 F. Supp. 2d at 150 (noting that “all of the arguments regardin g the Secretary’s alleged ‘about-face’ have been flatly rejected by every court that has considered them”). 10 Accordingly, the court concludes that the Administrator’s imposition of a bona fide sa le requirement on consolidating providers as a

9 In support of its argument that the bona fide sale requirement was not imposed on consolidating providers at the time of the consolidation at issu e here, the plaintiff cites two letters from former CMS officials and a provision of the Medicare Intermediary Manual (“MIM”). See generally A.R.P. at 909-10 (“Booth Letter”); A.R.P. at 1217-18 (“Goeller Letter”); A.R.P. at 1095 (“MIM § 4502.7”). Yet both letters speci fically invoke § 413.134(f) in stating that a consolidation may, under the proper circumstances, trigger a depreciation adjustment payment. See Booth Letter (stating that a consolidation “require[es] a de termination of gain or loss under § 413.134(f)”); Goeller Letter (stating that when providers conso lidate, “an adjustment to recognize any gain or loss . . . would be required in accordance w ith regulations section 42 CFR 413.134(f)”). Similarly, although the MIM section cited by the pl aintiff instructs intermediaries to compute a gain or loss upon consolidation, it expressly refers to the consolidating providers as “seller[s].” See MIM § 4502.7.

10 The plaintiff argues that all of these decisions are flawed because they failed to explicitly address the MIM section that the plaintiff cites. See Pl.’s Reply at 19. Yet, as the MIM section refers to the consolidating hospitals as “seller[s],” MIM § 4502.7, the court perceives no inconsistency between the MIM section and the administrative determinations upheld in these decisions.12 condition of permitting the payment of depreciat ion adjustments was not a regulatory reversal 11
and constituted a reasonab le interpretation of th e Medicare regulations. 2. The Administrator’s Conclusion that No Bona Fide Sale Took Place Was Supported By Substantial Evidence The plaintiff argues that even if the bona fi de sale requirement applied to consolidating providers, that requirement was satisfied here be cause the consolidation amounted to a bona fide sale. Pl.’s Mot. at 35. Specifical ly, the plaintiff argues that the Ad ministrator erred in ruling that a bona fide sale required the paym ent of reasonable consideration. Id. Instead, the plaintiff contends that at the time the c onsolidation occurred, a sale was considered bona fide as long as the transacting parties exchanged any consideration. Id. at 35-39. In suppor t of this contention, the plaintiff points to cases in which the Administrator found certain sales to be bona fide despite disparities between the consideration paid and the assets’ fair market value. See id. at 37. Alternatively, the plaintiff argues that to the exte nt that reasonable cons ideration was required, it was paid in this case. See id. at 40. In response, the defendant argues that the reasonableness of the consideration has always been part of the de termination of whether or not a bona fide sale has taken place, and contends that the cases cited by the plaintiff involved arm’s length negotiations over price that ar e inapposite in this case. See Def.’s Mot. at 18. Furthermore, the defendant asserts that substant ial evidence supports the Admini strator’s conclusion that the consolidation was not a bona fide sale. See id. at 20. At the time the consolidation occurred, th e Medicare regulations did not provide a

11 Because the court concludes that there was no re gulatory reversal regarding the bona fide sale requirement, it need not reach the plaintiff’s va rious arguments that the alleged reversal was invalid because it violated procedural and statutory requirements. See Pl.’s Mot. at 45-53.13 definition of “bona fide sale.” 12 See generally 42 C.F.R. §§ 400.200-203, 413.134. These regulations did, however, reflect an understanding that a bona fi de sale would involve a price that approximated market value. See id. § 413.134(b)(2) (defining “fai r market value” as the value that would be received in a bona fide sa le). Furthermore, the rationale underlying the bona fide sale requirement – “ensur[ing] that any depreciation adjustment will represent economic reality, rather than mere ‘paper losses,’” Via Christi Reg’l Med. Ctr. , 509 F.3d at 1275 – demands that the requirement be “more than a mere nullity,” id. at 1276. For these reasons, courts have consistently upheld determinations that a bona fi de sale requires reasonable consideration. See Albert Einstein Med. Ctr. , 566 F.3d at 378; Robert F. Kennedy Med. Ctr. , 526 F.3d at 563; Via Christi Reg’l Med. Ctr. , 509 F.3d at 1276; Provena Hosps. , 662 F. Supp. 2d at 154; St. Luke’s Hosp. , 662 F. Supp. 2d at 104. Accordingly, the court concludes that the Administrator did not err when it considered the reasonableness of consideration in determining whether the consolidatio n at issue resulted in a bona fide sale. The remaining issue before the court, then, is whether the Administ rator’s conclusion that the consolidation did not involve the payment of reasonable cons ideration was not supported by substantial evidence. See Md. Pharm., Inc. , 133 F.3d at 16. Through the consolidation, the plaintiff assumed responsibility fo r all of the liabilitie s of Harrisburg/Seidle and Polyclinic and gained title to all of their assets. A.R.P. at 2156. The plaintiff contends that the assumption of liabilities provided reasonable compensation to the consolidating hospitals fo r the assets that they transferred to the plaintiff. See Pl.’s Mot. at 41. Yet the record indicates that prior to the consolidation, Harrisburg/Seidle had a combined fair market value of $176,364,817,

12 In 2000, a definition of bona fide sale wa s added to the Provider Reimbursement Manual. See A.R.H. at 13. The definition provides that a “ bona fide sale contemplates an arm’s length transaction between a willing and well inform ed buyer and seller . . . for reasonable consideration.” Id.14 $101,420,796 of which was comprised of current assets and investments. See A.R.P. at 2168-69. In exchange for gaining title to those assets, the record shows that the plaintiff assumed only $98,923,542 in liabilities, less than the value of the current a ssets and investments alone. 13 See id. Similarly, prior to the consolidation, Po lyclinic had a fair market value of $115,116,356, $62,128,000 of which was comprised of current assets and investments, and which the plaintiff gained title to in exchange for assuming only $54,262,561 in liabilities. See A.R.P. at 2170. Although the plaintiff argues that it also assumed additional unknown and contingent liabilities, the mere possibility of such liabilities does not invalidate the Admini strator’s conclusion under the deferential “substantial evid ence” standard of review. See Albert Einstein Med. Ctr. , 566 F.3d at 379 n.11 (rejecting the possibility that unknown and contingent liabilities “could account for such a large discrepancy betw een consideration given and the market value of the assets”); Via Christi Reg’l Med. Ctr. , 509 F.3d at 1277 n.16 (rejecting th e argument that contingent liabilities explained the discre pancy between assumed liabilities and the value of assets). Furthermore, unlike the administrative decisions that the plaintiff cites in which sales were determined to be bona fide despite a discre pancy between sale price and market value, 14 it is

13 The plaintiff argues that the stated values of the facilities acquired through the consolidation are misleading because they represent the reproduction cost for outdated facilities rather than the cost to obtain more suitable modern facilities, wh ich the plaintiff asserts would be lower. See Pl.’s Mot. at 43-44. At most, however, this distinction could affect only the valuation of the plaintiff’s facilities and still could not explain the substa ntial discrepancy between the consolidating hospitals’ liabilities and the value of their moneta ry assets. Furthermore, the burden is on the plaintiff to prove that a bona fide sale took place, Via Christi Reg’l Med. Ctr. , 509 F.3d at 1277, and the plaintiff has not provided any evidence of the fair market value of the facilities determined according to its preferred methodology, see generally Pl.’s Mot.

14 See, e.g. , Ashland Reg’l Med. Ctr. v. Blue Cross & Blue Shield Ass’n , PRRB Dec. No. 98-D32, Medicare & Medicaid Guide (CCH) ¶ 46,109 (1998), A.R.P. at 1317-26; Lac Qui Parle Hosp., Inc. v. Blue Cross & Blue Shield Assn. , PRRB Dec. No. 95-D37, Medicare & Medicaid Guide (CCH) ¶ 43,269 (1995), A.R.P. at 1331-39.15 undisputed that the consolidation did not involve any negot iations over price. 15 See Pl.’s Mot. at 34. Because the record contains substantia l evidence supporting the conclusion that the consolidation at issue in this ca se was not a bona fide sale, the court affirms the Administrator’s determination.

IV. CONCLUSION For the foregoing reasons, the court grants the defendant’s motion for summary judgment and denies the plaintiff’ s cross-motion for summary judgment. An Order consistent with this Memorandum Opinion is separately and contempor aneously issued this 28th day of June, 2010.

RICARDO M. URBINA United States District Judge

15 The plaintiff argues that it would be impossible for consolidating entities to negotiate over price because all of their assets would transfer to th e consolidated entity upon consolidation. See Pl.’s Mot. at 34. Even if true, however, this fact w ould merely underscore the particular importance of the reasonable consideration requirement in c onsolidations as opposed to sales, during which procedural safeguards such as arm’s length price negotiations are possible.