Opinion ID: 406699
Heading Depth: 2
Heading Rank: 2

Heading: Coffee Shop Costs

Text: 31 Research's last claim goes to reimbursement for losses it sustained in operating its coffee shop. Roughly one-fourth of the coffee shop customers were staff members and patients; the rest were visitors. The Secretary determined that provision of a coffee shop for visitors is not a necessary expense, and therefore disallowed reimbursement of the proportion of the loss attributable to visitors. The Secretary reversed the decision of the Provider Reimbursement Review Board on this issue. 32 There are two parts to Research's argument that the Secretary should be reversed on this issue. The first is that the regulation which defines necessary and proper costs, 42 C.F.R. § 405.451(b)(2), must be read to include the coffee shop expenses attributable to visitors. That regulation reads: Necessary and proper costs are costs which are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities. They are usually costs which are common and accepted occurrences in the field of the provider's activity. (Emphasis added.) 33 The second part of Research's argument is that disallowance of visitor expenses for the coffee shop is inconsistent with the Secretary's allowance of other visitor-oriented costs, such as waiting rooms, lobbies, and parking lots. The Provider Reimbursement Manual specifically allows reimbursement for parking facilities. 34 First we point out that the fact that the Secretary reversed the decision of the Review Board does not change our standard of review. Medical Center of Independence, 628 F.2d at 1117. Of course, the Review Board's decision is part of the whole record which we must review, see 5 U.S.C. § 706 (1976), but that does not mean that we give less deference to the Secretary. 35 The first part of Research's argument can be disposed of easily. The phrase necessary and proper has some ambiguity, and the Secretary is in a much better position than this court to decide which costs are necessary and proper, or are common and accepted occurrences in the field of the provider's activity. We cannot say that there is anything inherently arbitrary in the Secretary's decision. 36 The second part of Research's argument is more troublesome. Allowing costs for visitor services other than the coffee shop could indicate that disallowing the coffee shop costs was an arbitrary act, which we would reverse pursuant to 5 U.S.C. § 706(2)(A) (1976). See Skidmore v. Swift and Company, 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944). 37 A careful review of the facts convinces us that distinguishing the coffee shop from other visitor services, like parking lots, waiting rooms, and lobbies, is not arbitrary. First, the coffee shop supplements a main cafeteria at Research's facility. The coffee shop opens at 7:00 a. m., an hour after the main cafeteria opens, and it remains open until 9:00 p. m., two and a half hours after the main cafeteria closes. Therefore, visitors would not be without a place to eat during the normal meal hours, even if there were no coffee shop. Second, the lack of waiting rooms and a lobby would be more likely to interfere with patient care than would the lack of a coffee shop. Visitors who had to roam halls would be likely to impede the staff in their duties and create security problems. The lack of a coffee shop would not have such an effect. Third, the lack of parking facilities would be a greater deterrent to visitors than would the lack of a coffee shop. (It is undisputed that visitors are generally helpful for patient care.) Nearly every visitor would need a place to park, but only those who make long visits would need a place to eat. Furthermore, even those who would make long visits would have a place to eat until 6:30 p. m. Parking on the street is not a realistic alternative. The lack of a lot would in itself be a deterrent to visitors, who would not want to have to search for a parking place or make a long walk to the hospital. Also, having visitors park on the street could damage a medical facility's relationship with the neighborhood. This damage could foster opposition to the facility's plans for expansion or other improvements intended to raise the quality of care. 38 In light of these considerations, it is reasonable to believe that the lack of a coffee shop would have a minor effect on the number of visitors compared with the lack of waiting rooms, lobbies, or parking lots. Although our thinking on the coffee shop issue is not in full accord with that of the Secretary, we are neither the finders of fact nor are we writing on a clean slate. The question appears to be a close one but as an appellate court we cannot say that the Secretary's decision is arbitrary or capricious or unsupported by substantial evidence. Therefore, the Secretary's decision to distinguish the coffee shop from other visitor services will be upheld. 39 The judgment of the district court is affirmed.