Condado Home Care Program, Inc. v. Cooperativa De Seguros De Vida, 85-1150

• Decision Date: 01 November 1985
• Docket Number: No. 85-1150,85-1150
• Citation: 775 F.2d 457
• Parties: , Medicare&Medicaid Gu 34,990 CONDADO HOME CARE PROGRAM, INC., Plaintiff, Appellant, v. COOPERATIVA DE SEGUROS DE VIDA, Secretary of Health and Human Services, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 457

775 F.2d 457

11 Soc.Sec.Rep.Ser. 182, Medicare&Medicaid Gu 34,990

CONDADO HOME CARE PROGRAM, INC., Plaintiff, Appellant, v. COOPERATIVA DE SEGUROS DE VIDA, Secretary of Health and Human Services, Defendants, Appellees.

No. 85-1150.

United States Court of Appeals, First Circuit.

Argued Sept. 12, 1985.

Decided Nov. 1, 1985.

Eduardo Morales Coll, Hato Rey, P.R., for plaintiff, appellant.

Connie Raffa, Asst. Regional Atty., New York City, with whom Daniel F. Lopez Romo, U.S. Atty., Hato Rey, P.R., Terry Coleman, Acting General Counsel, Washington, D.C., and Annette Blum, Regional Atty., New York City, were on brief for defendants, appellees.

Before COFFIN, ALDRICH and TORRUELLA, Circuit Judges.

BAILEY ALDRICH, Senior Circuit Judge.

This is an appeal from a district court's denial of a petition to review an administrative decision reducing reimbursement to plaintiff Condado Home Care Program, Inc., hereinafter provider, by not recognizing the full amount paid for supplies furnished it by Metropolitan Equipment Sale & Rental, Inc., hereinafter supplier. Full reimbursement was sought pursuant to the Medicare Program, 42 U.S.C. Secs. 1395 et seq., but defendant Secretary of Health and Human Services refused because provider and supplier were "related corporations," and provider had not shown entitlement to the exception provisions, 42 C.F.R. 405.427(d). Specifically, provider failed to show satisfaction of the following portion.

... if the provider demonstrates by convincing evidence to the satisfaction of ... the Health Care Financing Administration ... that a substantial part of [supplier's] business activity of the type carried on with the provider is transacted with others than the provider and organizations related to the supplier....

The regulations are spelled out with regard to the meaning of a "substantial" part.

Example of Exceptions

The exception was intended to cover situations where goods and services are supplied to the general public and only incidentally are furnished to related organizations. Provider Reimbursement Manual, HIM Sec. 1010.1. (emphasis suppl.)

In respect to this, provider furnished a one sentence statement by supplier's auditors to the effect that two thirds of supplier's business was carried on with others than provider, and a sworn statement of supplier's president that this other business was not with related organizations. Co-defendant Cooperativo de Seguros de Vida, acting as fiscal intermediary pursuant to 42 U.S.C. Sec. 1395h, replied that this was not evidence enough, and that intermediary wished to see supplier's books. To this, provider's counsel responded with a great many words, but no substance. Intermediary stood firm, and on review was supported by a majority decision of the Provider Reimbursement Review Board. It, in turn, was affirmed by the district court. We affirm.

Intermediary's position before the Board was that the evidence submitted was unsatisfactory; that, particularly in light of the fact that provider did 90% of its business with supplier, intermediary wished access to supplier's books. The Board agreed, on two grounds. One, it held against provider because provider had failed to solicit bids on the open market, and, two, provider had failed to show that "(2) the Supplier only incidentally did business with the Provider."

The dissenting member pointed out that open bidding was not a requirement. In this he was correct. ¹ However, he,...