Blue Cross and Blue Shield Association and Empire Blue Crossand Blue Shield, Plaintiffs-appellants, v. the United States, Defendant-appellee, 852 F.2d 1294 (Fed. Cir. 1988)

DECISION

The judgment of the United States Claims Court, 13 Cl.Ct. 710 (1987), is affirmed on the basis of the court's opinion.

OPINION

Blue Cross and Blue Shield Association consistently treated the New York Insurance Department assessment as a cost of its private subscription business; it included the entire assessment in its private premium rate structure; and it did not allocate or charge to the medicare program any portion of that assessment during the pertinent period. Because of the "commercial havoc" that would otherwise ensue, a contractor will generally be held to its chosen accounting method unless, as observed by the Claims Court, id. at 714, it shows that continued use of that method would produce an unreasonable or inequitable result. No circumstances here justify allowing Blue Cross retroactively to change the accounting treatment of the New York assessment.

BISSELL, Circuit Judge, dissenting.

I dissent. Substantial evidence does not support the Board's finding that the New York Insurance Department assessment was a direct cost of the private business of American Hospital Services of New York (AHS). The record reveals that AHS treated the assessment as an indirect cost of all business, but that AHS did not allocate a portion of this indirect cost against the government contracts at issue in this case until final settlement. In my view, therefore, the Board and the Claims Court erred by improperly analyzing this case as though it involved a retroactive change of accounting method. I would vacate and remand.