St. Vincent Randolph Hospital, v. Price, No. 16-3956 (7th Cir. 2017)Annotate this Case
St. Vincent Health group acquired Randolph County Hospital and decided to replace the 80-year-old building. In 2002 the Hospital financed the project by borrowing $15.3 million from a fraternal corporation. Within a year, St. Vincent Health group was acquired by Ascension, the nation’s largest Roman Catholic health-care system. Ascension loaned the Hospital $15.6 million to refinance the loan. The Hospital sought reimbursement under 42 U.S.C. 1395f(b)(1), 1395x(v)(1)(A), and 42 C.F.R. 413.153, for “the necessary and proper costs of financing medical facilities.” Recognizing its problems with poor documentation, the Hospital withdrew its request that Medicare cover any expense before 2004 but requested compensation for 2004-2008, after Ascension had refinanced the loan in compliance with section 413.153(c)(2). The Provider Reimbursement Review Board ordered the 2004-2008 claims paid, finding that problems with the 2002 loan did not taint the refinancing. The Centers for Medicare and Medicaid Services reversed. The district court rejected reasoning concerning the initial loan but granted summary judgment, finding that the Hospital had not established that the Ascension loan refinanced that loan. The Seventh Circuit vacated, stating the “taint” theory is legally untenable and cannot be reasserted on remand, but the agency is free to request more or better documentation and to explore the significance of the difference in the principal amounts of the loans.