St. Vincent officials sued the HHS for denying reimbursement on an unspecified amount of interest on the loan the hospital had taken to build Winchester, Ind.-based St. Vincent Randolph in 2002.
The Randolph hospital borrowed roughly $15.3 million from it’s parent company, St. Vincent Health for the project. However, a formal loan agreement written. The only documentation of the loan was an amortization table. St. Vincent Health was then acquired by St. Louis-based Ascension Health.
The Randolph hospital later agreed to take part in a bond-financing program in which Ascension agreed to pay development and construction costs on the new hospital in 2004. Randolph hospital officials said they used the funds from the bond-financing program to repay the loan it received from its parent company, St. Vincent Health. Officials then filed a report for Medicare reimbursement on the interest it paid on both the original loan and the bond financing. Medicare denied the reimbursement request.
St. Vincent Randolph officials withdrew the request for reimbursement for the interest on the loan, but continued to fight for reimbursement for the interest paid on the bond financing.
In 2015, CMS said the hospital could not claim reimbursement for the interest paid on the bond financing because there was insufficient documentation to establish that the venture was necessary and related to patient care. The decision led St. Vincent Health officials to file suit against HHS.
On Monday, U.S. District Judge Tanya Pratt ruled against St. Vincent and in favor of the HHS, stating that “although the [HHS secretary’s] determination may be harsh, her decision is entitled to substantial deference and the Court is not allowed to reweigh the evidence or substitute its own judgment for that of the Secretary.”
A spokesman for St. Vincent Health said the system was reviewing its appeal options.
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