Rio Hondo Memorial Hospital v. United States

This case, before us on cross motions for summary judgment, requires the court to determine the appropriate treatment under Medicare of sales transactions between related parties that were completed before the effective date of the Medicare Act. Specifically, plaintiff, the provider, seeks to deduct the interest expense incurred by its owner in purchasing plaintiffs assets from a related party as a reasonable cost of providing care. Secondly, plaintiffs owner seeks to increase the valuation of plaintiffs assets as a result of the sale in order to claim a stepped-up basis for depreciation.

On…