Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________
CATHOLIC HEALTHCARE WEST, :
:
Plaintiff, :
: v. : Civil Action 11-459 (GK) :
KATHLEEN SEBELIUS, in her :
official capacity as Secretary :
of Health and Human Services, :
:
Defendant. :
__________________________________
MEMORANDUM OPINION
Plaintiff, Catholic Healthcare West (“CHW”), brings this action against Defendant Kathleen Sebelius, Secretary of the
U.S. Department of Health and Human Services (respectively, the
“Secretary” and “HHS”), pursuant to Title XVII of the Social
Security Act, 42 U.S.C. §§ 1395 et seq. (“the Medicare Act”).
CHW seeks judicial review of a final agency decision denying
Marian Medical Center’s (“Marian”) reimbursement claim arising
from the merger of Marian, Mercy Healthcare Ventura County
(“Mercy”), and CHW.
This matter is before the Court on Plaintiff’s Motiоn for Summary Judgment [Dkt. No. 14] and Defendant’s Motion for
Summary Judgment [Dkt. No. 15]. Upon consideration of the
parties’ cross-motions, the administrative record, and the
*2 entire record herein, and for the reasons stated below,
Plaintiff’s Motion for Summary Judgment is denied and
Defendant’s Motion for Summary Judgment is granted .
I. BACKGROUND
On March 15 1997, Marian entered into an Agreement of Merger with Mercy, a two-hospital system whose sole corporate
member was CHW. Administrative Record (“A.R.”) 20, 409. CHW is a
Catholic healthcare system co-sponsored by several Catholic
women’s religious orders. Id. at 20. CHW overseеs and
coordinates the activities of a healthcare system consisting of
over 30 acute care hospitals in California, Arizona, and Nevada.
Id. Marian was a general acute care hospital located in Santa
Maria, California. Id. Marian was owned and operated by the
Sisters of St. Francis of Penance and Christian Charity, St.
Francis Province (“Sisters of St. Francis”). Id. The merger
between Marian, Mercy and CHW became effective April 24, 1997.
Id. at 20, 411, 413-14, 493-95. Mercy, renamed CHW-CC, remainеd
as the surviving corporation. Id. at 20, 411, 413-14.
A. Statutory and Regulatory Framework
Congress created the Medicare program in 1965 to pay for certain specified, or “covered,” medical services provided to
eligible elderly and disabled persons. See 42 U.S.C. §§ 1395 et
seq. Under the program, health care providers are reimbursed for
a portion of the costs that they incur treating Medicare
beneficiaries pursuant to an extremely “complex statutory and
regulatory regime.” Good Samaritan Hosp. v. Shalala , 508 U.S.
402, 404 (1993). That regime is administered by the Centers for
Medicare & Medicaid Services (“CMS”), under the supervision of
the Secretary. CMS contracts with a network of fiscal
intermediaries to review and process Medicare claims in the
first instance.
The Medicare Act provides for reimbursement of the “reasonable cost of [Medicare] services.” 42 U.S.C. §
1395f(b)(1). “Reasonable” costs are those “actually incurred . .
. [as] determined in accordance with regulations.” 42 U.S.C. §
1395x(v)(1)(A). Under the Secretary's regulations in effect at
the time of the transaction at issue, “[a]n appropriate
allowance for depreciation on buildings and equipmеnt used in
the provision of patient care [was] an allowable cost.” 42
C.F.R. § 413.134(a)(1997). The costs are calculated by dividing
the asset's purchase price by its “estimated useful life” and
then prorating this amount by the percentage of the asset's use
dedicated to Medicare services. 42 C.F.R. §§ 413.134(a)(3),
(b)(1). Medicare reimburses providers for these depreciation
costs on an annual basis.
*4 The Secretary determined that certain disposals of depreciable assets may give rise to recognition of a “gain” or
“loss.” That figure effectively adjusts the annual Medicare
depreciation payments to more accurately reflect the actual cost
of providing covered services to Medicare beneficiaries.
Entities that were Medicare providers prior to statutorily
merging with an unrelated party are able to recoup gains and
losses from the merger subject to 42 C.F.R. § 413.134(f).
Subsection (f) allows providers to request reimbursement for the
difference between the “net book value” [3] and the compensation
actually received in еxchange for assets disposed of prior to
December 1, 1997. [4] 42 C.F.R. § 413.134(f)(1). Subsection (f)(2)
permits the inclusion of “gains and losses realized from the
bona fide sale ... of depreciable assets” in the determination
of allowable cost. 42 C.F.R. § 413.134(f)(2). [5]
*5 The Secretary issued Program Memorandum (“PM” or “Memorandum”) A-00-76 in order to clarify the application of 42
C.F.R. § 413.134(l), the statutory merger regulation, to non-
profit providers. PM A-00-76 (Oct. 19, 2000) (A.R. 1676-79). The
Memorandum describes the “related organizations” and “bona fide
sale” standards under which mergers between non-profit
organizations should be analyzed. Id.
As to “related orgаnizations,” PM A-00-76 notes that consideration should be given to continuity of control, or the
degree to which the pre-merged entities continue to exercise
control over the post-merger entity. Id. As to “bona fide sale,”
the Memorandum defines that term as an arm’s length transaction
for reasonable consideration. Id. PM A-00-76 explains that “a
large disparity between the sales price (consideration) and the
fair market value of the assets sold indicates the lack of a
bona fide sale.” Id. The Memorandum recommends reviewing “the
allocation of the sales price among the assets sold” to help
determine whether a bona fide sale took place. Id.
PM A-00-76 explains that its effective date is not of consequence because it clarified, rather than changed, existing
policy. Accordingly, the Memorandum concludes by stating that it
should be applied to “all cost reports for which a final notice
C.F.R. § 413.134] concerning . . . the realization of gains and losses.” 42 C.F.R. § 413.134(l)(2)(i).
of program reimbursement has not been issued and to all settled
cost reports that are subject to reopening . . . .” Id.
B. Procedural Background
Marian claimed a loss on the disposal of assets on its final Medicare cost report for the hospital’s fiscal year ending
April 24, 1997. A.R. 65. On August 12, 1999, the fiscal
intermediary engaged by the Secretary to administer the Medicare
program denied Marian’s claim for reimbursement. Id. at 1723-27,
1861-64.
Marian appealed the fiscal intermediary’s determination to HHS’ Provider Reimbursement Review Board (“PRRB”). On November
3, 2010, the PRRB affirmed the intermediary’s denial of Marian’s
claim. Id. at 33-46. The PRRB concluded thаt the large disparity
between the consideration received and the fair market value of
the assets acquired indicated a lack of reasonable consideration
and, therefore, the lack of a bona fide sale. Id. at 46. Having
determined that there was no bona fide sale, the PRRB held that
payment for the claimed loss on disposal of assets was not
allowable. Id. The PRRB also concluded that the parties were not
related. Id. 39, 43.
The CMS Administrator, who has the discretion to rеview any final decision of the PRRB, chose to review the PRRB’s denial of
Marian’s claim. Id. at 2-25. On January 4, 2011, the CMS
Administrator issued her decision and determined that, based on
the cost appraisal approach, Marian transferred cash, cash
equivalent assets, plant, and equipment worth approximately $67
million (comprised of cash and cash equivalent assets worth
approximately $15.9 million and plant and equipment worth
approximately $51.1 million) in exchange for the assumption of
liabilities worth approximately $32.7 million. Id. at 22. Based
on these figures, the CMS Administrator concluded that the
merger did not qualify as a bona fide sale because Marian never
sought and did not receive reasonable consideration for the
transfer of its depreciable assets. Id. at 21-22. Like the PRRB,
the CMS Administrator held that Marian was “not entitled to
reimbursement for a loss on disposal of assets . . . .” Id. at
22.
The CMS Administrator also disallowed the loss-on-sale claim for a second, independent reason, i.e., that the merger
was a related-party transaction. Id. at 22-24. The CMS
Administrator explained that the PRRB “incorrectly concluded
that the related party concept only applied to the entities[’]
relationship that existed prior to the merger” and that the
principle in fact “applied to the parties’ relationship pre and
post merger.” Id. at 22. Although the CMS Administrator noted
that “the record is lightly developed with respect to whether
[Marian] was related tо the merged entity through a continuity
of control and ownership,” the Administrator nonetheless
concluded that there was sufficient evidence demonstrating that
the parties were related. Id. 23-24. The CMS Administrator’s
decision constitutes the final decision of the Secretary and is
now before this Court for review.
II. STANDARD OF REVIEW
The Medicare Act provides for judicial review of a final decision made by the Secretary. 42 U.S.C. § 1395 oo(f)(1). The
Medicare Act instructs the reviewing court to apply the
provisions of the Administrative Procedures Act (“APA”). Id.
Undеr the APA, the agency decision can be set aside only if it
is “arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law” or “unsupported by substantial
evidence.” 5 U.S.C. §§ 702(2)(A), (2)(E).
“The arbitrary and capricious standard [of the APA] is a narrow standard of review.” Citizens to Preserve Overton Park,
Inc. v. Volpe , 401 U.S. 402, 416 (1971). It is well established
in our Circuit that “[t]his court's review is . . . highly
deferential” and that “we are ‘not to substitute [our] judgment
for that of the agency’ but must ‘consider whether the decision
was based on a consideration of the relevant factors and whether
there has been a clear error of judgment.’” Bloch v. Powell , 348
F.3d 1060, 1070 (D.C. Cir. 2003) (citations omitted). Thus, even
if this Court were to find “that other policies might better
further the Secretary’s stated objectives, [the Court is]
compelled to accept the policies and rules adopted by the
Secretary so long as they have a rational basis, are reasonably
interpreted, and are consistent with the underlying statute.”
Sentara Hampton Gen. Hosp. v. Sullivan, 980 F.2d 749, 755 (D.C.
Cir. 1992).
The substantial evidence standard is satisfied if the final agency decision is suppоrted by “such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Consolo v. Fed. Maritime Comm’n,
20 (1966) (citation and internal quotation marks omitted); City
of S. Bend, Ind. v. Surface Transp. Bd., 566 F.3d 1166, 1170
(D.C. Cir. 2009). Substantial evidence is “something less than
the weight of the evidence, and the possibility of drawing two
inconsistent conclusions from the evidence does not prevent an
administrative agency’s findings from being supported by
substantial evidence.” Consolo, 383 U.S. at 620 (citation
omitted); S.E.C. v. Fed. Labor Relations Auth., 568 F.3d 990,
995 (D.C. Cir. 2009). Under this standard, a court may reverse
the agency’s findings “only when the record is so compelling
that no reasonable factfinder could fail to find to the
contrary.” Orion Reserves Ltd. P’ship v. Salazar, 553 F.3d 697,
704 (D.C. Cir. 2009).
When an agency interprets its own rule or regulation, the interpretation “is entitled to the utmost deference.” St. Luke’s
Hosp. v. Sebelius, 662 F. Supp. 2d 99, 102 (D.D.C. 2009); see
Ballard v. C.I.R., 544 U.S. 40, 70 (2005) (“An agency’s
interpretation of its own rule or regulation is entitled to
controlling weight unless it is plainly erroneous or
inconsistent with the regulation”) (internal quotation marks
omitted). In the case of Mеdicare regulations, “[t]his broad
deference is all the more warranted” because “the regulation[s]
concern[] a ‘a complex and highly technical regulatory program,’
in which the identification and classification of relevant
‘criteria necessarily require significant expertise and entail
the exercise of judgment grounded in policy concerns.’” Thomas
Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting
Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 697 (1991)).
Therefore, courts must defer to the Secretary’s interpretation
unless an alternative reading is “compelled by the regulation’s
plain language” or if the language is ambiguous, by “other
indications of the Secretary’s intent at the time of the
regulation’s promulgation.” Thomas Jefferson, 512 U.S. at 512.
The task of the reviewing court is to set aside only those
agency interpretations that are affirmatively and plainly
“inconsistent” with the regulation itself. Id.
III. ANALYSIS
A. The Secretary’s Interpretation of “Bona Fide Sale” in PMA-00-76 Is Reasonable and Not Inconsistent with 42 C.F.R. § 413.134
Plaintiff argues that the Secretary incorrectly relied on PM A-00-76’s definitions of “related organizations” and “bona
fide sale,” because those definitions are contrary to the
regulations.
As noted, supra, PM A-00-76 defines a “bona fide sale,” as an arm’s length transaction for reasonable consideration. A.R.
1676-79. The Memorandum explains that the absence of reasonable
consideration indicates the lack of a bona fide sale. Id. PM A-
00-76 elaborates on what constitutes reasonable consideration,
stating that “[n]on-monetary consideration, such as a seller’s
concession from a buyer that the buyer must continue to provide
care to the indigent, may not be taken into account in
evaluating the reasonableness of the overall consideration (even
where such elements may be quantified in dollar terms). These
factors are more akin to goodwill than to consideration.” Id.
PM A-00-76 further clarifies that when valuing assets, “the cost approach is the only methodology that produces a discrete
indication of the value for individual assets . . . .” Id. By
contrast, “[b]oth the market approach and the income approach
produce a valuation of the business enterprise as a whole,
without regard to the individual fair market values of the
constituent assets. As a result, both the market approach and
the income approach could produce an entity evaluation that is
less than the market value of the current assets.” [6] Id. The
Memorandum concludes that “the cost approach is the most
appropriate methodology” for the bona fide sale analysis in the
non-profit context. Id.
Plaintiff argues that PM A-00-76’s prohibition against considering non-monetary factors in evaluating the
reasonableness of consideration is inconsistent with Medicare
regulations. [7] Plaintiff further argues that PM A-00-76’s focus on
*13 the cost approach as the most appropriate methodology to be used
in establishing the fair market value of assets is at odds with
42 C.F.R. § 413.134’s definition of fair market value. Pl.’s
Mot. for Summ. J. at 13.
Plaintiff’s arguments are not persuasive. The D.C. Circuit has unambiguously upheld the Seсretary’s interpretation of “bona
fide sale” as memorialized in PM A-00-76. See St. Luke’s Hosp.
v. Sebelius, 611 F.3d 900, 906 (D.C. Cir. 2010) (“[W]e uphold
the Secretary’s interpretation of 42 C.F.R. § 413.134(f) and
(l), memorialized in PM A-00-76, because it is not ‘plainly
erroneous or inconsistent with the regulation’”); see Forsyth
Mem. Hosp. v. Sebelius, 639 F.3d 534, 537 (D.C. Cir. 2011)
(summarily rejecting “a host of arguments that the [Secretary]
should not have applied PM A-00-76[]” because the D.C. Circuit
had “previously upheld PM A-00-76 insofar as [was] relevant”).
considerations, so long as they bargain to receive rеasonable
economic consideration for the transfer of their assets and meet
the other statutory and regulatory criteria.” Def.’s Rep. at 11
[Dkt. No. 19]. Plaintiff contends that fair market value, as defined by 42
C.F.R. § 413.134(b)(2)(1997), “is established if the following
factors are present: (a) bona fide bargaining; and (b) well informed buyers and sellers.” Pl.’s Mot. for Summ. J. at 13.
Plaintiff further contends that “[p]rior cases interpreting the
‘bona fide sale’ provision at 42 C.F.R. § 413.134 have emphasized the centrality of arm’s length bargaining in
determining whether a bona fide sale occurred.” Id. at 17. However, Plaintiff has failed to cite any Medicare cases where the Secretary applied a valuation methodology other than the
cost approach.
Accordingly, the Secretary’s interpretation of “bona fide sale,” as memorialized in PM A-00-76, is reasonable, not plainly
erroneous, and not inconsistent with prior agency statements.
B. The Secretary Appropriately Applied PM A-00-76 to the Merger at Issue
Plaintiff argues that the Secretary “еrred in implementing PM A-00-76 because it failed to publish timely notice of the
same in the federal register as required by 42 U.S.C. §
1395hh(C)(1).” Pl.’s Mot. for Summ. J. at 30. Under the APA,
however, notice and comment is not required for “interpretive
rules” or “general statements of policy.” 5 U.S.C. §
553(b)(3)(A). As PM A-00-76 is “an interpretation of an existing
regulation [] [it] does not require notice and comment.” Forsyth
Mem. Hosp. v. Sebelius, 667 F. Supp. 2d 143, 150 (D.D.C. 2009);
see also St. Luke’s, 662 F. Supp. 2d at 104 (rejecting the
argument that PM A-00-76 was subject to notice and comment and
holding that “[n]or can therе be any doubt that [PM A-00-76] is
properly an informal interpretation”).
Plaintiff additionally argues that PM A-00-76 was impermissibly retroactive. Pl.’s Rep. at 39 [Dkt. No. 18].
Plaintiff’s retroactivity argument has been soundly rejected by
the D.C. Circuit. See St. Luke’s, 611 F.3d at 906-907 (finding
“no impermissible retroactivity” with respect to the Secretary’s
application of PM A-00-76 to a merger effective as of January 1,
1997 and holding that “any potential retroactive effect was
completely subsumed in the permissible retroactivity of the
agency adjudication”) (internal quotation marks omitted).
Accordingly, the Court concludes that the Secretary’s аpplication of PM A-00-76 to the merger at issue was
appropriate. [9]
C. The Secretary’s Finding that the Merger Was Not a Bona Fide Sale Was Supported by Substantial Evidence Given the validity of the interpretation relied upon by the Secretary, the only question remaining is whether the
Secretary’s finding that the merger between Marian, Mercy and
CHW was not a bona fide sale was supported by substantial
evidence.
The Secretary based her decision, in part, on the large discrepancy between the consideration received for Marian’s
assets and the value of those assets. Plaintiff takes issue with
the Secretary’s use of Plaintiff’s own cost approach appraisal [10]
*16 to determine that reasonable consideration was not exchanged.
Pl.’s Mot. for Summ. J. at 16-21; see A.R. 20-22.
The Secretary explained in her final decision why she relied upon the cost approach. A.R. 22. Her explanation is
consistent with PM A-00-76, which, as discussed supra, has been
upheld by the D.C. Circuit. Using the cost approach, the
Secretary dеtermined that $32.7 million, the approximate worth
of Marian’s liabilities, was not reasonable consideration for
$67 million in assets. That determination is not unreasonable
and certainly does not reflect “a clear error of judgment.”
million, the market approach at $38.5 million, and the income
approach at $28.5 million. Id. at 729-833. For the first time in its Reply, Plaintiff insists that the
Secretary should evaluate the reasonableness of the
consideration exchanged based on a valuation of Marian’s assets
at $35.28 million. The $35.28 million figure appears to be а
blending of the VCG appraisal report’s market and income
approaches, though no clear explanation is given in the report
as to how the appraiser calculated that figure. See Pl.’s Rep. at 9-10; see also A.R. 832. As PM A-00-76 explains, “the cost approach is the most appropriate methodology,” for the bona fide sale analysis in the non-profit context.
Moreover, Plaintiff has failed to submit evidence that the cost approach does not accurately reflect the fair market value
of the assets in question. Nor has Plaintiff adduced evidence as
to how the alleged impairments in Marian’s value (i.e., the alleged constructive trust and alleged need for seismic safety
upgrades, see Pl.’s Mot. for Summ. J. at 10, 18-21) should be reflected in a downward adjustment to the assets’ cost approach
appraised value. Instead, Plaintiff simply insists that the
Secretary should have used its preferred methodology. In any
event, “absеnt extraordinary circumstances (not present here)
[courts] do not entertain an argument raised for the first time
in a reply brief.” U.S. v. Whren, 111 F.3d 956, 958 (D.C. Cir. 1997).
Bloch,
logical [] to infer . . . that a ‘large disparity’ between the
assets’ purchase price and their fair market value indicates
that the underlying transaction is not in fact bona fide”).
Additional evidence that the parties did not engage in arm’s length, self-interested bargaining supports the
Secretary’s finding as well. For instance, Marian appeared
uninterested in maximizing the amount of consideration it would
receive from the sale of its assets. This is evidenced by the
fact Marian did not seek appraisal of its assets prior to the
merger. See A.R. 729-833 (The VCG appraisal report, the only
appraisal in the Administrative Record, was not completed until
February 22, 1999, nearly two years after the merger).
Marian also declined to place its assets for sale on the open market. See Id. at 84-85 (Marian’s then-CEO and the Sisters
of St. Francis explained, “[o]ne of the principal reasons we
have focused on CHW is our firm belief that, with this group, we
have the best assurance that the mission, presence, and
sponsorship of the Sisters of St. Francis can be most
effectively preserved and enhanced.”); id. at 214-15. Instead,
Marian was motivated by its desire to maintain the religious
*18 mission of the hospital. See Pl.’s Mot. for Summ. J. at 10-15.
Although Marian’s desire to maintain the religious mission of
the hospital may be an important and worthwhile goal, such non-
monetary considerations are “not indicative of parties engaged
in self-interested bargaining with a focus on maximizing
financial compensation.” Forsyth, 667 F. Supp. 2d at 151. Thus,
“[a party’s] non-monetary motivations may not form the basis of
a bona fide sale.” Id.
The sizable gap between the “purchase price” and the value of Marian’s assets, as well as the other circumstances
surrounding the merger, constitute substantial evidence that
supports the Secretary’s finding that reasonable consideration
was not exchanged, and that therefore, the merger was not a bona
fide sale.
Because the Seсretary’s finding that the merger between Marian, Mercy and CHW was not a bona fide sale was an
independent and adequate basis for denying Plaintiff’s
reimbursement claim, the Court need not address the Secretary’s
determination that the merger parties were related. See Forsyth,
639 F.3d at 539 (limiting its analysis to the bona fide sale
issue “because it was an independent and sufficient ground for
refusing appellants their requested reimbursement” and therefore
declining to address the related parties issue); Robert F.
Kennedy Med. Ctr. v. Leavitt, 526 F.3d 557, 563 (9th Cir. 2008)
(finding that because the “[‘bona fide sale’] issue is
dispositive in this case, we do not reach the ‘related parties’
issue”).
IV. CONCLUSION
For all of the reasons stated herein, Plaintiff’s Motion for Summary Judgment is denied and Defendant’s Motion for
Summary Judgment is granted . /s/________________________
January 29, 2013 Gladys Kessler
United States District Judge Copies to: attorneys on record via ECF
Notes
[1] CHW is the successor in interest to Marian.
[2] Since the merger at issue took effect on April 24, 1997, the Court, like the parties, will refer to the regulations as designated in the 1997 C.F.R., unless otherwise stated.
[3] “Net book value” is the remaining value of an asset after depreciation costs are deducted. 42 C.F.R. § 413.134(b)(9).
[4] In 1997, Congress amended the Medicare Act to eliminate depreciation adjustments for assets after December 1, 1997. Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4404, 111 Stat. 251, 400 (1997).
[5] In addition to the gain or loss regulation at 42 C.F.R. § 413.134(f), the Secretary’s regulations address “[t]ransactions involving a provider’s capital stock. See 42 C.F.R. § 413.134(l)(1997)(now substantively modified and recodified at 42 C.F.R. § 413.134(k)). The capital stock regulation, also referred to as the statutory merger regulation, specifies that providers that transfer assets pursuant to a statutory merger are “subject to the provision of paragraph[] . . . (f) of [42
[6] The Secretary recognizes that, in other circumstances, including some cases interpreting the Internal Revenue Code and other types of commercial cases, the market and income approaches may be appropriate appraisal methodologies. See A.R. 17; Pl.’s Rep. at 8, 14-15 (citing cases and tax regulations). Howevеr, the Secretary is correct that “Medicare rules may diverge from IRS rule and Medicare policy is not bound by IRS policy[.]” A.R. 17.
[7] Plaintiff contends that, relying on PM A-00-76, the Secretary “erred in holding that the desire to maintain the religious mission of the hospital cannot be considered in determining whether the merger was for fair market value.” Pl.’s Mot. for Summ. J. at 10. Plaintiff argues that under the Secretary’s interpretation, “Marian could never have been sold for fair market value, because Marian’s trustees wеre required by law to select a merger partner on the basis of adherence to the Catholic principles under which Marian was organized.” Id. at 13. However, as Defendant correctly points out “Plaintiff is mistaken that the Secretary’s final decision held that Marian was incapable of entering into an arm’s length transaction because of its religious affiliation” and that “non-profit providers, like for-profit providers, may engage in arm’s length transactions even while prioritizing non-economic
[9] In any event, even in the absence of PM A-00-76, the Secretary would have had the authority to interpret her own regulations in the context of a case-specific adjudication such as that which preceded this action. See St. Luke’s Hosp. v. Sebelius, 611 F.3d 900, 907 (D.C. Cir. 2010) (“[The] Secretary generally may lawfully interpret a regulation . . . [w]ithin the context of an agency adjudication”).
[10] The appraisal relied upon by the Secretary was commissioned by Marian itself and conducted by Valuation Counselors Group, Inc. (“VCG”). See A.R. 729. The appraisal estimated the market value of Marian’s assets using three approaches: cost, market and income. The cost approach valued Marian’s assets at $51.1
[12] At the time of the merger, the only available information about Marian’s fair market value with which the parties were working was a one-page attachment to the parties’ Purchase Price Allocation Agreement that was based upon a February 28, 1997 unaudited financial statement “to be adjusted.” See A.R. 301.