On December 5, 1979, the United States sued the Hughes House Nursing Home, Inc. and Walter Hughes to recover Medicare overpayments that Blue Cross made to the Home from 1967 to 1971. The applicable statute of limitations (insofar as relevant here) provides that this action
shall be barred unless the complaint is filed within six years after the right of action accrues ....
28 U.S.C. § 2415(a). The district court held that the government’s “right of action accrue^]” before December 5, 1973 (six years before the complaint was filed) and it dismissed the action. The government appeals. After examining the positions taken by district courts and some circuit courts of appeals on the question of accrual date, we conclude that, for most of the payments here at issue, the statute of limitations began to run when the administrative body made the “final retroactive adjustment” to the Nursing Home’s account.
Compare United States v. Pisani,
I
The government’s cause of action “accrues” and the statute of limitations starts to run when the government (through Blue Cross, the “fiscal intermediary”) can legally require the provider to repay the overpayment.
See United States v. One 1961 Red Chevrolet,
Insofar as relevant here, those statutes and regulations provide the following service and payment obligations: The program itself is designed to guarantee health care providers a steady flow of income sufficient to provide service, while ensuring that the government pays no more than the reasonable costs of that service. See 42 U.S.C. §§ 1395h(a), 1395x(v)(l)(A); 42 C.F.R. §§ 405.401, 405.402(b)(l)-(2), 405.454(a)-(b). Accordingly, the “fiscal intermediary” (here, Blue Cross) is to make “interim payments” to the providers, at least monthly. 42 U.S.C. § 1395g; 42 C.F.R. § 405.454(b). These interim payments are based upon estimates of the provider’s costs. 42 C.F.R. §§ 405.405, 405.454. At the end of each year, the provider is to give the intermediary a statement of its actual costs, 42 C.F.R. § 405.406(b); the intermediary will then make an “initial retroactive adjustment” bringing the money that the provider received in line with its costs as revealed in the statement. 42 C.F.R. § 405.454(f)(2). Subsequently, the intermediary is to audit the cost reports, to determine the actual “reasonable cost” of the services. This audit “constitute[s] the basis” for a final “retroactive adjustment.” 42 C.F.R. § 405.-1803(b); see 42 U.S.C. § 1395x(v)(l)(A)(ii). In addition to this basic scheme of monthly payments, the intermediary may make “accelerated payments” to a provider with cash flow problems, 42 C.F.R. § 405.454(h), and, prior to May 29, 1973, the intermediary could grant interest-free loans to needy providers, 42 C.F.R. § 405.454(g).
For purposes of this appeal, we assume that the Home was overpaid. The issue is when the government’s claim to recover the overpayment accrued: (1) at the time the Home received the money initially; (2) at the time the intermediary made the “initial retroactive adjustment”; (3) when the intermediary made the final audit; or (4) when the intermediary made the “final retroactive adjustment” on the basis of the audit.
The district court chose the first of these times; it chose the date when the Home first received the money. In keeping with the “contract” theory, it analogized the situation to one party to a contract overpaying another by mistake. In such circumstances, the statute of limitations typically begins to run “upon the receipt of payment without regard to when the mistake is discovered.”
City of New Bedford
v.
Lloyd Investment Associates, Inc.,
While the district court’s analogy is tempting, we do not believe it consistent with the rules and regulations that determine the parties’ obligation. Rather, those regulations suggest that nearly all of the claims set forth in the government’s complaint did not accrue prior to the final audit.
For one thing, the regulations indicate that no “mistake” was involved. The initial interim payments to providers typically depart from actual costs, not through “mistake,” but because the Medicare program’s administrators consciously have determined that estimated payments should be placed directly in the hands of the providers quickly (so that they have funds with which to operate) even though so doing concededly will lead to “underpayments” or “overpay-ments” throughout the year.
Moreover, the Department of Health and Human Services has developed a specific payment adjustment procedure that entitles the provider (or the intermediary) to keep any overpayment (or underpayment) until a specified cost statement is filed, or a final audit takes place, or a final “adjustment” is made. Here, the “initial retroactive adjustment” created no liability to the government because that adjustment is determined by taking at face value the provider’s cost data statements. The government’s
*894
claims here are not based upon discrepancies between the provider’s statement and the interim payments; rather, for the most part, they rest upon the later audit that allegedly revealed, among other things, that the Home had claimed excessive costs and that it owed Blue Cross “excess accelerated depreciation,”
see
42 C.F.R. § 405.415(d)(3). The government can require the provider to repay any “initial adjustment” overpayment at once, but the provider remains subject to further liability for any additional discrepancy revealed by the audit,
see United States v. Gottlieb,
Further, to look to the regulatory scheme to decide when the fiscal intermediary can require the Home to repay does not give the government undue power to control the timing of a lawsuit. The government has no direct incentive to delay the audit, the “final adjustment,” or any subsequent suit. Ordinarily, any such delay will simply reduce its ultimate chances of recovery. In fact, the government, as a specific aniidote to bureaucratic indifference, has granted to a provider who does not receive a final determination within 12 months of filing its cost report the right to obtain a hearing from the Provider Reimbursement Review Board. 42 U.S.C. § 1395oo(a); 42 C.F.R. § 405.1835. While this 1973 regulation came too late to help appellees, it minimizes the risk that reliance on the regulations rather than the date of payment will unfairly delay the cause of action accrual date.
While these considerations make clear that the government’s claims did not accrue before the “final audit,” we must still decide whether they accrued at that time (unrevealed in the record) or later, when the “final retroactive adjustment” was made (Jan. 29,1975). Some courts have chosen to rely on the date of the audit,
United States v. Pisani, supra; United States v. Withrow, supra; United States v. Normandy House Nursing Home, Inc., supra,
while others have chosen the date of the final adjustment.
United States v. Gravette Manor Homes, Inc., supra; United States v. White House Nursing Home, Inc., supra; United States v. Graham, supra.
We agree with the Eighth Circuit in
United States v. Gra-vette Manor Homes, Inc.,
that the “final adjustment” date governs. As that court pointed out, the audit does not fix liability until “the official of the intermediary who has the authority to approve and certify the yearly audits has done so.”
Gravette,
In sum, the government’s cause of action accrued when, under its regulations, it became entitled to demand its money back from the Home. And, those regulations indicate that it became entitled to *895 demand most of the money once the “final adjustment” was made.
II
We note one exception to our “final adjustment” conclusion. One of the items which the government seeks to recover is a “current financing payment” — a form of loan that the government no longer provided to anyone after May 29, 1973. This payment is described in 42 C.F.R. § 405.-454(g), which states:
Any current financing payments outstanding on May 29,1973, constitute over payments which are due and payable to the Social Security Administration as of such date.
The words “due and payable,” present only in respect to this type of payment, indicate that the government could have demanded repayment of the amount of the current financing payment in May, 1973, over six years before the December, 1979 commencement of the present lawsuit. We believe this language sufficiently definite to indicate that the government’s cause of action accrued on May 29, 1973. Hence its claim for recovery of those funds now is barred.
III
Appellee Walter Hughes, an individual defendant, to whom the government looks (on a constructive trust theory) for return of the funds, argues that laches bars the government’s personal claim against him. A virtually unbroken line of authority, however, holds that a private defendant cannot assert laches against the government.
Guaranty Trust Co. v. United States,
The judgment of the district court is vacated and the case is remanded for further proceedings consistent with this opinion.