Shalala

OVERVIEW

Lodi Community Hospital and Chico Community Hospital, both authorized providers of Medicare services, appeal the district court’s grant of summary judgment for the Secretary of Health and Human Services, upholding the Secretary’s disallowance of reimbursement for interest on a loan incurred by Paracelsus Healthcare Corporation to purchase 100 percent of appellants’ stock. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm.

FACTS

The facts are undisputed. In 1985, NME Hospitals, Inc. negotiated with Paracelsus, a private for-profit health care organization that owns or leases and operates hospitals, to sell Lodi Community Hospital and Chico Community Hospital to Paracelsus. ' The parties structured the sale through a stock transfer, whereby NME formed two subsidiary corporations — Lodi Community Hospital, Inc. and Chico Community Hospital, Inc. — and assigned all the assets and some of the liabilities of the hospitals to the two subsidiary corporations. NME then sold all the stock in both corporations to Paracelsus for $37 million. 1 Paracelsus financed the purchase with a bank loan.

Afterward, Paracelsus treated the transaction as a purchase of assets on its…