Next case is the Dean's Hospital versus Secretary of HHS. Mr. Hallwood. Hallwood. Hallwood Dream I heard. I heard him, alright, that's what I thought. He's the court. Hallwood Dream I have from Bips and Graham. We have from the Palantin's Hospital. With the court's permission, I thought there was a three minutes of my time from the Palantin. That request will be granted. Thank you. The Secretary's decision to deny the depreciation of the Jasmine to Dean's Hospital amounts to what is in effect a retroactive amendment to regulations that were put about the time of the Roger Green in this case. The Secretary will, in fact, preclude nonprofit hospital murderers from qualifying for the investigation and the investigation to the estimated depreciation as a feature of the costs that were re-reversible under Medicare. The fundamental principle of Medicare regulations that will replace the time of this murder or that Medicare should pay its full share of the actual reasonable costs of parole and services to Medicare beneficiaries. And that included the depreciation of the depreciable assets
. And Medicare will pay an estimate of that on a straight line depreciation method over the course of time. But when there is a transfer of control of the assets, the regulations recognize that there is a need to make an adjustment because straight line depreciation is simply an estimate. So what's the language in the regulations that prohibits the Secretary's use of valuations stemming from a reproduction cost analysis to approximate their market value? Well, there are a couple of things that prevent that. The first is that the essential term here and the basis of the Secretary's holding is that our merger did not qualify as a both-based sale. And the number extended to two things, an arms-to-inf transaction for reasonable consideration. And the Secretary's using the cost basis to determine whether there was reasonable consideration pay. But reasonable consideration is as many court decisions have reflected the fair market value of an asset. And fair market value is, in fact, the following in regulations. As that price, which is the product of a diligent bargaining between unrelated parties, and that's what we have here. To the extent that the regulations contemplate that there would be some estimate of fair market value against which the product of the party's negotiation would be assessed, it's a sales methodology. The regulation, and I'm citing to 413.134.22, which is the definition of fair market value. And it says that, quote, the price that the asset will bring, this is the definition of fair market value, quote, the price that the asset will bring by the only-femate bargaining between more firm buyers and sellers after date of acquisition. Usually, the fair market price is the price that the only-femate sales have been consummated for assets of like time, quality, and in particular market at the time of acquisition
. So, the preferred estimate, if you look at the guarantee of an imprasil, would be a sales page to let our other assets of this type selling for compromise sales. Another indicator here that the secretarian's cost-based methodology is inappropriate is that there's the reference to the particular market at the time of acquisition. That phrase reflects the fact that the market is wealthy buyer and seller are negotiating for in the context of other economic factors at the time. In feelable for the time of this merger, there was like an extreme overbending. This was what, 1996? 1996, right, right, right. And in the early years, there were just shutters and doors in the market, in some cases selling for a dollar. So, the predecessor of one that was just here. Including another hospital that was in sight of James Hospital. So, the regulations, again, indicate that you have to take account of the particular economic circumstance, the time in which the merger is taking place. In fact, the secretary conceded that fact in that case, in this quarter, L, that the secretaries determination that there had not been these inculcancellation based on cost method approach said, that it value those assets at $13.5 million, which flew to the market, because it had failed to take account of economic obsolescence. The way that you would take an adjusted cost-based method to make it look like the sales method or income method, the kinds of things that actual buyers and sellers would consider involving asset, you have to adjust for economic obsolescence. And that was the difference to $13.5 in cost-based and $3 million. The secretary admitted that that was an error, this court recognized it such a limited, but here the secretary tries to defend a cost-based appraisal that has not been adjusted through economic obsolescence
. So, it's inconsistent with the definition of fair market value. And I will also put it in fact in jail up for me, because I'm interested in judge-curdiness question. And you're wondering whether regulation precludes my program or whether there's emphasis on cost approach? No, no, no, no, because the cost approach is a long-lived. But the cost approach as referenced in the program, that random, is actually for a different purpose than what the secretary is using it for here. In the program number random, the secretary emphasizes that the cost approach is preferred for the purpose of allocating the purchase price of long-lived depreciable assets, because the cost-based method allows for an individual asset by asset valuation, whereas the income-based method or sales-based method when you're selling the lump sum of assets is going to give you a lump sum. And the fact that if you look at it in another way, as I already did, what we're saying here is that cost approach, among the three possibilities, the cost approach works better for this type of transaction. Is it that fair? It works better for one aspect of what the secretary has to do under the regulation, and that is to allocate the purchase price across the individual assets so that the secretary can know, okay, which asset has been underappreciated, which asset has been over-depreciated. There has to be an allocation, and the regulations action and do reference the fact that in some instances there would be an after acquisition, after merger, a price of long in order to allow that kind of allocation. Let me ask you this. Is it your position that number one that the secretary doesn't have this discretion because the regulations are clear as to which of the three methods should have been employed? Is that your point, or is it that I understand they have this discretion, or the secretary has the discretion she just made in stake? What the secretary can do is to adopt a rule that is not reasonable consideration if the consideration paid is less than reproduction cost. The regulations are going to go to another feature of the regulation, and that is in 413.134G that actually distinguishes between fair market value and reproduction cost, and acknowledges that fair market value, which is the price that is barred for by end-to-end parties, can be lower than reproduction cost. There are two features of the regulations that we indicate that certainly reproduction cost that isn't adjusted for economic obsolescence is not a permissible basis for determining whether there has been reasonable consideration paid in the transaction. The other thing that is inconsistent with the regulations for the secretary's view is that the secretary treated two features of the agreement as indicated that the risk was not an arms limit agreement. The one that the genes had not obtained in the praise of the four-roger, two that genes were as dilution to some extent with the interest of the ongoing cost of the land
. In Braddock, the court says specifically that neither of those factors is disqualifying, but the court indicates that Braddock is more relevant to determining whether there was arms limit negotiations. The secretary has asked the market itself to a whole host of potential buyers, just part of the exercise of the secretary's discretion. Braddock didn't conclude it. She considered it. Braddock did also consider another feature of the program that we had in the haphazard how the secretary was defining the remaining parties. The court said that the secretary's focus on the fact that some more members of the selling entity end up on the post-roger board, and that's an indication that they were related, not unrelated parties. The court said that's inconsistent with the regulations because it really, in effect, will out the roger provision as one basis for making an adjustment, because almost always there's going to be that type of holdover of some more members. Likewise, certainly in the nonprofit context, nonprofit work is required by law to be looking out for the interest of the hospital as it moves forward. So to suggest that the hospital board take into account the strength of the hospital post-roger disqualifies that for an adjustment with likewise read out of the regulation nonprofit mojures from consideration for adjustments. And that's never been the position of the regulation, so it is inconsistent. But I want to point to a couple of things here. I think it is extreme resentment here that the jeans board did shop itself to at least six different potential parties to propose the hospital. In addition to the intermoving of standing with another Quaker institution, it ultimately was rescinded that a lot of it and entered into it here with a nonprofit institution. One of the differences between those two agreements is the fact that Temple agreed to pay jeans, money, cash above the volume of the liabilities that were being sued. Jeans pushed, pressed, according to the CFL of Temple pushed repeatedly for even greater pain to jeans
. There would be intercontrolling jeans after the merger. They asked for five million, time to push back ultimately the bars of money. Secondly, that gives the definition of arms-length bargaining and product of that process is fair-market value. I would like to reserve the remainder of my time. That's correct. What evidence have he provided to show that the bigger use for jeans's depreciable assets was incorrect? The filmmaking is incorrect. It's the fact that, what we've heard, the number of things. First of all, the appraisal that was done on the basis of an income method in case the true value of the assets of the building concern is 30.1 million. On the sales method, there was a range that started, I think, at 20.1 million, up to 31.1 million. And so the appraisers said 30.1 is in the middle there. It's also the favorite generated by income method
. Those with the two methods that a buyer would be most interested in is the asset going to generate enough in income that will allow you to pay off the amount of assumed. So we have that. And then there's the fact that the filmmaking, the filmmaking, the secretaire uses is taking from the appraisers cost method. And the appraisers said specifically, don't tell me a lot of this as the indication of the actual value of these assets because it has not yet been adjusted for economic or functional obsolescence. That's exactly the feature of the appraisal that was deemed a runeous, what the secretary relied on in Braddock is runeous now and is inconsistent with the registration. So what do you want the number set at? What did you want the secretary set the number at? 3.1 million full and appreciable assets. And then there are other issues in terms of there's a dispute about whether the assets that went on to the summary bubble on this. Thank you. Mr. McElwain? Thank you. Joel McElwain for the secretary. I'd like to begin with the arms non-transaction issue because that's the first home in the jeans hospital needs to meet. And I think that's dispositive even before we reach any questions of reasonable consideration. To take a step back at the overall statutory structure, the secretary has a statutory duty to pay providers only for their reasonable and actually incurred costs
. To appreciate one of those costs and so providers are paid on depreciation schedule. And at times, an adjustment would be appropriate to to to throughout that schedule to a showing of what the actual cost of depreciation has been. A bona fide sale can do a lot of circumstances where you would make the adjustment, but you need to make a very strict showing that that the truth is a bona fide sale, but what that sale again to back up the secretary's obligation to pay only for actual and reasonable costs. So the secretary's opposed to conditions of bona fide sale has been arms non-transactions between parties where we go to the remote way to negotiate selfishly in our own interests and our role in the form of circumstances of a transaction. And we're going to stop here because I do feel accounts for jeans based on a tree in my rhythm. You just said it was quibble, but you have to bargain selfishly. And that seems to prevent a nonprofit from ever getting paid for this, right? Because the nonprofit's bond and a charter of a quadriple failure mission and mission frequently involves activities that are to the financial debtors of the hospital, so we report, etc. Well, the fact that nonprofits must do certain boards very well into the elevation that they're voluntarily for going income, that's when we get to the reasonable consideration point. But I mean, I do know why it was a way of your own support, but I thought this case for record is I recall in the king's board, where the jeans board is in fulfilling with financial intubes. And board members of this hospital are very concerned about fit and fit nested with mission. And those sorts of discussions are sometimes at odds with what's in the pure peculiar interest of institution. And it's exactly our point. It's entirely praiseworthy, it's entirely a good thing for the board to take those considerations into account. So we know that nonprofits, it's fulfilling and it's fairly sure duties will never get reimbursed for resources. I'd like to say that it would be a possible for a nonprofit nonprofit to meet this and to back up again
. 413.13 for work is the regulation that says a virgin party can, if it needs to requirements of a qualified sale, that can be evidence that the value is different than the depreciation schedule provided. And so, and so we'll make the adjustment. It really is a long-fired sale. You will not negotiate selfishly. Now 413.13 for work was now K, which phrased in terms of capital stock. So which possibly would create implication only provided to apply to to for-profit providers in nonprofit providers would be totally out of luck. The Secretary, she, the procurement learned, saying, no, no, no, this does apply also to nonprofit providers. But it applies on exactly the same terms to nonprofit providers. The asset would defer a nonprofit provider. If you can show there's a straight solution to pay with the board, it's one hard to get seen. Have the board of city or so, there are millions of dollars where the real estate is, we don't take the best offer available, the e-vents from the Darth Vader, the hospital industry. And then the other half of the board, saying, wait a minute, we're in a clean institution. We have a mission, we have a story in this tree, we do all these good things, et cetera, et cetera
. The day the thing, you don't really understand that. No, they're doing the appropriate thing. If they are concerned about the mission of this hospital that they are supposedly divorcing themselves from going forward, it's a good thing they had a concern, but what they're not doing is trying to maximize the value they're getting out of the transaction. And we don't have one party, and one side of the thing is actually doing that. But it seems to me that the points that you focused on, a lot of what the board, certain board minutes, board minutes from more specific board meetings, and talked about preservation and the Quaker mission, that those of what you primarily focused on, the administrators decision, the rewards, the realities of the healthcare market in 1996 in Philadelphia, the excess beds, the ensuing, what was perceived to be the difficult financial position in the water hospital in the room. And I thought, no, no financial difficulties, not the fact that they crumbled in 97, 98, but no financial difficulties. There were many buyers in this market place. I disagree with that. It must have been two. Okay, you must agree with that. I do. PHA 727 in the market for ordinance of August 12, 1994, when the process was beginning. Jeans was considering eight possible sewers, two number four profits, six number nine profit. The board minutes report the board dismissed early in the process because of the perceived conflict between the pro-fighting or interest as insurers and in that pro-profit mission, the two four profit entities were not even considered as potential partners. They thought about this range of six other partners who were all not for profit, ultimately entering down to the time and to temple, ultimately to the time
. In 1996, I don't even know who was two four profit entities in the world. They weren't major players in this market. The major players in this market, besides eight, or from 1996, were pen and temple. Jefferson and they negotiated with two of the three. But the point is that they were, they think these four profit entities were rejected, one of them explored as possible partners. They're possibly because they were four profit, so they're following the possibility of looking for somebody. There's certainly, I mean, to say that the mere fact that they ignored four profit entities, they were, clearly, where was the mission. Which I don't think you can clearly move, or particularly for nonprofits. Not profits all had a mission. And to be acquired by a four profit mission or a four profit hospital, I mean, I think it's easy to argue. It's just clear conflict with that. This is exactly the issue that this court addressed in Einstein. The same fact as before the 49th time. In this court, I'll wear the selling, supposedly selling entity, was negotiating for nonprofits for the hospital going forward. Well, I'm highly, I'm not able, and how are they consistent for the four profit mission? They're doing everything they should have been doing. Nonetheless, they've got showed that they're not negotiating, they're not trying to extract away the way they're trying to benefit the hospital. That was going to be like this. I think that's easy, as I said. You see these non-reference affordees. I think that's easy on one principle issue and ignoring all the other realities. I don't think so because the first, the threshold we're going to get over is, well, is there a non-self transaction? Would they be trying to extract value? And they weren't doing that. That's the end of the case. And the first issue we do really exclude the four profits from the arena potential. So this is, you know, a set of metrics there. I think that's exactly right. I mean, they show you that they're moving that profit, we were the best, those are the profit. That's exactly right. So that's, that's, that's, that's a bad, that's a women 80 non-profits. We got a bad, not bad. And that's what that's a client line of return to
. Nonetheless, they've got showed that they're not negotiating, they're not trying to extract away the way they're trying to benefit the hospital. That was going to be like this. I think that's easy, as I said. You see these non-reference affordees. I think that's easy on one principle issue and ignoring all the other realities. I don't think so because the first, the threshold we're going to get over is, well, is there a non-self transaction? Would they be trying to extract value? And they weren't doing that. That's the end of the case. And the first issue we do really exclude the four profits from the arena potential. So this is, you know, a set of metrics there. I think that's exactly right. I mean, they show you that they're moving that profit, we were the best, those are the profit. That's exactly right. So that's, that's, that's, that's a bad, that's a women 80 non-profits. We got a bad, not bad. And that's what that's a client line of return to. It's, it's a little bit hard to imagine that we'll manage how genes and these facts could have satisfied four, one, three, five, one, three, four. But let me suggest an alternative, I have a title. You have Tempel, which now owns the New Jeans Haskell. And also one's other Haskells, and they're all set up as separate subsidiaries. Time was forward, 96, 97, 98. They decides now where we have genes. The best thing for us to do for overall mission is sell off genes, use the profits for Haskell A and Haskell B, but they're also running. Temples and non-profit enemies, but they'll be a case where they really are trying to extract fair value. And they'll be an excellent product that can get teams that money for other parts of their products. That would be an example of how we're not having a problem. So this sort of non-profit is just like a full-profit. So, yeah, I know a lot of nonprofits, some of us are aware of the scene we have, but as much as we can, as much as we can, as much as we can. But as GDP Morgan, they, they, they, they get the benefit. And once there are more mission centric there, we're just, we feel we will build new rules. That sort of, they can't guess it's not a question of moral judgment
. It's, it's a little bit hard to imagine that we'll manage how genes and these facts could have satisfied four, one, three, five, one, three, four. But let me suggest an alternative, I have a title. You have Tempel, which now owns the New Jeans Haskell. And also one's other Haskells, and they're all set up as separate subsidiaries. Time was forward, 96, 97, 98. They decides now where we have genes. The best thing for us to do for overall mission is sell off genes, use the profits for Haskell A and Haskell B, but they're also running. Temples and non-profit enemies, but they'll be a case where they really are trying to extract fair value. And they'll be an excellent product that can get teams that money for other parts of their products. That would be an example of how we're not having a problem. So this sort of non-profit is just like a full-profit. So, yeah, I know a lot of nonprofits, some of us are aware of the scene we have, but as much as we can, as much as we can, as much as we can. But as GDP Morgan, they, they, they, they get the benefit. And once there are more mission centric there, we're just, we feel we will build new rules. That sort of, they can't guess it's not a question of moral judgment. It's not a question of, of, of the entities, the Medicare program doesn't really run into hospitals for, for doing a nice thing. I know a lot of companies will have time to call, but for the specific purpose here is to work for their costs. You know, I could cite to you another body of law, which really doesn't, isn't in this case. But there are real estate laws that impact what nonprofits can do, which preclude their ability to sell to for the profits. And no matter if there was an analysis, did you take that and you consider it? But yeah, it doesn't matter, your heart. But it does matter because you're, you're seizing on a couple different points to say it wasn't an arm's length. And I'll say that you do a lot of factors, which the secretariat is not taking into consideration. I like addition, if I told you there was a wrong Pennsylvania, then an nonprofit had to, had to be, had to have a move to another entity approved by the State Attorney General. Would you take that and the consideration as a factor? If you have to be approval, then you work with the legal regime behalf of the bottom line, you have to have a factor. But the actual, the ultimate factual question is, are they trying to maximize value? Because the secretariat is held in this court on the last time, they only bring up two parties trying to maximize value. Do you rely on an number of the tells you, you know, you simply, let me sketch it, run it out of time, and we took some of your time. I don't know why you're fighting so hard on this issue, when you can win on the second point. You know, I was going to say, you know, I'm going to say, you know, it's a serious issue, or it's a good idea to go all the way here. But maybe you can read the court that you really don't have a lot of support on that first issue. And you don't have to win everything
. It's not a question of, of, of the entities, the Medicare program doesn't really run into hospitals for, for doing a nice thing. I know a lot of companies will have time to call, but for the specific purpose here is to work for their costs. You know, I could cite to you another body of law, which really doesn't, isn't in this case. But there are real estate laws that impact what nonprofits can do, which preclude their ability to sell to for the profits. And no matter if there was an analysis, did you take that and you consider it? But yeah, it doesn't matter, your heart. But it does matter because you're, you're seizing on a couple different points to say it wasn't an arm's length. And I'll say that you do a lot of factors, which the secretariat is not taking into consideration. I like addition, if I told you there was a wrong Pennsylvania, then an nonprofit had to, had to be, had to have a move to another entity approved by the State Attorney General. Would you take that and the consideration as a factor? If you have to be approval, then you work with the legal regime behalf of the bottom line, you have to have a factor. But the actual, the ultimate factual question is, are they trying to maximize value? Because the secretariat is held in this court on the last time, they only bring up two parties trying to maximize value. Do you rely on an number of the tells you, you know, you simply, let me sketch it, run it out of time, and we took some of your time. I don't know why you're fighting so hard on this issue, when you can win on the second point. You know, I was going to say, you know, I'm going to say, you know, it's a serious issue, or it's a good idea to go all the way here. But maybe you can read the court that you really don't have a lot of support on that first issue. And you don't have to win everything. I like playing everything I do. I don't have the hope to win. It's an all-in-one thing to say, but I'm the second issue humanist, you can live there as well. I mean, the secretary may be easier. That's true. Because you're reasonably fine with that the value, or at least what the record support of finding out was a value of $133 million, that's exchanged for about $67 million. That's now exchanged with their fair value that doesn't need the reasonable consideration requirement. And the number of seeing it to be very strong through, except I think we have to deal with the obsceness of the document. Because your numbers don't look so strong for you if that means we take it with a count. Well, several out two issues. One is there a argument that they should have used the income approach, and the second is that I forget that. Let's say you'd say that correctly, use the cost approach because the problem in my head says you can't. Right. What about the, are there any point of future obsceness? We have a point on a different record than in the end, in Braddock and the letter D at a point. What you have there was an appraisal where the crazer came out and said, here is the cost, there's the physical appreciation
. I like playing everything I do. I don't have the hope to win. It's an all-in-one thing to say, but I'm the second issue humanist, you can live there as well. I mean, the secretary may be easier. That's true. Because you're reasonably fine with that the value, or at least what the record support of finding out was a value of $133 million, that's exchanged for about $67 million. That's now exchanged with their fair value that doesn't need the reasonable consideration requirement. And the number of seeing it to be very strong through, except I think we have to deal with the obsceness of the document. Because your numbers don't look so strong for you if that means we take it with a count. Well, several out two issues. One is there a argument that they should have used the income approach, and the second is that I forget that. Let's say you'd say that correctly, use the cost approach because the problem in my head says you can't. Right. What about the, are there any point of future obsceness? We have a point on a different record than in the end, in Braddock and the letter D at a point. What you have there was an appraisal where the crazer came out and said, here is the cost, there's the physical appreciation. And we are estimated, I have a number of $10 million that you should be further depreciated by for economic obsolescence. And the common radicalism in this year just, at least we saw another record, just thought that the only, the first time applied was just a simple factual mistake. And so it was remanded for me this year to reconsider. Here, you know, a crazer over the crazer said, yes, we think that there should be an adjustment for economic obsolescence. But they didn't attempt to quantify it at all. So it's a burden issue. It's a burden issue. They might have asked, is it more shoulder facts, et cetera, et cetera, than you would have had to give their credit, assuming that the obscess is a single factor. So it was well conceived, we would have an offset that. Just to ask you another different secretary, it has to be a burden of had to, and it seems fair. But if they need the right of showing, and you know this, compelled them, is all then, then yes. I mean, the advantage is here that it's there for them. They're trying to put the burden on you, so you, they're going to fulfill the cap for obsolescence, and we're going to get the importance of it. We're going to get the appraisal with support of that offset. And there's one additional issue, the sort of threshold issue, the 40-day numbers, which is that the administrator noted, this is an after-the-fact of craze-all
. And we are estimated, I have a number of $10 million that you should be further depreciated by for economic obsolescence. And the common radicalism in this year just, at least we saw another record, just thought that the only, the first time applied was just a simple factual mistake. And so it was remanded for me this year to reconsider. Here, you know, a crazer over the crazer said, yes, we think that there should be an adjustment for economic obsolescence. But they didn't attempt to quantify it at all. So it's a burden issue. It's a burden issue. They might have asked, is it more shoulder facts, et cetera, et cetera, than you would have had to give their credit, assuming that the obscess is a single factor. So it was well conceived, we would have an offset that. Just to ask you another different secretary, it has to be a burden of had to, and it seems fair. But if they need the right of showing, and you know this, compelled them, is all then, then yes. I mean, the advantage is here that it's there for them. They're trying to put the burden on you, so you, they're going to fulfill the cap for obsolescence, and we're going to get the importance of it. We're going to get the appraisal with support of that offset. And there's one additional issue, the sort of threshold issue, the 40-day numbers, which is that the administrator noted, this is an after-the-fact of craze-all. I don't need to consider this at all, but going through the fiction that this is the right number, that the party's worth thinking about in 1986, although for those numbers, and say, here's what they said for the past approach. And they still have that burden, even for those numbers. So, essentially, it's two points. One, the administrator's entitled to disregard the appraisal entirely, and then second, you take the appraisal upon the right approach, which is the cost approach, which is the most appropriate method for not-profit entities. You have a number that's tasting 30 million dollars on the higher the lowest concentration, which is coincidentally, what about the number that the Einstein court found to be highly indicative of the lack of reasonable concentration, 32 million dollars? I want you to comment for a moment if you would on your adversaries' invocation of the different regulations is showing why the method used by the Secretary was in court. There are circumstances where something other than the cost of course, something other than the cost of the physical appreciation would be appropriate, but what the program in London tells you is specifically in the context of that profit entities, the cost of which is better than income approach, because as we've previously discussed, that profit entities are voluntarily foregoing income. So, the income approach just doesn't tell you all that much about the real value of the entity, might be. And that's why, to the extent that all all of which have their flaws, you can pick out flaws in the cost of which all they want, but in the overall, the cost of the physical appreciation of the specific context of that profit entities, the cost of the cost is better than income approach. Okay, well, we've actually recently so far in the program. Okay, so his point that pursuant to the regulations, the Secretary essentially made a mistake, your rejoinder is under the program member and the Secretary is nearly invoking her discretion, and this cost approach, because in the nonprofit context, it's a superior approach. So, she can reasonably construe her regulations specifically to the context of the nonprofit entities to get to this result, and her town staffers and university nurses, so they know that's all the other host efforts. It's up okay. Okay, thank you, Rasty Maggallay. Mr. Howard
. I don't need to consider this at all, but going through the fiction that this is the right number, that the party's worth thinking about in 1986, although for those numbers, and say, here's what they said for the past approach. And they still have that burden, even for those numbers. So, essentially, it's two points. One, the administrator's entitled to disregard the appraisal entirely, and then second, you take the appraisal upon the right approach, which is the cost approach, which is the most appropriate method for not-profit entities. You have a number that's tasting 30 million dollars on the higher the lowest concentration, which is coincidentally, what about the number that the Einstein court found to be highly indicative of the lack of reasonable concentration, 32 million dollars? I want you to comment for a moment if you would on your adversaries' invocation of the different regulations is showing why the method used by the Secretary was in court. There are circumstances where something other than the cost of course, something other than the cost of the physical appreciation would be appropriate, but what the program in London tells you is specifically in the context of that profit entities, the cost of which is better than income approach, because as we've previously discussed, that profit entities are voluntarily foregoing income. So, the income approach just doesn't tell you all that much about the real value of the entity, might be. And that's why, to the extent that all all of which have their flaws, you can pick out flaws in the cost of which all they want, but in the overall, the cost of the physical appreciation of the specific context of that profit entities, the cost of the cost is better than income approach. Okay, well, we've actually recently so far in the program. Okay, so his point that pursuant to the regulations, the Secretary essentially made a mistake, your rejoinder is under the program member and the Secretary is nearly invoking her discretion, and this cost approach, because in the nonprofit context, it's a superior approach. So, she can reasonably construe her regulations specifically to the context of the nonprofit entities to get to this result, and her town staffers and university nurses, so they know that's all the other host efforts. It's up okay. Okay, thank you, Rasty Maggallay. Mr. Howard. Thank you very much, your honor. A couple of points that I'll let the focus on the reasonable consideration point. The first of all, the Secretary's program member that prefers the cost approach was not adopted until 2000, which is four years after the transaction at stake here, and also four years after the imprison that was done here. It was a really sorry for the proposition that can't be utilized. You cannot apply retroactively, a route that would disqualify you categorically. Now, I think his point is a little different. It's at the time that the decision was made. Is there anything stating that you can't invoke the cost approach? Well, you accept accepting from your point about what it came up to be. The Georgetown principal makes clear that the Secretary cannot adopt a retroactive amendments to the rules. She couldn't even do that through a nursing comment. She certainly can do that through a program in a random that has a contra-neurocent comment. And that has effectively put us happened here. Because at the time this transaction took place, there was no requirement that it be evaluated by the cost approach. There was a crazier done that utilized the two values that would most likely be of savings to a purchaser, the income value and the market value. The appraisal was done by James Master of the Trade Act
. Thank you very much, your honor. A couple of points that I'll let the focus on the reasonable consideration point. The first of all, the Secretary's program member that prefers the cost approach was not adopted until 2000, which is four years after the transaction at stake here, and also four years after the imprison that was done here. It was a really sorry for the proposition that can't be utilized. You cannot apply retroactively, a route that would disqualify you categorically. Now, I think his point is a little different. It's at the time that the decision was made. Is there anything stating that you can't invoke the cost approach? Well, you accept accepting from your point about what it came up to be. The Georgetown principal makes clear that the Secretary cannot adopt a retroactive amendments to the rules. She couldn't even do that through a nursing comment. She certainly can do that through a program in a random that has a contra-neurocent comment. And that has effectively put us happened here. Because at the time this transaction took place, there was no requirement that it be evaluated by the cost approach. There was a crazier done that utilized the two values that would most likely be of savings to a purchaser, the income value and the market value. The appraisal was done by James Master of the Trade Act. Yes, because the participation was done by the Federal Administration for the trade-as-for-the-trades. But when it was done, it was done for the purpose that the regulations specify the regulations provide at the time. 96 provide for the completion of an appraisal to allow for the allocation of the purchase price across assets. And that was the purpose for which the appraisal was done. The appraisal confirmed that there had been, it was two purposes also, it was confirmed to confirm what had been in the view of James that had to apply for the adjustment. The value of the depreciable assets in the transaction. But the secretariat was trying to do, and this is not at how much it's James entitled to as an adjustment. This is at the threshold. Did James actually undergo a change of control and arms-low is trading both the food and transaction? And really, let's assume it was a little bit of that. So it's arms-low, and the secretariat says, well, this isn't done for reasonable consideration because it was less than the unadjusted, the cost, reproduction cost, undigested for economic obsolescence. That is arbitrary and capricious. And in our example, the brief of the bobbin-bibin, in fact, we illustrate that. The cost approach is the least derivative of the reasonable consideration that someone pay for an ongoing enterprise. The reasonable consideration for ongoing enterprise would be most likely generated as the regulation provides by the sales, the purchase. What are similar assets being sold for? And it's judge-fishing right inside out of the tour in 1996 because the overbearing problem in Philadelphia, other hospitals were going for virtually nothing
. Yes, because the participation was done by the Federal Administration for the trade-as-for-the-trades. But when it was done, it was done for the purpose that the regulations specify the regulations provide at the time. 96 provide for the completion of an appraisal to allow for the allocation of the purchase price across assets. And that was the purpose for which the appraisal was done. The appraisal confirmed that there had been, it was two purposes also, it was confirmed to confirm what had been in the view of James that had to apply for the adjustment. The value of the depreciable assets in the transaction. But the secretariat was trying to do, and this is not at how much it's James entitled to as an adjustment. This is at the threshold. Did James actually undergo a change of control and arms-low is trading both the food and transaction? And really, let's assume it was a little bit of that. So it's arms-low, and the secretariat says, well, this isn't done for reasonable consideration because it was less than the unadjusted, the cost, reproduction cost, undigested for economic obsolescence. That is arbitrary and capricious. And in our example, the brief of the bobbin-bibin, in fact, we illustrate that. The cost approach is the least derivative of the reasonable consideration that someone pay for an ongoing enterprise. The reasonable consideration for ongoing enterprise would be most likely generated as the regulation provides by the sales, the purchase. What are similar assets being sold for? And it's judge-fishing right inside out of the tour in 1996 because the overbearing problem in Philadelphia, other hospitals were going for virtually nothing. James obtained very considerable consideration for itself. Thank you, Emerson. Thank you. Thank you. We thank both CAHBSO for an excellent argument. Well, brief case. And we'll take them out and I'll be advised.
Next case is the Dean's Hospital versus Secretary of HHS. Mr. Hallwood. Hallwood. Hallwood Dream I heard. I heard him, alright, that's what I thought. He's the court. Hallwood Dream I have from Bips and Graham. We have from the Palantin's Hospital. With the court's permission, I thought there was a three minutes of my time from the Palantin. That request will be granted. Thank you. The Secretary's decision to deny the depreciation of the Jasmine to Dean's Hospital amounts to what is in effect a retroactive amendment to regulations that were put about the time of the Roger Green in this case. The Secretary will, in fact, preclude nonprofit hospital murderers from qualifying for the investigation and the investigation to the estimated depreciation as a feature of the costs that were re-reversible under Medicare. The fundamental principle of Medicare regulations that will replace the time of this murder or that Medicare should pay its full share of the actual reasonable costs of parole and services to Medicare beneficiaries. And that included the depreciation of the depreciable assets. And Medicare will pay an estimate of that on a straight line depreciation method over the course of time. But when there is a transfer of control of the assets, the regulations recognize that there is a need to make an adjustment because straight line depreciation is simply an estimate. So what's the language in the regulations that prohibits the Secretary's use of valuations stemming from a reproduction cost analysis to approximate their market value? Well, there are a couple of things that prevent that. The first is that the essential term here and the basis of the Secretary's holding is that our merger did not qualify as a both-based sale. And the number extended to two things, an arms-to-inf transaction for reasonable consideration. And the Secretary's using the cost basis to determine whether there was reasonable consideration pay. But reasonable consideration is as many court decisions have reflected the fair market value of an asset. And fair market value is, in fact, the following in regulations. As that price, which is the product of a diligent bargaining between unrelated parties, and that's what we have here. To the extent that the regulations contemplate that there would be some estimate of fair market value against which the product of the party's negotiation would be assessed, it's a sales methodology. The regulation, and I'm citing to 413.134.22, which is the definition of fair market value. And it says that, quote, the price that the asset will bring, this is the definition of fair market value, quote, the price that the asset will bring by the only-femate bargaining between more firm buyers and sellers after date of acquisition. Usually, the fair market price is the price that the only-femate sales have been consummated for assets of like time, quality, and in particular market at the time of acquisition. So, the preferred estimate, if you look at the guarantee of an imprasil, would be a sales page to let our other assets of this type selling for compromise sales. Another indicator here that the secretarian's cost-based methodology is inappropriate is that there's the reference to the particular market at the time of acquisition. That phrase reflects the fact that the market is wealthy buyer and seller are negotiating for in the context of other economic factors at the time. In feelable for the time of this merger, there was like an extreme overbending. This was what, 1996? 1996, right, right, right. And in the early years, there were just shutters and doors in the market, in some cases selling for a dollar. So, the predecessor of one that was just here. Including another hospital that was in sight of James Hospital. So, the regulations, again, indicate that you have to take account of the particular economic circumstance, the time in which the merger is taking place. In fact, the secretary conceded that fact in that case, in this quarter, L, that the secretaries determination that there had not been these inculcancellation based on cost method approach said, that it value those assets at $13.5 million, which flew to the market, because it had failed to take account of economic obsolescence. The way that you would take an adjusted cost-based method to make it look like the sales method or income method, the kinds of things that actual buyers and sellers would consider involving asset, you have to adjust for economic obsolescence. And that was the difference to $13.5 in cost-based and $3 million. The secretary admitted that that was an error, this court recognized it such a limited, but here the secretary tries to defend a cost-based appraisal that has not been adjusted through economic obsolescence. So, it's inconsistent with the definition of fair market value. And I will also put it in fact in jail up for me, because I'm interested in judge-curdiness question. And you're wondering whether regulation precludes my program or whether there's emphasis on cost approach? No, no, no, no, because the cost approach is a long-lived. But the cost approach as referenced in the program, that random, is actually for a different purpose than what the secretary is using it for here. In the program number random, the secretary emphasizes that the cost approach is preferred for the purpose of allocating the purchase price of long-lived depreciable assets, because the cost-based method allows for an individual asset by asset valuation, whereas the income-based method or sales-based method when you're selling the lump sum of assets is going to give you a lump sum. And the fact that if you look at it in another way, as I already did, what we're saying here is that cost approach, among the three possibilities, the cost approach works better for this type of transaction. Is it that fair? It works better for one aspect of what the secretary has to do under the regulation, and that is to allocate the purchase price across the individual assets so that the secretary can know, okay, which asset has been underappreciated, which asset has been over-depreciated. There has to be an allocation, and the regulations action and do reference the fact that in some instances there would be an after acquisition, after merger, a price of long in order to allow that kind of allocation. Let me ask you this. Is it your position that number one that the secretary doesn't have this discretion because the regulations are clear as to which of the three methods should have been employed? Is that your point, or is it that I understand they have this discretion, or the secretary has the discretion she just made in stake? What the secretary can do is to adopt a rule that is not reasonable consideration if the consideration paid is less than reproduction cost. The regulations are going to go to another feature of the regulation, and that is in 413.134G that actually distinguishes between fair market value and reproduction cost, and acknowledges that fair market value, which is the price that is barred for by end-to-end parties, can be lower than reproduction cost. There are two features of the regulations that we indicate that certainly reproduction cost that isn't adjusted for economic obsolescence is not a permissible basis for determining whether there has been reasonable consideration paid in the transaction. The other thing that is inconsistent with the regulations for the secretary's view is that the secretary treated two features of the agreement as indicated that the risk was not an arms limit agreement. The one that the genes had not obtained in the praise of the four-roger, two that genes were as dilution to some extent with the interest of the ongoing cost of the land. In Braddock, the court says specifically that neither of those factors is disqualifying, but the court indicates that Braddock is more relevant to determining whether there was arms limit negotiations. The secretary has asked the market itself to a whole host of potential buyers, just part of the exercise of the secretary's discretion. Braddock didn't conclude it. She considered it. Braddock did also consider another feature of the program that we had in the haphazard how the secretary was defining the remaining parties. The court said that the secretary's focus on the fact that some more members of the selling entity end up on the post-roger board, and that's an indication that they were related, not unrelated parties. The court said that's inconsistent with the regulations because it really, in effect, will out the roger provision as one basis for making an adjustment, because almost always there's going to be that type of holdover of some more members. Likewise, certainly in the nonprofit context, nonprofit work is required by law to be looking out for the interest of the hospital as it moves forward. So to suggest that the hospital board take into account the strength of the hospital post-roger disqualifies that for an adjustment with likewise read out of the regulation nonprofit mojures from consideration for adjustments. And that's never been the position of the regulation, so it is inconsistent. But I want to point to a couple of things here. I think it is extreme resentment here that the jeans board did shop itself to at least six different potential parties to propose the hospital. In addition to the intermoving of standing with another Quaker institution, it ultimately was rescinded that a lot of it and entered into it here with a nonprofit institution. One of the differences between those two agreements is the fact that Temple agreed to pay jeans, money, cash above the volume of the liabilities that were being sued. Jeans pushed, pressed, according to the CFL of Temple pushed repeatedly for even greater pain to jeans. There would be intercontrolling jeans after the merger. They asked for five million, time to push back ultimately the bars of money. Secondly, that gives the definition of arms-length bargaining and product of that process is fair-market value. I would like to reserve the remainder of my time. That's correct. What evidence have he provided to show that the bigger use for jeans's depreciable assets was incorrect? The filmmaking is incorrect. It's the fact that, what we've heard, the number of things. First of all, the appraisal that was done on the basis of an income method in case the true value of the assets of the building concern is 30.1 million. On the sales method, there was a range that started, I think, at 20.1 million, up to 31.1 million. And so the appraisers said 30.1 is in the middle there. It's also the favorite generated by income method. Those with the two methods that a buyer would be most interested in is the asset going to generate enough in income that will allow you to pay off the amount of assumed. So we have that. And then there's the fact that the filmmaking, the filmmaking, the secretaire uses is taking from the appraisers cost method. And the appraisers said specifically, don't tell me a lot of this as the indication of the actual value of these assets because it has not yet been adjusted for economic or functional obsolescence. That's exactly the feature of the appraisal that was deemed a runeous, what the secretary relied on in Braddock is runeous now and is inconsistent with the registration. So what do you want the number set at? What did you want the secretary set the number at? 3.1 million full and appreciable assets. And then there are other issues in terms of there's a dispute about whether the assets that went on to the summary bubble on this. Thank you. Mr. McElwain? Thank you. Joel McElwain for the secretary. I'd like to begin with the arms non-transaction issue because that's the first home in the jeans hospital needs to meet. And I think that's dispositive even before we reach any questions of reasonable consideration. To take a step back at the overall statutory structure, the secretary has a statutory duty to pay providers only for their reasonable and actually incurred costs. To appreciate one of those costs and so providers are paid on depreciation schedule. And at times, an adjustment would be appropriate to to to throughout that schedule to a showing of what the actual cost of depreciation has been. A bona fide sale can do a lot of circumstances where you would make the adjustment, but you need to make a very strict showing that that the truth is a bona fide sale, but what that sale again to back up the secretary's obligation to pay only for actual and reasonable costs. So the secretary's opposed to conditions of bona fide sale has been arms non-transactions between parties where we go to the remote way to negotiate selfishly in our own interests and our role in the form of circumstances of a transaction. And we're going to stop here because I do feel accounts for jeans based on a tree in my rhythm. You just said it was quibble, but you have to bargain selfishly. And that seems to prevent a nonprofit from ever getting paid for this, right? Because the nonprofit's bond and a charter of a quadriple failure mission and mission frequently involves activities that are to the financial debtors of the hospital, so we report, etc. Well, the fact that nonprofits must do certain boards very well into the elevation that they're voluntarily for going income, that's when we get to the reasonable consideration point. But I mean, I do know why it was a way of your own support, but I thought this case for record is I recall in the king's board, where the jeans board is in fulfilling with financial intubes. And board members of this hospital are very concerned about fit and fit nested with mission. And those sorts of discussions are sometimes at odds with what's in the pure peculiar interest of institution. And it's exactly our point. It's entirely praiseworthy, it's entirely a good thing for the board to take those considerations into account. So we know that nonprofits, it's fulfilling and it's fairly sure duties will never get reimbursed for resources. I'd like to say that it would be a possible for a nonprofit nonprofit to meet this and to back up again. 413.13 for work is the regulation that says a virgin party can, if it needs to requirements of a qualified sale, that can be evidence that the value is different than the depreciation schedule provided. And so, and so we'll make the adjustment. It really is a long-fired sale. You will not negotiate selfishly. Now 413.13 for work was now K, which phrased in terms of capital stock. So which possibly would create implication only provided to apply to to for-profit providers in nonprofit providers would be totally out of luck. The Secretary, she, the procurement learned, saying, no, no, no, this does apply also to nonprofit providers. But it applies on exactly the same terms to nonprofit providers. The asset would defer a nonprofit provider. If you can show there's a straight solution to pay with the board, it's one hard to get seen. Have the board of city or so, there are millions of dollars where the real estate is, we don't take the best offer available, the e-vents from the Darth Vader, the hospital industry. And then the other half of the board, saying, wait a minute, we're in a clean institution. We have a mission, we have a story in this tree, we do all these good things, et cetera, et cetera. The day the thing, you don't really understand that. No, they're doing the appropriate thing. If they are concerned about the mission of this hospital that they are supposedly divorcing themselves from going forward, it's a good thing they had a concern, but what they're not doing is trying to maximize the value they're getting out of the transaction. And we don't have one party, and one side of the thing is actually doing that. But it seems to me that the points that you focused on, a lot of what the board, certain board minutes, board minutes from more specific board meetings, and talked about preservation and the Quaker mission, that those of what you primarily focused on, the administrators decision, the rewards, the realities of the healthcare market in 1996 in Philadelphia, the excess beds, the ensuing, what was perceived to be the difficult financial position in the water hospital in the room. And I thought, no, no financial difficulties, not the fact that they crumbled in 97, 98, but no financial difficulties. There were many buyers in this market place. I disagree with that. It must have been two. Okay, you must agree with that. I do. PHA 727 in the market for ordinance of August 12, 1994, when the process was beginning. Jeans was considering eight possible sewers, two number four profits, six number nine profit. The board minutes report the board dismissed early in the process because of the perceived conflict between the pro-fighting or interest as insurers and in that pro-profit mission, the two four profit entities were not even considered as potential partners. They thought about this range of six other partners who were all not for profit, ultimately entering down to the time and to temple, ultimately to the time. In 1996, I don't even know who was two four profit entities in the world. They weren't major players in this market. The major players in this market, besides eight, or from 1996, were pen and temple. Jefferson and they negotiated with two of the three. But the point is that they were, they think these four profit entities were rejected, one of them explored as possible partners. They're possibly because they were four profit, so they're following the possibility of looking for somebody. There's certainly, I mean, to say that the mere fact that they ignored four profit entities, they were, clearly, where was the mission. Which I don't think you can clearly move, or particularly for nonprofits. Not profits all had a mission. And to be acquired by a four profit mission or a four profit hospital, I mean, I think it's easy to argue. It's just clear conflict with that. This is exactly the issue that this court addressed in Einstein. The same fact as before the 49th time. In this court, I'll wear the selling, supposedly selling entity, was negotiating for nonprofits for the hospital going forward. Well, I'm highly, I'm not able, and how are they consistent for the four profit mission? They're doing everything they should have been doing. Nonetheless, they've got showed that they're not negotiating, they're not trying to extract away the way they're trying to benefit the hospital. That was going to be like this. I think that's easy, as I said. You see these non-reference affordees. I think that's easy on one principle issue and ignoring all the other realities. I don't think so because the first, the threshold we're going to get over is, well, is there a non-self transaction? Would they be trying to extract value? And they weren't doing that. That's the end of the case. And the first issue we do really exclude the four profits from the arena potential. So this is, you know, a set of metrics there. I think that's exactly right. I mean, they show you that they're moving that profit, we were the best, those are the profit. That's exactly right. So that's, that's, that's, that's a bad, that's a women 80 non-profits. We got a bad, not bad. And that's what that's a client line of return to. It's, it's a little bit hard to imagine that we'll manage how genes and these facts could have satisfied four, one, three, five, one, three, four. But let me suggest an alternative, I have a title. You have Tempel, which now owns the New Jeans Haskell. And also one's other Haskells, and they're all set up as separate subsidiaries. Time was forward, 96, 97, 98. They decides now where we have genes. The best thing for us to do for overall mission is sell off genes, use the profits for Haskell A and Haskell B, but they're also running. Temples and non-profit enemies, but they'll be a case where they really are trying to extract fair value. And they'll be an excellent product that can get teams that money for other parts of their products. That would be an example of how we're not having a problem. So this sort of non-profit is just like a full-profit. So, yeah, I know a lot of nonprofits, some of us are aware of the scene we have, but as much as we can, as much as we can, as much as we can. But as GDP Morgan, they, they, they, they get the benefit. And once there are more mission centric there, we're just, we feel we will build new rules. That sort of, they can't guess it's not a question of moral judgment. It's not a question of, of, of the entities, the Medicare program doesn't really run into hospitals for, for doing a nice thing. I know a lot of companies will have time to call, but for the specific purpose here is to work for their costs. You know, I could cite to you another body of law, which really doesn't, isn't in this case. But there are real estate laws that impact what nonprofits can do, which preclude their ability to sell to for the profits. And no matter if there was an analysis, did you take that and you consider it? But yeah, it doesn't matter, your heart. But it does matter because you're, you're seizing on a couple different points to say it wasn't an arm's length. And I'll say that you do a lot of factors, which the secretariat is not taking into consideration. I like addition, if I told you there was a wrong Pennsylvania, then an nonprofit had to, had to be, had to have a move to another entity approved by the State Attorney General. Would you take that and the consideration as a factor? If you have to be approval, then you work with the legal regime behalf of the bottom line, you have to have a factor. But the actual, the ultimate factual question is, are they trying to maximize value? Because the secretariat is held in this court on the last time, they only bring up two parties trying to maximize value. Do you rely on an number of the tells you, you know, you simply, let me sketch it, run it out of time, and we took some of your time. I don't know why you're fighting so hard on this issue, when you can win on the second point. You know, I was going to say, you know, I'm going to say, you know, it's a serious issue, or it's a good idea to go all the way here. But maybe you can read the court that you really don't have a lot of support on that first issue. And you don't have to win everything. I like playing everything I do. I don't have the hope to win. It's an all-in-one thing to say, but I'm the second issue humanist, you can live there as well. I mean, the secretary may be easier. That's true. Because you're reasonably fine with that the value, or at least what the record support of finding out was a value of $133 million, that's exchanged for about $67 million. That's now exchanged with their fair value that doesn't need the reasonable consideration requirement. And the number of seeing it to be very strong through, except I think we have to deal with the obsceness of the document. Because your numbers don't look so strong for you if that means we take it with a count. Well, several out two issues. One is there a argument that they should have used the income approach, and the second is that I forget that. Let's say you'd say that correctly, use the cost approach because the problem in my head says you can't. Right. What about the, are there any point of future obsceness? We have a point on a different record than in the end, in Braddock and the letter D at a point. What you have there was an appraisal where the crazer came out and said, here is the cost, there's the physical appreciation. And we are estimated, I have a number of $10 million that you should be further depreciated by for economic obsolescence. And the common radicalism in this year just, at least we saw another record, just thought that the only, the first time applied was just a simple factual mistake. And so it was remanded for me this year to reconsider. Here, you know, a crazer over the crazer said, yes, we think that there should be an adjustment for economic obsolescence. But they didn't attempt to quantify it at all. So it's a burden issue. It's a burden issue. They might have asked, is it more shoulder facts, et cetera, et cetera, than you would have had to give their credit, assuming that the obscess is a single factor. So it was well conceived, we would have an offset that. Just to ask you another different secretary, it has to be a burden of had to, and it seems fair. But if they need the right of showing, and you know this, compelled them, is all then, then yes. I mean, the advantage is here that it's there for them. They're trying to put the burden on you, so you, they're going to fulfill the cap for obsolescence, and we're going to get the importance of it. We're going to get the appraisal with support of that offset. And there's one additional issue, the sort of threshold issue, the 40-day numbers, which is that the administrator noted, this is an after-the-fact of craze-all. I don't need to consider this at all, but going through the fiction that this is the right number, that the party's worth thinking about in 1986, although for those numbers, and say, here's what they said for the past approach. And they still have that burden, even for those numbers. So, essentially, it's two points. One, the administrator's entitled to disregard the appraisal entirely, and then second, you take the appraisal upon the right approach, which is the cost approach, which is the most appropriate method for not-profit entities. You have a number that's tasting 30 million dollars on the higher the lowest concentration, which is coincidentally, what about the number that the Einstein court found to be highly indicative of the lack of reasonable concentration, 32 million dollars? I want you to comment for a moment if you would on your adversaries' invocation of the different regulations is showing why the method used by the Secretary was in court. There are circumstances where something other than the cost of course, something other than the cost of the physical appreciation would be appropriate, but what the program in London tells you is specifically in the context of that profit entities, the cost of which is better than income approach, because as we've previously discussed, that profit entities are voluntarily foregoing income. So, the income approach just doesn't tell you all that much about the real value of the entity, might be. And that's why, to the extent that all all of which have their flaws, you can pick out flaws in the cost of which all they want, but in the overall, the cost of the physical appreciation of the specific context of that profit entities, the cost of the cost is better than income approach. Okay, well, we've actually recently so far in the program. Okay, so his point that pursuant to the regulations, the Secretary essentially made a mistake, your rejoinder is under the program member and the Secretary is nearly invoking her discretion, and this cost approach, because in the nonprofit context, it's a superior approach. So, she can reasonably construe her regulations specifically to the context of the nonprofit entities to get to this result, and her town staffers and university nurses, so they know that's all the other host efforts. It's up okay. Okay, thank you, Rasty Maggallay. Mr. Howard. Thank you very much, your honor. A couple of points that I'll let the focus on the reasonable consideration point. The first of all, the Secretary's program member that prefers the cost approach was not adopted until 2000, which is four years after the transaction at stake here, and also four years after the imprison that was done here. It was a really sorry for the proposition that can't be utilized. You cannot apply retroactively, a route that would disqualify you categorically. Now, I think his point is a little different. It's at the time that the decision was made. Is there anything stating that you can't invoke the cost approach? Well, you accept accepting from your point about what it came up to be. The Georgetown principal makes clear that the Secretary cannot adopt a retroactive amendments to the rules. She couldn't even do that through a nursing comment. She certainly can do that through a program in a random that has a contra-neurocent comment. And that has effectively put us happened here. Because at the time this transaction took place, there was no requirement that it be evaluated by the cost approach. There was a crazier done that utilized the two values that would most likely be of savings to a purchaser, the income value and the market value. The appraisal was done by James Master of the Trade Act. Yes, because the participation was done by the Federal Administration for the trade-as-for-the-trades. But when it was done, it was done for the purpose that the regulations specify the regulations provide at the time. 96 provide for the completion of an appraisal to allow for the allocation of the purchase price across assets. And that was the purpose for which the appraisal was done. The appraisal confirmed that there had been, it was two purposes also, it was confirmed to confirm what had been in the view of James that had to apply for the adjustment. The value of the depreciable assets in the transaction. But the secretariat was trying to do, and this is not at how much it's James entitled to as an adjustment. This is at the threshold. Did James actually undergo a change of control and arms-low is trading both the food and transaction? And really, let's assume it was a little bit of that. So it's arms-low, and the secretariat says, well, this isn't done for reasonable consideration because it was less than the unadjusted, the cost, reproduction cost, undigested for economic obsolescence. That is arbitrary and capricious. And in our example, the brief of the bobbin-bibin, in fact, we illustrate that. The cost approach is the least derivative of the reasonable consideration that someone pay for an ongoing enterprise. The reasonable consideration for ongoing enterprise would be most likely generated as the regulation provides by the sales, the purchase. What are similar assets being sold for? And it's judge-fishing right inside out of the tour in 1996 because the overbearing problem in Philadelphia, other hospitals were going for virtually nothing. James obtained very considerable consideration for itself. Thank you, Emerson. Thank you. Thank you. We thank both CAHBSO for an excellent argument. Well, brief case. And we'll take them out and I'll be advised