stating that a regulation must be interpreted so as to harmonize with and not to conflict with the objective of the statute it implements
How later courts described this case
- stating that a regulation must be interpreted so as to harmonize with and not to conflict with the objective of the statute it implements
- where neither party would earn a profit from the transaction and there was no reason to believe the transaction was unnecessary or improper, that the parties were related did not bar reimbursement of interest on loans from Indiana University to its related organization, Indiana University Hospital
- regulation must be construed so as to harmonize, not conflict, with objective of statute it implements
- same as Am Trucking Ass’ns, Inc.
Written by the judges who cited it.
The opinion
Kunzig, Judge,
concurring:
I concur with the opinion for plaintiffs in this case and wish to emphasize its consistency with the court’s decision issued today in Pasadena Hospital Association, Ltd. v. United States, ante at 72, wherein I join the decision for defendant.
First, Pasadena involves a different regulation, 42 C.F.R. § 405.427 "Cost to related organization,” the thrust of which is, as the decision in Pasadena notes, to define what are includable costs for the purpose of reimbursement. In the instant case the regulation, 42 C.F.R. § 405.419 (c), is designed to assure that reimbursable interest expenses are reasonable. "The intent of this provision is to assure that loans are legitimate and needed, and that the interest rate is reasonable.” 42 C.F.R. § 405.419 (c)(1). The refusal to reimburse plaintiffs their interest expenses in Indiana University is directly contrary to this explicit purpose.. A similar situation does not exist in Pasadena.
Second, the decision herein is concerned with avoiding questions of the regulation’s validity on constitutional grounds. The regulation draws an exception for interest payments by a provider operated by members of a religious order made to that order. Denying reimbursement. to nonprofit Indiana University Hospitals yet permitting interest payment reimbursement to an affiliated religious order could well raise a first amendment question. Our decision herein avoids that problem. This factor is entirely absent from the court’s consideration of Pasadena.
These two aspects of Indiana University, the different nature of the regulation involved, the presence of the *98 constitutional question, plus the unique factual circumstances enumerated herein, serve clearly to distinguish this case from the approach outlined in Pasadena.
In accordance with the opinion of the court, a stipulation of the parties, and a memorandum report of the trial judge, it was ordered on August 1,1980 that judgment for plaintiff be entered for $61,651.