APPELLANT’S MOTION FOR SUMMARY RELIEF IN CBCA 2775

APPELLANT’S MOTION FOR SUMMARY RELIEF IN CBCA 2775

GRANTED IN PART; RESPONDENT’S MOTION FOR SUMMARY RELIEF

IN CBCA 2775 DENIED; CBCA 2774 DISMISSED FOR LACK OF JURISDICTION:

October 2, 2014

CBCA 2774, 2775

McALLEN HOSPITALS LP, dba

SOUTH TEXAS HEALTH SYSTEM,

Appellant,

v.

DEPARTMENT OF VETERANS AFFAIRS,

Respondent.

Jeffery Weinstein of The Weinstein Law Group, PLLC, Washington, DC, counsel for

Appellant.

Mary A. Mitchell and Bart Evans, Office of Regional Counsel, Department of

Veterans Affairs, Houston, TX, counsel for Respondent.

Before Board Judges STEEL, DRUMMOND, and LESTER.

LESTER, Board Judge.

McAllen Hospitals LP, dba South Texas Health System (appellant or STHS), filed

appeals from two separate contracting officer’s final decisions, claiming that the Department

of Veterans Affairs (respondent or VA) did not pay appellant the correct contractual amount

for services rendered.

CBCA 2774, 2775

2

Appellant argues: (1) it is entitled under its medical and hospital services contract to

be paid at a Case-Mix Group (CMG) rate (a rate of reimbursement that it contends is higher

than the Diagnostic-Related Group (DRG) rate) for inpatient rehabilitation services because

it is a Medicare-certified Inpatient Rehabilitation Facility (IRF); and (2) the VA’s Fees Basis

Claims System (FBCS) variously augmented and reduced reimbursement amounts so that

respondent underpaid and overpaid appellant for services throughout the life of the contract.

Having returned the overpayments, appellant seeks reimbursement to remedy the

underpayments.

Appellant filed a motion for summary relief, asking the Board to grant the appeals in

the aggregate amount of $1,054,473.90 – $976,603.66 in CBCA 2774 and $77,870.24 in

CBCA 2775. Respondent filed a motion for summary relief seeking denial of appellant’s

appeals.

Background

On October 20, 2008, the VA issued a solicitation seeking proposals for a one-year

indefinite-quantity contract, with four one-year option periods, through which the awardee

would provide general medical and hospital services for veterans in the Lower Rio Grande

Valley region in south Texas. The solicitation indicated that the VA would be the primary

payor of services for eligible/enrolled individuals, with payment to be made in accordance

with the contract’s Schedule of Supplies/Services:

VA shall be the primary payor for an eligible/enrolled individual (defined in

section B.4.6) whether or not the individual has a service-connected injury or

illness. Payment shall be made in accordance with this Schedule of

Supplies/Service.

Appeal File, Exhibit 11, Clause B.2.1 (Bates 001025).1 Clause B.2.2 of the solicitation

provided that “[p]ricing for this contract [would be] based on actual services provided in

accordance with contract percentage of current Medicare rates” and that “[a]djustments in

pricing during the term of the contract [would] be limited to published changes in Medicare

rates.” Id., Clause B.2.2 (Bates 001025).

The types of services that the awardee was to provide were identified under various

Contract Line Item Numbers (CLINs). In CLIN 0001 of the solicitation, the VA identified

1

noted.

All exhibits referenced in this decision are found in the appeal file, unless otherwise

CBCA 2774, 2775

3

a broad category of inpatient hospital services covered by the contract that the VA was to pay

using DRG codes, DRG being a specific reimbursement methodology identified in Medicare

regulations. Exhibit 11, Clause B.3.1 (Bates 001027); see 42 CFR 412.60 (2013) (discussing

DRGs). Other CLINs identified other particular services, including specialty professional

services (covered by the Current Procedure Terminology (CPT) reimbursement methodology)

(CLIN 0002), as well as lab pathology, anesthesia, physical medicine and rehab, pulmonary

rehab, and radiology support services (CLIN 0003). Exhibit 11 (Bates 001027-29). Despite

these listings, the VA made clear in the solicitation that it could not and did not intend to

identify every type of service that it expected to acquire under the contemplated contract and

that, after award, it might add services not listed:

While the quantities are based on historical data, they do not represent the

entire volume or breadth of services [Veterans Health Administration (VHA)]

intends to acquire under this contract. VA intends to purchase all services

related to the Contract Line Item Number (CLIN) listed in Section B. After

award VA may have need to add services not listed. If such needs arise, VA

will ask the contractor if such services can be provided and, if so, VA may

negotiate a modification to add those services.

Exhibit 11, Clause E.5.4 (Bates 001101) (emphasis added); see Exhibit 11 (Bates 001171)

(“If additional services are required in the future that the VA did not foresee at the time of

award, the VA can negotiate and modify the contract to add the required services.”).

Clause B.2.5 of the solicitation indicated that, for purposes of “determining the total

estimated dollar amount” of the anticipated contract during the award evaluation process, the

VA would use a list of DRG and CPT codes that the VA had included in the solicitation,

along with the identified estimated quantities:

For determining the total estimated dollar amount of award, the VA will use

the list of DRG and CPT codes in Attachment D.1. Pricing Schedule, and the

estimated quantities shown there. All DRG and CPT codes are not listed in the

Pricing Schedule, but the Contractor will be required to provide inpatient care

services for any Medicare DRG and CPT code when authorized by the VA.

Exhibit 11, Clause B.2.5 (Bates 001026). In Attachment D.1 to the solicitation, the VA

represented that the purpose of using the identified DRG and CPT codes was to provide the

VA with a basis for uniformly comparing competing offers during the contract award

decision-making process and not to limit the VA’s ability during contract performance to

purchase necessary medical services:

CBCA 2774, 2775

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Representative DRG or CPT codes have been supplied in this Price Schedule

to provide a uniform methodology to evaluate proposed offers. These codes

and sample quantities (volumes), while based on historical data, are for

illustrative purposes only and do not represent the entire volume or breadth of

services VHA intends to acquire under this contract. VA intends to purchase

all services related to the Contract Line Item Number (CLIN) Service Area

listed in Contract B.3. Schedule of Services.

Exhibit 17, at 1.2 The VA further made clear in the solicitation that, despite the method of

price evaluation, “[t]hroughout the life of the contract VA will pay current Medicare rates

in effect at the time of performance.” Exhibit 11, Clause E.5.4 (Bates 001102).

On or about November 28, 2008, STHS submitted an offer in response to the

solicitation, proposing to provide both inpatient hospital services and medical services.

STHS asserts that it is a designated Inpatient Rehabilitation Facility (IRF) under Medicare

rules, see 42 CFR 412.600 to .632 (discussing IRFs), although IRF status was not a

requirement of, and was not mentioned in, the solicitation.

On April 9, 2009, the VA awarded the contract to STHS. The contract required STHS

to invoice the VA according to the various CLINs listed in the solicitation using the

negotiated rate of reimbursement for each CLIN. The contract also stated the expected

minimum and maximum expenditures per CLIN. The negotiated rate of reimbursement was

103% or 106% of current Medicare rates, depending on the service provided and the

corresponding CLIN. See Exhibit 9, Clause B.3.1 (Bates 000608). The Attachment D-1

pricing schedule further specified the type of services, corresponding CLINs and Medicare

codes, and the proposed price for each service, see Exhibit 17, but, as previously discussed,

not all possible services were set out in the pricing schedule. Inpatient rehabilitation services

were not specifically set out in the pricing schedule.

To receive reimbursements, the contract required appellant to submit “medical

claims,” which it defined as “invoices prepared and submitted by the contractor that consist

of the charges of the provider(s) for the health care services rendered to veterans as

authorized by the VA.” Exhibit 9, Clause B.4.6 (Bates 000623). Pursuant to the contract,

appellant was to submit its “medical claims” to the VA through the VA’s claims processing

2

Similarly, in PowerPoint slides from a pre-solicitation conference, held July 22,

2008, the VA indicated on a page titled “Pricing” that the sample DRG/CPT codes were to

provide “a uniform methodology to evaluate all proposed offers equally” and to allow

“[f]lexibility to add additional services by negotiation.” Exhibit 12.

CBCA 2774, 2775

5

system – originally, the VistA Fee System and, later, the FBCS.3 According to STHS, some

of these “medical claims” included payment requests for inpatient rehabilitation services

provided by an IRF, for which STHS sought payment under the CMG reimbursement

methodology rather than under the DRG reimbursement methodology.4 STHS alleges that,

although DRG codes for inpatient rehabilitation services exist, IRFs generally receive a

higher level of payment for inpatient rehabilitation under the CMG code than facilities

providing inpatient rehabilitation without an IRF designation.

On April 4, 2011, appellant sent a formal claim to the contracting officer (CO) stating

that respondent had not paid it according to current Medicare rates for hospital (institutional)

claims and physician (professional) claims between April 6 and September 30, 2009. STHS

asserted that it had been both overpaid and underpaid on numerous hospital claims, that it

had reimbursed the VA for any identified overpayments, and that it was entitled to proper

payment on the underpaid hospital claims:

As noted on the contract, page 7 of 68, Section B.2, Schedule of Items –

Service, No. 2: “Pricing for this contract is based on actual services provided

in accordance with contract percentage of current Medicare rates”.

3

The contract originally required respondent to process claims through the VistA

Fee System, see Exhibit 9, Clause B.4.6 (Bates 000624), but, through Modification No. 0002

dated October 1, 2010, this requirement was changed to require claims processing through

the FBCS. See Exhibit 7 (Bates 000596). It appears from the record that the processing

system in place during the time periods at issue in the two CDA claims before the Board –

April 2009 through September 2009, and October 2009 through September 2010 – would

have been the VistA Fee System, not the FBCS. In fact, one of the Inspector General reports

that appellant references indicates that the FBCS was intended to replace and improve upon

the VistA Fee System, but was not fielded until at least December 2010 (if not later). See

Exhibit 24 (VA Office of Inspector General Report No. 09-03408-227, Veterans Health

Audit of Non-VA Inpatient Fee Care Program, at 9 (Aug. 18, 2010)). Nevertheless, because

appellant repeatedly references the FBCS in its complaint and in its briefing, and because it

is clear that appellant is complaining about underpayments allegedly caused by the VA’s

claims processing system, we will use the acronym “FBCS” to encompass both the FBCS and

its predecessor system, the VistA Fee.

4

None of the medical claims are in the record in this case. Respondent did not

include them in the appeal file, and appellant did not include them in its supplemental appeal

file.

CBCA 2774, 2775

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Since implementation of [the] contract, Hospital (institutional) claims have not

been paid based on STHS current Medicare rates and Physician (professional)

claims for all CPT’s at the current Medicare rate. STHS has repeatedly

requested the payment scheme followed by [VA Texas Valley Coastal Bend

Health Care System (VATVCBHCS)] so that the accounts could be adjusted

appropriately. To date, STHS has not received this information. STHS has

been refunding overpayments as based on our payment methodology. We are

requesting VATVCBHCS to reimburse on accounts identified as under paid.

Attached to this letter is supporting documentation including Excel

spreadsheets of underpaid claims from the beginning of the Contract (April 6,

2009) to the end of VATVCBHCS fiscal year (September 30, 2009). Hospital

claims’ supporting documentation includes a UB 04, an Explanation of

Benefits (EOB) and a screen print per account of the expected DRG

reimbursement for inpatients as well as the Outpatient Fee schedule. Physician

claims’ supporting documentation includes the Excel spreadsheet and a copy

of your EOB.

Exhibit 1 (Bates 000018). Through this claim, appellant sought to recover a total of

$77,870.24 in underpayments and requested that the CO issue a final decision in accordance

with the contract’s Disputes clause.5

On June 1, 2011, appellant sent a second formal claim to the CO making the same

arguments but claiming $976,603.666 of underpayments between October 1, 2009, and

September 30, 2010.7 Exhibit 1 (Bates 000009). To supplement both claims of

underpayments, appellant sent a total of 1434 “medical claims” (none of which are in the

record here) to the CO. Although STHS indicated in its motion for summary relief that this

5

The April 4, 2011, claim letter itself did not expressly identify the $77,870.24

figure, but both appellant and respondent agree that the figure was identifiable from the

documentation that accompanied the claim.

6

As with the April 4, 2011, claim, the June 1, 2011, claim letter itself did not

expressly identify the $976,603.66 figure, but appellant and respondent agree that the amount

was identifiable from the documentation that accompanied the claim.

7

Appellant also contends, and respondent does not dispute, that between 2009 and

2010, respondent overpaid on other claims by $1.2 million and that STHS has voluntarily

refunded this amount.

CBCA 2774, 2775

7

claim was “certified,” Appellant’s Motion for Summary Relief at 7, the record does not

contain a copy of the certification required by the Contract Disputes Act (CDA), 41 U.S.C.

§ 7103(b) (2012).

In her final decisions on the two claims, the CO interpreted the April 4 and June 1,

2011, claims to complain about the VA’s application of DRG codes to pay for inpatient

rehabilitation services and its failure to pay IRF claims under the CMG code. Exhibit 1

(Bates 000021). She determined that the contract at issue limited payments for authorized

services to the DRG and CPT codes. She held that inpatient rehabilitation services were

considered inpatient hospital services and were therefore paid at the DRG rate under CLIN

0001. Accordingly, the CO found that STHS, although a Medicare-certified IRF, was not

entitled to the higher CMG rates for providing inpatient rehabilitation services.

On March 13, 2012, appellant timely appealed both of the contracting officer’s final

decisions, and we consolidated the cases.

Cross-Motions for Summary Relief

Appellant filed a motion for summary relief, arguing that it is entitled to damages for

underpayments because (1) respondent should reimburse it at the CMG rate for inpatient

rehabilitation services, and (2) the FBCS altered reimbursement amounts so that appellant

was variously underpaid and overpaid.

Respondent also filed a motion for summary relief, arguing that the plain meaning of

the contract only allowed for DRG and CPT reimbursement rates. Respondent then argues

that the Board does not have jurisdiction to hear the issue involving the FBCS because

appellant did not present this issue to the CO, as required by the CDA.

Discussion

Jurisdictional Issues

I.

Standard of Review

Subject matter jurisdiction is a threshold matter involving a tribunal’s “power to hear

a case,” and a tribunal must dismiss a case over which it lacks jurisdiction. Arbaugh v. Y&H

Corp., 546 U.S. 500, 514 (2006); see Steel Co. v. Citizens for a Better Environment, 523 U.S.

83, 94-95 (1998) (tribunal must decide jurisdiction before proceeding to the merits).

Jurisdiction “may be challenged at any time by the parties or by the [tribunal] sua sponte.”

Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir. 2004). When considering a motion

CBCA 2774, 2775

8

to dismiss for lack of subject matter jurisdiction, a tribunal accepts as true the undisputed

allegations in the complaint and draws all reasonable inferences in favor of the plaintiff.

Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011).

Nevertheless, when a question of the tribunal’s jurisdiction is raised, “either by a party or by

the [tribunal] on its own motion, the [tribunal] may inquire, by affidavits or otherwise, into

the facts as they exist.” Land v. Dollar, 330 U.S. 731, 739 n.4 (1947). The party invoking

the Board’s jurisdiction bears the burden of establishing it by a preponderance of the

evidence. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Reynolds

v. Army & Air Force Exchange Service, 846 F.2d 746, 748 (Fed. Cir. 1998); Rocovich v.

United States, 933 F.2d 991, 993 (Fed. Cir. 1991).

II.

Jurisdiction to Entertain CBCA 2774

While reviewing the parties’ briefing on summary relief, the Board identified a

potential jurisdictional defect in one of STHS’s claims – the $976,603.66 claim at issue in

CBCA 2774 – that neither party raised. Because subject matter jurisdiction “can never be

forfeited or waived,” Arbaugh, 546 U.S. at 514, tribunals “have an independent obligation

to determine whether subject-matter jurisdiction exists, even in the absence of a challenge

from any party.” Id. Accordingly, we consider this issue sua sponte.

The CDA requires that “[e]ach claim by a contractor against the Federal Government

relating to a contract shall be in writing” and “shall be submitted to the contracting officer

for a decision.” 41 U.S.C. § 7103(a)(1), (2). It also requires that, for any claim in excess of

$100,000, the contractor must certify the claim, as follows:

For claims more than $100,000 made by a contractor, the contractor shall

certify that –

(A) the claim is made in good faith;

(B) the supporting data are accurate and complete to the best of the

contractor’s knowledge and belief;

(C) the amount requested accurately reflects the contract adjustment for which

the contractor believes the Federal Government is liable; and

(D) the certifier is authorized to certify the claim on behalf of the contractor.

CBCA 2774, 2775

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Id. § 7103(b)(1). “[T]here is nothing in the CDA that excuses contractor compliance with

the explicit CDA claim requirements.” M. Maropakis Carpentry, Inc. v. United States, 609

F.3d 1323, 1329 (Fed. Cir. 2010).

“Certification of a claim of more than $100,000 is not only a statutory requirement,

but also a jurisdictional prerequisite for review of a contracting officer’s decision before this

Board.” Red Gold, Inc. v. Department of Agriculture, CBCA 2259, 12-1 BCA ¶ 34,921, at

171,121 (citing Fidelity Construction Co. v. United States, 700 F.2d 1379, 1384 (Fed. Cir.

1983)); see W.M. Schlosser Co. v. United States, 705 F.2d 1336, 1338-39 (Fed. Cir. 1983);

Essex Electro Engineers, Inc. v. United States, 702 F.2d 998, 1004 (Fed. Cir. 1983).

Although a contractor can correct a defective claim certification after an appeal is filed, see

48 CFR 33.207(f), it cannot remedy a complete failure to certify. K Satellite v. Department

of Agriculture, CBCA 14, 07-1 BCA ¶ 33,547, at 166,154; see B&M Cillessen Construction

Co. v. Department of Health and Human Services, CBCA 931, 08-1 BCA ¶ 33,753, at

167,084 (2007); CDM International, Inc., ASBCA 52123, 99-2 BCA ¶ 30,467, at 150,514;

see also 48 CFR 33.201 (“[f]ailure to certify shall not be deemed to be a defective

certification”).

Here, although STHS has represented that the June 1, 2011, claim was “certified,”

Complaint ¶ 35, we were unable to locate any evidence in the record to support that

statement. In response to our inquiry about the missing certification, appellant’s counsel

stated in a letter dated September 23, 2014, that STHS “is unable to locate the certification

that it believes accompanied the claim,” but that STHS “believes that the certification may

have been placed in one of the six boxes of claim material, referenced in the claim, that were

provided to the VA contracting officer as supporting documentation.” Appellant’s counsel

further asserted that, “[a]lthough STHS cannot locate the original certification, it believes

that it was submitted, since the contracting officer in conjunction with counsel, prepared a

final decision, which would not have been required absent a properly certified claim.”

As the appellant, STHS bears the burden of proving jurisdiction by a preponderance

of the evidence. See McNutt, 298 U.S. at 189; Reynolds, 846 F.2d at 748. To satisfy this

burden, STHS must establish that it is “more probable” than not that STHS submitted its

certification with its June 1 claim. See LaLonde v. Secretary of Health & Human Services,

746 F.3d 1334, 1338 (Fed. Cir. 2014) (defining “preponderance” standard). STHS’s belief

that it “may” have placed a certification in a box accompanying the June 1 claim is simply

insufficient to meet that burden. Even had STHS affirmatively declared that it submitted the

certification, counsel’s statement is devoid of any specific information tending to support that

fact – he does not identify the purported certification’s signatory or the person who

purportedly prepared it for signature, he does not identify specific persons who recall seeing

the submitted CDA certification, and there is no indication that an unsigned copy (drafted

CBCA 2774, 2775

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contemporaneously with the June 1 claim submission) was found on the drafter’s computer

hard drive or in paper form. Further, STHS presents no affidavits or declarations from the

fact witnesses who would have prepared and signed the certification, and “[a]llegations

without support are not evidence.” Castle, AGBCA 97-128-1, 97-1 BCA ¶ 28,833, at

143,845. Counsel’s reference to a vague generalized recollection of an unsupported

corporate belief is simply insufficient to establish certification by a preponderance of the

evidence.

It is true, as STHS notes, that the CO actually issued a final decision on the June 1

claim. See Exhibit 1 (Bates 000007). Issuance of a decision in response to an uncertified

claim, however, does not cure or waive the jurisdictional defect. Red Gold, 12-1 BCA at

171,722; Hemmer-IRS Limited Partnership v. General Services Administration, GSBCA

16134, 04-1 BCA ¶ 32,509, at 160,814. Further, the CO’s action in issuing the decision does

not necessarily indicate that, as respondent suggests, STHS must have certified the claim.

In fact, a comparison of the final decisions issued in response to the April 4 claim and the

June 1 claim strongly suggest that the June 1 claim was, in fact, not certified. In its April 4

claim, STHS sought an amount below the $100,000 certification threshold, and the

contracting officer issued a final decision denying that claim. The contracting officer’s final

decision in response to the June 1 claim was virtually identical to the prior final decision,

except for the addition of the following sentence to the conclusion: “In addition, claims

submitted to the Agency in excess of $100,000 must be certified in accordance with FAR

33.207(c).” Exhibit 1 (Bates 000007). Although the CO did not expressly state that STHS’s

June 1 claim was uncertified, had the claim been accompanied by the required CDA

certification, the addition of that sentence to the final decision would seemingly have no

purpose, suggesting that it was not certified. In any event, STHS’s inability to produce a

copy of its certification, coupled with its failure to identify the putative signatory to or

preparer of such a certification and the absence of any affirmative definitive statement under

oath and by declaration that the certification was definitely provided to the VA with the June

1 claim, preclude STHS from meeting its burden of establishing the necessary prerequisite

to this Board’s jurisdiction to entertain CBCA 2774.

Perhaps recognizing the problem created by the absent certification, STHS, in

response to the Board’s inquiry regarding this issue, has provided the VA contracting officer

with what it calls a “recertification,” containing the language required by the CDA and

signed by STHS’s Chief Financial Officer. Unfortunately, that certification is dated

September 22, 2014, long after this appeal was filed. Jurisdiction must be determined under

the actual circumstances existing at the time the case is filed. Sharman Co. v. United States,

2 F.3d 1564, 1569 (Fed. Cir. 1993), overruled in part on other grounds by Reflectone, Inc.

v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995); see Newman-Green, Inc. v. Alfonzo-Larrain, 490

U.S. 826, 830 (1989) (jurisdiction “ordinarily depends on the facts as they exist” when the

CBCA 2774, 2775

11

case is filed). “[P]ost-filing events cannot create jurisdiction.” Tyler House Apartments, Ltd.

v. United States, 38 Fed. Cl. 1, 17 (1997) (citing Lujan v. Defenders of Wildlife, 504 U.S.

555, 571 n.4 (1992)). Accordingly, as this Board has repeatedly recognized, a certification

issued during the pendency of a case has “no legal bearing on the Board’s jurisdiction over

the subject appeal and [could not] serve to cure our lack of jurisdiction.” B&M Cillessen

Construction, 08-1 BCA at 167,085 (citing CDM International, 99-2 BCA at 150,514).8

Because STHS’s June 1, 2011, claim exceeded $100,000 and STHS has failed to

establish that it was certified, we lack subject matter jurisdiction to entertain that claim.

Accordingly, CBCA 2774, the case that is the subject of that claim, is dismissed for lack of

jurisdiction.

III.

Jurisdiction to Entertain CBCA 2775

The April 4, 2011, claim underlying CBCA 2775 seeks less than $100,000 and,

therefore, is not subject to the certification requirement discussed above. Nevertheless,

respondent raises two jurisdictional arguments regarding the April 4 claim in its motion for

summary relief, which we treat as a motion to dismiss.9

8

Further, at the moment, there is no valid final decision upon the newly certified

claim that STHS could appeal. STHS will have no right of appeal until the CO issues a final

decision on the newly certified claim or that claim is “deemed denied” by the passage of

time. See Ostaszewski v. Department of State, GSBCA 16319-ST, 04-2 BCA ¶ 32,640, at

161,509 (“a contracting officer’s decision is ‘the very linchpin and necessary prerequisite for

the board’s jurisdiction’” (quoting McDonnell Douglas Corp. v. United States, 754 F.2d 365,

370 (Fed. Cir. 1985)).

9

In evaluating jurisdiction sua sponte, the Board also recognizes that, although

appellant and respondent agree that the April 4, 2011, claim seeks a total of $77,870.24, the

claim letter itself does not expressly state that figure. A valid CDA claim seeking monetary

relief must contain a demand for “the payment of money in a sum certain.” 48 CFR 2.201.

Although no particular wording is necessary, the demand must contain “a clear and

unequivocal statement that gives the contracting officer adequate notice of the . . . amount

of the claim.” Contract Cleaning Maintenance, Inc. v. United States, 811 F.2d 586, 592

(Fed. Cir. 1987). Generally, then, “[t]o comply with the sum certain requirement for a valid

claim, a fixed amount must be stated.” ASP Denver, LLC v. General Services

Administration, CBCA 2618, 12-1 BCA ¶ 35,007, at 172,041. Nevertheless, the sum certain

requirement is satisfied if a total “is readily calculable by simple arithmetic from the

(continued...)

CBCA 2774, 2775

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First, respondent argues that, in STHS’s claims to the CO, STHS requested relief

based solely upon the VA’s purported refusal to pay CMG rates for inpatient rehabilitation

services. Respondent asserts that STHS’s claims to the CO did not include any allegations

relating to errors in payment arising out of problems with the FBCS. Accordingly, the VA

asserts, the Board lacks jurisdiction over appellant’s claim concerning the FBCS. In

response, appellant argues that evidence concerning the integrity of the FBCS is highly

relevant to its previous claims of underpayments and that these claims were presented to the

CO.

Under the CDA, “[e]ach claim by a contractor against the Federal Government shall

be submitted to the contracting officer for a decision.” 41 U.S.C. § 7103(a)(1). The Board

has jurisdiction over appeals from a contracting officer’s final decision on claims that were

either denied or deemed denied. CB&I Federal Services LLC v. Department of Homeland

Security, CBCA 3112, et al., 14-1 BCA ¶ 35,550, at 174,210 (citing Walsh/Davis Joint

Venture v. General Services Administration, CBCA 1460, 10-2 BCA ¶ 34,479). The purpose

of this requirement is to allow the CO to pass judgment on the contractor’s entire claim.

Ketchikan Indian Community v. Department of Health and Human Services, CBCA 1053ISDA, et al., 13 BCA ¶ 35,436, at 173,808 (citing Scott Timber Co. v. United States, 333

F.3d 1358, 1366 (Fed. Cir. 2003)). Therefore, the Board does not have jurisdiction over new

claims that were not presented to the contracting officer. EHR Doctors, Inc. v. Social

Security Administration, CBCA 3522, 14-1 BCA ¶ 35,630, at 174,492 (citing Santa Fe

Engineers, Inc. v. United States, 818 F.2d 856, 858 (Fed. Cir. 1987)). The Board does not

require rigid adherence to the original claim, but “[r]ather, when a new claim is asserted that

was not directly addressed in the appellant’s original claim submission, the tribunal must

examine whether the newly posed claim derives from the same operative facts, seeks

essentially the same relief, and, in essence, merely asserts a new legal theory for the recovery

9

(...continued)

attachments” to the claim. PHI Applied Physical Sciences, Inc., ASBCA 56581, et al., 13

BCA ¶ 35,308, at 173,337, appeal dismissed, No. 2013-1627 (Fed. Cir. Dec. 11, 2013); see

Metric Construction, Inc. v. United States, 1 Cl. Ct. 383, 391 (1983) (sum certain

requirement met with data “which allows for reasonable determination of the recovery

available at the time the claim is presented and/or decided by the contracting officer”);

Madison Lawrence, Inc., ASBCA 56551, 09-2 BCA ¶ 34,235, at 169,207 (“when the amount

can be calculated with reasonable effort, a contractor’s submission is sufficiently in a sum

certain”). Here, the documents that accompanied the written claim are not in the record.

Nevertheless, it is clear that both respondent and appellant were able to calculate the precise

figure at issue from those documents. Accordingly, the sum certain requirement appears

satisfied.

CBCA 2774, 2775

13

originally sought.” Ketchikan Indian Community, 13 BCA at 173,808-09 (citing Scott

Timber, 333 F.3d at 1365).

In its April 4, 2011, claim, appellant alleged that, since the implementation of the

contract, respondent has not reimbursed medical claims according to current Medicare rates.

To support its argument, appellant sent 1434 “medical claims” as proof of underpayments.

In her final decision, the CO acknowledged that the alleged underpayments may have various

causes. In the complaint, appellant then asserts that underpayments were caused by the

CMG/DRG rate dispute, as well as by faults within the FBCS.

We find that both the CMG/DRG rate dispute and the FBCS issue are encompassed

within the April 4, 2011, claim. STHS alleged in its April 4 claim that “Hospital

(institutional) claims have not been paid based on STHS current Medicare rates and

Physician (professional) claims for all CPT’s at the current Medicare rates.” Exhibit 1 (Bates

000018). STHS also represented that it had “repeatedly requested” implementation of an

appropriate payment scheme “so that the accounts could be adjusted appropriately.” Id. The

claim does not limit itself to inpatient rehabilitation claims and, in fact, does not even use the

words “inpatient rehabilitation” or “CMG.” It instead expansively encompasses

underpayments, which would include both the CMG/DRG rate dispute and the FBCS

payment issue. The allegations relating to the FBCS arise out of the same operative facts as

those identified in the claim and request the same relief as that asserted in the claim.

Appellant’s complaint merely asserts alternative theories for how the alleged underpayments

occurred. The facts for both the claim and the complaint remain the same and require the CO

and the Board to consider what services appellant rendered, how much the contract required

respondent to pay for those services, and whether respondent paid the correct amount. The

CO considered these factors in her final decisions, and the “new” assertion that the FBCS

altered medical claim amounts is merely a theory about how the wrong amounts were paid

and does not rise to the level of a separate claim. We have jurisdiction to entertain the claim

underlying CBCA 2775.

Second, respondent argues that we lack jurisdiction to consider various documents that

STHS references in its complaint or has included in a supplemental appeal file, including

several VA Office of Inspector General (OIG) reports, Congressional Subcommittee hearing

excerpts, and Medicare rules published in the Federal Register that “were never submitted

to the Contracting Officer for a Final Decision.” Respondent’s Motion for Summary

Judgment (Respondent’s Motion) at 13. The VA asserts that, “since it is patently clear that

these submissions are irrelevant to the contract dispute before the Board, any discussion or

review of these documents should be considered outside the jurisdiction of the Board.” Id.

at 13-14.

CBCA 2774, 2775

14

Respondent has confused the issues of jurisdiction and relevance. Under the CDA,

41 U.S.C. §§ 7101-7109, the Board has jurisdiction to entertain appeals challenging a

contracting officer’s final decision denying a contractor’s CDA claim. Id. §§ 7104(a),

7105(e)(1)(B). Here, as we have already found, we possess jurisdiction to entertain STHS’s

appeal of the CO’s final decision underlying CBCA 2775. Whether the documents about

which respondent complains actually support or relate to STHS’s factual and legal arguments

goes to those documents’ relevance to this case. Under Rule 401 of the Federal Rules of

Evidence, evidence is relevant if it “has any tendency to make a fact more or less probable

than it would be without the evidence” and “the fact is of consequence in determining the

action.” Fed. R. Evid. 401. Relevant evidence is admissible in a proceeding unless the

United States Constitution, a Federal statute, the Federal Rules of Evidence, or other rules

prescribed by the Supreme Court provide otherwise. Fed. R. Evid. 402. Although

respondent could raise evidentiary objections to the relevance of the documents that STHS

has cited, objections to particular pieces of evidence do not in any way affect the Board’s

jurisdiction to entertain the underlying case. The Board’s jurisdiction arises from appellant’s

timely appeal of the CO’s final decision at issue in CBCA 2775, not from the documents that

appellant wants to use to support its arguments. Respondent’s attempt to turn evidentiary

objections into an issue of subject-matter jurisdiction is wholly unfounded.10

Motions for Summary Relief

I.

Standard of Review

Summary relief is this Board’s analogous procedure to summary judgment. GE

Capital Information Technology Solutions-Federal Systems v. General Services

Administration, GSBCA 15467, 01-2 BCA ¶ 31,445, at 155,306. “Summary relief is only

10

Respondent also asserts that, because the challenged documents were “never

submitted to the Contracting Officer” as part of the claim, the Board cannot review them

here. See Respondent’s Motion at 13. Respondent is wrong. This Board’s review of a

challenge to a CO’s final decision is de novo, Bay Shipbuilding Co. v. Department of

Homeland Security, CBCA 54, et al., 07-2 BCA ¶ 33,678, at 166,743 (citing Wilner v. United

States, 24 F.3d 1397, 1401-02 (Fed. Cir. 1994) (en banc)), not a review limited to an

administrative record developed before the CO. Although there may be evidentiary reasons

that particular documents will not be admissible in a case, appellants in CDA cases are not

barred from submitting documentary evidence to the Board in support of their appeals simply

because they did not originally present that evidence to the CO. See generally H.L. Smith,

Inc. v. Dalton, 49 F.3d 1563, 1566 (Fed. Cir. 1995) (supporting documentation need not

accompany CDA claim for jurisdiction to attach on appeal).

CBCA 2774, 2775

15

appropriate where there is no genuine issue as to any material fact and the moving party is

entitled to relief as a matter of law.” Butte Timberlands, LLC v. Department of Agriculture,

CBCA 3232, 13 BCA ¶ 35,383, at 173,627 (quoting Greene v. Department of Homeland

Security, CBCA 49, 07-2 BCA ¶ 33,668, at 166,700). A material fact is one that will affect

the outcome of a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). “Any

doubt on whether summary relief is appropriate is to be resolved against the moving party.

Butte Timberlands, 13 BCA at 173,627 (quoting Greene, 07-2 BCA at 166,700).

In these consolidated cases, both parties moved for summary relief, addressing two

distinct issues: (1) whether appellant is entitled to payment at the CMG rate for providing

inpatient rehabilitation services as a Medicare-certified IRF, and (2) whether respondent’s

FBCS altered Medicare reimbursement amounts for services rendered. It is unclear from the

record which of the 1434 patient claims are alleged underpayments because of the CMG rate

issue and which can be attributed to the alleged alteration by the FBCS.

II.

Claims for Underpayments Based on Appellant’s Status as an IRF

For inpatient rehabilitation services, appellant claims it is entitled to be reimbursed

at the higher CMG rate (rather than at the DRG rate that respondent insists the contract

requires) because it is a Medicare-certified provider of such rehabilitation services. The

contract language determines whether STHS is limited to payment at DRG rates. Contract

interpretation begins with the contract language’s plain meaning. ACM Construction &

Marine Group, Inc. v. Department of Transportation, CBCA 2245, et al., 14-1 BCA

¶ 35,537, at 174,151 (citing LAI Services, Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir.

2009)). The contract is read as a whole to give reasonable meaning to all parts. Gould, Inc.

v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). The inquiry ends if the plain

language is unambiguous. ACM Construction, 14-1 BCA at 174,151 (citing Hunt

Construction Group, Inc. v. United States, 281 F.3d 1369, 1373 (Fed. Cir. 2002)).

The contract language here is clear and unambiguous: it does not limit the contractor

to DRG and CPT pricing for every service that the contractor might provide. Although the

solicitation indicated that, in “determining the total estimated dollar amount” of the

anticipated contract award, the VA would evaluate offers using “the list of DRG and CPT

codes in Attachment D.1” to the solicitation “and the estimated quantities shown there,” see

Exhibit 11, Clause B.2.5 (Bates 001026), that language clearly was intended to provide the

VA with a basis for uniformly comparing competing offers during the contract award

decision-making process and not to limit the VA’s ability to purchase necessary medical

services, as the VA plainly stated in Attachment D.1 itself: “Representative DRG or CPT

codes have been supplied in this Price Schedule to provide a uniform methodology to

evaluate proposed offers.” Exhibit 17 at 1.

CBCA 2774, 2775

16

Even though the VA argues that the contract limits appellant to DRG and CPT pricing,

it has identified nothing in Clause B.2.5 or in any other contract clause that expressly

imposes such limits upon any and all services that appellant might perform. Although Clause

B.2.5 of the contract states that, during contract performance, “the contractor will be required

to provide inpatient care services for any Medicare DRG and CPT code when authorized by

the VA,” Exhibit 9, Clause B.2.5 (Bates 000607), the clause does not preclude the VA from

obtaining services that are not covered by a DRG or CPT code, and it does not expressly limit

payment for such services to DRG and CPT codes.

In fact, in the solicitation, respondent expressly recognized the possibility that it would

order services not expressly identified in the contract and that the VA would have to pay for

those services: “After award VA may have need to add services not listed. If such needs

arise, VA will ask the contractor if such services can be provided and, if so, VA may

negotiate a modification to add those services.” Exhibit 11, Clause E.5.4 (Bates 001101).

Clause B.2.2 states that “[p]ricing for this contract is based on actual services provided in

accordance with contract percentage of current Medicare rates,” with adjustments in pricing

during the term of the contract limited to “published changes in Medicare rates.” Exhibit 9,

Clause B.2.2 (Bates 000606); see Appeal File, Exhibit 11 (Bates 001102) (“[t]hroughout the

life of the contract, VA will pay current Medicare rates in effect at the time of performance”).

Here, the “contract percentage” was 103% or 106% of Medicare rates, depending on the

corresponding CLIN. See Exhibit 9, Clause B.3.1 (Bates 000608). Accordingly, to the

extent that the VA obtained services, it had to pay for them at that percentage of the

applicable Medicare rate, whether the proper code was a DRG, a CPT, or a CMG.

Under Medicare regulations, Medicare-certified IRFs are generally reimbursed at a

CMG rate. See 42 CFR 412.624 (discussing methodology for calculating payments to IRFs

within CMGs); see also CMS Manual System, Pub. 100-04 Medical Claims Processing,

Transmittal 1104, at 71, available at http://www.cms.gov/Medicare/cms-forms/cms-forms/

cms-forms-items/cms1196256.html (Medicare billing form showing that IRFs are billed at

CMG rates). The contract did not specifically address, or limit, the price to be paid for

inpatient rehabilitation services by an IRF provider. Under the terms of this contract, STHS

is entitled to price its reasonable and necessary IRF-provided inpatient rehabilitation services

“in accordance with [the] contract percentage” – that is, 103% and 106% – “of current

Medicare rates.” Exhibit 9, Clause B.2.2 (Bates 000606).

Respondent argues that requiring it to pay Medicare rates is inappropriate because the

VA “is not governed by Medicare or” the Department of Health and Human Services.

Respondent’s Motion at 10. To the extent that the VA is arguing that it never needs to pay

Medicare rates, the VA’s position appears in conflict with its own published regulations,

through which it has voluntarily obligated itself to pay Medicare rates for inpatient hospital

CBCA 2774, 2775

17

services in at least certain situations. See 38 CFR 17.55, .56. It is unnecessary to evaluate

the scope and meaning of those regulations, however, because, in the contract at issue here,

the VA contractually bound itself to pay such rates. It plainly stated that it would pay the

“contract percentage” of applicable Medicare rates. To the extent that the VA obtained

reasonable and necessary IRF inpatient rehabilitation services, the contract does not permit

respondent to limit its liability to DRG and CPT rates.

That being said, we hold here only that the contract does not limit potential recovery

to DRG and CPT rates. We express no opinion at this time, and cannot on the basis of the

current record, about the appropriateness of any individual IRF medical claim for which

appellant might be seeking payment. Although appellant has argued that it is entitled to

recovery at CMG rates for its IRF inpatient rehabilitation services, the medical claims for

which it is seeking recovery are not a part of the record. Accordingly, the record does not

indicate the means by which inpatient rehabilitation services through an IRF (rather than a

non-IRF facility) were ordered or whether the use of an IRF was “reasonable and necessary”

under Medicare rules. See 42 U.S.C. § 1395y(a)(1)(A) (limiting Medicare payments to

“reasonable and necessary” services). To the extent that appellant identifies specific

individual “medical claims” that it believes were not properly paid, which it will have to do

to quantify its alleged underpayments, the VA may still raise challenges to the

appropriateness of the use of an IRF in particular instances. See United Medical Healthcare,

Inc. v. Department of Health and Human Services, 889 F. Supp. 2d 832, 841 (E.D. La. 2012)

(discussing payment challenges to medical services that may not have been “reasonable and

necessary” pursuant to Medicare rules). On the record here, we have no basis for addressing

such issues. We hold here only that the VA cannot defend against “medical claims” seeking

payment using a CMG code by asserting that STHS’s contract limits payments to DRG and

CPT rates.

III.

Claims for FBCS underpayments

The second issue is whether respondent’s FBCS11 altered reimbursement amounts so

that appellant was not paid according to current Medicare rates. The contract requires that

respondent reimburse appellant in accordance with current Medicare rates plus a certain

percentage. Whether or not the FBCS modified reimbursement amounts, the issue here is

whether respondent paid appellant the proper amount for services rendered. If appellant can

11

As previously discussed, it appears from the record that the VistA Fee System, not

the FBCS, was the claims processing system in place during the time period at issue in

CBCA 2775. We will assume for purposes of the pending motions that appellant’s

discussion of the FBCS also encompasses the VistA Fee System.

CBCA 2774, 2775

18

prove that respondent paid less than the contractual amount, it will be entitled to the

difference between “contract percentage” of the Medicare rate and the amount that

respondent paid, regardless of the reason for the underpayment.

Unfortunately, the record here provides us with no basis for determining whether

appellant received any underpayments through the FBCS. To support its argument, appellant

has provided us with several OIG reports and other materials criticizing and identifying

problems with the VistA Fee System and/or the FBCS, but not with any audit reports or

accounting records establishing particular underpayments. None of the cited reports establish

that, with regard to any particular payment that the VA owed appellant, appellant was

underpaid. Appellant cannot recover based upon mere speculation that, because there were

problems with the FBCS, it must have been underpaid. Instead, it has an affirmative burden

to show that it suffered actual damage from the Government acts of which it complains. See,

e.g., Puritan Associates, Inc. v. United States, 215 Ct. Cl. 976, 978 (1977) (appellant “must

show it was damaged . . . by defendant’s derelictions”); Willems Industries, Inc. v. United

States, 295 F.2d 822, 831 (Ct. Cl. 1961) (claimant must “prov[e] the fact of loss with

certainty, as well as . . . the amount of loss with sufficient certainty so that the [eventual]

determination of the amount of damages will be more than mere speculation”); Winn-Senter

Construction Co. v. United States, 75 F. Supp. 255, 259 (Ct. Cl. 1948) (“[t]hese being suits

for breach of contract, the plaintiffs had the burden not only of proving that there were

breaches, but that they were harmed by the breaches, and the extent of the harm, within

measurable limits”). Although criticisms of the FBCS may assist appellant in proving that

it was underpaid, only a thorough analysis of STHS’s payment requests and receipts – either

through fact accounting witnesses or an expert that appellant hires to assist in such an

analysis – will provide the evidence that appellant will need to prove that it was underpaid

in specific amounts.

Because neither appellant nor respondent was able to establish the existence, or

absence, of underpayments in their respective motions for summary relief, we deny both

parties’ motions to the extent that they address amounts to be recovered.

Decision

For the reasons stated above, CBCA 2774 is DISMISSED, in its entirety, FOR

LACK OF SUBJECT-MATTER JURISDICTION. Appellant’s motion for summary

relief in CBCA 2775 is GRANTED IN PART, and respondent’s motion is DENIED.

CBCA 2774, 2775

19

Because the record in CBCA 2775 is not sufficiently developed, we cannot currently rule on

quantum. The Board will schedule a telephonic conference to discuss further proceedings.

___________________________

HAROLD D. LESTER, JR.

Board Judge

We concur:

JEROME M. DRUMMOND

Board Judge

CANDIDA S. STEEL

Board Judge