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MEAD NURSING HOME v. COMMONWEALTH PENNSYLVANIA (06/08/81)

decided: June 8, 1981.

MEAD NURSING HOME, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, RESPONDENT



Appeal from the Order of the Department of Public Welfare in case of In Re: Audit Appeal of Mead Nursing Home, No. 77-312.

COUNSEL

Paul D. Shafer, Jr., Shafer, Dronhaffer, Swick & Bailey, for petitioner.

Bruce G. Baron, Assistant Attorney General, for respondent.

Judges Mencer, Williams, Jr. and Craig, sitting as a panel of three. Opinion by Judge Mencer.

Author: Mencer

[ 59 Pa. Commw. Page 540]

Mead Nursing Home (facility) has appealed from a decision of the Department of Public Welfare (DPW) which disallowed reimbursement for employee meals and certain interest expenses under the Pennsylvania Medical Assistance Program, Section 441.1 et seq. of the Public Welfare Code, Act of June 13,

[ 59 Pa. Commw. Page 5411967]

, P.L. 31, as amended, 62 P.S. § 441.1 et seq. We affirm.

The facility is wholly owned by Mead Nursing Home, Inc. (corporation), a corporation-for-profit organized under the Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended, 15 P.S. § 1001 et seq. The facility is entitled to reimbursement from DPW for the allowable costs of providing health care services. Allowable costs are defined in the "Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities" (Manual) published at 8 Pa. B. 2832 (1978). Following its fiscal year ending June 30, 1977, the facility requested reimbursement for certain costs, including $20,046.75 for employee meals and $59,811.81 for interest paid under the terms of a stock redemption agreement. DPW disallowed reimbursement for these two items.

I. Employee Meals

The request for reimbursement for employee meals was based solely upon a lump sum figure determined by a DPW audit as the cost of all meals provided to employees. The facility did not provide any evidence to indicate which employees ate the meals, when the meals were provided, or whether the provision of meals was related to patient care.

Section IV F(1)(k) of the Manual specifically excludes employee meals from the determination of allowable costs, but employee salaries and fringe benefits may be reimbursed as allowable costs under Section IV C(1). Therefore, to receive reimbursement, the facility was required to establish that the employee meals were provided as bona fide fringe benefits.

Section III B of the Manual requires that "[p]roviders are required to maintain adequate financial records and statistical data for proper determination of ...


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