Belshe

Introduction

At issue in this appeal is whether the California Department of Health Services (the Department) properly interpreted Medi-Cal regulations when it determined that Family Planning Associates Medical Group, Inc. (the Medical Group) was not entitled to be reimbursed separately for a component of an abortion procedure known as “dilation and extraction.” In a postpayment audit of the cost reports for two of the Medical Group’s clinics, the Department interpreted the Medi-Cal regulations to disallow as a separate cost item the office visit held two days before the abortion for the purpose of inserting a hygroscopic cervical dilator. Based on its interpretation, the Department concluded it had overpaid the Medical Group its Medi-Cal reimbursement and demanded repayment. The Medical Group filed a petition for administrative mandate challenging the Department’s interpretation of its regulations. The trial court granted the Medical Group’s petition, overturning the decisions of the administrative law judge and the Director of the Department. In its appeal, the Department argues its interpretation must be upheld because it was not arbitrary or capricious. Pursuant to…