Shalala

I. INTRODUCTION

Plaintiff Loma Linda Community Hospital (“Loma Linda”) filed separate actions for judicial review of two decisions by Donna Shalala, as Secretary of the United States Department of Health and Human Services (the “Secretary”) regarding Loma Linda’s claims for additional Medicare reimbursement. The two actions have been consolidated.

Both Loma Linda and the Secretary filed motions for summary judgment raising the following question for determination by the court: Did the Secretary act arbitrarily, capriciously, and not in accordance with the law in denying Loma Linda’s claim for additional Medicare reimbursement for three fiscal periods because it served a disproportionate number of low-income patients in these periods? The denial was predicated on the ground that Loma Linda did not meet its burden of disproving the Secretary’s calculation of Loma Linda’s percentage of low-income patients who receive Medicare, which percentage calculation is a prerequisite for reimbursement.

II.

THE UNDERLYING ADMINISTRATIVE HEARINGS

Ordinarily Medicare payments to hospitals are limited to fixed reimbursement amounts, although additional payments may be made to a hospital if it…