Shewry

INTRODUCTION

In 1983, the state contracted with the University of California, Los Angeles Medical Center (UCLA) that UCLA be the sole provider of medical services to Medi-Cal beneficiaries in Los Angeles. With the state’s approval, UCLA subsequently delegated to Cedars-Sinai Medical Center (Cedars-Sinai) the right to provide inpatient services to certain Medi-Cal beneficiaries and to bill the state for those services under UCLA’s contract rate. The delegation contract was later amended to expand the services Cedars-Sinai could provide. For the next four years, instead of billing the state under UCLA’s contract rate, Cedars-Sinai billed and was paid under a higher cost rate for certain patients. Later the state’s audits concluded that Cedars-Sinai should have been paid UCLA’s contract rate for treatment of these patients, and the state recouped more than $35 million in overpayments.

Cedars-Sinai filed administrative appeals of the audit findings, but contended that under Welfare and Institutions Code section 14087.27 it was first entitled to judicial review of the terms of the contracts at issue. The administrative law judge disagreed, proceeded with the hearings, and…