Oroville Hospital v. Department of Health Services

Under California’s Medi-Cal program, a health care provider who furnishes medical assistance to the poor may seek reimbursement from the government for certain expenses, including the cost of employee health care benefits. If the provider is self-insured for such employee benefits, they are allowable costs only if the self-insurance program meets specific requirements.

Oroville Hospital (Oroville) appeals from the trial court’s order denying its petition for writ of mandate, seeking to compel the California Department of Health Services (DHS) to reimburse Oroville for money it expended for employee health care.

In the published portions of this opinion, we reject Oroville’s contention that the trial court and DHS improperly construed and applied pertinent guidelines found in the Provider Reimbursement Manual. As we will explain, the money that Oroville spent for its employee health care was not an allowable cost because Oroville’s self-insurance program did not comply with requirements of the regulatory scheme, in that Oroville did not maintain the fund with an independent fiduciary. Consequently, Oroville was entitled only to partial reimbursement for such costs as…