Daniel Freeman Memorial Hospital v. Richard S. Schweiker, Secretary of Health and Human Services

This is a suit by a group of California Hospitals challenging a section of the Provider Reimbursement Manual, Health Insurance Manual 15 (HIM-15). This manual is promulgated by the Secretary of Health and Human Services as a guide to the interpretation of Medicare reimbursement regulations governing reimbursable costs under the Medicare Act. 42 U.S.C. §§ 1395 et seq. The manual section in question, HIM-15 § 2345, was promulgated in 1976 and relates to the inclusion of labor and delivery room days in the determination of the average per diem cost of routine patient care. Plaintiffs successfully challenged the provision in an administrative appeal covering the 1975 cost reporting period, but the final agency decision stated that the provision would be applied in future years. Plaintiffs then filed this action, challenging the appli cability of the provision to the years following 1975, and seeking a determination that the provision was a regulation to which the rulemaking procedures of the Administrative Procedure Act (APA), 5 U.S.C. § 553 , applied.

The district court entered summary judgment for the government. The court refused to review the substantive validity of section 2345…