Bellwood General Hospital, a Corporation v. Richard S. Schweiker, Secretary of Health and Human Services

Bellwood General Hospital (the hospital) rents its facility from Bellwood Investors, Inc., a corporation controlled by a partnership composed of nineteen physicians practicing at the hospital and one investment banker (the lessors). The hospital filed claims for reimbursement of certain Medicare expenses including rental costs paid to the lessors. The Secretary disallowed the rental costs and substituted the ownership costs to the lessors. The hospital then filed this action in district court challenging the Secretary’s decision. The district court granted summary judgment for the Secretary, and the hospital appealed. We affirm.

The district court had jurisdiction pursuant to 42 U.S.C. § 1395oo(f). We have jurisdiction under 28 U.S.C. § 1291 . Our review of the Secretary’s administrative action, however, is very limited. We may overturn it only if we conclude that his action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law,” 5 U.S.C. § 706 (2)(A), or “unsupported by substantial evidence.” 5 U.S.C. § 706 (2)(E). See Goleta Valley Community Hospital v. Schweiker, 647 F.2d 894 (9th Cir. 1981).

Two issues are presented by this appeal:…