National Medical Enterprises v. Otis R. Bowen

851 F.2d 291 22 Soc.Sec.Rep.Ser. 317, Medicare&Medicaid Gu 37,202 NATIONAL MEDICAL ENTERPRISES, et al., Plaintiffs-Appellees, v. Otis R. BOWEN, M.D., Secretary of Department of Health and Human Services, Defendant-Appellant. No. 87-5605. United States Court of Appeals, Ninth Circuit. Argued and Submitted Nov. 4, 1987. Decided July 11, 1988. Robert K. Rasmussen, Dept. of Justice, Washington, D.C., for defendant-appellant. Patric Hooper, Hooper, Lundy & Bookman, Inc., Los Angeles, Cal., for plaintiffs-appellees. Appeal from the United States District Court for the Central District of California. Before ALARCON, NELSON and REINHARDT, Circuit Judges. REINHARDT, Circuit Judge: 1 Under the Medicare Act, 42 U.S.C. Sec. 1395 et seq., hospitals are reimbursed for the reasonable costs of the services they provide for medicare patients. Until recently, for-profit hospitals received return on equity capital as part of the calculation of their reasonable costs under the Act. This case involves a dispute over how the return-on-equity payments should be calculated. 2 Twelve hospital-subsidiaries of National Medical Enterprises, Inc. ("NME") included return-on-equity capital in their…