COUNTY OF LOS ANGELES, Plaintiff-Appellant, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant-Appellee

The County of Los Angeles (“County”) challenges the validity of a rule promulgated by the Secretary of Health and Human Services (“Secretary”) that limited the amount of reimbursement received by three of the County’s hospitals for treating Medicare patients for the fiscal years 1974 through 1980. The County contends that the rule (1) conflicts with the Secretary’s statutory mandate to provide the three hospitals with the “reasonable costs” of their services, (2) ignores statutes and regulations requiring the Secretary to accommodate hospitals’ accounting capabilities, and (3) violates the Administrative Procedure Act (“APA”), 5 U.S.C. § 553 , because the Secretary did not abide by the APA’s rule-making requirements. The County initially appealed the rule to the Provider Reimbursement Review Board (“PRRB”), an administrative tribunal with jurisdiction over Medicare reimbursement disputes. See 42 U.S.C. § 1395oo. After the PRRB upheld the rule, the County filed an action for judicial review of the PRRB’s decision in district court pursuant to 42 U.S.C. § 1395oo(f). The district court granted summary judgment for the Secretary, and the County timely appeals. We have jurisdiction…