Independent Acceptance Co. v. California

This case arises from efforts of the State of California to amend its state plan of medical assistance under the Medicaid Act by changing its method of reimbursement for both state-operated and non-state-operated long-term care facilities. The main issue before us is whether the Secretary of Health and Human Services acted arbitrarily or capriciously in approving State Plan Amendments (“SPAs”) 90-20A and 90-20B and other subsequent amendments. We conclude that the Secretary’s approval of the SPAs at issue was neither arbitrary nor capricious.

THE PARTIES

Plaintiff-Appellant Independent Acceptance Co. (dba San Bruno Convalescent Hospital) is a long-term care facility, and plaintiff-appellant California Association of Health Facilities (“CAHF”) is an associa *1249 tion of long-term care providers participating in the California Medicaid Program. Defendants-Appellees are the United States Department of Health and Human Services and its Secretary, Donna E. Sha-lala. 2 Within the Department, the Secretary has delegated to the Health Care Financing Administration the authority to review and approve state plans for medical assistance.

BACKGROUND

1. The Medicaid Program

Title XIX…