Thompson

The Secretary of Health and Human Services (Secretary) appeals the district court’s reversal of the Secretary’s decision to deny Providence Health System-Washington (Providence) a “new provider” exemption under 42 C.F.R. § 413.30 (e) (1996). We hold that 42 C.F.R. § 413.30 (e) is ambiguous. Because the Secretary’s interpretation that Providence is not entitled to a new provider exemption due to its acquisition of pre-existing bed rights from Summitview Manor (Summitview) is reasonable, it is therefore entitled to deference. Consequently, we reverse the decision of the district court and direct entry of summary judgment in favor of the Secretary.

I. Factual and Procedural Background

Providence opened as a Medicare-certified skilled nursing facility (SNF) in Yakima, Washington in May 1993. Washington, like many other states, has developed a fairly elaborate methodology for regulating the number of its nursing home beds. See Wash. Admin. Code §§ 246-310-350 to 246- 310-390 (1992). Under this scheme, Washington closely monitors geographical planning areas in the state in order to determine which areas are “under-bedded” or “over-bedded,” relative to the need for medical…