Select Specialty Hospital—Bloomington, Inc. v. Burwell

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge.

A group of long-term care hospitals challenges the Secretary’s determination that, because the organizations operate out of buildings previously owned by hospital entities, they are not “new hospitals.” Because we cannot tell how the Secretary arrived at this conclusion, we find it arbitrary and capricious.

I

Hospitals are costly to build. Medicare has traditionally provided for a “return on equity capital” for the construction of such buildings, which includes “depreciation, interest, taxes, insurance and similar expenses…