National Medical Enterprises v. Bowen

REINHARDT, Circuit Judge:

Under the Medicare Act, 42 U.S.C. § 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.

Twelve hospital-subsidiaries of National Medical Enterprises, Inc. (“NME”) included return-on-equity capital in their year-end cost reports. The Medicare fiscal intermediary required NME to…