Desoto General Hospital v. Heckler

POLITZ, Circuit Judge:

The Secretary of Health and Human Services appeals a summary judgment invalidating the 1979 medicare regulation known as the Malpractice Rule, now 42 C.F.R. § 405.452(a)(l)(ii) (1984). The district court found the rule arbitrary and capricious, contrary to 5 U.S.C. § 706(2)(A). We modify the judgment and, as modified, affirm.

Facts and Procedural Background

The Malpractice Rule was promulgated by the Secretary in performance of her statutory duty to reimburse hospitals for the reasonable costs of services furnished to medicare beneficiaries.1 Health care providers formerly…