St. Anthony Regional Hosp. v. Heckler

Citations: 613 F. Supp. 23; 1984 U.S. Dist. LEXIS 22788Docket: C 84-37

Court: District Court, N.D. Iowa; October 12, 1984; Federal District Court

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Iowa hospitals providing services to Medicare patients challenged a regulation known as the Malpractice Rule, set forth in 42 CFR 404.452(b)(1)(ii) (1982), which altered the reimbursement process for malpractice insurance premiums under the Medicare program. The plaintiffs argued that the rule was invalid for several reasons: it conflicted with the Medicare Act, was promulgated in violation of the Administrative Procedure Act (APA), and infringed upon their constitutional rights to just compensation and due process under the Fifth Amendment. 

The court noted that similar issues had been addressed previously in fifteen district courts, with eleven ruling against the Malpractice Rule while four upheld it. After reviewing relevant briefs and previous court decisions, the court concluded that the defendant, Margaret Heckler, Secretary of Health and Human Services, did not comply with the APA when issuing the Malpractice Rule, and that the rule violated the Medicare Act by denying reasonable reimbursement costs to the plaintiffs. The court aligned its decision with the analyses in Bedford County Memorial Hospital v. Heckler and St. James Hospital v. Heckler, finding those decisions to be well-reasoned.

As the court ruled the regulation invalid on statutory grounds, it did not consider the Fifth Amendment claims. The court granted the plaintiffs' motion for summary judgment and denied the defendant's motion, remanding the case to the Secretary for further action consistent with its order. Additionally, the court criticized the excessive length of the parties' briefs, referencing Local Rule 2.2.9.