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SELECT SPECIALTY HOSPITAL — BLOOMINGTON v. BURWELL

Nos. 12-5355, 12-5358.

757 F.3d 308 (2014)

SELECT SPECIALTY HOSPITAL — BLOOMINGTON, INC., et al., Appellants v. Sylvia Mathews BURWELL, Secretary, United States Department of Health and Human Services, Appellee.

United States Court of Appeals, District of Columbia Circuit.

Decided July 8, 2014.

Attorney(s) appearing for the Case

David J. Bird argued the cause for appellants. With him on the briefs were Andrew C. Bernasconi and Daniel Z. Herbst.

Joshua P. Waldman , Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Stuart F. Delery , Assistant Attorney General, Ronald C. Machen Jr. , U.S. Attorney, and Michael S. Raab , Attorney. R. Craig Lawrence , Assistant U.S. Attorney, entered an appearance.

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...

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