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KAISER FOUNDATION HOSPITALS v. SEBELIUS

No. 12-5037.

708 F.3d 226 (2013)

KAISER FOUNDATION HOSPITALS, doing business as Kaiser Foundation Hospital-Anaheim, doing business as Kaiser Foundation Hospital-Bellflower, doing business as Kaiser Foundation Hospital-Fontana, doing business as Kaiser Foundation Hospital-Harbor City, doing business as Kaiser Foundation Hospital-Panorama City, doing business as Kaiser Foundation Hospital-Riverside, doing business as Kaiser Foundation Hospital-San Diego, doing business as Kaiser Foundation Hospital-Sunset, doing business as Kaiser Foundation Hospital-West Los Angeles, doing business as Kaiser Foundation Hospital-Woodland Hills, Appellee v. Kathleen SEBELIUS, Secretary of the United States Department of Health and Human Services, Appellant.

United States Court of Appeals, District of Columbia Circuit.

Decided March 5, 2013.

Attorney(s) appearing for the Case

Howard S. Scher , Attorney, U.S. Department of Justice, argued the cause for appellant. With him on the briefs were Stuart F. Delery , Acting 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.

Jordan B. Keville argued the cause for appellee. With him on the brief was Jonathan P. Neustadter.   Harry R. Silver entered an appearance.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge:

The Kaiser plaintiffs ("Kaiser") are a consortium of ten teaching hospitals located in Southern California that receive Medicare payments to offset the costs associated with training "full-time equivalent" residents and intern physicians ("FTEs"). In 1997, Congress capped those payments in such a way that the number of FTEs the hospitals trained in 1996 would dictate the maximum reimbursement in all future years. Although Kaiser and the Health...

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