and the salary ranges were adjusted on an annual basis for inflation. Plaintiffs have failed to show that the survey information was so defective as to render the guidelines arbitrary, unreasonable, or capricious.
Second, plaintiffs claim that Blue Cross' valuation of Stanley Diller's services was unreasonable because the salary range guidelines place an upper limit on the compensation that is considered "reasonable" for an owner-administrator. Plaintiffs urge it was arbitrary and unreasonable to value Stanley Diller's services within the confines of such a range because it failed to take account of the fact that his services were of such "extraordinary depth and scope" that it was "impossible" to compare them with the services provided by administrators and managers in other hospitals.
Plaintiffs' argument is not well taken. In the case of institutions of LANH's size and character, Blue Cross determined that the appropriate salary range for administrators in 1974 was from $27,000 to $42,400. For even larger hospitals, the upper end of the scale was still only $55,000. Plaintiffs seek fees nearly ten times greater under a management contract which awards Mr. Diller two percent of the gross revenues of the hospital. That claim is clearly in excess of the cost of similar services at comparable institutions and indeed appears unreasonably excessive on its face. United States v. Fairlane Memorial Convalescent Homes, Inc., 501 F. Supp. 863, 871 (E.D. Mich. 1980), affirmed, 667 F.2d 1028 (6th Cir. 1981). Faced with such an exorbitant claim, the Secretary's decision to stay within the range of salaries found in existing guidelines was clearly reasonable.
The Secretary cannot make special allowances for every owner such as Mr. Diller who claims unique value to his services but must rely on broader categorizations in determining what compensation is reasonable. Such line-drawing is a necessity in a program as complex and ripe for potential abuse as Medicare, and especially in circumstances such as these where salary arrangements are not made at arms' length. The guidelines at issue reasonably advance the purposes of the statute and are valid. Weinberger v. Salfi, 422 U.S. 749, 776-777, 45 L. Ed. 2d 522, 95 S. Ct. 2457 (1975); Shaker Medical Center Hospital v. Secretary of Health and Human Services, 686 F.2d 1203, 1209 (6th Cir. 1982).
Third, plaintiffs argue that Blue Cross' determination is invalid because the point system used to place Mr. Diller's compensation within the applicable range is irrational. Although plaintiffs' argument is far from clear, it appears to focus on the fact that the point system, which is used to take account of the personal qualities of an administrator in terms of experience, education, and responsibilities, is not based on survey data such as that used to formulate the salary range guidelines. Because the point system was created without such survey data, plaintiffs argue, there is no reason to assume that it reflects the compensation actually paid to administrators by providers.
The Secretary is granted broad authority under the Social Security Act to devise methods for determining when costs are "reasonable." 42 U.S.C. § 1395x(v) (1) (A). Once survey data is used to determine the range of salaries actually paid by comparable institutions, it is within the Secretary's discretion to apply those ranges in accord with its expertise without acquiring further, more detailed data. The point system methodology applied to plaintiffs' claim is rational and must be upheld.
Finally, plaintiffs argue that the guidelines relied on by the Secretary are invalid because they were never published in the Federal Register in accord with the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552(a) (1) (D). That provision applies to "substantive rules of general applicability adopted as authorized by law, and statements of general policy or interpretations of general applicability formulated and adopted by the agency."
The Court finds that the plaintiffs have failed to show that the guidelines set out in the Provider Reimbursement Manual are rules or statements of policy which must be published under 5 U.S.C. § 552(a) (1) (D). There is no evidence that the guidelines impose mandatory obligations upon either providers or intermediaries as to owner's compensation or that they effect pre-existing legal rights or obligations. Appalachian Power Co. v. Train, 566 F.2d 451, 455 (4th Cir. 1977). The guidelines serve as aids to intermediaries in determining reasonable owner's compensation, and there is no indication that intermediaries do not retain discretion to take account of unusual or compelling circumstances in their application. Nor is there evidence that the PRRB or the Secretary may not adjust the compensation set by the intermediary when there is a reason to do so, or that providers are prevented from presenting further information supporting a valuation of compensation different from that suggested by the guidelines. The Manual appears only to explain how "comparable" services and institutions may be determined under existing regulations and has no significant impact upon the general public or a segment thereof. National Association of Concerned Veterans v. Secretary of Defense, 487 F. Supp. 192, 200 (D.D.C. 1979); Lewis v. Weinberger, 415 F. Supp. 652, 659 (D. N.M. 1976). See Morton v. Ruiz, 415 U.S. 199, 39 L. Ed. 2d 270, 94 S. Ct. 1055 (1974).
The third and last claimed expense at issue involves the LANH's Cardiac Observation Unit ("COU"). For the 1976, 1977 and 1978 cost-reporting years, the LANH claimed a special high rate of reimbursement for its COU on the grounds the unit qualified as a "special care unit" under applicable regulations. Special reimbursement was denied on the grounds that the COU in fact more closely resembled a routine care area. For the cost-reporting years at issue, the regulations defined a special care unit as follows:
" Intensive care units, coronary care units, and special care inpatient hospital units. To be considered an intensive care unit, coronary care unit, or other special care inpatient hospital unit, the unit must be in a hospital, must be one in which the care required is extraordinary and on a concentrated and continuous basis and must be physically identifiable as separate from general patient care areas. There shall be specific written policies for each of such designated units which include, but are not limited to, burn, coronary care, pulmonary care, trauma, and intensive care units but exclude postoperative recovery rooms, postanesthesia recovery rooms, or maternity labor rooms.