belies any claim of "substantial impact."
The plaintiffs further contend that the Secretary, by electing to promulgate the 2% allowance rule according to § 553 rulemaking procedure, was bound to employ that procedure before repealing the rule. This is essentially a waiver argument, for which the court finds no authority. The plaintiffs rely on Environmental Defense Fund, Inc. v. Gorsuch, 230 U.S. App. D.C. 8, 713 F.2d 802 (D.C. Cir. 1983); but the issue in that case was whether EPA inaction rose to the level of rulemaking at all, in which case § 553 procedures applied. Here the agency action is obviously a rulemaking. See 5 U.S.C. § 551(5). The question is whether it is nevertheless exempt; and under the grants and benefits exception, it is.
The court therefore holds that the Secretary was not obligated to provide notice and opportunity to comment before repealing the 2% allowance.
Likewise, the court rejects the plaintiffs' contention that the Secretary was obligated to explain the reasons for the repeal more fully. The repeal was exempt from the APA requirement of a "concise general statement of [its] basis and purpose," 5 U.S.C. § 553(c), just as it was exempt from the notice and comment requirements. Nevertheless the agency provided a brief but clear statement in the Federal Register, thus going beyond what the APA required. This court declines to compel the agency to go even further beyond the APA than it did, by requiring a more detailed statement. Such a requirement would be especially inappropriate in light of the broad discretion afforded the Secretary under the Medicare Act. See St. Joseph Hospital v. Heckler, 570 F. Supp. at 439 (discussing Schweiker v. Gray Panthers, 453 U.S. 34, 69 L. Ed. 2d 460, 101 S. Ct. 2633 (1981)).
The court, then, rejects the plaintiffs' procedural arguments; in addition, there is a further reason for granting summary judgment in favor of the Secretary, having to do with the nature of the 2% allowance. The allowance was, at least in part, a return on equity, see section I, supra. In substance, too, return on equity seems to be what the plaintiffs are seeking.
But courts which have reviewed the legislative history have uniformly held that the Medicare Act does not authorize a return on equity for nonprofit providers. See Saline Community Hospital Association v. Schweiker, 554 F. Supp. 1133 (E.D. Mich. 1983); Indiana Hospital Association, Inc. v. Schweiker, 544 F. Supp. 1167 (S.D. Ind. 1982), aff'd sub nom. St. Francis Hospital Center v. Heckler, 714 F.2d 872 (7th Cir. 1983); Hospital Authority of Floyd County v. Schweiker, 522 F. Supp. 569 (N.D. Ga. 1981), aff'd, 707 F.2d 456 (11th Cir. 1983). These cases settle any substantive issue regarding return on equity: the Secretary is not authorized to include a return on equity in a nonprofit provider's reimbursement, as part of a general allowance or otherwise.
The plaintiffs, then, seek a result under which the Secretary would violate the Medicare Act. But the APA requires courts to strike down agency actions which constitute "an abuse of discretion" or are "otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). It would be directly contrary to the APA, as well as the Medicare Act, for this court to require an agency action which would fit just that description.
An appropriate order shall issue.
Upon consideration of the submissions of the parties and for the reasons discussed in the memorandum accompanying this order, it is hereby
ORDERED that C.A. No. 83-2830 and C.A. No. 83-2341 be consolidated, insofar as they concern the repeal of the former 20 C.F.R. § 405.428 (containing the "2% allowance"); further
ORDERED that the motions of the plaintiffs in C.A. No. 83-2830 and C.A. No. 83-2341 for summary judgment and partial summary judgment, respectively, be denied; and further
ORDERED that the motions of the defendant in C.A. No. 83-2830 and C.A. No. 83-2341 for summary judgment and partial summary judgment, respectively, be granted.