Family Health Centers of San Diego v. State Dept. of Health Care Service
Annotate this CaseAs part of a request to receive a higher reimbursement rate, plaintiff Family Health Centers of San Diego (Family Health) submitted a cost report detailing the reimbursable costs incurred by its clinics in providing covered services to Medi-Cal patients. Because the costs were not allowable Medi-Cal costs, Family Health eliminated them from its cost report. As part of an audit, however, defendant State Department of Health Care Services (the Department) determined the costs should not have been eliminated from the cost report. Instead, the Department reclassified the costs to a nonreimbursable cost center, which had the effect of disallowing a proportionate share of the clinics’ administrative overhead costs. Family Health filed an administrative appeal to dispute the audit adjustments, but, after a formal hearing, its appeal was denied. Family Health then filed a petition for a writ of mandate challenging the administrative decision, which also was denied. On appeal, Family Health contended the Department did not establish a proper basis for reclassifying the costs to a nonreimbursable cost center, and that the decision to reclassify the costs was not supported by substantial evidence. Family Health separately argued that a significant subset of the costs should not have been included in the nonreimbursable cost center because they were not costs at all. After review, the Court of Appeal found no reversible error and affirmed the judgment denying the petition.
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