Pacific Coast Medical Enterprises V. Department Of Benefit Payments

Defendant, the Department of Benefit Payments of the State of California, predecessor to the Department of Health Services (Department), appeals from a judgment in favor of plaintiff, Pacific Coast Medical Enterprises (PCME). PCME, a provider of health care services to Medi-Cal beneficiaries, sought reimbursement from the Department for costs incurred in supplying those services. Among the costs for which PCME sought reimbursement from the Department was a reasonable return on the amount of equity capital (for goodwill and other intangible assets) it had invested in a recently purchased hospital, Community Hospital of Los Angeles (CHLA). The Department denied reimbursement for that element of claimed costs for the fiscal years ending June 30, 1970, 1971 and 1972. PCME timely appealed the audit adjustments for the 1970 and 1971 costs reports. It did not file an appeal from the audit adjustments made with respect to the 1972 costs report and it did not notify the Department of its intention to appeal regarding the 1972 costs report until about March 1975, well after the deadline for filing an appeal.