Business Law

Gardena Hospital, L.P. v. Baass (Feb. 9, 2024, B316529) __ Cal.App.5th __ [2024 WL 510108]

Hospitals must count “bed holds” in subacute section as “patient days” when determining Medi-Cal reimbursement.

Gardena Hospital offers acute and long-term care. Its care for Medi-Cal patients is reimbursed by the state. The reimbursement formula divides costs by “patient days,” so Gardena gets a larger per diem if it reports fewer patient days. Relying on the state Accounting and Reporting Manual for California Hospitals (Hospital Manual), Gardena excluded “bed holds”—days where patients’ beds in the subacute care section are left empty because those patients are expected to return after receiving acute care—from reported patient days. The state audited Gardena and said it must include bed holds as patient days in its report. Gardena sought a writ of mandate from the superior court, arguing the Hospital Manual specifies that hospitals should report patient days for patients that were “ ‘provided sub-acute care,’ ” but it is not “providing” care to patients during a bed hold. The state relied on a different resource, the Accounting and Reporting Manual for California Long-Term Care Facilities (Long-Term Manual), and argued that it controls over the Hospital Manual. Under the Long-Term Manual, bed holds should be included in total patient days. The court ruled in favor of the state. Gardena appealed.

The Court of Appeal affirmed, holding that the more specific Long-Term Manual governs over the more general Hospital Manual under the specific-trumps-general canon of statutory construction. The court emphasized “the particular provision [in the Long-Term Manual] is a nearer and more exact view of the subject than the general, of which it may be regarded as a correction.”

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson, Peder K. Batalden, and Lacey Estudillo at the appellate firm Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or

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