408
Opinion of the Court
they asserted that under the cost limits a rural hospital could not show that it incurred the same wage costs as its urban counterparts when in fact its location next to urban hospitals forced it to compete for employees by offering equivalent compensation. Petitioners also complained that the cost limits were applied conclusively rather than presumptively. Invoking clause (ii), which provides for "suitable retroactive corrective adjustments," they argued that they were entitled to reimbursement of all costs they could show to be reasonable, even if they were in excess of the applicable cost limit.4
Because the PRRB believed that it lacked the authority to award the desired relief, it granted petitioners' request for expedited judicial review. See 42 U. S. C. § 1395oo(f)(1). Adhering to the Eighth Circuit's decision in St. Paul-Ramsey Medical Center v. Bowen, 816 F. 2d 417 (1987), the District Court ruled for petitioners, holding that clause (ii) compelled the Secretary to reimburse all costs shown to be reasonable, regardless of whether they surpassed the amount calculated under the cost limit schedule.5
The United States Court of Appeals for the Eighth Circuit reversed. Good Samaritan Hospital v. Sullivan, 952 F. 2d 1017 (1991). The court relied on our decision in Bowen v. Georgetown Univ. Hospital, 488 U. S. 204 (1988), in which we held that clause (ii) does not permit retroactive rule-making. 952 F. 2d, at 1023. It reasoned that petitioners' request for adjustments to correct "inequalities in the system . . . would amount to a retroactive change in the methods used to compute costs that, after Georgetown, is invalid." Id., at 1024. Instead, the Court of Appeals adopted the Secretary's more modest view of clause (ii) as permitting only a "year-end book balancing of the monthly installments" with
4 Petitioners concede that they do not qualify for any of the exceptions or exemptions provided in the regulations. Brief for Petitioners 22, n. 19.
5 The court did not rule on the hospitals' claim that the wage index and rural/urban classifications were arbitrary and capricious in violation of the Administrative Procedure Act, 5 U. S. C. § 706.
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