In a decision having a significant impact on research hospitals, the Federal Court for the District of Arizona ruled that Medicare must reimburse hospitals through indirect medical education (IME) for resident time spent on research. Initially, the fiscal intermediary denied the University Medical Center IME reimbursement because the resident time was not attributed to direct patient care. The University appealed the decision to the Provider Reimbursement Review Board which ruled in its favor, only to have the CMS Administrator reverse the decision. Both the federal magistrate and the District Court granted the University’s motion for summary judgment approving the IME reimbursement for resident research time. Ultimately, the ruling keyed on the federal IME regulations, noting that the resident must be assigned to "the portion of the hospital subject to the prospective payment system" or to the outpatient department in order to be included in IME. See 42 C.F.R. § 412.105(f)(1)(A). The District Court did not believe CMS’s argument that "portion of the hospital" somehow implied that the resident must be providing direct patient care. Rather, the District Court ruled that the regulations simply required that the resident must be assigned to the hospital, nothing more. University Med. Ctr. Corp. v. Leavitt, No. 05-CV-495 TUCJMR (D. Ariz. Mar. 21, 2007).