California Assn. of Health Services v. Department of Health Facilities

• Decision Date: 07 August 1997
• Docket Number: No. S056559,S056559
• Citation: 65 Cal.Rptr.2d 872,16 Cal.4th 284,940 P.2d 323
• Court: California Supreme Court
• Parties: , 940 P.2d 323, 97 Cal. Daily Op. Serv. 6292, 97 Daily Journal D.A.R. 10,295 CALIFORNIA ASSOCIATION OF HEALTH FACILITIES, Plaintiff and Appellant, v. DEPARTMENT OF HEALTH SERVICES, Defendant and Appellant

Page 872

65 Cal.Rptr.2d 872

16 Cal.4th 284, 940 P.2d 323, 97 Cal. Daily Op. Serv. 6292,

97 Daily Journal D.A.R. 10,295

CALIFORNIA ASSOCIATION OF HEALTH FACILITIES, Plaintiff and Appellant, v. DEPARTMENT OF HEALTH SERVICES, Defendant and Appellant.

No. S056559.

Aug. 7, 1997.

Foley, Lardner, Weissburg & Aronson, Mark E. Reagan, San Francisco, Jonathon E. Cohn and J. Mark Waxman, Los Angeles, for Plaintiff and Appellant.

Hunter, Richey, Di Benedetto & Brewer, Sharon K. Sandeen, Sacramento, Hanson, Bridgett, Marcus, Vlahos & Rudy, Paul A. Gordon, Robert L. Rusky and James A. Napoli, San Francisco, as Amici Curiae on behalf of Plaintiff and Appellant.

Daniel E. Lungren, Attorney General, Charlton G. Holland III, Assistant Attorney General, Jennifer S. Cady and Edward H. Ochoa, Deputy Attorneys General, for Defendant and Appellant.

Bet Tzedek Legal Services, Eric M. Carlson, Los Angeles, Houck & Balisok and Russell S. Balisok, Los Angeles, as Amici Curiae on behalf of Defendant and Appellant.

MOSK, Justice.

Health and Safety Code section 1424 ¹ provides that long-term health care facility licensees, including operators of nursing homes, may receive citations for violations of state and federal statutes and regulations, and that such citations may include the imposition of civil monetary penalties. Section 1424 also provides that the citation "shall be dismissed" if the licensee proves that despite the fact that the violation occurred, it "did what might reasonably be expected of a long-term health care facility licensee, acting under similar circumstances, to comply with the regulation."

We are now called upon to construe the meaning of this part of the statute, which we will designate the "reasonable licensee defense." Plaintiff, the California Association of Health Facilities (CAHF), an association representing the licensees of nursing homes and other long-term health care facilities, contends that the reasonable licensee defense was intended to relieve licensees of vicarious liability for their employees. The Department of Health Services (Department), the agency charged with enforcing patient care regulations in long-term health care facilities, contends to the contrary that the reasonable licensee defense does not apply whenever an employee who is the agent of a long-term health care facility licensee has acted unreasonably, and that the reasonable licensee defense is intended to preclude not vicarious liability but rather strict liability. We conclude that the Department's position is the correct one.

I.

The Department is charged with responsibility for the administration and enforcement of the Long-Term Care, Health, Safety, and Security Act of 1973 (the Act) and for the enforcement of the regulations promulgated pursuant to the Act. (Health & Saf.Code, § 1417 et seq.; Cal.Code Regs., tit. 22 § 72001 et seq.)

On August 25, 1993, CAHF filed a complaint for declaratory relief, requesting a declaration of rights and duties arising under the "reasonable licensee defense" set forth in section 1424. There was no particular citation at issue in the case, but merely a request to declare the proper interpretation of the statute. The complaint alleged that the Department's policy was to interpret and enforce the statute so as to improperly hold the licensee liable for the unreasonable actions of its employees, and that such policy was contrary to its statutory authority under the Act.

Both parties filed motions for summary judgment. The trial court denied both motions and dismissed CAHF's complaint pursuant to Code of Civil Procedure section 1061 ² because the action did not present an actual controversy and was therefore not justiciable. The Department initially supported the trial court's position but CAHF appealed. In an unpublished decision, the Court of Appeal held that declaratory relief was in fact appropriate, and that the trial court had abused its discretion by dismissing the claim. The cause was remanded to the trial court for determination on the merits.

On remand, the trial court granted CAHF's motion for summary judgment and issued the following declaratory relief order: "When a citation is issued against a licensee for conduct which does not involve unreasonable conduct of an employee of the institution, the reasonable conduct defense clearly applies. When a citation is issued for the conduct of an employee which is unreasonable and the conduct of the institution is otherwise in all aspects reasonable, the statute requires that the citation be dismissed when the following conditions are present: (1) The conduct involved must not be so outrageous, so heinous, that it must, as a matter of law, be imputed to the licensee. (For example, if an employee murdered numerous patients, etc.) (2) The conduct in question must be by a primary caregiver. (3) The primary caregiver involved must not be a management employee." The Department filed a timely notice of appeal and CAHF subsequently filed a notice of cross-appeal.

The Court of Appeal modified the judgment and affirmed it as so modified. It agreed with the trial court that the reasonable licensee defense does not impose on a licensee vicarious liability for its employees, and that the unreasonable conduct of an employee is not to be imputed to the licensee unless the licensee has done something that itself is unreasonable. But it disagreed with the trial court inasmuch as it placed the three conditions enumerated above on the licensee's ability to assert the reasonable licensee defense. It concluded that such categorical conditions were unwarranted, and that the reasonableness of the licensee is a factual question that must be determined from the totality of the circumstances in each case. We granted review to determine the meaning of the reasonable licensee defense. ³

II.

A.

In order to interpret the meaning of the reasonable licensee defense, we must first understand the nature of the statutory scheme of which that defense is part. As discussed, section 1424 is one section of the Act. The declared legislative intent of the Act is to "establish (1) a citation system for imposition of prompt and effective civil sanctions against long-term health care facilities in violation of the laws and regulations of this state ... relating to patient care; (2) an inspection and reporting system to ensure that long-term health care facilities are in compliance with state statutes and regulations pertaining to patient care; and (3) a provisional licensing mechanism to ensure that full-term licenses are issued only to those long-term health care facilities that meet state standards relating to patient care." (§ 1417.1.) The Act covers skilled nursing facilities as well as intermediate care facilities of various types. (§ 1418.)

We summarized the licensing enforcement regime under the Act in Kizer v. County of San Mateo (1991) 53 Cal.3d 139, 142, 279 Cal.Rptr. 318, 806 P.2d 1353: "Licensed health care facilities must demonstrate an ability to comply with statutory requirements. (See, generally, § 1250 et seq.) The Act authorizes the Department to inspect such facilities for compliance with statutes and regulations on patient care and to issue citations to noncomplying facilities. (§§ 1421, 1423; Myers v. Eastwood Care Center, Inc. (1982) 31 Cal.3d 628, 631, 183 Cal.Rptr. 386, 645 P.2d 1218; Lackner v. St. Joseph Convalescent Hospital, Inc. (1980) 106 Cal.App.3d 542, 546, 165 Cal.Rptr. 198.) The Department is authorized to enter any facility for inspection (§ 1421), and must inspect every facility at least once every two years (§ 1422, subd. (b)) or upon receipt of a complaint (§§ 1419, 1420). When the Department observes a violation of a statute or regulation, it issues a citation to the facility. (§ 1423.) Citations are classified according to the seriousness of the violation, and a penalty range is prescribed for each class.

"Among the criteria that define a class AA violation, the most serious class, is a determination by the Department that the violation was a 'direct proximate cause of death of a patient.' (§ 1424, subd. (b).) The penalty for a class AA violation is not less than $5,000 and not more than $25,000. (Ibid.) Class A violations are those that present either an imminent danger or a substantial probability that death or serious harm to patients would result. The penalty for a class A violation is not less than $1,000 and not more than $10,000. (§ 1424, subd. (c).) Class B violations are violations that 'have a direct or immediate relationship to the health, safety, or security of ... patients, other than class "AA" or "A" violations.' The penalty for a class B violation is not less than $100 and not more than $1,000. (§ 1424, subd. (d).) Failure to correct a violation within a specified time may result in an additional penalty of $50 for each day that the deficiency continues. (§ 1425.) Repeated violations may result in a trebling of the penalty assessed. (§ 1428, subd. [ (h) ].)"

When determining the amount of the civil penalty, the Department is directed to consider, inter alia, "the good faith efforts exercised by the facility to prevent the violation from occurring" and "the licensee's history of compliance with regulations." (§ 1424, subd. (a)(4), (5).) Moreover, no citation is to issue from a violation of the regulations if the "violation was not willful and resulted in no actual harm to any patient or guest" and if certain other conditions were also met. (§ 1424.1, subd. (a)(2).)

The Department's regulations, promulgated pursuant to statute (§ 1275), mandate many specific duties that the licensee is ultimately responsible for performing. For example, the regulations relating to skilled nursing facilities include 12 regulations specifically entitled, "Nursing Service." (Cal.Code Regs., tit. 22, § 72309 et seq.) Many of these regulations contain multiple nursing duties to be regularly performed in skilled nursing...