California Physicians Service v. Superior Court

• Decision Date: 13 February 1980
• Citation: 162 Cal.Rptr. 266,102 Cal.App.3d 91
• Court: California Court of Appeals Court of Appeals
• Parties: CALIFORNIA PHYSICIANS' SERVICE, a California Corporation, dba Blue Shield of California, and California Physicians' Insurance Corporation, a corporation, Petitioners, v. SUPERIOR COURT OF the State of California, COUNTY OF LOS ANGELES, Respondent; Wanda GILMORE, by and through her Guardian ad Litem, Robert Gilmore, Robert Gilmore, an Individual, Estate of Emanuel Duke, M.D., S.E.H. Corp., Para- Medics, Inc., James Lantz, Appelantz Corp., Steven Sorenson, Sandoz, Inc., Oxymed, Inc., Air Products and Chemicals, Inc., Bristol-Myers, Inc., and Does 1 through 100, inclusive, Real Parties in Interest. Civ. 57460.

Page 266

162 Cal.Rptr. 266

102 Cal.App.3d 91

CALIFORNIA PHYSICIANS' SERVICE, a California Corporation, dba Blue Shield of California, and California Physicians' Insurance Corporation, a corporation, Petitioners, v. SUPERIOR COURT OF the State of California, COUNTY OF LOS ANGELES, Respondent;

Wanda GILMORE, by and through her Guardian ad Litem, Robert Gilmore, Robert Gilmore, an Individual, Estate of Emanuel Duke, M.D., S.E.H. Corp., Para- Medics, Inc., James Lantz, Appelantz Corp., Steven Sorenson, Sandoz, Inc., Oxymed, Inc., Air Products and Chemicals, Inc., Bristol-Myers, Inc., and Does 1 through 100, inclusive, Real Parties in Interest.

Civ. 57460.

Court of Appeal, Second District, Division 2, California.

Feb. 13, 1980.

Hearing Denied April 10, 1980.

Rehearing Denied March 5, 1980.

Merrill K. Albert and Morris & Polich, Merrill K. Albert, Landon Morris, Robert S. Wolfe, Los Angeles, for petitioners.

Thon & Matz, Jeffrey A. Matz, a Professional Corp., Los Angeles, for real party in interest Wanda Gilmore, her Guardian ad Litem, Robert Gilmore and Robert Gilmore, individually.

Home & Clifford, Horvitz, North Hollywood, Greines & Poster, Irving H. Greines, Encino, Barry R. Levy, Los Angeles, Alan L. Rushfeldt, North Hollywood, for real party in interest Greater El Monte Community Hospital.

Kermit J. Morgan, Cyril E. Armbrister, Jr., Los Angeles, for real party in interest Bristol-Myers, Inc.

Kirtland, Darby & Hager, Ronald B. Hager, Pasadena, for real party in interest Louis Novak, M.D.

Omansky, Lyden & Lazarus, Alfred W. Omansky, Encino, for real party in interest Emanuel Duke, M.D., and Estate of Emanual Duke, M.D.

Grace, Neumeyer & Otto, Thomas W. Ely, Los Angeles, for real parties in interest Oxymed, Inc. and Sandoz, Inc.

Sroloff & Biren, Ernest Sroloff, Los Angeles, for real party in interest Robert Hagerman, M.D.

Morgan, Wenzel & McNicholas, John D. Dwyer and Darryl L. Dmytriw, Los Angeles, for real party in interest Air Products and Chemicals, Inc.

No appearance for Respondent Court.

COMPTON, Associate Justice.

California Physicians' Service (CPS) seeks to intervene in a personal injury action brought by one of its subscribers, Wanda Gilmore, ¹ against several doctors, a hospital and various manufacturers, suppliers and operators of hospital respiratory equipment.

The superior court refused to permit intervention. On petition of CPS, we granted an alternative writ because it appeared to us that the circumstances of the case were unique and the remedy of appeal inadequate.

We were provided with extensive briefing and oral argument by counsel for CPS, the hospital and the equipment manufacturer. Counsel for the Gilmores and other real parties in interest elected not to respond to the petition. We have concluded that the trial court properly refused to permit CPS to intervene and thus the petition for the peremptory writ must be denied.

In 1976, Wanda Gilmore underwent surgery for a hysterectomy. As a result of complications and alleged negligence in her post operative care, including the use of certain respiratory equipment, she is permanently disabled. The damages are extensive. CPS has provided hospital and medical benefits of approximately $500,000.

The master contract between CPS and its subscribers provides that in the event that the need for medical benefits results from the actions of a third party tort-feasor, the subscriber is required to provide CPS with a lien on any recovery and to reimburse CPS therefrom.

During the period that CPS was providing benefits a dispute arose between it and the Gilmores over the extent of the coverage to which Wanda was entitled. CPS continued to provide the disputed coverage, partly because of its concern that a claim of bad faith might be leveled against it, but primarily because in a separately written compromise agreement executed by the Gilmores they agreed to make a good faith effort to recover the costs of the medical benefits in the personal injury action which was then pending. This agreement was executed in November of 1977.

In July of 1979, the Gilmores notified CPS that they were repudiating the agreement. They simultaneously filed a motion in their pending action seeking (1) approval of a settlement with one of the defendants Para-Medics, Inc. for $200,000, the limit of that defendant's liability coverage; (2) approval of a settlement with one of the doctors for $500,000, also the limit of the doctor's liability coverage; and (3) a declaration that "all medical liens" are null and void. CPS promptly filed a motion for leave to intervene.

At the hearing on the motion, the trial judge first approved the Para-Medics' settlement. He then found that Para-Medics was a "health care provider" under the terms of Civil Code section 3333.1 ² and thus that CPS was not entitled to any of the proceeds.

The hearing on the approval of the settlement with the doctor was continued for reasons unrelated to these proceedings. The motion to intervene was then denied.

By these writ proceedings, CPS seeks (1) vacation of the order which purports to deny its claim to any of the proceeds of the settlement with Para-Medics, Inc., and (2) permission to intervene in the action.

CPS's claim to reimbursement rests on its contracts with the Gilmores. It has no independent claim against any of the real parties in interest in the pending action. Its goal simply is to preserve its ability to recoup from any sums recovered by the Gilmores.

Prior to amendments in 1977, Code of Civil Procedure section 387 provided that "at any time before trial, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, May intervene . . .." (Emphasis added.)

Case law applying that statute developed the principle that intervention was largely in the discretion of the trial court to be exercised according to the facts of the particular case. (Beshara v. Goldberg, 221 Cal.App.2d 392, 34 Cal.Rptr. 501; Isaacs v. Jones, 121 Cal. 257, 53 P. 793.)

Reported decisions which deal with the exercise of that discretion further refine the principle to provide that the intervener's interest in the litigation must be direct and immediate rather than consequential, the issues must not be enlarged by the intervention and the reasons for intervention must outweigh the rights of the original parties to litigate in their own way. (Fireman's Fund Ins. Co. v. Gerlach, 56 Cal.App.3d 299, 128 Cal.Rptr. 396.)

One cardinal rule which is established by the cases is that an intervener's interest must be more direct and immediate than that of a simple creditor of one of the parties. (See Fireman's Fund Ins. Co. v. Gerlach, supra.)

Code of Civil Procedure section 387 was, as noted, amended in 1977. The effect of that amendment was to retain a permissive intervention couched in the almost identical language of the former statute and to create a Right to intervene for persons who, inter alia, claim an interest relating to the Property or transaction which is the subject of the action, when disposition of the action may impede or impair that interest.

CPS admits that its intervention in this matter would expand the issues in litigation and impinge on the right of the original parties to litigate the matter in their own fashion. Hence, as pertains to the issue of permissive intervention, CPS would be hard put to argue that the trial court was guilty of an abuse of discretion, even were we to conclude that CPS's interest in the litigation was direct and immediate.

The issue then is whether, under the facts, CPS meets the qualifications for mandatory intervention. If so, the fact that such intervention would add to the complexity of the action, create delay or adversely affect the original parties is of no moment.

There appears to be a dearth of case law interpreting the mandatory provisions of Code of Civil Procedure section 387(b). CPS, of course, has an interest in the outcome of the litigation and the success of one of the parties. The critical phrase in section 387(b) is "the property or transaction which is the subject of the action."

We think it evident that there is no "property" which is the subject of the pending action. A cause of action in tort would not qualify as "property" in this context.

As to "transaction," Black's Law Dictionary defines the term as: "Act of transacting or conducting any business; negotiation, management; proceeding; that which is done; an affair. It may involve selling, leasing, borrowing, mortgaging or lending. Something which has taken place, whereby a cause of action has arisen." (Black's, p. 1341, col. 1; emphasis added.)

While CPS's claim is based on a contract or "transaction" with the Gilmores, that contract or "transaction" is not the subject of the litigation in which CPS seeks to intervene. The "transaction" being litigated is the alleged tortious conduct of the real parties in interest and the injury to Wanda. CPS does not have, nor could it have, an interest in the Gilmores' cause of action in tort. (Block v. Cal. Physicians' Service, 244 Cal.App.2d 266, 53 Cal.Rptr. 51; Lee v. State Farm Mut. Auto Ins. Co., 57 Cal.App.3d 458, 129 Cal.Rptr. 271.) It only has an interest in any recovery.

In our view, CPS, at best, is simply a creditor of the Gilmores. Its right to recover would only arise if and...