Department of Health Services v. Superior Court

• Decision Date: 23 July 1991
• Citation: 283 Cal.Rptr. 546,232 Cal.App.3d 776
• Parties: , 2 NDLR P 32 DEPARTMENT OF HEALTH SERVICES, Petitioner, v. The SUPERIOR COURT of the State of California, for the County of Los Angeles, Respondent; TORRANCE MEMORIAL HOSPITAL, Real Party In Interest. B056132.
• Court: California Court of Appeals Court of Appeals

Page 546

283 Cal.Rptr. 546

232 Cal.App.3d 776, 2 NDLR P 32

DEPARTMENT OF HEALTH SERVICES, Petitioner, v. The SUPERIOR COURT of the State of California, for the County of Los Angeles, Respondent TORRANCE MEMORIAL HOSPITAL, Real Party In Interest.

B056132.

Court of Appeal, Second District, Division 3, California.

July 23, 1991.

Review Denied Oct. 31, 1991.

[232 Cal.App.3d 777] Daniel E. Lungren, Atty. Gen., Charlton G. Holland, Asst. Atty. Gen., John H. Sanders and Y. Tammy Chung, Deputy Attys. Gen., for petitioner.

Joy Young-Stephenson, North Hollywood, for real party in interest.

No appearance for Respondent.

INTRODUCTION

DANIELSON, Associate Justice.

In 1965, Congress established the federal Medicaid program, "a cooperative federal-state health benefits assistance program designed to provide necessary medical services to low income persons. Title XIX of the Social Security Act, codified at 42 U.S.C. § 1396 et seq. ('the Act'); see also Schweiker v. Gray Panthers, 453 U.S. 34, 36-37, 101 S.Ct. 2633, 2636-2637, 69 L.Ed.2d 460 (1981). State governments principally administer the program, and in so doing must abide by the requirements of the Act to qualify for receipt of federal Medicaid funds. Beltran v. Myers, 701 F.2d 91, 92 (9th Cir.), cert. denied sub nom., Rank v. Beltran, 462 U.S. 1134, 103 S.Ct. 3115, 77 L.Ed.2d 1369 (1983). California participates in the Medicaid program through its California Medical Assistance Program ('Medi-Cal'), which provides medical services to aged, disabled, and needy persons. Cal.Welf. & Inst.Code §§ 14005.1, 14050.1, 14051 ...; see generally Lynch v. Rank, 747 F.2d 528 (9th Cir.1984), modified, 763 F.2d 1098 (9th Cir.1985)." (Citizens Action League v. Kizer (9th Cir.1989) 887 F.2d 1003, 1005.)

At the federal level, the Secretary of Health and Human Services is responsible for the administration of federal grants-in-aid for state programs (42 U.S.C. § 1396). Immediate responsibility at the federal level has been assigned to the Health Care Financing Administration, Department of Health and Human Services. The California Department of Health Services (the Department) administers the program at the state level (Welf. & Inst.Code, § 10721; 22 C.C.R. § 50004), while county welfare offices (the County) provide most of the direct services to Medi-Cal beneficiaries. (Welf & Inst.Code, § 14100 et seq.; 22 C.C.R. § 50101.)

In this case concerning the confidentiality of the Department's records with respect to applicants for Medi-Cal benefits, the Department seeks a writ of prohibition to restrain enforcement of a discovery order requiring disclosure of its records concerning an unsuccessful applicant for benefits, to Torrance Memorial Hospital (the Hospital), provider of health services to the applicant. We grant the petition.

FACTS

On July 18, 1990, the Hospital filed a First Amended Petition for Writ of Mandate; and Complaint for Medi-Cal Reimbursement against the Department, alleging that from September 19, 1986 to October 8, 1986, the Hospital rendered medically necessary services to a patient, Dorothy C. (the patient), who was indigent and had no medical insurance.

The Hospital alleged that a year later, on September 3, 1987, the patient filed an application for Medi-Cal benefits, which was denied by the County. Following a fair hearing (Welf. & Inst.Code, § 10950 et seq.; 22 C.C.R. § 50951 et seq.), the Department denied the application in a decision dated July 26, 1988. ¹

The Hospital claimed the patient was in fact entitled to receive full payment from the Department for the reasonable value of the medical services provided, which amounted to $34,836.80, and the Department was indebted to the Hospital in that amount.

In a second cause of action, the Hospital alleged the Department breached the contract pursuant to which the Hospital agreed to provide medical services to designated patient beneficiaries covered by the Medi-Cal Program, and the Department agreed to pay, upon submission of a claim for payment, the reasonable value of the medical services provided by the Hospital to such persons.

In a third cause of action, the Hospital sought equitable relief from any failure on its part to perform any covenant, condition or promise set forth in its agreement with the Department.

In its fourth cause of action, the Hospital sought a writ of mandate pursuant to Code of Civil Procedure sections 1085 and 1094.5, compelling the Department to set aside its final decision denying the patient eligibility for Medi-Cal benefits.

The fifth and final cause of action sought an award of attorney fees.

The record shows that in the course of discovery, the Hospital demanded production of "[a]ll medical reports, memoranda, notes, Medi-Cal applications, Disability Evaluation Division (DED) Reports, MC 210, MC 221, MC 223, MC 220 and other documents relating to or referring to the claimant, Dorothy C. ..." The Department objected to this request on the ground, inter alia, that it "is prohibited by law, both state and federal, from disclosing documents containing confidential information regarding an applicant for Medi-Cal benefits without specific authorization from the applicant."

The Hospital's motion to compel further response to its demand was granted by the court following a hearing held on January 14, 1991.

CONTENTIONS

The Department contends the trial court lacked jurisdiction to order the Department to produce confidential documents in violation of Welfare and Institutions Code section 14100.2 and federal regulations.

The Hospital contends the relevant statutes and regulations permit the release of Medi-Cal applicant information to a provider who has brought a civil action to (1) compel the Department to establish eligibility for the applicant to whom the provider has rendered medical services, and (2) obtain reimbursement from the Department for medical services to the applicant. The Hospital also contends a provider is not required to obtain a patient's consent to obtain access to such information. Finally, the Hospital contends there are compelling state interests necessitating the release of the information requested by the provider herein.

DISCUSSION

The trial court found "that Welfare and Institutions Code [section] 14100.2 provides that the information being asked about does fall into the category of confidential information, but that the exceptions set forth in [section] 14100.2 [subdivisions] (a) and (c) apply in this case to the type of discovery being undertaken by the plaintiff/petitioner."

Welfare and Institutions Code section 14100.2 provides, in subdivision (a): "All types of information, whether written or oral, concerning a person, made or kept by any public officer or agency in connection with the administration of any provision of this chapter, Chapter 8 (commencing with Section 14200), or Chapter 8.7 (commencing with Section 14520) and for which a grant-in-aid is received by this state from the United States government pursuant to Title XIX of the Social Security Act shall be confidential, and shall not be open to examination other than for purposes directly connected with the administration of the Medi-Cal program." ² (Fn. omitted; see 42 U.S.C. § 1396a, subd. (a)(7); 42 C.F.R., § 431.300.)

Welfare and Institutions Code, section 14100.2, subdivision (c) provides that "Purposes directly connected with the administration of the Medi-Cal Program, Chapter 8 ... or Chapter 8.7 ... encompass those administrative activities and responsibilities the State Department of Health Services and its agents are required to engage in to insure effective program operations. Such activities include but are not limited to: establishing eligibility and methods of reimbursement; determining the amount of medical assistance; providing services for recipients; conducting or assisting an investigation, prosecution, or civil or criminal proceeding related to the administration of the Medi-Cal Program; and conducting or assisting a legislative investigation or audit related to the administration of the Medi-Cal Program." ³ (See 41 C.F.R., § 431.302.)

In an Information Memorandum dated June 22, 1978, to state agencies administering medical assistance programs, the Health Care Financing Administration, which, as stated above, is the federal agency charged with overseeing state Medicaid programs, defined "administration of the program" as encompassing "those administrative activities and responsibilities which States are required to engage in to ensure effective program operation. Such activities include determining eligibility and methods of reimbursement, processing claims, conducting fair hearings, arranging for interagency agreements, ensuring the availability of transportation, conducting outreach, and similar activities. Since Medicaid is not involved in providing medical services, the provision of such services is not considered to be directly connected with the administration of the program. Consequently, service providers are not considered to be directly connected with the administration of the program and are not entitled to confidential information, including lists of names and addresses of Medicaid recipients, without informed consent."

" '[T]he interpretation of an agency charged with the administration of a statute is entitled to substantial deference.' [Citation.] Moreover, the agency's construction need not be the only reasonable one in order to gain judicial approval." (Conn. Dept. of Income Maint. v. Heckler (1985) 471 U.S. 524, 532, 105 S.Ct. 2210, 2214, 85 L.Ed.2d 577, 583-584; fn. omitted; see also Citizens Action League v. Kizer, supra, 887 F.2d 1003, 1007; Continental Ins. Co. v. Crockett (1985) 177 Cal.App.3d Supp. 12, 29, 223 Cal.Rptr. 772, and cases there cited.)

Title 22, California Code of Regulations, section 50111, provides "(a) The county department shall adhere to the requirements in Divisions 19 and 23, Manual of Policies and...