Hi-Desert Med. Ctr. v. Douglas

• Decision Date: 18 August 2015
• Docket Number: B255441,B256894,B257021,B253268
• Citation: 190 Cal.Rptr.3d 897,239 Cal.App.4th 717
• Parties: HI–DESERT MEDICAL CENTER, Plaintiff and Appellant, v. Toby DOUGLAS, as Director, etc., et al., Defendants and Respondents. Modoc Medical Center, Plaintiff and Appellant, v. Toby Douglas, as Director, etc., et al., Defendants and Respondents. Dignity Health, Plaintiff and Appellant, v. Toby Douglas, as Director, etc., et al., Defendants and Respondents. George L. Mee Memorial Hospital, Plaintiff and Respondent, v. Toby Douglas, as Director, etc., et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

239 Cal.App.4th 717

190 Cal.Rptr.3d 897

HI–DESERT MEDICAL CENTER, Plaintiff and Appellant

v.Toby DOUGLAS, as Director, etc., et al., Defendants and Respondents.

Modoc Medical Center, Plaintiff and Appellant

v.Toby Douglas, as Director, etc., et al., Defendants and Respondents.

Dignity Health, Plaintiff and Appellant

v.Toby Douglas, as Director, etc., et al., Defendants and Respondents.

George L. Mee Memorial Hospital, Plaintiff and Respondent

v.Toby Douglas, as Director, etc., et al., Defendants and Appellants.

B253268

B255441

B256894

B257021

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

Filed August 18, 2015

As Modified September 15, 2015

Law Offices of Thomas J. Weiss, Thomas J. Weissand Lindsay K. Seltzer, Los Angeles, for Plaintiffs and Appellants in B253268 and B25541.

Hooper, Lundy & Bookman, Lloyd A. Bookman and Jordan B. Keville, Los Angeles, for Plaintiff and Appellant in B256894.

Kamala D. Harris, Attorney General, Julie Weng–Gutierrez, Assistant Attorney General, Leslie P. McElroy, and Janet E. Burns, Deputy Attorneys General, for Defendants and Appellants in B257021.

Law Offices of Thomas J. Weiss, Thomas J. Weiss and Lindsay K. Seltzer, Los Angeles, for Plaintiff and Respondent in B257021.

Kamala D. Harris, Attorney General, Julie Weng–Gutierrez, Assistant Attorney General, Jennifer M. Kim, Richard T. Waldow, Andrea F. Ventura, Jon F. Worm, and Kristen T. Dalessio, Deputy Attorneys General, for Defendants and Respondents in B253268, B255441, and B256894.

Opinion

ASHMANN–GERST, J.

This appeal is the latest attempt by various hospitals¹ to recoup financial reimbursement from the Department of Health Care Services (the Department) following their successful petition for writ of mandate to have Senate Bill No. 1103 (2003-2004 Reg. Sess.)² invalidated. Although the hospitals failed to seek monetary damages in that original petition for writ of mandate, they did request financial reimbursement in administrative proceedings, which were stayed at the hospitals' request pending resolution of court proceedings; they also sought monetary relief from the trial court in a motion to amend their original petition for writ of mandate and in a new court proceeding, which they later dismissed. After all of the court proceedings terminated, the administrative law judges (ALJs) dismissed the administrative proceedings, prompting the underlying petitions for writ of mandate. At issue is whether the ALJs properly dismissed the administrative proceedings on the grounds that the hospitals' requests for financial reimbursement are barred by the doctrine of res judicata.

We conclude that Dignity Health, Hi–Desert, and Mee's requests are all barred by the doctrine of res judicata. The hospitals could have requested monetary damages in their original petition for writ of mandate, as has already been pointed out to the parties by the Court of Appeal, Third Appellate District, but they failed to do so. The parties are bound by that decision and cannot circumvent it by seeking writ relief here.

Regarding Modoc, we conclude that its request is barred by the doctrine of forfeiture given its failure to object or otherwise oppose the Department's motion to dismiss in front of the ALJ.

FACTUAL AND PROCEDURAL BACKGROUND

Factual Background

A. Enactment of Senate Bill 1103

The federal Medicaid program provides financial assistance to states that offer medical treatment to needy persons. (Mission Hospital Regional Medical Center v. Shewry (2008) 168 Cal.App.4th 460, 469–470, 85 Cal.Rptr.3d 639 (Mission I ).) “California participates in the federal Medicaid program through the Medi–Cal program,” and the Department is the state agency authorized to administer the Medi–Cal program. (Id. at p. 474, 85 Cal.Rptr.3d 639.)

In 2004, the Legislature enacted Senate Bill 1103, which limited reimbursement rates to noncontract hospitals, including all four hospitals here. (Mission I, supra, 168 Cal.App.4th at p. 476, 85 Cal.Rptr.3d 639.)

B. Challenge to Senate Bill 1103; Sacramento Superior Court Denies Writ to the Hospitals

Dignity Health, Hi–Desert, and Mee (collectively the petitioners),³ along with other noncontract hospitals, challenged Senate Bill 1103 in September 2005 via a petition for writ of mandate pursuant to Code of Civil Procedure section 1085⁴ in Sacramento Superior Court. The petitioners specifically alleged that Senate Bill 1103 was invalid, with “some expecting losses of $1 million or more as a result of the reimbursement freeze.” While the writ petition prayed for declaratory and injunctive relief, it did not request monetary relief.

On December 19, 2006, the Sacramento Superior Court rejected most of the petitioners' allegations. The petitioners filed an appeal. (Mission I, supra, 168 Cal.App.4th at pp. 477–478, 85 Cal.Rptr.3d 639.)

C. Administrative Action and Stay Pending Resolution of Mission I

Meanwhile in early 2006 and 2007, the Department issued its audited cost reports for the 2004–2005 fiscal year to the hospitals. While Mission I was pending, the hospitals each filed an administrative action challenging their audit reports on the grounds that the reimbursement cap (Senate Bill 1103) was illegal. Dignity Health, Hi–Desert, and Mee separately advised each ALJ that it was a plaintiff in the pending Mission action. Each of these hospitals represented: “Since this issue should be resolved in the [pending Court of Appeal decision], the [hospital] hereby requests that this appeal be put in abeyance pending the outcome of the [Mission appeal].”

Although it was not a petitioner in the original Mission petition, Modoc requested that the hearing set on its audit report be taken off calendar because “the same issues involved in this case are being heard in a pending state court action,” and the upcoming decision in Mission I would “impact” its case.

Each ALJ granted each hospital's request for abeyance to await a decision in Mission I.

D. Victory for the Hospitals in Mission I

On November 19, 2008, the Court of Appeal, Third Appellate District, reversed the trial court's judgment on one legal ground only, concluding that the Legislature had failed to comply with the notice and comment procedures of title 42 United States Code section 1396a(a)(13)(A). (Mission I, supra, 168 Cal.App.4th at p. 480, 85 Cal.Rptr.3d 639.) The Court of Appeal ordered the Sacramento Superior Court to issue a writ of mandate prohibiting the Department from applying Senate Bill 1103 in calculating the petitioners' reimbursement rates for the state fiscal year 2004–2005. (Id. at p. 493, 85 Cal.Rptr.3d 639.)

E. Motion to Enforce the Writ; Writ Granted as Requested by the Hospitals

After remand, on April 22, 2009, the Sacramento Superior Court issued a writ of mandate prohibiting the Department from applying Senate Bill 1103 in computing reimbursement rates for the fiscal year 2004–2005. (See Mission Hospital Regional Medical Center v. Douglas (May 25, 2011, C062792) 2011 WL 2040742, at p. *1, 2011 Cal.App. Lexis 4036, at p. *1 (Mission II ).) The parties disputed whether this decision applied retroactively. The Department believed that, by this time, it had already applied Senate Bill 1103 and reimbursed most of the noncontract hospitals. The hospitals, on the other hand, claimed that Mission I 's holding entitled them to both retroactive and prospective relief. (Mission II, supra, at p. *1, 2011 Cal.App. Lexis 4036 at p. *2.) Thus, the petitioners filed a motion to enforce the writ of mandate, asking the trial court to order the Department “to recalculate the reimbursement amounts for 2004–2005 for all plaintiffs and to reimburse them the amounts they would have received for that fiscal year had Stats. section 32 not been applied.” (Mission II, supra, at p. *2, 2011 Cal.App. Lexis 4036 at pp. *6–*7.)

The trial court granted the hospitals' petition, and the Department appealed. (Mission II, supra, 2011 WL 2040742, at pp. *2–3, 2011 Cal.App. Lexis 4036, at pp. *7–*8.)

F. Court of Appeal Reverses Trial Court (Mission II )

The Court of Appeal, Third Appellate District, reversed the trial court order enforcing the writ, holding that the trial court “lacked jurisdiction to authorize additional relief beyond what [had been] ordered.” (Mission II, supra, 2011 WL 2040742, at p. *3, 2011 Cal.App. Lexis 4036, at p. *8 C062792.) The Court of Appeal reasoned as follows: In Mission I, the petitioners only sought “prospective declaratory and mandamus relief”; they did not request any other type of relief, including “financial reimbursement.” (Mission II, supra, at p. *4, 2011 Cal.App. Lexis 4036 at p. *10 C062792.) While the Court of Appeal was expressly “sympathetic to plaintiffs' and the trial court's efforts to ensure the state does not enrich itself pursuant to its unlawful acts, which are here established by the Legislature and the Department's decision not to challenge Mission ... I substantively in their petition for review[,] ...the enforcement burden rested on plaintiffs. If they wanted to be reimbursed for monies wrongfully withheld or taken, they were burdened to make all appropriate allegations and pleadings for that to occur. They did not do this in Mission ... I. ” (Mission II, supra, at p. *4, 2011 Cal.App. Lexis 4036 at p. *11.)

G. Motion to Amend the 2005 Petition and the New Petition

Following Mission II, on November 18, 2011, the hospitals moved to amend the original 2005 petition in Sacramento Superior Court to allege a request for reimbursement. On the same day that the motion for leave to amend was filed, the hospitals filed a new petition in Sacramento Superior Court (Mission III ),⁵ mirroring the 2005 petition, but expressly praying for reimbursement in a manner similar to their proposed amended petition. The Sacramento Superior Court denied the motion to amend the 2005 petition on the grounds that the pleading was substantively identical to the newly filed Mission III petition. The hospitals did not appeal that ruling.

In April 2013, the Department and some of the hospitals...