Kfh v. Sacramento County Superior Court

• Decision Date: 04 April 2005
• Docket Number: No. C047124.,C047124.
• Citation: 128 Cal.App.4th 85,26 Cal.Rptr.3d 744
• Court: California Court of Appeals
• Parties: KAISER FOUNDATION HOSPITALS et al., Petitioners, v. The SACRAMENTO COUNTY SUPERIOR COURT, Respondent; Debbie Dennis-Johnson, M.D., Real Party in Interest.

26 Cal.Rptr.3d 744

128 Cal.App.4th 85

KAISER FOUNDATION HOSPITALS et al., Petitioners, v.The SACRAMENTO COUNTY SUPERIOR COURT, RespondentDebbie Dennis-Johnson, M.D., Real Party in Interest.

No. C047124.

Court of Appeal, Third District.

April 4, 2005.

Rehearing Denied April 21, 2005.

Review Denied July 13, 2005.^*

Bingham McCutchen, Ross E. Campbell, Beth McGowen, Katharine West, East Palo Alto, and David M. Heilbron, San Francisco, for Petitioners Kaiser Foundation Hospitals, Kaiser Foundation Health Plan, Inc., Jack Rozance, M.D., and Robert Azevedo, M.D.

Quinn Emanuel Urquhart Oliver & Hedges, Samuel B. Shepherd and Philip J. Wang, Redwood Shores, for PetitionerThe Permanente Medical Group, Inc.

No appearance for Respondent.

Carter & Schear, Stephen D. Schear and Jana Carter, Oakland; Eric Weaver for Real Party in Interest.

ROBIE, J.

In this writ proceeding, we are called on to decide whether the failure of a hospital to begin a peer review hearing within the 60-day period provided by subdivision (h) of Business and Professions Code¹ section 809.2 excuses the physician who is subject to peer review from completing the peer review process and permits the physician to bring an immediate tort action for damages and other relief in the superior court.We conclude the answer to that question is "no."The hospital's failure to begin the hearing on time, without more, does not render the administrative remedy of the peer review process inadequate or unavailable and does not constitute such a deprivation of "fair procedure" that the physician is entitled to escape peer review altogether.

We also conclude that a physician facing peer review cannot avoid the process by claiming that the hearing officer and/or panel members appointed by the hospital are impermissibly biased.Because subdivision (c) of section 809.2 provides a method for raising the issue of bias in the administrative proceeding, the exhaustion of administrative remedies doctrine requires the physician to raise the issue of bias before the hearing officer.The physician cannot escape that requirement simply by claiming the hearing officer is biased.

Based on these conclusions, we will issue a peremptory writ of mandate granting the relief petitioners seek.

FACTUAL AND PROCEDURAL BACKGROUND

We begin with our cast of players.Petitioner Kaiser Foundation Hospitals (KFH) is a California not-for-profit public benefit corporation that owns Kaiser Foundation Hospital-Sacramento/Roseville, a licensed general acute care hospital (the Hospital).Petitioner Kaiser Foundation Health Plan (KFHP) is a health care service plan that contracts with KFH to provide hospital services to KFHP's members.PetitionerJack Rozance is the chief of staff of the professional staff at the Hospital.PetitionerRobert Azevedo is the chief of the department of obstetrics and gynecology at the Hospital.Petitioner The Permanente Medical Group (TPMG) is a professional corporation that contracts with KFHP to provide medical services to KFHP's members.Finally, real party in interest Debbie Dennis-Johnson is a licensed physician specializing in obstetrics and gynecology (OB/GYN).²

In November 2001, TPMG hired Dr. Dennis as an associate physician.At the same time, Dr. Dennis joined the professional staff of the Hospital and obtained provisional OB/GYN privileges there.

On March 19, 2003, Dr. Azevedo informed Dr. Dennis that the Hospital was summarily suspending her gynecological surgery privileges.³Shortly thereafter, TPMG terminated Dr. Dennis's employment.⁴

By letter dated March 31, 2003, Dr. Rozance notified Dr. Dennis that she was entitled to request a hearing on the termination of her employment.Dr. Dennis requested that hearing on April 8, 2003.About a week later, Dr. Dennis received another letter from Dr. Rozance notifying her that she was entitled to request a hearing on the summary suspension of her surgical privileges.Dr. Dennis requested that hearing on April 29, and the Hospital received the request the following day.

Under the Hospital's bylaws and TPMG's policy manual, Dr. Dennis was entitled to a single hearing addressing both the termination of her employment and the suspension of her surgical privileges, because both events arose from the same set of circumstances.The hearing was supposed to begin within 60 days after receipt of Dr. Dennis's requests for a hearing.Thus, at least with respect to the suspension of Dr. Dennis's surgical privileges, the hearing was supposed to begin by the end of June.⁵

Under the Hospital's bylaws, the hearing was to be held before an ad hoc judicial review committee (JRC) appointed by the chief of staff (Dr. Rozance), the members of which were to serve "as the initial finder of fact in this hearing and appeal process."The members of the JRC were to be other practitioners "who shall gain no direct financial benefit from the outcome, who have not acted as accusers, investigators, fact finders or initial decision makers in the same matter, and who have not previously taken an active part in the consideration of the matter contested."The bylaws also provided for appointment of an attorney as a hearing officer to preside over the hearing.TPMG's policy manual provided for similar requirements.

On May 6, 2003, the Hospital's attorney, Ross Campbell, wrote to Dr. Dennis's attorney, Stephen Schear, and named two attorneys who were under consideration for appointment as the hearing officer.Campbell stated he wanted to talk to Schear about the two candidates "in the near future."Although the Hospital was entitled to set the hearing date unilaterally, it is Campbell's practice to set hearing dates for hospital peer review hearings by mutual agreement of counsel.Thus, Campbell also stated in his letter that he wanted to talk to Schear about "potential hearing dates."

The following day, Schear responded regarding the hearing officer candidates, objecting to one of them, and indicated he would be out of the office until May 19.He offered no response regarding potential hearing dates.

On May 13, 2003, a joint notice of charges issued, setting forth the reasons for the adverse actions taken against Dr. Dennis.The notice referred to various problems that allegedly occurred in eight of her cases, including, among other things, improper surgical technique, inadequate informed consent processing, and inadequate charting.The notice further stated that "[s]election of a hearing panel and hearing officer is proceeding as well as the determination of dates for the hearing, which will be coordinated with your attorney.Once these details have been finalized, you will be informed in writing."

On May 28, 2003, Schear wrote to Campbell, objecting to the Hospital's second hearing officer candidate on the ground there was "a significant risk that [he] will favor Kaiser and/or TPMG at the hearing in order to continue receiving work from them."Schear "continue[d] to insist that the hearing officer and the panelists be chosen by mutual agreement rather than by [Campbell] or [the Hospital], in order to ensure a fair and objective process."Schear further stated that Dr. Dennis did "not consent to and has not waived any of her procedural rights, including her right to compliance with policies, bylaws, and statutes requiring timely notice and hearing."

On June 13, 2003, Campbell responded to Schear, noting that while he"naturally prefer[ed] to work with [Schear] so that both the hearing officer and panelists are acceptable as that will make the process run more efficiently,"he would "not agree to a hearing officer and panelist[s] chosen by `mutual agreement.'"⁶He further stated that Schear "obviously ha[d] a right to voir dire any hearing officer or panel member and to disqualify any such individual for a valid reason as provided for in Section 809.2."⁷In closing his letter, Campbell suggested a telephone discussion, noting they had "a number of things to discuss, the most important of which is identifying hearing dates that are workable."

The attorneys apparently had that telephone discussion on June 19.Schear followed up that conversation with a letter the next day, in which he insisted it was "plainly a violation of due process for [the Hospital] and TPMG to unilaterally appoint the hearing officer and panel members."Citing Haas v. County of San Bernardino(2002)27 Cal.4th 1017, 119 Cal. Rptr.2d 341, 45 P.3d 280, Schear asserted that the Hospital's bylaws and TPMG's policies "violate due process on their face," and he insisted that for this reason Dr. Dennis was "not required to submit to the hearing process because it is an inadequate remedy."

On June 27, 2003, Campbell responded to Schear, asserting Haas was inapplicable because, among other things, it "dealt with due process concepts applicable to governmental agencies."Campbell asserted the Hospital's selection of the hearing officer and members of the JRC was consistent with state law, and any objections Dr. Dennis had could be addressed to the hearing officer pursuant to subdivision (c) of section 809.2.Campbell agreed with Schear's "apparent wish to proceed with the hearing as soon as reasonably possible" and stated they would "try to have a panel selected and a hearing officer chosen by the time [Schear] return[ed] from [his] early July vacation."

Less than a week later, on July 2, 2003, Dr. Dennis filed a complaint in the superior court for declaratory and injunctive relief and damages against KFH, KFHP, Dr. Rozance, and Dr. Azevedo (the Kaiser action)(case No. 03AS03739).⁸Dr. Dennis sought damages on a variety of tort theories (e.g., race and gender discrimination in violation of the Fair Employment and Housing Act), alleging, among other things, that Kaiser had retaliated against her for complaining of harassment by Dr. Azevedo.In her first of 20 "counts," Dr. Dennis sought a judicial declaration that she was "not required to exhaust [the Hospital's]...