Lee v. Blue Shield of California

Decision Date07 September 2007
Docket NumberNo. B190441.,B190441.
Citation154 Cal.App.4th 1369,65 Cal.Rptr.3d 612
CourtCalifornia Court of Appeals Court of Appeals
PartiesThomas T. LEE, Plaintiff and Appellant, v. BLUE SHIELD OF CALIFORNIA, Defendant and Respondent.

Law Offices of Russell D. Kinnier and Russell D. Kinnier, Pasadena, for Plaintiff and Appellant.

Barger & Wolen, John M. LeBlanc and Andrew S. Williams, Los Angeles, for Defendant and Respondent.

ROTHSCHILD, J.

Dr. Thomas T. Lee sued Blue Shield of California alleging that Blue Shield wrongfully suspended him from its network of medical providers for alleged medical incompetency, unlawfully denied him an administrative hearing on the issue of his competency and then illegally terminated his provider contract based on his alleged failure to cooperate in the administrative process. Lee seeks damages and declaratory relief but not reinstatement as a provider. The trial court sustained Blue Shield's demurrer without leave to amend on the ground that Lee had not exhausted his administrative remedies. Lee filed a timely appeal from the judgment dismissing his action.

The trial court correctly sustained Blue Shield's demurrer to Lee's contract and tort causes of action. Exhaustion of the administrative remedy under Business and Professions Code sections 809-809.91 (commonly referred to as an "809 hearing") is a prerequisite to Lee's recovery of damages for wrongful suspension and termination as a Blue Shield physician, and Lee admits he has not exhausted that remedy. The trial court erred, however, in sustaining the demurrer to Lee's cause of action for declaratory relief. Instead, the court should have treated Lee's cause of action for declaratory relief as a petition requesting the court to issue a writ of mandate ordering Blue Shield to vacate its decision terminating his provider status for failure to cooperate with the 809 hearing and to reinstate the 809 proceedings.

FACTS AND PROCEEDINGS BELOW
A. The Peer Review Hearing Process—Statutory Background

We briefly summarize the peer review hearing process applicable to hospitals extending privileges to doctors and to health care service plans such as Blue Shield contracting with doctors as medical providers. (§ 809-809.9.)

Under the statutory scheme, if a "peer review body" (§ 805, subd. (a)(1)) proposes to terminate a physician's membership in the organization for "a medical disciplinary cause or reason" (§ 805, subd. (b)(1)) or if it immediately suspends the physician on the ground that its failure to do so may result in "an imminent danger to the health" of a patient (§ 809.5, subd. (a)), the physician is entitled to notice and an administrative hearing. (§ 809.1, subd. (b).) A peer review body includes a health care service plan. (§ 805, subd. (a)(1)(B).) Blue Shield concedes it is a health care service plan subject to the 809 hearing procedure.

Section 809.2, subdivision (a), states: "The hearing shall be held, as determined by the [plan], before a trier of fact, which shall be an arbitrator or arbitrators selected by a process mutually acceptable to the [doctor] and the [plan], or before a panel of unbiased individuals who shall gain no direct financial benefit from the outcome, who have not acted as an accuser, investigator, factfinder, or initial decisionmaker in the same matter, and which shall include where feasible, an individual practicing the same specialty as the [doctor]." The panel may select a hearing officer to preside at the hearing but is not required to do so. (§ 809.2, subd. (b).)

When an 809 hearing is requested by a doctor, the plan "shall bear the burden of persuading the trier of fact [i.e. the hearing panel] by a preponderance of the evidence that the action or recommendation is reasonable and warranted." (§ 809.3, subd. (b)(3).)

Section 809.2, subdivisions (d) and (f), describe the discovery rights of the doctor and the plan and the remedies if either party fails to comply with the discovery process.

Section 809.2, subdivision (d), gives the doctor and the plan the right to inspect and copy "any documentary information relevant to the charges" in the opposing party's possession or control, subject to certain restrictions. Subdivision (d) further provides that the hearing panel "shall consider and rule upon any request for access to information and may impose any safeguards the protection of the peer review process and justice requires." Finally, subdivision (d) states that a party's failure to provide the requested information "shall constitute good cause for a continuance."

Section 809.2, subdivision (f), provides that "[a]t the request of either side, the parties shall exchange lists of witnesses expected to testify and copies of all documents expected to be introduced at the hearing." As in subdivision (d), quoted above, a party's failure to timely exchange witness lists and copies of documents "shall constitute good cause for a continuance."

Of particular importance to this case, 809 hearings apply only to proposed terminations and suspensions that are taken for "a medical disciplinary cause or reason" which is defined as "that aspect of a [doctor's] competence or professional conduct that is reasonably likely to be detrimental to patient safety or to the delivery of patient care." (§§ 805, subd. (a)(6), 809.1, subd. (a).)

B. Summary Of The Facts.

For purposes of this appeal, we accept as true the properly pleaded factual allegations of the complaint. (Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746, 167 Cal.Rptr. 70, 614 P.2d 728.)

Lee is an obstetrician and gynecologist licensed to practice medicine in California. Blue Shield is a health care service plan. At the time of the events leading to this litigation, Lee had been a Blue Shield health care provider for 15 years.

Blue Shield proposed to terminate Lee as a provider based on concerns about the quality of his medical care and gave Lee notice of his right to an 809 hearing. Lee timely requested a hearing. Blue Shield and Lee agreed on two persons, a doctor and a lawyer, to serve as the hearing panel.

While the hearing on Lee's proposed termination was pending, Blue Shield notified Lee it was summarily suspending his provider status because he posed "an imminent danger" to the health of his patients.2 The proposed termination and summary suspension were consolidated for the 809 hearing.

Two weeks before the scheduled start of the 809 hearing, Blue Shield notified Lee's counsel by telephone that "Blue Shield was no longer going to participate in the administrative process and that it was terminating Dr. Lee's contract for Dr. Lee's alleged `failure to cooperate with the peer review process.'" According to Lee, "No further opportunity was provided to Dr. Lee's counsel to respond to the issues raised by Blue Shield's counsel, and no effort whatsoever was made by Blue Shield's counsel to seek the assistance of the hearing panel to resolve this perceived 'failure to cooperate' on the part of Dr. Lee's counsel." Three days after this conversation between counsel for Blue Shield and Lee, "Blue Shield notified Dr. Lee and the hearing panel, in writing, that it was abandoning the fair hearing process and terminating Dr. Lee's contract. The same day, counsel for Dr. Lee spoke with [a member of the hearing panel] and was told that as a result of Blue Shield's actions in terminating Dr. Lee's contract, the hearing panel no longer had any authority to conduct the administrative hearing."

Based on these facts Lee alleges violation of the statutes governing 809 hearings, violation of the common law right to fair procedure, breach of contract, various business torts and entitlement to declaratory relief. As previously noted, the trial court sustained Blue Shield's demurrer without leave to amend and dismissed the action on the ground that Lee failed to exhaust his administrative remedies.

DISCUSSION
I. ASSUMING THE TRUTH OF LEE'S ALLEGATIONS, BLUE SHIELD VIOLATED THE 809 HEARING PROCESS BY TERMINATING THE HEARING BASED ON ITS ALLEGATION THAT LEE FAILED TO COOPERATE WITH DISCOVERY.

Blue Shield argues that Lee's termination was not justiciable in an 809 hearing because it was not based on a medical disciplinary cause or reason; it was based on Lee's failure to cooperate with the hearing. In the alternative Blue Shield argues that if Lee's termination was justiciable in an 809 hearing, his complaint fails because he admits that he did not exhaust his administrative remedy.

Lee argues that once Blue Shield terminated his provider contract, his 809 hearing remedy was no longer available and therefore he was entitled to bring a civil action for damages arising from the wrongful suspension of his provider status and the subsequent wrongful termination of his provider contract.

Before Lee can seek damages for the wrongful suspension or wrongful termination of his provider `contract he must exhaust the 809 hearing remedy, including seeking judicial review of the hearing decision should the suspension or termination be upheld. We conclude, however, that the trial court should have treated Lee's cause of action for declaratory relief as a petition requesting the court to issue a writ of mandate ordering Blue Shield to vacate its decision terminating his provider status for failure to cooperate with the 809 hearing and to reinstate the 809 proceedings.

Assuming the truth of Lee's factual allegations, Blue Shield terminated Lee's provider contract because he was not cooperating with Blue Shield's discovery requests related to the 809 hearing. This was a violation of Lee's rights under the statutes governing the hearing process.

There is no suggestion in the statutes governing the 809 hearing process that the Legislature intended to authorize a plan to arrogate to itself the power to adjudicate its own claim of discovery abuse and to impose a terminating sanction while denying the doctor an opportunity to be heard on the issue. Yet, according to Lee, this...

To continue reading

Request your trial
25 cases
  • San Mateo Union High Sch. Dist. v. Cnty. of San Mateo
    • United States
    • California Court of Appeals Court of Appeals
    • 31 Enero 2013
    ...[Citation.]' [Citation.]" (Bagatti v. Department of Rehabilitation (2002) 97 Cal.App.4th 344, 352 ; see also Lee v. Blue Shield of California (2007) 154 Cal.App.4th 1369, 1377-1378 .) The material allegations in the action filed by plaintiff "must be accepted as true. [Citations.] In additi......
  • San Mateo Union High Sch. Dist. v. Cnty. of San Mateo
    • United States
    • California Court of Appeals Court of Appeals
    • 10 Abril 2013
    ...v. Department of Rehabilitation (2002) 97 Cal.App.4th 344, 352, 118 Cal.Rptr.2d 443; see also Lee v. Blue Shield of California (2007) 154 Cal.App.4th 1369, 1377–1378, 65 Cal.Rptr.3d 612.) The material allegations in the action filed by plaintiff “must be accepted as true. [Citations.] In ad......
  • Indep. Living Ctr. of S. Cal., Inc. v. Kent
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 21 Noviembre 2018
    ...method for compelling a City to perform a legal, usually ministerial duty." (citations omitted) ) with Lee v. Blue Shield of Cal. , 154 Cal.App.4th 1369, 65 Cal.Rptr.3d 612, 619 (2007) (referring to "a cause of action for a writ of mandate," as well as a "declaratory relief cause of action"......
  • Hughes v. OneWest Bank
    • United States
    • California Court of Appeals Court of Appeals
    • 13 Marzo 2012
    ...[Citation.]' [Citation.]" (Bagatti v. Department of Rehabilitation (2002) 97 Cal.App.4th 344, 352; see also Lee v. Blue Shield of California (2007) 154 Cal.App.4th 1369, 1377-1378.) The properly pleaded material allegations in the action filed by plaintiff "must be accepted as true. [Citati......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT