Pervaiz A. Chaudhry & Valley Cardiac Surgery Med. Grp. v. Smith, Case No. 1:16-CV-1243-LJO-MJS

• Decision Date: 16 December 2016
• Docket Number: Case No. 1:16-CV-1243-LJO-MJS
• Citation: Chaudhry v. Smith, Case No. 1:16-CV-1243-LJO-MJS (E.D. Cal. Dec 16, 2016)
• Court: U.S. District Court — Eastern District of California
• Parties: PERVAIZ A. CHAUDHRY and VALLEY CARDIAC SURGERY MEDICAL GROUP, Plaintiffs, v. KAREN SMITH, et al., Defendants.

PERVAIZ A. CHAUDHRY and VALLEY CARDIAC SURGERY MEDICAL GROUP, Plaintiffs, v. KAREN SMITH, et al., Defendants.

Case No. 1:16-CV-1243-LJO-MJS

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

December 16, 2016

MEMORANDUM DECISION AND ORDER RE DEFENDANTS' MOTION TO DISMISS

(ECF No. 7)

On June 17, 2016, Plaintiffs Pervaiz A. Chaudhry ("Chaudhry" or "Plaintiff") and Valley Cardiac Surgery Medical Group ("VCSMG") (collectively, "Plaintiffs") commenced this action in Fresno County Superior Court against Defendants Karen Smith, in her official capacity as the Director of the California Department of Public Health ("CDPH"); Steven Lopez, in his personal capacity as the Fresno District Office Manager of the CDPH; Eric Creer, in his personal capacity as a CDPH employee; Bea Hensleit, in her personal capacity as a former Fresno District Office Manager of the CDPH; Shirley Campbell, in her personal capacity; Deidre Kappmeyer, in her personal capacity; and Does 1-10, inclusive (collectively, "Defendants"). ECF No. 1 at 10-30¹. Through this suit, Plaintiffs assert two claims against Defendants under 42 U.S.C. § 1983 ("§ 1983"), and seek both injunctive relief and monetary damages. Id Defendants subsequently removed the action to this Court, invoking federal question jurisdiction under 28 U.S.C. § 1441. ECF No. 1. Plaintiffs filed a First Amended Complaint ("FAC") on August 29, 2016. ECF No. 6. Now before the Court is Defendants' motion to dismiss the FAC pursuant to Federal Rule of Civil Procedure 12(b)(6).² ECF No. 7. Plaintiffs filed their opposition (ECF No. 8), and Defendants replied (ECF No. 9). The matter is appropriate for resolution without oral argument. See E.D. Cal. L.R. 230(g). Having reviewed the record and the parties' briefing in light of the relevant law, the Court DENIES Defendants' motion in its entirety.

LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. Dismissal under Rule 12(b)(6) is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

To survive a 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions." Twombly, 550 U.S. at 555 (internal citations omitted). Thus, "bare assertions . . . amount[ing] to nothing more than a'formulaic recitation of the elements' . . . are not entitled to be assumed true." Iqbal, 556 U.S. at 681. "[T]o be entitled to the presumption of truth, allegations in a complaint . . . must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In practice, "a complaint . . . must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562. To the extent that the pleadings can be cured by the allegation of additional facts, a plaintiff should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. Northern Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).

FACTUAL ALLEGATIONS³

Chaudhry is a Fresno-based cardiothoracic surgeon with a substantial interest in VCSMG, a California general partnership. FAC ¶ 1. Chaudhry, who came to Fresno in 2005, worked with other surgeons in VCSMG to establish a cardiac surgery program to serve the medical needs of the community, regardless of the patient's ability to pay, and introduced new techniques to provide care for patients who were previously without options. Id. ¶ 13. Prior to the events leading up to this lawsuit, Chaudhry and other VCSMG surgeons were active members of the medical staff at Community Regional Medical Center ("CRMC") and other local hospitals in the Fresno area, and Chaudhry had an "outstanding" reputation amongst patients, colleagues, and hospitals. Id. ¶ 15.

On April 2, 2012, Chaudhry performed surgery on Mr. Silvino Perez at CRMC. Id. ¶ 16. Chaudhry was continuously present during the surgery and did not leave the operating room to speak until after he completed the surgery and Perez had stabilized. Id. ¶ 17.

On April 11, 2012, unbeknownst to Plaintiffs, CDPH received an anonymous complaint falsely alleging that Chaudhry left the operating room while Perez's chest was still open and left the hospital before the surgery was complete, leaving the physician's assistant to take over the surgery, and that Perez entered cardiac arrest. Id. ¶ 18. The caller was not present in the operating room during the surgery and his identity was unknown until 2014. Id.

On or about April 16, 2012, CDPH (including Defendants Kappmeyer and Campbell, who were CDPH investigators) began its initial investigation of the anonymous complaint, which included an on-site visit to CRMC from April 17-19, 2012, and interviews with CRMC personnel. Id. ¶ 19. However, Defendants did not interview Chaudhry, his physician's assistant, the assistant surgeon, or the anesthesiologist during their on-site visit to CRMC. Id. ¶ 20.

From July 10-17, 2012, Campbell and Kappmeyer conducted further investigations at CRMC regarding the April 2 surgery. Id. ¶ 21. On July 13, 2012, Kappmeyer and Campbell interviewed Chaudhry without advance notice, and took copious detailed notes during the interview. Id. However, CDPH investigators again failed to interview CRMC staff members who had been present during the April 2 surgery, but only interviewed again the individuals they had previously interviewed during their earlier visit. Id. Furthermore, CDPH investigators "failed to review the full medical record available to them, or they negligently failed to understand the significance of what they were reading in terms of whether the information in the medical record supported the allegations in the complaint or refuted it," including information that would demonstrate that the allegation that Chaudhry left the operating room was false. Id. ¶ 22-23.

CDPH issued to CRMC its initial report containing false allegations against Chaudhry on July 17, 2012. Id. ¶ 28. On July 27, 2012, as a result of the CDPH investigation and report, Chaudhry was removed from his position as medical director of cardiac surgery. Id.

On August 8, 2012, CDPH sent CRMC a non-public letter containing citations for non-compliance with applicable government conditions, and allowed CRMC the opportunity to review and respond to its report about the April 2 surgery, without any public disclosure. Id. ¶ 24. This report contained numerous significant errors and misquotes, including some quotations attributed to Chaudhry that he did not actually make. Id. Chaudhry was not permitted to contest the report, and his attempts to persuade CRMC leadership and other officials to contest said report failed. Id. ¶ 26.

In February 2013, CRMC submitted its plan of correction to CDPH, which the state accepted. Id. ¶ 27. CDPH then publicly disclosed the entire report in March 2013 and assessed against CRMC a $75,000 administrative fine. Id. Shortly thereafter, the Fresno Bee published an article about this administrative penalty, referencing the CDPH report, and linking it to the April 2surgery that Chaudhry had performed on Perez. Id. Subsequently, Perez's family filed a medical malpractice lawsuit against Chaudhry that was based substantially on allegations contained in the April 11, 2012 anonymous complaint and the final CDPH report. Id. The Perez family's lawsuit was widely publicized. Id. ¶ 29. Furthermore, five additional malpractice lawsuits based upon the Perez lawsuit and the CDPH report were filed against Plaintiffs. Id.

In June 2014, Plaintiffs' counsel obtained the handwritten notes of CDPH investigators while representing him in the malpractice suits. Id. ¶ 30. Between July 2014 and June 2015, Plaintiffs endeavored to correct the CDPH report through administrative channels. Id. ¶¶ 30-49. CDPH counsel informed Plaintiffs' counsel that it was reviewing the entire investigative file and requested additional information and documents, which Plaintiffs' counsel provided. Id. ¶¶ 35-36. Plaintiffs' counsel additionally informed CDPH that the Medical Board of California had completed its investigation and determined that there were no grounds for discipline against Chaudhry in December 2014. Id. ¶ 42. After further communications, CDPH counsel told Plaintiffs' counsel that CDPH was "seriously contemplating changing the report." Id. ¶ 47. CDPH counsel emailed Plaintiffs' counsel on May 30, 2015 to inform him that a final decision would be made soon. Id. ¶ 48. However, on June 19, 2015, CDPH counsel informed Plaintiffs' counsel that CDPH would not correct the report. Id. ¶ 50.

On July 9, 2015, P...