Peterson v. Sutter Med. Found., 3:21-cv-04908-WHO

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
Writing for the CourtWiliam H. Orrick United States District Judge
PartiesRALPH PETERSON, Plaintiff, v. SUTTER MEDICAL FOUNDATION, et al., Defendants.
Docket Number3:21-cv-04908-WHO
Decision Date20 July 2022



No. 3:21-cv-04908-WHO

United States District Court, N.D. California

July 20, 2022


Re: Dkt. Nos. 79, 80, 81, 82

Wiliam H. Orrick United States District Judge

Plaintiff Ralph Peterson alleges that various defendants associated with the Medical Board of California (“MBC”) and Sutter network of healthcare providers took several unlawful acts against him, including subjecting him to a peer-review and disciplinary proceeding. The remaining defendants move to dismiss or strike the claims. The MBC board members are dismissed from the suit due to personal immunity doctrines, the suit may proceed against the Sutter-associated defendants and doctors who carried out the peer-review only on claims for First Amendment and due process violations, and the anti-SLAPP motion is granted.



A. The Parties

Peterson is a medical doctor who lives and works in Oakland, California. Second Amended Complaint (“SAC”) [Dkt. No. 78] ¶ 2. He has practiced medicine since 1983. Id. ¶ 57.

Three groups of defendants are relevant to the current motions. The “MBC Defendants” are Kristina Lawson, Howard Krauss, Randy Hawkins, Richard Fantozzi, Dev Gnanadev, Ronald Lewis, Laurie Rose Lubiano, Asif Mahmood, Richard Thorp, and Felix Yip. All were or are


members of the MBC, the state's medical licensure agency. Id. ¶¶ 11-22. The “Sutter Defendants” are Sutter Bay Medical Foundation (“Sutter Bay”) and Sutter Bay Hospitals d/b/a Alta Bates Summit Medical Center (“Alta Bates”). Id. ¶¶ 3-5. The “Doctor Defendants” are Neil Stollman, Rod Perry, and Philip Rich, physicians associated with the Sutter Defendants. See id. ¶¶ 7-10.

From 1999 to 2009, Peterson had endoscopy privileges at Alta Bates. Id. ¶ 58.

B. The MediCal Strategy

Peterson alleges that Sutter employs something called the MediCal Strategy. According to him, Sutter Bay “monopolizes and controls healthcare and medical discipline in Northern California.” Id. ¶ 30. It does this in part, he alleges, through having 24 hospitals with tens of thousands of employees. Id. But, he claims, it also uses “unlawful strategies” to maintain its position. Id. ¶ 31. The MediCal Strategy, he alleges, has several parts. First, the Sutter Defendants perform only “profitable procedures” while “steering” less profitable ones to county medical facilities. Id. ¶ 34. Then, it uses the revenue to pay kickbacks and acquire new medical practices. Id. ¶ 35. He alleges that it uses “medical discipline” to control referrals and acquisitions of medical practices by other practices to punish non-cooperating physicians. Id. ¶ 32. And, he says, it is able to do so by placing cooperating physicians and attorneys on the MBC and on the panels that review other physicians. Id. ¶ 33.

One way by which the Sutter Defendants carry out this alleged strategy is through connections between the MBC and the law firm Hanson Bridgett LLP. Hanson Bridgett allegedly represents Sutter in some matters and Lawson is an attorney there. See id. ¶ 43. Later, Hanson Bridgett would represent Sutter and other defendants in a state-court suit that Peterson filed. Id. ¶ 101.

C. The Peer Review and MBC Proceeding

In February 2009, Doctor Defendants Perry and Stollman “ordered” Peterson to “appear at Alta Bates without explanation.” Id. ¶ 63. Despite Peterson's demands, they refused to grant him a “formal” meeting under the Health Care Quality Improvements Act about any allegations against him and refused to provide him a notice of the allegations. Id. ¶ 64. Ten days after that first


“order,” Perry “ordered” Peterson to increase his “call coverage” or pay a fee to Stollman. Id. ¶ 65. The next month, Peterson requested more call coverage from Stollman, but Stollman refused unless he was paid an “unreasonable fee.” Id. ¶ 67. The next day, Doctor Defendant Rich ordered Peterson to resign his privileges at Alta Bates due to “failure to obtain additional call coverage.” Id. ¶ 68 (internal quotation marks omitted).

Peterson refused. Id. ¶ 69. He also refused to “steer” unprofitable indigent clients and MediCal patients to the county medical facility. Id. He alleges that his privileges were summarily suspended without a complaint, investigation, or hearing. Id. ¶ 70. He says that, five days later, the privileges were “constructively terminated” because he was forced to resign under threat of a peer review proceeding and MBC discipline. Id.

Two days later, Sutter Bay transmitted a “form 805,” also called an “adverse action report,” to a national database of medical practitioners and the MBC. Id. ¶ 72. In November 2009, the MBC opened an investigation into the allegations of the form 805. Id. ¶ 76.

In 2010, a longtime patient of Peterson's (referred to in the complaint as “B.E.”) filed a complaint against Peterson with the MBC that he calls “unfounded.” Id. ¶ 87. According to Peterson, Sutter “encouraged and participated in the filing.” Id. On his telling, the complaint resulted from B.E. not attending a series of cardiologist appointments that Peterson arranged for her. See id. ¶¶ 81-82. She then had an “ischemic attack” resulting from blockage in an artery for which she went to Sutter Bay for care. Id. ¶ 83. Peterson alleges that Sutter “steered” B.E. to a county facility in line with the MediCal Strategy and failed to treat her. Id. She later suffered a stroke, treated by Sutter, and complaint about Peterson. Id. ¶¶ 85-97. MBC ultimately determined that there were “no quality of care issues” in Peterson's treatment of B.E. in July 2013. Id. ¶ 111. But it did not disclose that to Peterson at the time. Id. A state-court suit brought by B.E.'s conservator was also determined in Peterson's favor. Id. ¶ 113. In December 2013, however, Peterson was told by the MBC that he did not maintain adequate records regarding B.E. Id. ¶ 117.

In November 2012, Peterson filed an action in California state court against Perry and Stollman for alleged misuse of the disciplinary process. Id. ¶ 98. The trial court and Court of


Appeal found against Peterson. Id. ¶ 133. In July 2013, Peterson (represented by counsel) agreed to a settlement with the MBC under which he surrendered his medical privileges and license. See id. ¶ 210.

Peterson alleges that, as a result of all this, he was repeatedly denied provider status at various healthcare facilities and that others declined to partner with him to provide care, in part because various defendants communicated that he had been disciplined. See, e.g., id. ¶¶ 103, 110, 114, 136.

D. Attorney General Investigations

Starting in 2013, Sutter was investigated by the California Attorney General for, as the complaint characterizes it, paying kickbacks to compliant physicians in line with the MediCal Strategy. Id. ¶ 102. Peterson learned of this from a television program in December 2020. Id. ¶ 109. Public reporting indicates that Sutter paid $30 million to settle a resulting lawsuit. Id. ¶ 148. The Attorney General's office stated that Sutter had been giving physicians kickbacks. Id. ¶ 149.

The California Attorney General also at some point investigated the MBC for-again, as the complaint puts it-discrimination against Black and Hispanic physicians. Id. ¶ 102.


Peterson filed this suit in June 2021. See Dkt. No. 1. In February 2022, I granted in part and denied in part motions to dismiss the complaint. See Dkt. No. 75. I dismissed the State of California and the MBC itself from suit. I also dismissed all of the state-law claims against the MBC Defendants with prejudice. Some other claims survived and some claims were dismissed with leave to amend, as discussed in more detail in the body of this Order.

Now, the SAC includes the following claims against all defendants: (1) violation of the First Amendment, (2) violation of the Due Process Clause, (3) what Peterson labels “protected class” discrimination under federal law, and (4) failure to prevent discrimination and retaliation under federal law. Peterson alleges the following claims only against the Sutter Defendants: (5) federal antitrust interference, (6) violation of federal antitrust laws, (7) breach of contract, (8) breach of the covenant of good faith and fair dealing, (9) negligence, (10) intentional interference with current and prospective contractual relationships, (11) business disparagement, (12)


intentional infliction of emotional distress, (13) negligent infliction of emotional distress, (14) violation of the Unfair Competition Law, and (15) violation of the Unruh Civil Rights Act.



A motion to dismiss filed pursuant to Federal Rule of Civil Procedure (“FRCP”) 12(b)(1) is a challenge to the court's subject matter jurisdiction. See Fed.R.Civ.P. 12(b)(1). “Federal courts are courts of limited jurisdiction,” and it is “presumed that a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. of Am., 511 U.S. 375, 377 (1994). The party invoking the jurisdiction of the federal court bears the burden of establishing that the court has the requisite subject matter jurisdiction to grant the relief requested. Id.

A challenge pursuant to Rule 12(b)(1) may be facial or factual. See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). In a facial attack, the jurisdictional challenge is confined to the allegations pled in the complaint. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). The challenger asserts that the allegations in the complaint are insufficient “on their face” to invoke federal jurisdiction. See Safe Air Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). To resolve this challenge, the court assumes that the allegations in the...

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