Potvin v. Metropolitan Life Ins.

• Decision Date: 30 April 1997
• Docket Number: No. B100170,B100170
• Citation: 54 Cal.App.4th 936,63 Cal.Rptr.2d 202
• Parties: Previously published at 54 Cal.App.4th 936 54 Cal.App.4th 936, 65 USLW 2736, 97 Daily Journal D.A.R. 5552 Louis E. POTVIN, Plaintiff and Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

Page 202

63 Cal.Rptr.2d 202

Previously published at 54 Cal.App.4th 936

54 Cal.App.4th 936, 65 USLW 2736, 97 Daily Journal D.A.R. 5552

Louis E. POTVIN, Plaintiff and Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Respondent.

No. B100170.

Court of Appeal, Second District, Division 1, California.

April 30, 1997.

Seview Granted July 30, 1997.

Henry R. Fenton and Dennis E. Lee, Los Angeles, for Plaintiff and Appellant.

Catherine I. Hanson and Astrid G. Meghrigian, San Francisco, as Amici Curiae on behalf of Plaintiff and Appellant.

Rosato & Samuels, A.P.C., Cary S. Samuels, Ellen Kamon, N Hollywood, and Ann C. Schneider, Arcadia, for Defendant and Respondent.

INTRODUCTION

SPENCER, Presiding Justice.

Plaintiff Louis E. Potvin, M.D. appeals from a summary judgment in favor of defendant Metropolitan Life Insurance Company.

STATEMENT OF FACTS

Plaintiff is a physician, licensed to practice in California. He practices obstetrics and gynecology. At all relevant times, he was a member of the American Board of Obstetrics and Gynecology and a Fellow of the American College of Obstetrics and Gynecology and of the American College of Surgeons. He was a member of local medical organizations, had served as an officer of some of these organizations, had staff privileges at a number of hospitals and had been on their boards of directors. He had been practicing medicine for over 30 years and enjoyed a good reputation in the medical community.

Defendant is a mutual insurance company incorporated in New York and licensed to do business in California. It offers two networks of health care providers, the Managed Care Network and the Met-Elect Network, which agree to accept payment by defendant as payment in full for covered services. Defendant contracts directly with about 16,000 physicians in Southern California and with about 6,500 through its HMO networks.

On September 10, 1990, plaintiff and defendant entered into a Physician Agreement (Agreement). The Agreement recites that employers have provided employee benefit plans which include one of two networks of participating health care providers, the Managed Care Network and the Met-Elect Network. Defendant provides administrative services under self-funded plans or insurance benefits under plans including insurance policies. Plaintiff desired to participate in the Managed Care and Met-Elect Networks.

The Agreement provides for payment to plaintiff by defendant for covered health care services. It regulates plaintiff's provision of services to covered individuals.

The Agreement also provides, in paragraph 11, that plaintiff is an independent contractor: "None of the provisions of the Agreement are intended to create, or shall be deemed or construed to create any relationship between the parties hereto other than that of independent entities contracting with each other hereunder solely for the purpose of effecting the provisions of this Agreement. Neither of the parties hereto, nor any of their respective employees shall be construed to be the agent, employee, or the representative of the other."

Paragraph 14 of the Agreement provides for its termination. It provides a number of circumstances in which the Agreement will terminate automatically. It also provides: "This Agreement may be terminated by either party at any time, with or without cause, by giving thirty (30) days prior written notice to the other party by certified mail."

On July 22, 1992, defendant wrote to plaintiff, giving him the required 30 days' notice that it was terminating the Agreement. Termination was to be effective on August 31. On July 30, plaintiff wrote to defendant, requesting an explanation as to the reason for termination of the Agreement.

Defendant's Regional Network Director, Bud Volberding (Volberding) wrote back on January 7, 1993. He stated that the decision to terminate the Agreement was being reaffirmed. The termination was consistent with paragraph 14 of the Agreement, which permits termination with or without cause upon Defendant's Network Director wrote back to plaintiff on March 5, 1993. He reiterated that termination of the Agreement was without cause as permitted by paragraph 14 of the Agreement. "In addition, there is no contractual requirement to provide you with any notification of a cause for the termination. Thus any explanation for the contract termination is being provided merely as a convenience to you and as a result of your request for information. In this context we advise that your delistment from the provider network was related to the fact that you did not meet our current selection and retention standard for malpractice history. [p] The above is not intended to be an exhaustive explanation of the circumstances surrounding your delistment. Other factors, such as network need, normally also contribute to such a decision. The determination was finalized after a full examination of the totality of circumstances involved. [p] The furnishing of the above information does not constitute an allegation that your provider contract was terminated for cause...."

30 days' notice. The termination was a business decision and no reflection on his performance as a medical provider. Plaintiff wrote back to Volberding, again requesting an explanation for defendant's termination of the Agreement.

Plaintiff wrote back on March 30, 1993 explaining his malpractice history. He had not been at fault in a malpractice action filed against him in 1977, but his insurer had settled the case without admitting liability. Other claims of malpractice against him had been dropped. He explained the difficulty his delistment had caused for himself and his patients and requested a hearing on the matter. Not hearing from defendant, plaintiff wrote back on June 23, 1993, again requesting a hearing and stating that defendant's decision to terminate the Agreement had caused him "financial grief." Defendant never provided him with a hearing.

In 1991, defendant had instituted criteria for retention of participants in its health care provider networks. It had three medical directors assigned to the task of reviewing documentation received from network physicians. Each physician's documentation would be reviewed by only one medical director, however.

Dr. Ramona Johnson, one of defendant's medical directors, reviewed plaintiff's documentation in late 1991. A form entitled "Quality Assurance Committee Review Sheet" and dated November 13, 1991 indicates review by the committee was required due to malpractice history. Under the heading "QA Committee Action," the date November 20, 1991 is stamped in the space labeled "MD Denied," "Malpractice History." The form was signed by Dr. Johnson on November 19, 1991 and had Volberding's signature stamp on it. At the time the form was filled out, however, there was no Quality Assurance Committee Review; the review was by a single medical director.

Dr. Johnson rejected plaintiff's retention as a health care provider based solely on his malpractice history, which did not fit within defendant's established criteria for acceptable malpractice history. At the time defendant decided to terminate the Agreement, defendant was aware of the 1977 malpractice case, which was settled in 1987. It also was aware of three dropped or dismissed malpractice cases against defendant. The 1977 malpractice case was settled for more than defendant's limit of $50,000; the number of cases was more than the limit of two.

As a result of defendant's termination of the Agreement, plaintiff lost a large percentage of his patients. He was terminated by other managed care entities and rejected by physician groups which require that members be one of defendant's health care providers. He also lost referrals from other physicians who were members of defendant's health care provider networks.

Defendant is not licensed under division 2 of the Health and Safety Code. It is not a facility certified to participate in the federal Medicare program as an ambulatory surgical center.

CONTENTIONS

I

Plaintiff contends the summary judgment must be reversed and his motion for summary

adjudication should have been granted, in that he established defendant's liability as a matter of law.

II

Plaintiff further contends the trial court erred in granting summary judgment to defendant, in that defendant failed to conclusively negate any essential element of his case.

III

Plaintiff also asserts the trial court abused its discretion in denying his motion to amend, since defendant would suffer no prejudice from the amendment and the amended complaint would rest on the same set of facts as the original complaint.

DISCUSSION

I

Plaintiff contends the summary judgment must be reversed and his motion for summary adjudication should have been granted, in that he established defendant's liability as a matter of law. We agree in part.

Summary judgment properly is granted if the "affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken" in support of and in opposition to the motion "show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ.Proc., § 437c, subds. (b), (c).) Summary adjudication properly is granted if the foregoing "show that there is no triable issue as to any material fact" with respect to a cause of action, and the cause of action "has no merit." (Id., § 437c, subds. (b), (c), (f)(1).) Summary adjudication is proper only if it resolves an entire cause of action; it cannot be used to adjudicate issues within the cause of action other than the existence of a duty or damages. (Hood v. Superior Court (1995) 33 Cal.App.4th 319, 323, 39 Cal.Rptr.2d 296; Regan Roofing Co. v. Superior Court (1994) 24 Cal.App.4th 425, 433, 29 Cal.Rptr.2d 413.)

Summary judgment is a drastic procedure, inasmuch as it denies the right of the opposing ...