Rich Vision Centers, Inc. v. Board of Medical Examiners

• Decision Date: 21 June 1983
• Citation: 144 Cal.App.3d 110,192 Cal.Rptr. 455
• Parties: RICH VISION CENTERS, INC., Terminal-Hudson Electronics, Inc., of California DBA Opti-Cal, Plaintiffs and Appellants, v. BOARD OF MEDICAL EXAMINERS of the State of California, Defendant and Respondent. Civ. 66031.
• Court: California Court of Appeals Court of Appeals

Page 455

192 Cal.Rptr. 455

144 Cal.App.3d 110

RICH VISION CENTERS, INC., Terminal-Hudson Electronics, Inc., of California DBA Opti-Cal, Plaintiffs and Appellants, v. BOARD OF MEDICAL EXAMINERS of the State of California, Defendant and Respondent.

Civ. 66031.

Court of Appeal, Second District, Division 3, California.

June 21, 1983.

Hearing Denied Sept. 7, 1983.

Mark Kalisch, Marina Del Ray, and Richard A. Brody, Los Angeles, for plaintiffs and appellants.

John K. Van De Kamp, Atty. Gen., David Chandler, Deputy Atty. Gen., for defendant and respondent.

KLEIN, Presiding Justice.

Rich Vision Centers (Rich) and Terminal-Hudson Electronics (Terminal-Hudson) appeal from an adverse judgment in their suit against the Board of Medical Examiners ¹ (Board) for the recovery of certain payments made pursuant to a negotiated settlement.

Because the Board, and therefore the attorneys representing it, had the power to settle the case upon reasonable conditions, we affirm the judgment.

FACTS AND PROCEDURAL BACKGROUND

Rich and Terminal-Hudson were corporations doing business as dispensing opticians. In June 1975, they had a large number of contested matters pending with the Board. These matters included 19 administrative and at least 9 civil proceedings.

In a letter dated June 9, 1975, to the deputy attorney general representing the Board, the attorney for Rich and Terminal-Hudson made an offer to compromise all the lawsuits. After a number of conversations, the deputy attorney general indicated that as a condition of settlement, the Board would require the payment of its attorneys' fees. The figure $25,546.50 represented the Board's attorneys' fees, investigative costs and administrative hearing expenses.

At a Board meeting on August 23, 1975, Rich and Terminal-Hudson also agreed to pay $16,186.56 to cover cost for future inspection for compliance.

Pursuant to the negotiated settlement, the deputy attorney general drafted a "Stipulation and Decision" covering the administrative matters and other required documents necessary for the civil proceedings. As a consequence of the settlement, the pending Statements of Issues were resolved by issuance of licenses, no licenses were revoked, and only two civil actions remained to be litigated. During the settlement negotiations, no allegation was raised by Rich and Terminal-Hudson that the money payment portion of the settlement was illegal.

About two years later in June 1977, Rich and Terminal-Hudson filed the two cases here involved seeking the recovery of the $25,546.50 paid for attorney's fees and the $16,186.56 paid for future inspection costs provided for in the prior negotiated settlement. At this point in time, they alleged that in accepting thesettlement, the Board did not have the authority to condition the licenses on such payments and that the payments were coerced.

In due course, evidence was presented by Rich and Terminal-Hudson before the trial court in the present action. At the close of plaintiffs case, the Board moved for judgment under Code of Civil Procedure section 631.8, subdivision (a) on the grounds that the plaintiffs had failed to prove their case. The motion was granted by the trial court, with a finding that as a part of a negotiated settlement, the Board required, and Rich and Terminal-Hudson agreed to pay, the $25,546.50 as attorneys' fees, investigative costs and administrative hearing expenses, and the $16,186.56 as future inspection fees. The trial court further held that the settlement was legal and noncoerced. Judgment was entered and a notice of appeal was timely filed.

ISSUE AND CONTENTIONS

The issue here presented is whether the Board had the authority to engage in settlement negotiations of pending cases, the resolution of which called for payment of attorneys' fees and future investigation costs by litigants.

Rich and Terminal-Hudson contend that the Board had no such authority because such fees were actually "penalties" which were imposed without notice and hearing and they rely on Business and Professions Code section 108 to support their claim. ² They reason that the settlement was an illegal and ultra vires act and that they were entitled to restitution of monies paid.

DISCUSSION

We note at the outset that the scope of a licensing agency's power to settle cases has never been litigated in California. Therefore, this is a case of first impression. ³ We look to basic principles for guidance.

1. The Board has implied power to settle licensing disputes.

Administrative agencies only have the power conferred upon them by statute and an act in excess of these powers is void. (City and County of San Francisco v. Padilla (1972) 23 Cal.App.3d 388, 400, 100 Cal.Rptr. 223; see also Ferdig v. State Personnel Board (1969) 71 Cal.2d 96, 103, 77 Cal.Rptr. 224, 453 P.2d 728; Selby v. Department of Motor Vehicles (1980) 110 Cal.App.3d 470, 474-475, 168 Cal.Rptr. 36.) However, an agency's powers are not limited to those expressly granted in the legislation; rather, "[i]t is well settled in this state that [administrative] officials may exercise such additional powers as are necessary for the due and efficient administration of powers expressly granted by statute or as may fairly be implied from the statute granting the powers." (Dickey v. Raisin Proration Zone No. 1 (1944) 24 Cal.2d 796, 810, 151 P.2d 505; see also Stackler v. Department of Motor Vehicles (1980) 105 Cal.App.3d 240, 245, 164 Cal.Rptr. 203.)

No statute expressly authorizes the Board even to settle licensing disputes, let alone spells out conditions governing settlement. We must therefore first decide whether the ability to negotiate settlement of disputes may be implied from the overall statutory scheme. In so doing, we look to the purpose of the agency for guidance. (See Dickey v. Raisin Proration Zone No. 1, supra, at p. 802, 151 P.2d 505.)

The main purpose of the Board, like other agencies within the Department of Consumer Affairs is to insure that persons engaged in the profession possess and use "the requisite skills and qualifications necessary to provide safe and effective services to the public, ..." (Bus. & Prof.Code, § 101.6.) This broad purpose is effectuated mainly by the issuance, renewal or revocation of a license to practice. (See Bus. & Prof.Code, §§ 2553, 2555.)

Permitting the Board to settle disputes over present or continuing fitness for a license helps to achieve the Legislature's purpose. Settlement negotiations provide the Board greater flexibility. Importantly, settlements provide the means to condition the issuance or renewal of licenses in order best to protect the public. Licensing can be tailored to suit the particular situation. Because conditions are voluntarily accepted by the applicant, enforcement problems are unlikely.

Increased efficiency enures to the busy Board possessed of the authority to settle disputes.

When the Board initially determines that a license should be denied, revoked or suspended, the applicant becomes entitled to a full hearing in accordance with the Administrative Procedure Act. (Gov.Code, §§ 11501, 11503.) While not as formal as a trial, the hearing has many of the same trappings as a regular civil proceeding including a detailed accusation or statement of issues, notice, discovery and the adversary presentation of evidence. (See Gov.Code, §§ 11503-11516.) Obviously, for both the Board and litigants, the cost of such proceedings may be avoided by settlements and a time savings is also likely to be realized.

Because settlement is administratively efficient and furthers the purpose for which the Board was created, we hold that the Board has the implied power to settle licensing disputes. (Cf. Hamilton v. Oakland School District (1933) 219 Cal. 322, 327, 26 P.2d 296 (ability to settle claims against district an implied power of school board).) This holding is consistent with the general policy of favoring compromises of contested rights. (See Id., at p. 329, 26 P.2d 296; Fisher v. Superior Court (1980) 103 Cal.App.3d 434, 441, 163 Cal.Rptr. 47.)

That at least part of a settlement must be incorporated into a formal Board decision to be effective does not change our determination that the Board has the ability to formulate the settlement in the first instance. In other areas of the law, parties may try privately to settle problems even 2. Settlement terms are limited only by public policy.

though a court must adopt or ratify their agreement. (See e.g. Robinson v. Robinson (1949) 94 Cal.App.2d 802, 805, 211 P.2d 587 (marital property settlement incorporated in interlocutory decree of divorce); Fed.Rules Civ.Proc., Rule 23(e) (requiring court approval of class action settlement).)

Additionally, we see no limitations on the conditions that may be included in a settlement except that such conditions must not violate public policy. A party need not have a legally enforceable right to a concession granted in a compromise agreement. (Hall v. Coyle (1952) 38 Cal.2d 543, 546, 241 P.2d 236; Stub v....