Royal Convalescent Hospital, Inc. v. State Board of Control

• Decision Date: 13 December 1979
• Citation: 160 Cal.Rptr. 458,99 Cal.App.3d 788
• Court: California Court of Appeals Court of Appeals
• Parties: ROYAL CONVALESCENT HOSPITAL, INC., Plaintiff and Respondent, v. STATE BOARD OF CONTROL and State Department of Health, Defendants and Appellants. Civ. 18660.

Page 458

160 Cal.Rptr. 458

99 Cal.App.3d 788

ROYAL CONVALESCENT HOSPITAL, INC., Plaintiff and Respondent, v. STATE BOARD OF CONTROL and State Department of Health, Defendants and Appellants.

Civ. 18660.

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

Dec. 13, 1979.

Evelle J. Younger, Atty. Gen., Anne S. Pressman and John H. Sanders, Deputy Attys. Gen., and George Deukmejian, Atty. Gen., L. Stephen Porter, Asst. Atty. Gen., and Thomas E. Warriner, Deputy Atty. Gen., for defendants and appellants.

Tobias Friedman and Fred Friedman, for plaintiff and respondent.

WORK, Associate Justice. ^*

Royal Convalescent Hospital, Inc., a licensed Medi-Cal services provider (Royal), claims monies due from the state for services rendered to Medi-Cal beneficiaries without first receiving authorization required by regulation.

Upon rejection of the claim by the State Board of Control (Board), Royal elected not to file an action on it but instead petitioned for administrative mandamus (Code Civ.Proc., § 1094.5), asking for an order its claim be paid, or, in the alternative, Board be ordered to reconsider the claim without regard to any lack of compliance with the regulations of the State Department of Health ¹ (Department). The superior court granted the writ and ordered the Board to reconsider on the terms requested.

We find administrative mandamus does not lie for review of claims rejected by the State Board of Control. We, therefore, reverse.

The factual background is not disputed.

At all relevant times, Royal has been a licensed nursing care facility to provide services for Medi-Cal recipients. Commencing in June 1977, and for an undetermined period ² thereafter, Royal allegedly provided services to persons entitled to Medi-Cal benefits without first obtaining authorization in accordance with Department's regulations. (Cal.Admin.Code, tit. 22, § 51003.)

Royal's request for retroactive authorization for these services was denied as not falling within the sole exceptions set forth in that regulation.

While Department has the discretion to approve or deny prior authorization, it does not exercise discretion by the resolution of facts presented by opposing parties to an evidentiary hearing. Its determination of grievances is statutorily limited to a two-stage review outlined in Administrative Code section 51015. The written presentation is by the claimant only. No evidentiary hearing is authorized at either level.

The first stage requires the unilateral submission of a written grievance. This is reviewed by Department's fiscal intermediary who may, but is not required to, refer the matter to a peer review body. In this case, no such referral was made and the intermediary made his own conclusions based on the uncontradicted allegations in the claim.

The second stage is a written appeal to Department whose decision is based solely on the documents submitted and any additional information it may obtain.

Royal's remedy after an adverse ruling from Department is limited to presentation of its claim against the state in accordance with the provisions of Government Code section 900 et seq.

"The provisions of this section shall be the exclusive remedy available to a provider of services for money alleged to be payable by reason of this chapter (7)." (Welf. & Inst.Code, § 14104.5.)

Claims against the state are presented to the State Board of Control. In reviewing claims for money, the Board may, but is not required to, take evidence. (Gov.Code, § 912.8.) On rejection of a claim for money by the State Board of Control, the claimant may bring a lawsuit for damages on any legal theory deemed relevant.

The State Board of Control adopted regulations for the conduct of hearings as follows:

"(b) At the hearing, and in The discretion of the Board, oral testimony and written instruments may be introduced . . . ." (Cal.Admin.Code, tit. 22, § 632.9, subd. (b); italics added.)

Thus, neither the applicable statute nor the regulation require taking of evidence at a hearing. In the absence of either of these requirements, administrative mandamus will not lie. (Keeler v. Superior Court, 46 Cal.2d 596, 599, 297 P.2d 967.)

Keeler involved a writ taken from the ten-day suspension of a governmental employee followed by the rejection of an appeal by the State Personnel Board. At the time the appeal was decided, the Personnel Board was regulated by Government Code section 19576 which stated the Board "shall make an investigation, with or without a hearing as it deems necessary." The court held no hearing was required and, therefore, administrative mandamus was not proper, whether or not a hearing was, in fact, held. (Keeler v. Superior Court, 46 Cal.2d 596, 599, 297 P.2d 967.)

Royal contends the later decision in Koehn v. State Board of Equalization, 166 Cal.App.2d 109, 333 P.2d 125, states a rule contrary to the one set forth in Keeler, supra, 46 Cal.2d 596, 297 P.2d 967. If it did, we and the superior court would be bound to follow Keeler under the mandate of Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.

Koehn makes no reference to Keeler, but instead refers to the earlier Supreme Court decision, Boren v. State Personnel Board, 37 Cal.2d 634, 234 P.2d 981. Keeler points out Boren also recognized the necessity of a hearing and a record of such proceeding as a condition prerequisite to administrative mandamus. (Keeler, supra, 46 Cal.2d at p. 600, 297 P.2d 967; Boren, supra, 37 Cal.2d at p. 637, 234 P.2d 981.)

Koehn merely holds the hearing may be held and the record prepared at an administrative level subordinate to that which makes the final decision. (Koehn v. State Board of Equalization, 166 Cal.App.2d 109, at p. 117, 333 P.2d 125.)

Even more compelling is the fact the Board of Control need not review claims such as this at all. Government Code section 912.4, subdivision (c), specifically allows a claim to be deemed rejected without any action whatsoever. Failure to act cannot be an abuse of discretion because that option is legislatively given the Board.

"If the board fails or Refuses to act on a claim within the time prescribed by this section, the claim shall be deemed to have been rejected by the board on the last day of the period within which the board was required to act on the claim. . . ." (Gov.Code, § 912.4, subd. (c).)

Therefore, not only is there no evidentiary hearing required before the Board acts on a claim, there is no requirement for any action whatsoever.

Even if administrative mandamus did lie, Royal has not shown compliance with the rules applicable to administrative as well as to ordinary mandamus, i. e., proof there is no available adequate remedy at law. (Tivens v. Assessment Appeals Bd., 31 Cal.App.3d 945, 107 Cal.Rptr. 679.)

Here an action at law is clearly contemplated following claim rejection, whether by action or inaction of the State Board of Control. All issues relevant to Royal's right to payment for its services, including the constitutional questions raised, can be litigated in its lawsuit. The remedy is clearly available and unquestionably adequate.

Administrative mandamus was designed to set out an orderly process for the review of judicial functions of local agencies and of quasi-judicial functions of state agencies. (Since the 1950 amendment to the California Constitution, article VI, section 1, local agencies only have quasi-judicial powers.) Review of these functions previously had been limited to ordinary mandamus, certiorari or prohibition.

Code of Civil Procedure section 1094.5 was not designed to expand the existing methods of review, but to clarify the procedures to be utilized where the review was of an administrative adjudication. (10 Cal. Judicial Council, Biennial Report, pp. 26-27 (1944).) Even though a hearing is held, section 1094.5...