Watanabe v. California Physicians' Service

Decision Date18 November 2008
Docket NumberNo. B195725.,B195725.
CourtCalifornia Court of Appeals Court of Appeals
PartiesMARIA TERESA WATANABE, Plaintiff and Appellant, v. CALIFORNIA PHYSICIANS' SERVICE, Defendant and Respondent.
OPINION

FLIER, J.

Appellant Maria Teresa Watanabe filed an action against California Physicians' Service doing business as Blue Shield of California (Blue Shield). The jury returned a verdict that Blue Shield had breached its contract with appellant and awarded $65 in damages. The jury, however, found that Blue Shield had not breached its duty of good faith and fair dealing under its contract with appellant. A judgment conforming to the verdict was entered1 and this appeal followed. Appellant contends that the trial court erred in giving certain instructions to the jury. We disagree and affirm the judgment.

INTRODUCTION

Appellant's complaint set forth causes of action for breach of contract, for breach of the covenant of good faith and fair dealing, for unfair business practices under Business and Professions Code section 17200 and for a violation of Civil Code section 1750 et seq. The latter two causes of action were dismissed upon the stipulation of the parties and the case went to the jury only on the first two causes of action. From the first, the only defendant named in the action was Blue Shield.

The Good Samaritan Medical Practice Association (GSMPA), the entity that directly provided the medical care to appellant that is the basis of the action against Blue Shield, settled with appellant at some point prior to the entry of the judgment in this action for $150,000. This settlement offset the recovery of $65 in this action.

THE RELEVANT REGULATORY FRAMEWORK

The comprehensive statute that governs Blue Shield is the Knox-Keene Health Care Service Plan Act of 1975 (hereafter Knox-Keene) (Health & Saf. Code, § 1340 et seq.).2

Under Knox-Keene, a "health care service plan" is "[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees." (§ 1345, subd. (f)(1).)3 Blue Shield does not actually provide medical care. It contracts with "providers"4 like GSMPA to deliver medical care to persons who are subscribers to Blue Shield's health care service plan.

Under its agreement with GSMPA, and consistent with Knox-Keene,5 Blue Shield delegated to GSMPA the initial determination whether a particular service or treatment is medically necessary. This is referred to variously as utilization review, UR, utilization management or UM.

Under its agreement with GSMPA, Blue Shield retained final authority to determine whether a treatment or service should be provided. In other words, Blue Shield retained the final authority to review and, if appropriate, to reverse the provider's decision.

Blue Shield's review of the provider's decision is triggered by the appeal process. Every letter informing a person that a treatment, service or referral has been denied contains information about how to appeal the decision. An appeal may be taken in writing, by telephone or by e-mail. This case raises no issues about the appeal process.

THE MEDICAL CARE PROVIDED TO APPELLANT

Appellant selected GSMPA as her provider and Dr. Irina Jasper of GSMPA as her primary care physician.

Appellant saw Dr. Jasper several times after the birth of her second child. Dr. Jasper diagnosed appellant with high blood pressure, tension headaches, sinusitis, fatigue and other issues arising from the stress of caring for a newborn. In February 2003, appellant complained to Dr. Jasper about dizziness and occasional blurred vision.

Eventually, in July 2003, while on a visit in Japan, appellant was found to have a brain cyst. In August 2004, after her return to the United States, a noncancerous cyst was removed from her brain.

Returning to appellant's course of treatment by GSMPA and Dr. Jasper, appellant's headaches responded to rest, massage and Motrin. Appellant's expert testified that brain tumors do not respond to rest or massage. In February 2003, Dr. Jasper referred appellant to an ear, nose and throat (ENT) specialist (GSMPA approved the referral) who concluded that appellant's symptoms were connected with high blood pressure. This specialist recommended a change in blood pressure medication and suggested that a referral to a neurologist would be appropriate if appellant did not respond to the new medication. The specialist also detected issues with appellant's thyroid; additional appointments with this specialist followed, which included ultrasound imaging and treatment, all of which were approved by GSMPA.

There now followed a series of slip-ups having to do with an eye examination ordered by Dr. Jasper that led to the jury's award of $65 for breach of contract. Initially, Dr. Jasper ordered a referral to an ophthalmologist to check appellant's blurred vision. When queried by GSMPA whether Dr. Jasper wanted appellant checked for a need for glasses, Dr. Jasper replied that a routine vision exam by an optometrist would do. GSMPA denied the request for an optometrist (there was testimony it would have granted the request for an ophthalmologist) because this was not a covered benefit. GSMPA telephoned Blue Shield to ask whether it was correct that this was not a covered benefit and Blue Shield confirmed it was not. GSMPA informed appellant by letter of its decision, as well as of her right to appeal the decision. Instead of appealing, appellant went to see an optometrist who prescribed reading glasses. Appellant paid $65 for this visit.

Appellant saw Dr. Jasper on March 11, 2003; she complained of dizziness and headaches. Dr. Jasper had not adjusted the blood pressure medication, as had been suggested by the ENT specialist, but requested authorization for an MRI. Dr. Hollinger, the GSMPA director responsible for medical decisions, decided that an MRI was not appropriate and that Dr. Jasper should do as the ENT specialist had suggested, i.e., begin by adjusting the blood pressure medication. Appellant and Dr. Jasper were informed of this decision, as well as of appellant's right to appeal it. Appellant did not appeal and Dr. Jasper testified that she thought Dr. Hollinger's decision was reasonable.

In May 2003, appellant continued to complain to Dr. Jasper about headaches and dizziness. Once again, some wires got crossed. Mistakenly, while filling out the form, Dr. Jasper stated that appellant needed to see a neurosurgeon—a request that was refused because she would have had to see a neurologist before she could see a neurosurgeon. This mixup was straightened out and the request to see a neurologist was approved.

The neurologist performed a full neurological examination and concluded that the results were normal. Appellant's symptoms, according to the neurologist, were due to stress. The neurologist recommend a brain imaging study in order to put appellant's mind at ease.

In June 2003, appellant asked Dr. Jasper whether she could travel to Japan and Dr. Jasper, who thought that appellant had tension headaches, encouraged her to take the trip.

Around July 10, 2003, Dr. Jasper submitted to GSMPA a request for a CT brain scan, even though the neurologist thought that this was only for appellant's peace of mind. This request was approved on July 15, 2003, but appellant was not told of the approval before she left for Japan.

After appellant's trip to Japan and the surgery that found a noncancerous brain cyst, there was a referral to an ophthalmologist for a followup. This was initially denied but, after an appeal to Blue Shield, the denial was reversed and the request was granted.

The gist of the foregoing is that, with the exception of the $65 visit with the optometrist, Blue Shield never denied appellant any medical service or treatment. The jury rectified the denial of the visit with the optometrist by awarding $65, even though there is evidence that this was not a covered benefit. Appellant was denied an MRI by GSMPA but never appealed that decision, which was predicated on the circumstance that appellant's medication had not been adjusted and that this should have been done before an MRI. The decision denying a followup with an ophthalmologist after the surgery was reversed by Blue Shield and this visit was authorized. In sum, Blue Shield, if it is liable at all, could be liable only vicariously for GSMPA's acts or omissions.

JURY INSTRUCTIONS

Appellant contends that the trial court gave a number of prejudicially erroneous instructions to the jury.

First. The trial court instructed the jury that Blue Shield and GSMPA are each liable for their own acts or omissions, and are not liable for the acts and omissions of each other. This instruction is based on the first sentence of section 1371.25.6 Appellant contends that it was error to omit the balance of section 1371.25 from the instructions.

Second. The trial court instructed the jury that Blue Shield delegated to GSMPA the function of "conducting initial reviews as to the appropriateness of requests for medical services. That delegation is permitted under California law." Appella...

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