Supreme Court of California Justia
Citation 58 Cal. 4th 655 (2014), 318 P.3d 833, 168 Cal. Rptr. 3d 165, 37 IER Cases 1215, 14 Cal. Daily Op. Serv. 1722, 2014 Daily Journal D.A.R. 2006.

Fahlen v. Sutter Central Valley Hospitals

Filed 2/20/14



IN THE SUPREME COURT OF CALIFORNIA



MARK T. FAHLEN,

Plaintiff and Respondent,

S205568

v.

Ct.App. 5 F063023

SUTTER CENTRAL VALLEY )
HOSPITALS et al.,

Stanislaus County

Defendants and Appellants.

Super. Ct. No. 662696

____________________________________)


In Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465

(Westlake), we held that, before a physician may bring a common law tort action

directed against a hospital’s quasi-judicial decision to terminate the physician’s

staff privileges, he or she must first exhaust all internal hospital procedures to

reverse the decision, and, if this fails, must prevail in court in a mandamus

proceeding to have the decision set aside. In two more recent decisions, however,

we concluded that persons filing damage suits authorized by certain whistleblower

statutes — laws forbidding employer retaliation against workers who have

reported fraud, danger, corruption, waste, or malfeasance — did not have to

exhaust available administrative and mandamus remedies before seeking relief in

court. (Runyon v. Board of Trustees of California State University (2010)

48 Cal.4th 760 (Runyon); State Bd. of Chiropractic Examiners v. Superior Court

(2009) 45 Cal.4th 963 (Arbuckle); but see Miklosy v. Regents of University of

California (2008) 44 Cal.4th 876 (Miklosy).)

1


Here, as in Westlake, defendant Sutter Central Valley Hospital, through its

quasi-judicial peer review procedures, terminated plaintiff Mark T. Fahlen’s

physician’s staff privileges. He sued the hospital and its chief operating officer,

seeking damages, reinstatement, and other relief on multiple theories. Among

other things, his complaint claims the hospital’s action constituted retaliation for

his reports of substandard performance by hospital nurses, and thus violated

Health and Safety Code section 1278.5.1

Defendants moved to dismiss the action on grounds, among others, that

plaintiff could not bring a civil suit under section 1278.5 unless he first succeeded

by mandamus in overturning the hospital’s action. The trial court denied the

motion. In a published decision, the Court of Appeal reversed in part. The

appellate court held that plaintiff could pursue those claims based on section

1278.5, rather than on the common law, even though he had not previously sought

and obtained a mandamus judgment against the hospital’s decision. This holding

conflicted with that of another appellate decision, Nesson v. Northern Inyo County

Local Hospital Dist. (2012) 204 Cal.App.4th 65 (Nesson). We granted

defendants’ petition for review for the sole purpose of resolving the conflict.

We conclude that when a physician claims, under section 1278.5, that a

hospital’s quasi-judicial decision to restrict or terminate his or her staff privileges

was itself a means of retaliating against the physician “because” he or she reported

concerns about the treatment of patients, the physician need not first seek and

obtain a mandamus judgment setting aside the hospital’s decision before pursuing

a statutory claim for relief. Section 1278.5 declares a policy of encouraging


1

Unless otherwise specifically noted, all further unlabeled statutory

references are to the Health and Safety Code.

2

workers in a health care facility, including members of a hospital’s medical staff,

to report unsafe patient care. The statute implements this policy by forbidding a

health care facility to retaliate or discriminate “in any manner” against such a

worker “because” he or she engaged in such whistleblower action. (§ 1278.5,

subd. (b).) It entitles the worker to prove a statutory violation, and to obtain

appropriate relief, in a civil suit before a judicial fact finder.

Section 1278.5 does not expressly or impliedly condition this right on a

prior successful mandamus challenge to a hospital’s quasi-judicial decision to

restrict or terminate the whistleblower’s medical staff privileges. Indeed, the

statute includes terms indicating the Legislature’s understanding and expectation

that a medical staff member’s whistleblower suit might begin and go forward

while the hospital’s proceedings against the physician were still pending.

Moreover, such a condition would seriously undermine the Legislature’s

purpose to afford a whistleblower on a hospital medical staff the right to sue.

A hospital disciplinary proceeding against a member of the medical staff is

ostensibly focused on concerns about the physician’s professional fitness, not on

redressing his or her claims of whistleblower retaliation. Indeed, plaintiff asserts

here that the hospital proceeding was the very means of retaliation. By

concluding, on limited mandamus review, that the administrative evidence of the

physician’s deficiencies was sufficient to support the hospital’s decision, the

mandamus court could thus entirely and permanently foreclose the physician’s

statutory right to litigate, in court, his or her distinct claim that whistleblower

retaliation was a reason for the exclusionary effort.

The Legislature cannot have intended, sub silentio, to so limit the

physician’s statutory right to persuade a judicial fact finder, in the first instance,

that the adverse hospital action actually occurred because of, and in retaliation for,

his or her efforts to report concerns about the hospital’s quality of care. We thus

3

conclude, as to the narrow issue before us, that there is no such necessary

condition to a physician’s statutory medical whistleblower claim.

Of course, both the California Legislature and the United States Congress

have recognized that legitimate, properly conducted hospital peer review

proceedings are themselves a crucially important means of protecting patients

against unsafe hospital medical care. As we discuss below, both state and federal

statutes seek to encourage participation in medical peer review activities by

providing qualified tort immunity for those involved in reasonably founded

medical peer review decisions. Even aside from these statutory limitations,

“mixed motive” cases may arise in which such proceedings, though instigated at

least in part as retaliation against a whistleblower, nonetheless disclose substantial

legitimate medical grounds for restricting or terminating a physician’s hospital

staff privileges — reasons that would properly have produced the same decision in

the absence of retaliatory animus.

Future litigants may argue that proper attention to these various concerns

should affect the trial timing, the issues, and the available remedies in an

individual physician’s whistleblower suit under section 1278.5. Such matters,

however, are beyond the scope of the narrow question before us here. We pass no

final judgment upon them, but await their appropriate future development.

FACTS AND PROCEDURAL BACKGROUND

Plaintiff physician, a kidney specialist, was employed by Gould Medical

Group (Gould) in Modesto. Beginning in 2004, he was granted nonprovisional

staff privileges at Memorial Medical Center (Hospital), which is operated by

defendant Sutter Central Valley Hospital (Sutter). Twice in 2004 and twice in

2006, plaintiff argued with Hospital nurses who assertedly failed to follow his

patient treatment instructions. From August 2007 through April 2008, plaintiff

had six other clashes with particular Hospital nurses about patient care. On

4

several of these occasions, he reported to nursing supervisors, or in writing to the

Hospital’s administration, that nurses had been insubordinate and had provided

substandard care.

In early May 2008, after the last of these clashes, defendant Steve Mitchell,

the Hospital’s chief operating officer, contacted Gould’s medical director about

plaintiff’s disruptive interactions with the Hospital’s nursing staff. Mitchell hoped

that Gould’s director would meet with plaintiff, that plaintiff would get angry

during the meeting, that Gould’s director would react by terminating plaintiff’s

employment, and that plaintiff would then leave town. This, Mitchell envisioned,

would obviate the need for peer review proceedings to determine the status of

plaintiff’s Hospital staff privileges. Gould did terminate plaintiff’s at-will

employment contract on May 14, 2008. As a result, plaintiff’s medical

malpractice insurance was cancelled, leaving him immediately unable to treat

patients at the Hospital.

Because he intended to open a private practice in Modesto, plaintiff

scheduled a meeting with Mitchell to determine the status of his Hospital staff

privileges. After the meeting was scheduled, but before it occurred, Mitchell

declared in an e-mail to the Hospital’s chief executive officer that plaintiff “does

not get it” — meaning, as Mitchell admitted, that plaintiff was going to lose his

privileges at the Hospital. The chief executive officer responded that it “[l]ooks

like we need to have the Medical Staff take some action on his MedQuals!!!

Soon!”

At his May 30, 2008, meeting with plaintiff, Mitchell told plaintiff he

should resign from the Hospital staff and leave town, or the Hospital would begin

an investigation and peer review proceeding that would result in a report to the

Medical Board of California. The Hospital thereafter convened an ad hoc

investigative committee, which presented a report to the Hospital’s medical

5

executive committee (MEC) — the body responsible, under the Hospital’s bylaws,

for reviewing staff privilege applications and initiating corrective or disciplinary

action against medical staff. At its meeting on August 11, 2008, the MEC

recommended against renewal of plaintiff’s privileges. The MEC notified plaintiff

of its decision and his right to contest it.

Plaintiff requested a hearing. The MEC informed him by letter that a

judicial review committee (JRC) would conduct the review hearing in accordance

with the procedures set forth in the bylaws. The letter also included a statement of

charges, including 17 incidents of disruptive or abusive behavior toward Hospital

staff from 2004 through 2008, and one incident of “abusive and contentious

behavior” during a 2008 interview with the ad hoc investigating committee.

The JRC, composed of six physicians with Hospital staff privileges,

conducted an extensive evidentiary hearing in 13 sessions between October 2009

and May 2010. An attorney acted as hearing officer.

In unanimously adopted findings, issued on June 14, 2010, the JRC

reversed the MEC’s decision. The JRC reached the following conclusions: The

evidence failed to show plaintiff was professionally incompetent or had engaged

in behavior endangering the delivery of patient care. To the extent anyone’s

conduct was detrimental to such care, the nursing staff was more to blame than

plaintiff. Several of his interactions with the nursing staff had been “inappropriate

and [un]acceptable,” but the Hospital should have intervened sooner and failed in

its responsibility to do so. As a result, the Hospital omitted to consider

intermediate steps short of loss of staff privileges, such as anger management

counseling. Moreover, after the MEC recommended termination of privileges,

plaintiff had voluntarily obtained psychological counseling and attended anger

management sessions, and his behavior had appreciably improved. Accordingly,

the MEC had failed to sustain its burden of proving that its recommendation not to

6

reappoint plaintiff to the Hospital’s medical staff for “medical disciplinary cause”

was “reasonable and warranted.”

Under the Hospital’s bylaws, the final decision whether to terminate a

physician’s staff privileges rests with its board of trustees (Board). The Board

concluded it needed the JRC’s assistance to fulfill its duties in plaintiff’s case. By

a letter dated September 16, 2010, the Board propounded a series of detailed

questions to the JRC, asking whether each alleged incident of misconduct

occurred, what findings the JRC had made with respect to each charge presented

by the MEC, and “[w]hat evidence provided at the [JRC] hearing was considered”

in making these findings. The JRC was asked to respond within 30 days.

After considering the Board’s request, the JRC concluded it was

unreasonable, because it would require JRC members to read the entire hearing

transcript and all the documentary evidence. The JRC advised that the Board

would “have to proceed on the basis of all the materials available to it at this time,

including the Findings of Fact and Conclusion that [were] previously rendered by

the [JRC].”

In a letter to plaintiff’s counsel, dated January 7, 2011, the Board conveyed

its decision reversing the JRC. The Board criticized the JRC’s findings and

conclusions as “unlinked to any factual support in the hearing record.” From its

own review of the evidence, the Board concluded that plaintiff’s conduct “was

inappropriate and not acceptable, [and was] directly related to the quality of

medical care at the Hospital.”

Plaintiff did not seek direct judicial review of the Board’s decision by

means of a petition for writ of mandamus to set the decision aside. The Hospital

7

filed with the Medical Board of California a so-called 805 report of its action, as

required by Business and Professions Code section 805.2

On March 9, 2011, plaintiff filed the instant complaint against Sutter,

Mitchell, and various Doe defendants. The complaint alleged generally that

defendants had caused his medical group (Gould) to fire him, had tried to run him

out of Modesto, and had terminated his staff privileges “because of his complaints

about the substandard, insubordinate and unprofessional nursing care he had

observed at [the Hospital], conduct which endangered patient care and patient

safety.” On various theories, the complaint sought reinstatement to the Hospital’s

medical staff; a declaration of defendants’ bad faith; economic and noneconomic

compensation, including lost wages; costs and attorney fees; punitive damages;

and other appropriate relief permitted by law.

The first count stated a claim under section 1278.5, the health care facility

whistleblower statute. The second count similarly prayed for a declaration of bad

faith under Business and Professions Code section 803.1, subdivision (b)(6). In

the sixth count, plaintiff asserted a violation of Business and Professions Code

sections 510 and 2056, which condemn a health care facility’s retaliation against a

physician who “advocate[s] for medically appropriate health care.” Finally, the


2

This statute requires a licensed health care facility to file an 805 report with

the “relevant agency” within 15 days after the facility’s “peer review body” has
taken any one or more of specified actions against a licensed health care
professional, including the rejection, termination, or revocation of the licensee’s
staff privileges or membership “for a medical disciplinary cause or reason.”
(Bus. & Prof. Code, § 805, subd. (b), see id., subd. (f).) The agency must disclose
to “an inquiring member of the public” a summary of “hospital disciplinary
actions that result in the termination or revocation of a licensee’s staff privileges
for medical disciplinary cause or reason, unless a court finds, in a final judgment,
that the peer review resulting in the disciplinary action was conducted in bad faith
and the licensee notifies the [agency] of that finding.” (Id., § 803.1, subd. (b)(6).)

8

complaint included common law claims for interference with the right to practice

an occupation (third count), intentional interference with contractual relations

(fourth count), interference with prospective advantage (fifth count), and wrongful

termination of hospital privileges (seventh count).

Defendants demurred, and also filed a motion under Code of Civil

Procedure section 425.16, the so-called anti-SLAPP statute, to strike the

complaint.3 The anti-SLAPP motion asserted that (1) plaintiff’s causes of action

arose from defendants’ “protected activity” within the meaning of the anti-SLAPP

statute and (2) the suit lacked probable merit because, when plaintiff timely failed

to seek direct judicial review of the decision by a petition for mandamus, that

decision became final, and plaintiff could not thereafter attack it collaterally in this

action.

The trial court overruled the demurrer and denied the anti-SLAPP motion.

The court found that plaintiff’s suit did not arise from defendants’ protected

activity, as described in Code of Civil Procedure section 425.16, because

“disciplinary action is not protected activity.” Moreover, the court determined,


3

Code of Civil Procedure section 425.16 provides a procedure for the early

dismissal of what are commonly known as SLAPP suits (strategic lawsuits against
public participation) — litigation of a harassing nature, brought to challenge the
exercise of protected free speech rights. The section is thus informally labeled the
anti-SLAPP statute, and a motion to dismiss filed under its authority is
denominated an anti-SLAPP motion. (See, e.g., Kibler v. Northern Inyo County
Local Hospital Dist.
(2006) 39 Cal.4th 192, 196-197 (Kibler).) We employ these
terms as appropriate hereafter. Where the proponent of an anti-SLAPP motion,
i.e., a defendant in a lawsuit, establishes that the suit arises from an act in
furtherance of his or her rights of petition or free speech, the motion must be
granted unless the plaintiff establishes a probability of prevailing on the merits of
the action. (Code Civ. Proc., § 425.16, subd. (b); Kibler, supra, at p. 198; but see
Code Civ. Proc., § 425.17 [placing certain limits on right to anti-SLAPP
dismissal].)

9

plaintiff had established probable merit to his suit, because he was not required to

exhaust direct judicial review of the Board’s decision, by seeking and obtaining a

writ of mandamus to set it aside, before filing the instant action.

The Court of Appeal affirmed in part and reversed in part. The appellate

court first concluded the trial court had erred in finding the Hospital’s peer review

action was not protected activity for purposes of the anti-SLAPP provision. For

this conclusion, the Court of Appeal cited Kibler, where we held that a medical

peer review proceeding contemplated by Business and Professions Code section

809 et seq. is an “official proceeding authorized by law” within the meaning of the

anti-SLAPP statute. (Code Civ. Proc., § 425.16, subd. (e).) Accordingly, Kibler

concluded, defendants in suits arising from oral or written statements made in

connection with issues under consideration or review in such a proceeding are

entitled to anti-SLAPP protections. (Kibler, supra, 39 Cal.4th 192, 198-203; see

Code Civ. Proc., § 425.16, subd. (e)(2).)

However, the Court of Appeal agreed in part with the trial court’s “merits”

determination. The appellate court concluded that the first count of plaintiff’s

complaint, for relief under section 1278.5, does not lack probable merit despite his

prior failure to exhaust judicial remedies by way of a mandamus proceeding to set

aside the Board’s decision. In this regard, the Court of Appeal disagreed with any

contrary implication in Nesson, supra, 204 Cal.App.4th 65. Furthermore, the

appellate court determined, the complaint’s second count, for a declaration under

Business and Professions Code section 803.1, subdivision (b)(6), that the

defendants acted in bad faith in terminating his Hospital privileges — a

prerequisite to precluding the Medical Board of California from disclosing the

termination to an “inquiring member of the public” — is functionally ancillary to

the statutory whistleblower claim, and may thus also be maintained without prior

exhaustion of judicial remedies.

10

On the other hand, the Court of Appeal held, the third, fifth, sixth, and

seventh Counts of the complaint set forth statutory or common law claims to

which the Westlake rule of prior judicial exhaustion applies. The Court of Appeal

thus entered an order directing the trial court to grant the anti-SLAPP motion with

respect to the third, fifth, sixth, and seventh counts, but to deny it with respect to

the first, second, and fourth counts.4

We granted defendants’ petition for review, and limited the issue to that

raised in the petition, i.e., whether, before a physician may commence a civil suit

alleging that a hospital’s quasi-judicial decision to terminate the physician’s staff

privileges was wrongfully retaliatory under section 1278.5, the physician must

first prevail in an administrative mandamus proceeding to set the decision aside.

Answering that narrow question, we conclude that a successful mandamus attack

on the decision is not a necessary condition to the filing of a section 1278.5 action.

Accordingly, we will affirm the Court of Appeal’s judgment.


4

The Court of Appeal noted that “[w]hile defendants’ opening brief states

that defendants seek reversal of the anti-SLAPP order ‘in its entirety,’ in their
summary of the proceedings in the lower court, defendants concede that [count
four of the complaint, a claim for intentional interference with contractual
relations] is ‘not subject to the anti-SLAPP motion and this subsequent appeal.’ ”

11

DISCUSSION5

A. Section 1278.5.

Section 1278.5, the health care facility whistleblower statute, was adopted

in 1999 and amended in 2007. As currently in effect, it declares “the public policy

of the State of California to encourage patients, nurses, members of the medical

staff, and other health care workers to notify government entities of suspected

unsafe patient care and conditions.” (Id., subd. (a), italics added.) To this end, the

statute provides that “[n]o health care facility shall discriminate or retaliate, in any

manner, against any patient, employee, member of the medical staff, or any other

health care worker . . . because that person has . . . [¶] . . . [p]resented a grievance,

complaint, or report to the facility, to an entity or agency responsible for

accrediting or evaluating the facility, or the medical staff of the facility, or to any

other governmental entity.” (Id., subd. (b)(1)(A), italics added.)6 As applicable to


5

Amicus curiae briefs on behalf of defendants have been filed by (1) Beta

Healthcare Group; (2) the California Hospital Association; (3) Dignity Health and
Adventist Health System/West; (4) Kaiser Foundation Hospitals; (5) a group
including (a) Good Samaritan Hospital, L.P., (b) Los Robles Regional Medical
Center, (c) San Jose Healthcare System, LP, (d) Riverside Healthcare System,
L.P., (e) West Hills Hospital, and (f) Fountain Valley Regional Hospital &
Medical Center; and (6) a group including (a) Scripps Health, (b) Sharp
Healthcare, and (c) St. Joseph Health. The California Medical Association and the
American Medical Association have jointly filed an amicus curiae brief on behalf
of plaintiff.

6

Section 1278.5 does not explicitly limit the type of “grievance, complaint,

or report” for which retaliation is prohibited to one involving concerns about the
quality of patient care. However, such a limitation is implicit in other provisions
of the statute. In its declaration of policy, the statute sets forth the Legislature’s
finding that “whistleblower protections apply primarily to issues relating to the
care, services, and conditions of a facility and are not intended to conflict with
existing provisions in state and federal law relating to employee and employer
relations.” (§ 1278.5, subd. (a).) Moreover, in extending whistleblower protection
to those health care workers who cooperate or participate in certain governmental

(Footnote continued on next page.)

12

a member of the medical staff, “discriminatory treatment” includes “any

unfavorable changes in . . . the . . . privileges of [such] member . . . .” (Id.,

subd. (d)(2).)

Besides providing for a civil penalty of up to $25,000 for each violation

(§ 1278.5, subd. (b)(3)), the statute specifies, inter alia, that “[a] member of the

medical staff who has been discriminated against pursuant to this section shall be

entitled to reinstatement, reimbursement for lost income resulting from any change

in the terms or conditions of his or her privileges caused by the acts of the facility,

. . . and the legal costs associated with pursuing the case, or to any remedy deemed

warranted by the court pursuant to this chapter or any other applicable provision of

statutory or common law” (id., subd. g)). After a member of the medical staff

“has filed an action pursuant to this section,” civil discovery in the case may be

delayed upon a petition by the facility’s peer review committee demonstrating that

such discovery will impede a pending peer review proceeding. (Id., subd. (h).)

B. Case law background.

In Westlake, supra, 17 Cal.3d 465, after a hospital revoked a physician’s

staff privileges, she sued the hospital and numerous individual members of its

boards and committees. In her complaint, she asserted that she was a highly

competent and qualified doctor, and that the revocation was the result of a

malicious conspiracy to destroy her medical practice and restrain competition.

The complaint set forth common law causes of action for unlawful intentional



(Footnote continued from previous page.)

investigations or proceedings, the statute makes clear that such investigations and
proceedings are those “related to . . . the quality of care, services, or conditions at
the facility.” (Id., subd. (b)(1)(B).)

13

interference with the right to practice a trade or calling; conspiracy to restrain

competition; intentional infliction of emotional distress; and fraud and deceit.

Compensatory and exemplary damages were sought.

Defendants moved for summary judgment, alleging that, in making its

decision, the hospital had followed its established quasi-judicial procedures for

determining staff privilege issues; that these procedures included a review

committee hearing at which live and documentary evidence was presented; that

the plaintiff was advised of, and exercised, all her internal rights to review; and

that the decision had been upheld on review by the hospital’s board of directors.

The defendants claimed, among other things, that these facts barred plaintiff’s

action because she could not attack the hospital’s quasi-judicial decision

“collateral[ly]” by a tort suit for damages, but must first mount a successful “direct

attack” on the decision by means of a mandamus action to set it aside. (Westlake,

supra, 17 Cal.3d 465, 473.)

Applying the law generally applicable to cases of exclusion from

professional associations, we agreed with defendants that, before suing for

damages arising from expulsion or exclusion from a hospital’s medical staff, a

physician must exhaust all administrative and judicial avenues of review of the

exclusionary decision. Thus, we reasoned, where the hospital afforded the

physician quasi-judicial procedures before reaching its decision, he or she cannot

sue in tort on grounds the decision was maliciously motivated without first having

attacked it successfully by means of an administrative mandamus action.

(Westlake, supra, 17 Cal.3d 465, 476-478.)

We analogized to the rule that, before bringing a malicious prosecution

action, the plaintiff must have prevailed — i.e., achieved a “favorable

termination” — in the prior suit he or she alleges was filed and pursued with

wrongful motives. (Westlake, supra, 17 Cal.3d 465, 483.) In both instances, we

14

reasoned, a claim that a judicial or quasi-judicial proceeding was misused for

malicious purposes necessarily rests on the premise that the decision reached in

that proceeding was erroneous and unjustified. Accordingly, we concluded, a

failure to set aside a hospital’s quasi-judicial decision by appropriate means of

review has the effect of establishing its propriety. This principle, we said, accords

proper respect for the result reached under the hospital’s quasi-judicial procedures,

prevents circumvention of normal avenues of review, and provides a justified

measure of tort liability protection for those individuals “who take on, often

without remuneration, the difficult, time-consuming, and socially necessary task of

policing medical personnel.” (Westlake, supra, 17 Cal.3d 465, 484.)7

Westlake thus established the principle that, before one may bring a

common law tort suit claiming purely personal professional injury or damage

arising from an allegedly malicious and wrongful quasi-judicial administrative

decision, he or she must first demonstrate that the decision cannot survive the

normal means of judicial review. The question before us is whether a different

rule applies to a statutory cause of action for whistleblower retaliation under

section 1278.5.

Of course, statutes generally should not be construed to alter or abrogate

the common law. We have said that a legislative purpose to do so must clearly

and unequivocally appear. (See, e.g., Aryeh v. Canon Business Solutions, Inc.


7

As Westlake noted, an individual member of a hospital’s medical staff peer

review committee has a qualified state law immunity against personal liability for
monetary damages for any act or proceeding undertaken within the scope of the
committee’s function to review the quality of care rendered by members of the
hospital medical staff. The immunity applies if the committee member acted
without malice, made a reasonable effort to ascertain the relevant facts, and
reasonably believed his or her actions were warranted by the facts he or she knew
after exerting such reasonable effort. (Civ. Code, § 43.7, subd. (b).)

15

(2013) 55 Cal.4th 1185, 1193; California Assn. of Health Facilities v. Department

of Health Services (1997) 16 Cal.4th 284, 297.) Accordingly, our post-Westlake

cases addressing an individual’s statutory right to sue for whistleblower retaliation

— and thereby to vindicate the Legislature’s purpose to encourage whistleblowing

in the public interest — have examined the relevant laws carefully to determine if

the Legislature intended, “ ‘either by express declaration or by necessary

implication’ ” (Campbell v. Regents of University of California (2005) 35 Cal.4th

311, 329 (Campbell)), to abrogate the traditional requirements of prior

administrative and judicial exhaustion.

Applying this principle, we have on several occasions found a clear

legislative intent, whether express or implicit, to permit a statutory whistleblower

action without prior exhaustion of administrative and judicial remedies. We have

done so even where the quasi-judicial administrative procedure at issue was not, as

here, an alleged instrument of retaliation, but was instead itself a forum

specifically provided to address claims of retaliation accomplished by other

means.

Campbell, the first case in this series, was concerned only with whether

particular whistleblower statutes required an employee claiming forbidden

retaliation to exhaust the employer’s internal administrative grievance procedures

before filing a tort suit. The plaintiff, an architect employed by the Regents of the

University of California (Regents), sued the Regents, alleging she was demoted,

then terminated, for reporting to superiors, and later to the Federal Bureau of

Investigation, that the overly restrictive specifications the Regents were using for

small campus construction projects violated competitive bidding laws. Before

commencing her whistleblower suit, she had filed an informal grievance with the

Regents, but then ignored their advisement that the complaint must be resubmitted

under the particular internal procedures applicable to whistleblower claims.

16

Then, as now, the California Whistleblower Protection Act (Gov. Code,

§ 8547 et seq. (Whistleblower Act)) generally forbade retaliation against an

employee of a state agency, including the University of California (UC), for

disclosing information that may evidence improper government activity, if the

purpose of the disclosure was to remedy the improper situation. (Id., §§ 8547.2,

subd. (a), 8547.10, subds. (b), (c) (section 8547.10(b), section 8547.10(c).) As

applicable to UC in particular, the statute provided, under the version of section

8547.10(c) then in effect, that the wronged whistleblower could bring a damage

action, but only after the employee “[had] first filed a complaint with the

university . . . , and the university [had] failed to reach a decision regarding that

complaint within the time limits established for that purpose by the [R]egents.”

In an apparent effort to avoid section 8547.10(c)’s explicit condition that an

administrative complaint be filed, the plaintiff asserted her court claim under two

other statutory whistleblower protection schemes, Government Code section

12653, subdivisions (b) and (c) (False Claims Act provision specifying that

government employee discharged for disclosing false claim to law enforcement

agency may bring damage action), and Labor Code sections 1102.5 and 1105

(forbidding employer, including UC, to retaliate against employee for disclosing to

a government or law enforcement agency information about violations of law or

failure to comply with regulations; further providing that “[n]othing in this

chapter” shall prevent an employee’s suit for damages). Among other things, the

plaintiff urged that by comparing the express administrative complaint

requirement in Government Code section 8547.10(c) with the “silence” on this

subject in Government Code section 12653, subdivision (c) and Labor Code

section 1105, we must conclude the latter statutes included no such requirement.

We disagreed. We noted that the specific exhaustion provisions in

Government Code section 8547.10(c) — which primarily address how long a

17

pending administrative proceeding can delay the right to file a civil whistleblower

complaint against the Regents — did not imply an intent to omit the traditional

requirement of administrative exhaustion from any statutory whistleblower

scheme where exhaustion was not expressly mentioned. (Campbell, supra,

35 Cal.4th 311, 327.) We further invoked the principle that where statutes, such as

Government Code section 12653 and Labor Code sections 1102.5 and 1105, or

their equivalents, create a right that did not previously exist at common law, and

also provide a comprehensive system of administrative enforcement (there,

through UC’s detailed official grievance procedures), we must infer a requirement

that the employee seek administrative relief before filing suit.

Finally, we rejected the plaintiff’s argument that when it extended the

Labor Code’s whistleblower protections to public employees, including employees

of UC, in 1992, the Legislature intended to abrogate any need to invoke the public

employer’s administrative grievance procedures before filing suit. We noted that,

while initial legislative analyses of the 1992 bill indicated it would give public

employees (like the private employees previously covered) a direct right to sue,

later reports suggested a purpose merely to eliminate any prior requirement that a

public employee prove malice in order to prevail on an administrative claim of

whistleblower retaliation. Deeming the legislative history thus “unclear”

(Campbell, supra, 35 Cal.4th 311, 331), we concluded we could not read into the

statutory scheme an intent to override the normal rules of resort to administrative

procedures.

More pertinent to the issue of judicial exhaustion, as presented by the

instant case, is our decision in Arbuckle, supra, 45 Cal.4th 963. There, Arbuckle,

an employee of the State Board of Chiropractic Examiners (SBCE) alleged she

was subjected to workplace retaliation after she asked superiors whether she

should issue a citation to the SBCE’s chairperson for practicing with an expired

18

license, and was told not to do so. Arbuckle filed a complaint with the State

Personnel Board (SPB), alleging retaliation in violation of the Whistleblower Act.

After a detailed investigation pursuant to SPB regulations, during which each side

submitted extensive documentary evidence and written arguments, the SPB’s

executive officer issued a 16-page “Notice of Findings” recommending dismissal

of the complaint. The SPB’s regulations allowed a complainant who received

adverse findings from the executive officer to petition for a hearing before the

board, but provided that if no timely petition was filed, the executive officer’s

recommendation would become the SPB’s “final decision.”

Arbuckle did not seek board review. Instead, she filed a superior court

damage suit against the SBCE and its executive director, alleging whistleblower

retaliation in violation of Government Code section 8547.88 and Labor Code

section 1102.5. The defendants moved for summary judgment on these claims,

asserting Arbuckle’s failure to exhaust administrative and judicial remedies. The

trial court denied the motion, but the Court of Appeal reversed.

On review, we reversed the Court of Appeal. We first concluded that

Arbuckle had satisfied the administrative prerequisites to suit expressly set forth in

Government Code section 8547.8, subdivision (c) (section 8547.8(c)). This

statute, we noted, specified that a public employee could not pursue a civil damage

action for whistleblower retaliation “ ‘unless [the employee] has first filed a

complaint with the [SPB] . . . , and the Board has issued, or failed to issue,

findings pursuant to [Government Code] [s]ection 19683.’ ” (Arbuckle, supra,

145 Cal.4th 963, 971, quoting § 8547.8(c), italics omitted.) In turn, we explained,


8

Government Code section 8547.8, part of the Whistleblower Act, applies to

employees of state agencies other than the UC and California State University
(CSU) systems. (See id., § 8547.2, subds. (a), (f).)

19

Government Code section 19683, governing SPB procedures for handling

complaints of reprisal or retaliation, clearly used the word “findings” to mean the

initial decision of the SPB’s executive officer, and did not encompass a

requirement that a complainant who received adverse “findings” at this level seek

a hearing before the board. Hence, we concluded, no such requirement was

incorporated in section 8547.8(c).

We then turned to the defendants’ claim that, before filing a statutory tort

suit for whistleblower retaliation, Arbuckle was also required to exhaust judicial

remedies against the SPB’s adverse decision by prevailing in a mandamus action

to have that decision set aside. (Arbuckle, supra, 45 Cal.4th 963, 974.) Generally,

we conceded, writ review of an adverse administrative decision is a necessary step

before further remedies are pursued, and if the administrative proceeding had the

requisite judicial character, it is binding in a later court action. (Id. at pp. 975-

976.) However, we noted, the Whistleblower Act expressly provided a civil action

for whistleblower retaliation, while also specifying, as the only precondition to

suit, that a complaint be filed with the SPB, and that the board “issue[ ], or fail[ ]

to issue, findings.” (§ 8547.8(c).) This statutory language, we concluded,

suggested the Legislature did not intend the SPB decision to have preclusive effect

against a complaining employee.

Moreover, we stressed, a conclusion that, unless overturned on mandamus,

the SPB’s findings are binding in a court action for damages under the

Whistleblower Act would unduly restrict the statutory remedy. As we explained,

“Writ review [of a quasi-judicial administrative proceeding] under Code of Civil

Procedure section 1094.5 is limited to the record compiled by the administrative

agency, and the agency’s findings of fact must be upheld if supported by

‘substantial evidence.’ [Citation.]” (Arbuckle, supra, 45 Cal.4th 963, 977.)

Under that standard of review, we noted, “it would be very difficult for a

20

complaining employee to have the board’s adverse factual findings overturned.

Therefore, in nearly every case, an adverse decision from the board would leave

the employee without the benefit of the statutory remedy set forth in section

8547.8(c). . . . Nothing in section 8547.8(c) suggests that the Legislature intended

the damages remedy created in that provision to be so narrowly circumscribed,

and such a narrow interpretation of the damages remedy would hardly serve the

Legislature’s purpose of protecting the right of state employees ‘to report waste,

fraud, abuse of authority, violation of law, or threat to public health without fear of

retribution.’ [Citation.]” (Arbuckle, supra, at pp. 977-978.)

We later reached similar results, for similar reasons, when construing a

portion of the Whistleblower Act that applies specifically to employees of the

CSU system. In Runyon, supra, 48 Cal.4th 760, the plaintiff, Runyon, who had

chaired an academic department of the College of Business Administration

(College) at CSU Long Beach, filed an administrative whistleblower complaint

with CSU. Runyon alleged he had been removed from his position by the

College’s dean, Luis Calingo, in retaliation for reporting improper conduct by

Calingo. Pursuant to CSU’s established procedures for handling such complaints,

a CSU human resources manager conducted an internal investigation, during

which Runyon had the opportunity to respond in writing to the investigator’s

tentative findings. Ultimately, CSU’s vice-chancellor for human resources issued

a determination letter stating CSU’s decision that, while Runyon had made a

protected disclosure by complaining about Calingo’s habitual absence from

campus, Calingo had not removed Runyon as department chair for that reason, but

for inadequate job performance.

Runyon then filed a damage action against CSU and Calingo, asserting a

cause of action under Government Code section 8547.12, which states when an

employee may sue CSU for whistleblower retaliation. Under section 8547.12,

21

subdivision (c) (section 8547.12(c)), such an action is allowed only if the

complaining employee has filed an administrative complaint, and CSU “has failed

to reach a decision” thereon within the time set by its internal procedures, or has

not “satisfactorily addressed” the claim within 18 months.

The trial court granted the defendants’ motion for summary judgment. The

court reasoned, first, that CSU had foreclosed a damage suit under section

8547.12(c) simply by rendering a timely, and thus “satisfactor[y],” decision on

Runyon’s administrative complaint, and second, that Runyon had failed to exhaust

judicial remedies by successfully challenging CSU’s action in a mandamus

proceeding. The Court of Appeal affirmed. It rejected Runyon’s argument that

section 8547.12(c) protects CSU against a damage action only if CSU has

addressed a whistleblower claim to the employee’s “satisfact[ion].” Instead, the

CA held, section 8547.12(c) precludes a damage suit so long as CSU has rendered

its decision — even one adverse to the employee — after conducting a thorough,

good-faith investigation in the spirit of the Whistleblower Act. The Court of

Appeal also determined that, before filing a damage action, Runyon must

establish, through a mandate proceeding, CSU’s failure to meet these standards.

We reversed. We first concluded that by foreclosing a damage suit when

CSU has “satisfactorily addressed” the employee’s administrative complaint

(italics added), section 8547.12(c) meant to impose such a bar only when CSU’s

administrative response was to the satisfaction of the complaining employee, not

when CSU had rejected the employee’s complaint. This construction, we

explained, was consistent with both the language and the legislative history of

section 8547.12(c). (Runyon, supra, 48 Cal.4th 760, 773.)9


9

Our Runyon opinion compared its construction of section 8547.12(c) with

our then-recent interpretations of similar, but materially distinct, provisions of the

(Footnote continued on next page.)

22

We also concluded that section 8547.12(c) does not require a CSU

employee to exhaust judicial remedies by mounting a successful mandamus

challenge against CSU’s adverse administrative decision before filing a civil

action under the Whistleblower Act. As in Arbuckle, we explained that the



(Footnote continued from previous page.)

Whistleblower Act applicable to other state entities. In Miklosy, supra, 44 Cal.4th
876, we noted, we had addressed section 8547.10 (c), specifically applicable to the
UC system. As then in effect, section 8547.10(c) provided that a UC employee
who claimed whistleblower retaliation could sue only if he or she had filed an
administrative complaint with the university, and UC “[had] failed to reach a
decision regarding that complaint within the time limits established for that
purpose by the [R]egents.” (Stats. 1999, ch. 673, § 7, p. 5000.) Section
8547.10(c), unlike section 8547.12(c), did not then contain a further proviso that a
suit was allowed if UC had not “satisfactorily addressed” the complaint within a
specified time. In Miklosy, supra, 44 Cal.4th 876, we found that the plain
language of section 8547.10(c) barred a whistleblower damage action against UC
if the university had reached any decision on an employee’s administrative
complaint, whether favorable or adverse to the employee, within the time limits
established by the university. Our Miklosy opinion noted the absence from section
8547.10(c) of the “satisfactorily addressed” language included in section
8547.12(c), and expressly left open whether the presence of such language in
section 8547.10(c) would have altered our interpretation of that statute. (Miklosy,
supra, 44 Cal.4th at pp. 887-890.) In the wake of Miklosy, the Legislature
amended section 8547.10(c) to add “satisfactorily addressed” language.
(§ 8547.10(c), as amended by Stats. 2010, ch. 104, § 1.)

Our Runyon decision also took note of a “third textual variation”(Runyon,

supra, 48 Cal.4th 760, 766) in administrative exhaustion language included in the
Whistleblower Act, language we had confronted in Arbuckle, supra, 45 Cal.4th
963. As explained above, Arbuckle was concerned with section 8547.8(c), which
requires an employee of a state agency, such as the SBCE, to file a whistleblower
complaint with the SPB before bringing a civil action, but then allows such a suit
if the SPB has thereafter “issued, or failed to issue, findings.” We concluded in
Arbuckle that this language does not require the employee to seek administrative
or judicial review of the SPB’s initial adverse “findings” before filing suit. (See
text discussion, ante.)

23

general rule giving preclusive effect to a final quasi-judicial administrative

decision in a later civil proceeding does not apply if it would contravene the

Legislature’s intent in establishing the proceeding in which such preclusive effect

is urged. We noted that, by its terms, section 8547.12(c) authorizes a damage

action once the employee claiming whistleblower retaliation has filed an internal

complaint, and CSU has failed to “satisfactorily address” that complaint — i.e., to

resolve it to the employee’s satisfaction — within the requisite times. We

explained that, like section 8547.10(c), the similar provision at issue in Arbuckle,

section 8547.12(c), expressly recognizes the parallel administrative remedy, yet

does not require that the administrative findings be set aside by mandate before a

civil damage action is permitted. “As in Arbuckle, then, to hold an adverse

administrative finding preclusive in the expressly authorized damages action

would be contrary to the evident legislative intent.” (Runyon, supra, 48 Cal.4th

760, 774.)

Moreover, we stressed that, as in Arbuckle, according preclusive effect to

the administrative decision would unduly restrict the civil remedy provided by the

pertinent whistleblower statute. We iterated that “[w]rit review, whether through

administrative mandate (Code Civ. Proc., § 1094.5) or ordinary mandate (id.,

§ 1085), gives substantial deference to the agency’s findings. Requiring the

employee to overturn CSU’s adverse decision by writ before bringing a civil

action would mean that ‘in nearly every case, an adverse decision from [CSU]

would leave the employee without the benefit of the damages remedy set forth in

[section 8547.12(c)].’ [Citation.]” (Runyon, supra, 48 Cal.4th 760, 774.) Quoting

Arbuckle, we explained again that nothing in the Whistleblower Act suggests the

Legislature intended to so narrowly circumscribe a statutory damage remedy

designed to encourage public employees to report threats to health or safety, or the

wrongful or incompetent performance of public duty. (Ibid.)

24

C. Does section 1278.5 require judicial exhaustion?

On the issue of exhaustion of judicial remedies, we reach a similar

conclusion with respect to the instant plaintiff’s complaint for whistleblower

retaliation under section 1278.5. As indicated above, this statute prohibits a health

care facility from “discriminat[ing] or retaliat[ing], in any manner” against a

patient, employee, or member of the medical staff “because” that person has

presented to the facility a grievance, complaint, or report related to patient care of

safety. (Id., subd. (b)(1)(A).) In this regard, discriminatory treatment of a medical

staff member includes any unfavorable change in the member’s staff privileges.

(Id., subd. (d)(2).) If such a discriminatory act, known to hospital officials, occurs

within 120 days after the medical staff member has reported a grievance or

complaint related to patient health, care, or safety, there is a “rebuttable

presumption” that the act was done in retaliation for the complaint. (Id.,

subd. (d)(1).)

A medical staff member who has suffered retaliatory discrimination “shall

be entitled” to redress, including, as appropriate, reinstatement and reimbursement

of resulting lost income. (§ 1278.5, subd. (g).) Section 1278.5 does not

affirmatively state that these remedies may be pursued by means of a civil action,

but it necessarily assumes as much when it explains certain procedures that may

apply when “the member of the medical staff . . . has filed an action pursuant to

this section.” (Id., subd. (h), italics added.)

We note, at the outset, a distinction between the whistleblower provisions

addressed in Arbuckle and Runyon, on the one hand, and section 1278.5, on the

other — a distinction that further weakens any inference of the need, under the

latter statute, to overturn a quasi-judicial hospital disciplinary decision on

mandamus before a statutory whistleblower action is permitted. Unlike the

statutes at issue in Arbuckle and Runyon, section 1278.5 includes no express or

25

implied proviso that a protected individual who alleges retaliatory discrimination

cannot sue on this claim unless he or she first presents it to an administrative body.

Indeed, in contrast with those laws, section 1278.5 neither provides, nor

acknowledges the existence of, a parallel administrative proceeding in which the

complainant’s claim of retaliation, as such, might be addressed and resolved.

Section 1278.5’s failure to mention resort to such an administrative forum as a

condition to suit, where the Legislature has included such a requirement in similar

statutes, is a significant indicator that the Legislature did not contemplate such a

precondition in this instance.

Indeed, the Hospital’s peer review proceeding was not an administrative

forum designed to consider, and to redress by appropriate relief, plaintiff’s claim

of discriminatory treatment in retaliation for his reports about substandard patient

care by others. On the contrary, the ostensible purpose of the proceeding was to

address charges against him that deficiencies in his own competence and

professionalism constituted a danger to patient care. The retaliatory termination of

his privileges, he claims in essence, was accomplished by this pretextual means.

Thus, the peer review proceeding was not a potential administrative remedy for

the discrimination he allegedly suffered, but, according to his civil complaint, was

itself the instrument of that discriminatory treatment.10


10

It does appear that the charges addressed in the Hospital’s peer review

proceedings on the one hand, and plaintiff’s claims of retaliation on the other, are
factually related, in that they arise, at least in part, from the same disagreements
between plaintiff and Hospital nurses. The gravamen of the disciplinary charges
was that, on numerous occasions, plaintiff was belligerent and abusive to members
of the Hospital’s staff, displaying anger management problems that seriously
disrupted the Hospital’s routine, created a hostile work environment, and
interfered with his own clinical judgment, thus adversely affecting patient care.
For purposes of section 1278.5, on the other hand, plaintiff claims the real motive
for the Hospital’s effort to get rid of him was not his allegedly disruptive behavior

(Footnote continued on next page.)

26

Reasons cited in Arbuckle and Runyon for concluding that judicial

exhaustion was contrary to the legislative intent and purpose thus apply with even



(Footnote continued from previous page.)

toward coworkers that endangered patients, but his very acts of calling the
Hospital’s attention to those coworkers’ deficiencies in the interest of patient
health and safety. However, this alleged motive was not at issue, as such, in the
peer review proceedings. At the JRC hearing, the instructions given by the
presiding hearing officer, and the arguments of both parties, focused solely on
whether the MEC’s recommendation that plaintiff’s Hospital staff privileges not
be renewed was “reasonable and warranted,” in that the evidence disclosed an
“aspect of [plaintiff’s] competence or professional conduct that [was] reasonably
likely to be detrimental to patient[s’] safety or to the delivery of patient care.”
Though plaintiff apparently suggested during the JRC hearing that the Hospital
administration acted unfairly in presenting one-sided information to the MEC, his
counsel asserted in argument that “we’re not asking for a specific finding of bad
faith or improper motive by the hospital administration. The hospital
administration’s conduct explains how we got here, but it’s not something you
need to decide in terms of your issue of the removal of [plaintiff’s] privileges.”

Yet, as the parties’ conflicting claims in this case suggest, a hospital’s

concerns about a medical staff member’s ability to provide adequate patient care
— even if those concerns are reasonable and sincere — do not negate the
possibility that retaliatory animus against a whistleblower, a motive forbidden by
statute, was a contributing influence on the hospital’s quasi-judicial peer review
decision to terminate or limit the member’s staff privileges. These are distinct
issues, even if they happen to coalesce in a particular case, and the Legislature has
provided distinct fora and procedures to address each of them. We see no
indication that, in doing so, the Legislature intended to limit the statutory right to
sue for whistleblower retaliation to only those physicians who have shown on
mandamus that there was no reasonable quality-of-care basis for the actions taken
against them. We do not speculate whether such “mixed motives” were at work in
this case. Moreover, as we discuss in greater detail below, we express no views on
how the timing, issues, and remedies involved in a physician’s whistleblower
retaliation suit under section 1278.5 might be affected by a final, unreviewed
quasi-judicial peer review decision finding quality-of-care grounds to limit or
terminate the physician’s hospital staff privileges. These difficult questions are
beyond the scope of the narrow issue on which we granted review. They must
await future development, and we thus do not address them.

27

greater force here. In those cases, we emphasized that judicial exhaustion

requirements would seriously undermine the protective statutory purposes of the

Whistleblower Act even though the administrative procedures at issue were

designed to address and resolve the very claims of retaliation later asserted in civil

lawsuits. Here, by contrast, the administrative proceeding at issue was not a forum

for redressing a claim of retaliation, but instead is alleged to be a means by which

that retaliation occurred.

A requirement that plaintiff succeed in overturning an allegedly retaliatory,

as opposed to remedial, administrative decision before filing a statutory action

would very seriously compromise the legislative purpose to encourage and protect

whistleblowers. On mandamus review, the Hospital’s ruling in this case could not

be set aside if, on the face of the administrative record, fair procedures produced a

decision substantially supported by evidence and findings that plaintiff’s

professional shortcomings endangered patient care and thus warranted the

termination of his staff privileges. (Code Civ. Proc., § 1094.5, subds. (b)-(d); see

Arbuckle, supra, 45 Cal.4th 963, 977.)11 The difficulty of overcoming this hurdle


11

In Anton v. San Antonio Community Hosp. (1977) 19 Cal.3d 802 (Anton I),

we held that, when reviewing a private hospital’s quasi-judicial decision
terminating a physician’s staff privileges — a “ ‘fundamental vested right’ ” in the
nature of “ ‘a property interest which directly relates to the pursuit of [the
physician’s] livelihood’ ” (id., at p. 823) — the mandamus court must exercise its
“independent judgment” on “the weight of the evidence” (id., at p. 830). The
Legislature then amended Code of Civil Procedure section 1094.5 to provide that
such decisions are reviewable by the more deferential “substantial evidence”
standard. (Code Civ. Proc., § 1094.5, subd. (d), as added by Stats. 1978, ch. 1348,
§ 1, p. 4476.) Subsequent decisions held that the 1978 amendment, adding
subdivision (d) to Code of Civil Procedure section 1094.5, validly abrogated
Anton I. (Anton v. San Antonio Community Hospital (1982) 132 Cal.App.3d 638,
653 (Anton II), accord, Gaenslen v. Board of Directors (1985) 185 Cal.App.3d
563, 574.)

28

would significantly impede plaintiff’s opportunity, afforded to him without

apparent qualification by section 1278.5, to prove by a preponderance of evidence,

to a judicial fact finder, his or her distinct claim that there was a forbidden

retaliatory motive for the decision. In some cases, it would flatly contradict the

provision of section 1278.5, subdivision (d)(1) that, for purposes of a civil

whistleblower suit, there is a “rebuttable presumption” of retaliatory motive if a

discriminatory action is taken against a hospital physician, with the knowledge of

the facility’s responsible staff, within 120 days after he or she has submitted a

protected grievance or complaint.

Defendants stress that in Westlake, supra, 17 Cal.3d 465, we invoked, by

analogy, the law applicable to malicious prosecution suits to assert that a physician

may not base a common law tort action on the allegation that a quasi-judicial

medical peer review decision was wrongly motivated, unless the physician first

succeeds in showing, by mandamus, that the decision was erroneous with respect

to the issues actually adjudicated. We noted in particular that such a rule provided

some justified measure of protection against unfair tort liability for those

individuals who voluntarily undertake the difficult but socially important task of

policing hospital medical standards.

But the balance of competing interests is altered when the wrongful motive

at issue is one specifically prohibited by statute, in the public interest, under a

legislative policy that also seeks to safeguard the health and safety of hospital

patients. Section 1278.5 specifically contemplates that forbidden retaliatory action

against a medical staff whistleblower includes “any unfavorable changes in . . . the

terms or conditions of . . . privileges of the . . . member of the medical staff.” (Id.,

subd. (d)(2).) The statute further provides, without qualification, that a medical

staff member who has suffered such retaliatory discrimination is entitled to relief

for “any change in the terms or conditions of his or her privileges caused by the

29

[wrongful] acts of the [health care] facility” (id., subd. (g)). Clearly aware that

hospitals commonly “act[ ]” on medical staff privilege issues through quasi-

judicial peer review proceedings (§ 1278.5, subd. (h); Bus. & Prof. Code, § 809 et

seq.; see Westlake, supra, 17 Cal.3d 465), the Legislature has given no indication

that it intends to require a medical staff whistleblower to have such an allegedly

retaliatory “act[ ]” set aside in a separate court proceeding before he or she may

bring a statutory action.12

Indeed, as the Court of Appeal noted, the Legislature expressly

contemplated that a staff physician’s action under section 1278.5 might already

have begun while medical staff peer review proceedings against the plaintiff were

also still pending. When section 1278.5 was amended in 2007 to extend

whistleblower protection to hospital staff physicians (Stats. 2007, ch. 683, § 1,

p. 5809), a new subdivision (h) was added “to protect a [hospital] peer review

committee from . . . evidentiary demands on a pending peer review hearing from

the member of the medical staff who has filed an action pursuant to this section.”

(Italics added.) Under this provision, a hospital’s medical staff may petition the

court for an injunction, pending completion of a peer review process, to protect the

peer review committee from having to comply with such demands “from the

complainant” if they “would impede the peer review process or endanger the


12

Defendants suggest that, because the California Medical Association, the

principal sponsor of the 2007 amendments adding hospital staff physicians to the
list of persons protected by section 1278.5, did not expressly include quasi-judicial
hospital peer review proceedings in its examples of the devices health care
facilities use to retaliate against whistleblowing physicians, there was no
legislative intent to encompass such proceedings as potentially retaliatory acts.
The plain statutory language belies that contention; it provides that “[n]o health
care facility shall discriminate or retaliate, in any manner, against any . . . member
of the medical staff.” (Id., subd. (b)(1), italics added.)

30

health and safety of patients of the [hospital].” (Ibid.) Thus, by its terms,

subdivision (h), as added by the 2007 amendments, envisions that hospital peer

review proceedings against a physician, on the one hand, and the physician’s

section 1278.5 whistleblower action, on the other, might coexist simultaneously.

The legislative history of subdivision (h) is consistent with a conclusion

that the Legislature did not intend to require postponement of a section 1278.5

action even while peer review proceedings against the plaintiff were still in

progress, let alone until the final peer review decision had been set aside by

mandamus. As introduced on February 21, 2007, Assembly Bill No. 632 (2007-

2008 Reg. Sess.) (Assembly Bill No. 632) added hospital staff physicians to the

list of protected persons under section 1278.5, but it did not include the provisions

of subdivision (h).

The genesis of subdivision (h) is elucidated in a Senate Judiciary

Committee analysis prepared for a July 10, 2007, committee hearing. The analysis

reported that a major opponent of the proposed amendments, the California

Hospital Association (CHA), was concerned that extension of whistleblower

protection to hospital staff physicians would have a chilling effect on peer review

proceedings, because “the bill could stop a peer review process in its tracks by the

simple filing of a section 1278.5 action,” or “could compel a peer review

committee not to initiate a peer review process for fear that it could be considered

a retaliatory action . . . .” (Sen. Judiciary Com., analysis of Assem. Bill No. 632

as amended June 6, 2007, p. 9, italics added.)

The analysis further declared that “[t]he critical question, according to the

principal opponents of [Assembly Bill No.] 632, is what would happen to a

pending peer review action, or to the evidentiary protections and immunity from

liability that attend peer review actions, once the member of the medical staff files

a [section] 1278.5 action? The hospital, CHA states, could very well be required

31

to produce evidence in the [section] 1278.5 action even before that evidence has

been fully developed and presented in a [m]edical [s]taff fair hearing under

[Business and Professions Code section] 809 et seq.” (Sen. Judiciary Com.,

analysis of Assem. Bill No. 632, supra, p. 10, italics added.)

The Legislature responded to these concerns by a Senate amendment to the

bill on July 17, 2007. (Sen. Amend. to Assem. Bill No. 632, July 17, 2007.) It did

not do so by immunizing the final quasi-judicial decisions of peer review

committees from section 1278.5 actions, or by requiring, as a condition to a civil

suit under section 1278.5, that such a decision be set aside by mandamus, or even

by providing that a section 1278.5 action should be postponed, or held in

abeyance, pending such a final decision. Instead, it simply specified that if the

staff physician did file such a suit, the committee could obtain, for the duration of

its proceedings and no longer, an injunction against civil discovery demanded by

the physician if such discovery would impede those proceedings. (Sen. Amend. to

Assem. Bill No. 632, July 17, 2007.)

CHA was not satisfied with the July 17, 2007, amendment. In a “Senate

Floor Alert” dated August 21, 2007, CHA advanced various objections to

Assembly Bill No. 632, as then amended, and proposed further amendments.

Among other things, CHA argued that the medical peer review process, with its

requirements of administrative exhaustion subject to deferential review under

Code of Civil Procedure section 1094.5, would be “significantly undermined if [as

proposed subdivision (h) appeared to contemplate,] a member of the medical staff

is able to move directly into court without completing the fair hearing process.”

(David van der Griff, CHA Legis. Advocate, CHA, Sen. Floor Alert re Assem.

Bill No. 632 (Aug. 21, 2007) (CHA Senate Floor Alert), p. 2.)

Accordingly, CHA asserted, the bill should further guard against the

“chilling effect” of section 1278.5 suits on hospital peer review activities by

32

replacing subdivision (h)’s provision for injunctive relief against civil discovery

while peer review proceedings were still under way with a provision “that section

1278.5 does not apply to a proposed or taken investigation, corrective or

disciplinary action by a medical staff or a hospital governing board against a

member of a medical staff or an applicant unless and until there has been a

determination that the member or applicant has been determined to have

substantially prevailed in such action as specified in current law.” (CHA Sen.

Floor Alert, supra, at p. 2, italics added.)13 A Senate analysis of Assembly Bill

No. 632, as amended on July 17, 2007, reported generally that “CHA believes that

this bill needs further clarification to ensure that hospitals retain the right to take

disciplinary action with regard to disruptive behavior by employees, patients and

physicians, regardless of [such individuals’] protected activity.” (Sen. Rules.

Com., Off. of Sen. Floor Analysis, 3d reading analysis of Assem. Bill No. 632, as

amended July 17, 2007, p. 7.)

The only discernible response to these arguments was the addition of

subdivision (l) to section 1278.5 by a September 5, 2007, Senate amendment.

(Sen. Amend. to Assem. Bill No. 632, Sept. 5, 2007.) As so added, subdivision (l)

provides simply that “[n]othing in this section shall be construed to limit the

ability of the medical staff to carry out its legitimate peer review activities in

accordance with [s]ections 809 to 809.5, inclusive, of the Business and Professions

Code.” (§ 1278.5, proposed subd. (l) as amended in Sen., Sept. 5, 2007, italics

added.)


13

Though the wording of this proposal is not entirely clear, it appears to

suggest that a disciplined staff physician would not be able to sue under section
1278.5 without some form of prior review of the disciplinary decision to
determine whether the physician had “substantially prevailed.”

33

Still not satisfied, CHA submitted an “Assembly Floor Alert” dated

September 10, 2007. (David van der Griff, CHA Legis. Advocate, CHA, Assem.

Floor Alert re Assem. Bill No. 632 (Sept. 10, 2007) (CHA Assembly Floor Alert).)

Again CHA proposed replacement of subdivision (h)’s “injunction against

discovery” language with CHA’s earlier suggestion that no section 1278.5 action

should lie absent a prior “determination” that the plaintiff had “substantially

prevailed” in peer review proceedings. CHA insisted the current version of

subdivision (h) was not good enough, because it “does not . . . address the real

issue, which is allowing someone to get into court on a retaliation claim while a

peer review action is either still in the investigatory stage[,] . . . or underway, . . .

but the hearing/appeal is not yet completed and the [hospital’s] governing body

has not yet taken final action.” (CHA Assem. Floor Alert, supra, at p. 2.) If a

section 1278.5 suit were allowed under such conditions, CHA argued, the court

would be “independently assessing the validity of the unfinished peer review

action . . . in a circumstance where the burden of proof is on the hospital,” rather

than “pursuant to Code of Civil Procedure [section] 1094.5 . . . , where the

standard of review is . . . ‘substantial evidence’ . . . .” (CHA Assem. Floor Alert,

supra, at p. 2.)

The Legislature was thus specifically aware of CHA’s insistence that the

bill should protect medical staff peer review proceedings by not allowing a

whistleblower suit unless a hospital’s final disciplinary decision failed to survive

deferential mandamus review. Nonetheless, the Legislature made no changes in

response to the CHA Assembly Floor Alert. Specifically, it left intact subdivision

(h), in which, as noted above, the Legislature indicated its understanding that a

civil action under section 1278.5 might be commenced, and civil discovery

attempted, while peer review proceedings were still under way. The legislative

history thus supports the clear implications of the statutory language, i.e., that the

34

Legislature did not intend to require a hospital staff physician who claims a peer

review committee’s final disciplinary decision was an act in retaliation for

whistleblowing activity to succeed in setting the decision aside by mandamus

before bringing an action under section 1278.5.14

Defendants and their amici curiae stress that since 1989, California statutes

have specifically mandated a detailed system of hospital medical peer review with

quasi-judicial requirements of fair procedure — a system intended both to protect

hospitals and their patients against medical staff incompetence and to assure that

competent doctors are not arbitrarily denied staff privileges. (Bus. & Prof. Code,

§ 809 et seq.; see, e.g., Mileikowsky v. West Hills Hospital & Medical Center

(2009) 45 Cal.4th 1259, 1267; Kibler, supra, 39 Cal.4th 192, 199.) By so

providing, defendants insist, the Legislature clearly intended to retain the common

law Westlake rule, actually codified that rule, and thus rendered the final decisions

reached in quasi-judicial hospital peer review proceedings proof against all

challenges — including claims of wrongful motive — unless those decisions fail

to survive mandamus review. It is suggested that patient care and safety would be


14

Defendants note that, when recommending concurrence in the Senate’s

September 5, 2007, addition of subdivision (l), a final Assembly bill analysis
stated the intent of this amendment, as described by the Senate Judiciary
Committee, was “to ensure that the health facility peer review committee
continues to operate as it has under current law.” (Assem. Conc. in Sen. Amend.
to Assem. Bill No. 632, as amended Sept. 5, 2007, p. 3, italics added.) But this
description is entirely consistent with subdivision (l)’s assertion that section
1278.5 should not be construed to limit a hospital medical staff’s “ability” to carry
out its “legitimate” peer review “activities.” Nothing in either subdivision (l), or
in the legislative remark defendants cite, suggests an intent — contrary to the
understanding implicitly set forth in subdivision (h) — to require a disciplined
staff physician to mount a successful mandamus challenge to the final peer review
decision before filing a whistleblower suit under section 1278.5.

35

seriously undermined by allowing lay jurors to assess the validity of a medical

peer review decision.

But nothing we see in either the Business and Professions Code scheme, or

in section 1278.5 itself, expressly or implicitly impedes a legal claim, authorized

by the explicit terms of section 1278.5, that a hospital physician’s staff privileges

were terminated in retaliation for his or her attempts to alert the hospital to patient

care and safety problems. Sections 809 through 809.9 of the Business and

Professions Code are silent on that subject. Business and Professions Code

section 809.8 declares that nothing in the preceding provisions for medical peer

review “shall affect the availability of judicial review under [s]ection 1094.5 of

the Code of Civil Procedure.” (Italics added.) However, the section does not state

that such review is a precondition to filing a statutory action for whistleblower

retaliation.

Similarly, the 2007 amendment to section 1278.5, which authorizes

whistleblower suits by hospital staff physicians, contains no hint that the right to

sue is procedurally limited when a forbidden retaliatory action was taken through

medical peer review proceedings. As indicated above, the Legislature knew that

disciplinary actions against a hospital staff physician commonly do — indeed

must — occur through the peer review process. Thus, the Legislature’s failure to

expressly provide that a medical peer review decision be overturned on mandamus

before a physician could claim, under section 1278.5, that the decision constituted

forbidden retaliation strongly suggests no such limitation on the statutory cause of

action was intended.

We understand the need to implement both the statutory medical peer

review process, and the whistleblower protections provided by section 1278.5, in a

manner that serves the common aim of both schemes — the safe and competent

care of hospital patients. We also realize that two things may be true at the same

36

time — first, that personal enmity, including a forbidden retaliatory motive, was

involved, at least to some degree, in a peer review decision to restrict or terminate

a physician’s staff privileges, and second, that the peer review record nonetheless

discloses substantial quality-of-care grounds for the decision.

Under such circumstances, future litigants may contend that several

substantive factors, unrelated to the issue of mandamus exhaustion, do, or should,

limit the remedies available for the retaliatory aspect of the decision. As we have

explained, Civil Code section 43.7 immunizes the duly appointed members of a

properly constituted medical peer review committee from monetary liability for

nonmalicious, reasonably informed, and reasonably warranted disciplinary

decisions against a hospital staff physician. As we discuss below, the federal

Health Care Quality Improvement Act of 1986 (HCQIA; 42 U.S.C. § 11101 et

seq.) appears to require an even broader state immunity from monetary liability for

both individuals and health care facilities that participate in reasonably informed,

reasonably justified disciplinary decisions by qualified medical peer review

bodies.

Moreover, we recently held, under California’s Fair Employment and

Housing Act, that where an employer’s decision to terminate an employee

involved a combination of legitimate reasons and statutorily forbidden

discrimination, but the employer proves it would have reached the same

conclusion even absent the wrongful discriminatory motive, the terminated worker

is not entitled to reinstatement, lost income, and noneconomic damages otherwise

available under the statute. In such a case, the worker’s remedies are limited to

injunctive and declaratory relief, and legal fees and costs. (Harris v. City of Santa

Monica (2013) 56 Cal.4th 203, 232-235.) It is possible to argue that similar

limitations should apply, in an action under section 1278.5, when a physician

shows that his or her medical whistleblowing activities helped fuel the hospital’s

37

desire to restrict or terminate staff privileges, but the hospital then demonstrates

that the peer review process would validly have produced the same result, on

legitimate quality-of-care grounds, even absent the retaliatory animus.

It may also be urged that efficiency, and proper deference to the peer

review process, justify delaying a trial of a civil action under section 1278.5 until

peer review proceedings involving the same hospital staff physician are complete.

In a related vein, questions may arise about the extent to which the findings made,

and the issues determined, in a final, unreviewed quasi-judicial peer review

proceeding should have preclusive effect in a section 1278.5 trial. We stress,

however, that all these matters are beyond the scope of the narrow issue on which

we granted review. We therefore pass no judgment on them, and await their

development in future cases.

Finally, in an argument raised for the first time in this court, defendants

urge that serious questions of federal preemption arise under HCQIA if section

1278.5 is construed to allow a staff physician to challenge a quasi-judicial hospital

peer review decision in a whistleblower action for damages without first

overturning the decision on mandamus. Amici curiae Dignity Health and

Adventist Health System/West echo that argument, and suggest further that

HCQIA was intended to entirely preclude state laws granting whistleblower

protection to hospital staff physicians.

HCQIA seeks to address the “nationwide problems” of the “increasing

occurrence of medical malpractice,” and of “the need to improve the quality of

medical care,” through “greater efforts than those that can be undertaken by any

individual State.” (42 U.S.C. § 11101(1)). The statute’s focus is “effective

professional peer review.” (Id., § 11101(3).) In this regard, Congress has found

that the threat of private damages liability discourages physicians from

participating in the peer review process (id., § 11101(4)), and that “[t]here is an

38

overriding national need to provide incentive and protection for physicians

engaging in effective professional peer review” (id., § 11101(5)).

Accordingly, HCQIA provides, in pertinent part, that if a “professional

review action” by a “professional review body”15 meets statutory standards,

participants in the professional review process “shall not be liable in damages

under any law . . . of any [s]tate . . . with respect to the action.” (42 U.S.C.

§ 11111(a)(1).) To qualify for this immunity, the professional review action “must

be taken— [¶] (1) in the reasonable belief that the action was in the furtherance

of quality health care, [¶] (2) after a reasonable effort to obtain the facts of the

matter, [¶] (3) after adequate notice and hearing procedures are afforded to the

physician involved or after such other procedures as are fair to the physician under

the circumstances, and [¶] (4) in the reasonable belief that the action was

warranted by the facts known after such reasonable effort to obtain [the]

facts . . . .” (Id., § 11112(a).)

A professional review action is presumed to have met these standards,

subject to rebuttal by a preponderance of evidence. (42 U.S.C. § 11112(a).)

Federal decisions generally have held that where the objective standards for

HCQIA immunity are met, i.e., where the record establishes a sufficient quality-

of-care basis for the peer review action, the disciplined physician cannot overcome

the immunity by showing the peer reviewers acted in bad faith or with hostile

motives. (E.g., Poliner v. Texas Health Systems (5th Cir. 2008) 537 F.3d 368,


15

A “professional review body” includes a “health care entity . . . which

conducts professional review activity,” “the governing body or any
committee of [the] entity which conducts [such] activity,” and “any
committee of the [entity’s] medical staff . . . when assisting the governing
body in a professional review activity.” (42 U.S.C. § 11151(11).)

39

379-380, and cases cited; Brader v. Allegheny General Hospital (3d Cir. 1999)
167 F.3d 832, 840; Austin v. McNamara (9th Cir. 1992) 979 F.2d 728, 734.)16

The substantive effect of HCQIA on section 1278.5’s whistleblower

protection for hospital staff physicians was not raised below, was not included in

defendants’ petition for review, and is beyond the scope of the issue on which we

granted review. Accordingly, we decline to address that question in detail. We

note parenthetically that, at a minimum, HCQIA does not preclude such remedies

as reinstatement and injunctive relief. Moreover, it allows the presumption of

immunity to be rebutted by a preponderance of evidence that the peer review

participant acted without adequate effort to ascertain the relevant facts, or had no

reasonable ground to believe, based on the known facts, that the action was

warranted on quality-of-care grounds. Thus, nothing in HCQIA’s terms absolutely

forecloses a state tort suit alleging that a peer review decision constituted improper

retaliation against a whistleblower.17

Nor do we see any basis to conclude that HCQIA precludes a hospital

physician from bringing a state law whistleblower suit claiming that a hospital

peer review decision was retaliatory until the physician has first obtained


16

As noted above, California provides a similar immunity from monetary

liability to members of a medical peer review committee, acting within the scope
of their quality care assurance duties, who make reasonable efforts to ascertain the
relevant facts and reasonably believe their actions are warranted on quality-of-care
grounds, but the California immunity is expressly limited to actions taken “without
malice.” (Civ. Code, § 43.7, subd. (b).)

17

Plaintiff also urges that HCQIA immunity is superseded if a peer review

decision, even one reasonably supported on quality-of-care grounds, involved a
criminal purpose against the disciplined physician, such as the whistleblower
retaliation made a misdemeanor by section 1278.5 As indicated above, we have
no occasion to decide that issue, and we decline to do so.

40

mandamus relief against the decision. HCQIA says or implies nothing about the

procedures states may utilize to determine whether medical peer review decisions

are subject to challenge. Accordingly, we are satisfied that HCQIA does not call

into question the interpretation of section 1278.5 we have reached above.18



18

As noted above, our conclusions are in apparent conflict with Nesson,

supra, 204 Cal.App.4th 65. There, a physician filed a suit challenging a hospital’s
suspension, after peer review, of his staff privileges, and the resulting termination
of his contract to provide hospital radiology services. Included in the complaint
were both common law and statutory causes of action, including a claim under
section 1278.5. With no independent analysis, the Court of Appeal in Nesson
applied Westlake to hold that the entire action, including the section 1278.5 claim,
must fail because the plaintiff had not first exhausted internal hospital
administrative remedies, then filed and prevailed in a mandamus proceeding to
overturn the decision. Additionally, Nesson held, the section 1278.5 cause of
action could not succeed because the evidence showed that the suspension of the
plaintiff’s privileges was unrelated to the patient safety complaints he had made
over eight months earlier. As noted, the Nesson court gave no critical
consideration to whether Westlake should govern under the specific provisions and
policies of section 1278.5, and we find Nesson’s analysis of the judicial exhaustion
issue unpersuasive in that regard. To the extent Nesson, supra, 204 Cal.App.4th
65, contradicts our analysis in this case, we disapprove that decision.

41

DISPOSITION

We conclude that a hospital staff physician who claims a hospital decision

to restrict or terminate his staff privileges was an act in retaliation for his or her

whistleblowing in furtherance of patient care and safety need not seek and obtain a

mandamus petition to overturn the decision before filing a civil action under

section 1278.5. Accordingly, we affirm the judgment of the Court of Appeal. To

the extent Nesson v. Northern Inyo County Local Hospital Dist. (2012)

204 Cal.App.4th 65 is inconsistent with our conclusion, that decision is

disapproved.

BAXTER, J.

WE CONCUR:

CANTIL-SAKAUYE, C.J.
KENNARD, J.
WERDEGAR, J.
CHIN, J.
CORRIGAN, J.
LIU, J.

42



See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Fahlen v. Sutter Central Valley Hospitals
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted
XXX 208 Cal.App.4th 557
Rehearing Granted

__________________________________________________________________________________

Opinion No.
S205568
Date Filed: February 20, 2014
__________________________________________________________________________________

Court:
Superior
County: Stanislaus
Judge: Timothy W. Salter

__________________________________________________________________________________

Counsel:

Hanson Bridgett, Joseph M. Quinn, Glenda M. Zarbock, Lori C. Ferguson; Arent Fox, Lowell C. Brown,
Debra J. Albin-Riley and Jonathan E. Phillips for Defendants and Appellants.

Fulbright & Jaworski, Mark A. Kadzielski, Robert M. Dawson, Tambry L. Bradford and Kristina Ayers for
Kaiser Foundation Hospitals as Amicus Curiae on behalf of Defendants and Appellants.

Manatt, Phelps & Phillips, Barry S. Landsberg, Doreen W. Shenfeld and Joanna S. McCallum for Dignity
Health and Adventist Health System/West as Amici Curiae on behalf of Defendants and Appellants.

Horvitz & Levy, David S. Ettinger, H. Thomas Watson and Peder K. Batalden for Good Samaritan
Hospital, L.P., Los Robles Regional Medical Center, San Jose Healthcare System, L.P., Riverside
Healthcare System, L.P., West Hills Hospital and Fountain Valley Regional Hospital & Medical Center as
Amici Curiae on behalf of Defendants and Appellants.

Davis Wright Tremaine and Terri D. Keville for Scripps Health, Sharp HealthCare and St. Joseph Health as
Amici Curiae on behalf of Defendants and Appellants.

Jana N. DuBois; Davis Wright Tremaine, Terri D. Keville; Arent Fox, Lowell C. Brown, Debra J. Albin-
Riley and Jonathan E. Phillips for California Hospital Association as Amicus Curiae on behalf of
Defendants and Appellants.

DiCaro, Coppo & Popcke, Carlo Coppo, Michael R. Popcke and Shelley A. Carder for Beta Healthcare
Group as Amicus Curiae on behalf of Defendants and Appellants.

Law Offices of Stephen D. Schear, Stephen D. Schear; Justice First and Jenny Huang for Plaintiff and
Respondent.

Center for Legal Affairs, Francisco J. Silva and Long X. Do for California Medical Association and
American Medical Association Amici Curiae on behalf of Plaintiff and Respondent.








Counsel who argued in Supreme Court (not intended for publication with opinion):

Joseph M. Quinn
Hanson Bridgett
425 Market Street, 26th Floor
San Francisco, CA 94105
(415) 777-3200

Lowell C. Brown
Arent Fox
555 W. Fifth Street, 48th Floor
Los Angeles, CA 90013-1065
(213) 629-7400

Stephen D. Schear
Law Offices of Stephen D. Schear
2831 Telegraph Avenue
Oakland, CA 94609
(510) 832-3500

Long X. Do
Center for Legal Affairs
1201 J Street, Suite 200
Sacramento, CA 95814
(916) 444-5532


Petition for review after the Court of Appeal affirmed in part and denied in part an order denying a special motion to strike in a civil action. This case presents the following issue: Must a physician obtain a judgment through mandamus review setting aside a hospital's decision to terminate the physician's privileges prior to pursuing a whistleblower retaliation action under Health and Safety Code section 1278.5?

Opinion Information
Date:Citation:Docket Number:
Thu, 02/20/201458 Cal. 4th 655 (2014), 318 P.3d 833, 168 Cal. Rptr. 3d 165, 37 IER Cases 1215, 14 Cal. Daily Op. Serv. 1722, 2014 Daily Journal D.A.R. 2006.S205568

Opinion Authors
OpinionJustice Marvin R. Baxter
ConcurChief Justice Tani Cantil-Sakauye, Justice Carol A. Corrigan, Justice Goodwin Liu, Justice Joyce L. Kennard, Justice Kathryn M. Werdegar, Justice Ming W. Chin

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May 23, 2014
Annotated by Steven Spriggs

Facts: Plaintiff physician was employed by Gould Medical Group (Gould), with nonprovisional staff privileges at Memorial Medical Center (operated by Sutter Central Valley Hospital). From 2004 to 2008, plaintiff argued with Hospital nurses (at least) ten times about poor patient care and their failure to follow his instructions. He reported the insubordination and substandard care issues to supervisors and Hospital administrators in several of these instances. After the last of these arguments, Gould fired the plaintiff after hearing complaints from the Hospital’s chief operating officer (COO). The COO hoped this would prevent the need for peer review proceedings about staff privileges at the Hospital

Plaintiff inquired about his staff privileges, noting that he intended to open his own practice. The COO told plaintiff he should resign from the Hospital staff and leave town, or the Hospital would begin peer review proceedings, which would result in a report to the Medical Board of California. The Hospital then convened an ad hoc investigative committee, which presented a report to the medical executive committee (MEC), the group responsible for reviewing staff privilege access. After the MEC declined to renew plaintiff’s privileges, plaintiff requested a hearing from the judicial review committee (JRC) to evaluate the decision.

After an extensive evidentiary hearing, the JRC unanimously reversed the MEC’s decision. The JRC noted that while plaintiff’s interactions with the nursing staff were inappropriate, the evidence failed to show that plaintiff was professionally incompetent or had endangered the delivery of patient care. The hospital’s board of trustees (Board), which had the final decision over staff privileges, asked the JRC to thoroughly evaluate again each individual alleged incident of misconduct by plaintiff. After the JRC found the Board’s request to be overwhelming and unreasonable, the Board disagreed with the JRC’s initial findings. The plaintiff did not seek direct judicial review by petitioning for a writ of mandamus to set aside the Board’s decision. After the Hospital filed a report announcing its action with the Medical Board of California, plaintiff filed the instant complaint.

Procedural history: Plaintiff brought suit against the Hospital, the COO, and various others, alleging that the defendants took action against him in retaliation for his complaints about the poor treatment he observed at the Hospital. He sought reinstatement, a declaration of defendants’ bad faith, economic and non-economic compensation, attorney fees, punitive damages, and other relief permitted by law. He brought these claims under the health care facility whistleblower statute (Health & Safety Code section 1278.5), bad faith provisions (Bus. & Prof. Code section 803.1(b)(6)), health care retaliation provisions (Bus. & Prof. Code sections 510 and 2056), and various common law tort claims.

Defendants demurred and filed a motion under the anti-SLAPP statute (Civ. Proc. Code section 425.16), asserting that the plaintiff’s causes of actions arose from defendants’ protected activity and that the suit lacked probable merit because plaintiff had failed to timely seek judicial review of the hospital’s decision by petitioning for mandamus (meaning the decision couldn’t be attacked anew). The trial court held overruled the demurrer and denied the anti-SLAPP motion, noting that disciplinary action is not protected activity. The court also held that plaintiff had established probable merit because he was not required to exhaust judicial review by seeking and obtaining a writ of mandamus before bringing suit.

The Court of Appeal held that the Hospital’s peer review process was protected under the anti-SLAPP statute. The Court of Appeal agreed with the trial court regarding probable merit. The Court of Appeal denied the anti-SLAPP motion with respect to counts brought under the Health & Safety Code sections and Bus. & Prof. Code sections, but granted it with respect to the remaining ones. The California Supreme Court granted defendants’ petition for review on the issue of whether plaintiff needed to have first prevailed in a mandamus proceeding before bringing suit.

Issues: Whether a physician may bring a civil suit under California Health and Safety Code section 1278.5, alleging that he or she lost staff privileges as retaliation for whistleblowing, without first pursuing a mandamus judgment to set aside the hospital’s quasi-judicial decision.

Holding: A physician may pursue a statutory claim for relief in response to a retaliatory loss or restriction of staff privileges for whistleblowing without first seeking and obtaining a mandamus judgment setting aside the hospital’s decision.

Analysis: Cal. Health & Safety Code section 1278.5 states that California encourages members of the medical staff to notify the government of unsafe patient care and conditions and outlaws any manner of retaliation by hospitals against staff members who raise concerns with the hospital and its staff members. The statute provides for civil penalties for each violation, reinstatement, backpay, legal costs, and appropriate remedies. It also states that after a staff member has filed an action under the statute, civil discovery can be postponed by petition if it will impede pending peer review proceeding.

In Westlake Community Hosp. v. Superior Court, 17 Cal.3d 465 (1976), the court held that one must exhaust ordinary means of judicial review of a quasi-judicial administrative decision before bringing a common law suit based on that decision. In regard to applying this principle to statutory claims, the court has found clear legislative intent to permit statutory whistleblower action without prior exhaustion of administrative and judicial remedies. See, e.g., Campbell v. Regents of University of California, 35 Cal.4th 311 (2005); State Bd. of Chiropractic Examiners v. Superior Court, 45 Cal.4th 963 (2009); Runyon v. Board of Trustees of California State University, 48 Cal.4th 760 (2010). In contrast to the statutes in the past cases, section 1278.5 does not provide or acknowledge the existence of a parallel administrative proceeding to address the retaliation claim, suggesting its remedies are intended to be sought through civil action in court. The Hospital’s JRC proceeding was designed to establish plaintiff’s competence, but not whether he had been terminated as a retaliatory measure. Furthermore, the peer review process was itself the retaliatory action.

A mandamus proceeding couldn’t be set aside if, facially, the Hospital’s procedure led to a decision substantially supported by evidence warranting termination of staff privileges. The difficulty of overcoming that result would weaken plaintiff’s opportunity to prove by a preponderance of evidence that there was an illegal retaliatory motivation for the decision. The court noted that in some situations this would contradict the statutory provision establishing a rebuttable presumption of retaliatory motive when the physician is fired soon after submitting a protected complaint.

The statute’s provision for postponing civil discovery itself clarifies that the statute allows a suit to be brought before other processes are exhausted. The legislative history of that provision also supports this view, noting that the Legislature included the provision in response to concerns from the California Hospital Association (CHA). Further amendment to the statute made clear that section 1278.5 was not designed to interfere with “legitimate” peer review activities. The Legislature was made clearly aware of the CHA’s strong position that civil action shouldn’t occur until after mandamus review and did not comply with it.

Remedies under retaliatory aspects of the decision may be limited by substantive factors unrelated to mandamus. California Civil Code section 43.7 immunizes peer review committee members from liability for nonmalicious, reasonable conclusions. The federal Health Care Quality Improvement Act of 1986 (HCQIA) (42 U.S.C. section 11101) provides an even broader immunity on the same grounds. The court noted that it had limited remedies when the employer would have come to the same conclusion absent a wrongful motive. Harris v. City of Santa Monica, 56 Cal.4th 203 (2013). The court declined to address whether efficiency and proper deference to the peer review process would justify delaying a section 1278.5 trial. The court also declined to address in detail whether HCQIA preempted or had any effect on section 1278.5, though it noted that the federal statute didn’t absolutely foreclose a state tort suit alleging retaliation. For the reasons above, the court held that a physician need not seek and obtain a mandamus petition before filing under section 1278.5.

Definitions:
Demur- to challenge the opposing party’s pleadings.
Protected activity- action for which someone cannot be forced to face legal punishment.
SLAPP- an acronym for “strategic lawsuit against public participation.”
Whistleblower- someone who exposes misconduct from within an organization.
Writ of mandamus- a court order to make someone take a specific action (or refrain from taking one).

Key Statutes:
Health Care Quality Improvement Act of 1986, 42 U.S.C. § 11101 et seq. (2011)
Cal. Bus. & Prof. § 510
Cal. Bus. & Prof. Code § 803.1(b)(6)
Cal. Bus. & Prof. Code § 805
Cal. Bus. & Prof. § 2056
Cal. Civ. Code § 43.7
Cal. Civ. Proc. Code § 425.16
Cal. Health & Safety Code § 1278.5

Key Cases:
Harris v. City of Santa Monica, 56 Cal.4th 203 (2013)
Runyon v. Board of Trustees of California State University, 48 Cal.4th 760 (2010)
State Bd. of Chiropractic Examiners v. Superior Court, 45 Cal.4th 963 (2009)
Miklosy v. Regents of University of California, 44 Cal.4th 876 (2008)
Kibler v. Northern Inyo County Local Hospital Dist., 39 Cal.4th 192 (2006)
Campbell v. Regents of University of California, 35 Cal.4th 311 (2005)
Westlake Community Hosp. v. Superior Court, 17 Cal.3d 465 (1976)
Nesson v. Northern Inyo County Local Hospital Dist., 204 Cal.App.4th 65 (2012)

Tags: Whistleblowing, Health & Safety Code § 1278.5, retaliation, physician, hospital, mandamus, health care, anti-SLAPP, SLAPP, strategic lawsuit against public participation, HCQIA, Health Care Quality Improvement Act of 1986, peer review, California Hospital Association, quasijudicial administrative decision, exhaustion, Medical Board of California

Annotated by Steven Spriggs