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, 02/20/2014 | 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. | S205568 |
| Brief Downloads | |
 | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| 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: Key Statutes: Key Cases: 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 |
