IMPORTANT
INFORMATION FOR HEALTH PLANS AND HMO'S
(Archives - continued)
California Statute Limiting Appeals of
Medical Board Discipline Ruled Unconstitutional
A California Court of Appeal has
ruled unconstitutional a new California law that limited appeals by physicians of
discipline imposed by the Medical Board. In the case of Leone v. Division of Medical
Quality (1997) 97 CDOS 7635, the Second Appellate District issued an opinion voiding
as unconstitutional a revision to Business and Professions Code ß2337, which eliminated
the rights of physicians to take a full appeal from unfavorable Superior Court decisions
on disciplinary orders from the Medical Board. The new law had provided that the procedure
in the court of appeal was limited to writ petitions, which are much more streamlined and
easy to deny, rather than a full appeal. The court of appeal held that the legislature was
without the authority to abridge this basic appellate right and that the law was therefore
unconstitutional.
California Supreme Court Agrees to Decide
Potvin case
The California Supreme Court has
agreed to hear the Potvin v. Metropolitan Life case in which a lower court had announced
that managed care plans have an obligation to give terminated physicians "fair
procedure" prior to termination, regardless of the reason or basis for the
termination. By agreeing to hear the case, the Supreme Court has automatically vacated the
lower court decision. It will probably take a year for the case to proceed through
briefing and oral argument to a decision.
Brock Phillips, August 1997
Court of Appeal Reaffirms Immunities for Medical Board
Investigators
Broad immunities exist for state
employees carrying out investigative and prosecutorial duties. Those immunities apply to
Medical Board investigators and members of the attorney general's office who prosecute
disciplinary cases for the Medical Board. This was underscored in the recently decided
case of Vincent Bradley v. Medical Board of California (97 CDOS 5663) in which a
California appellate court rebuffed Dr. Bradley's charges that those who investigated and
prosecuted the action against his medical license violated his state and federal rights
through an "entrapment" type of investigation.
Dr. Bradley was accused of improper prescribing of controlled substances and as part of
its investigation the Board sent investigators into his office posing as patients seeking
prescriptions for controlled substances. The prescriptions he provided to the
investigators posing as patients became part of the case against his license. He
ultimately surrendered his license but sued numerous individuals involved in his
investigation and prosecution, claiming violations of his rights. Not only did the
appellate court throw out Dr. Bradley's suit, it ordered him to pay the state's costs for
defending the appeal.
Brock Phillips, July 1997
Metropolitan Life petitions the California Supreme Court
to overturn the Potvin decision.
By now the Potvin decision, which
came out of the California Court of Appeal on 30 April 1997, is quite well known in the
managed care and physician communities. That court of appeal decision requires a managed
care plan or payor to give a "deselected" physician a due process hearing. It is
not clear from the decision whether the right to a due process hearing arises every time a
physician is deselected, regardless of the reason, or whether the right is confined to
deselections for quality of care concerns.
In any event, not surprisingly, Metropolitan Life has petitioned the California Supreme
Court to hear the case. As of the end of June the court had not responded to this request.
The question of whether
managed care entities should be required to provide due process hearings to excluded or
deselected physicians similar to those required of hospital medical staffs and private
peer organizations is hotly disputed by HMO's and other managed care providers. They
maintain that their relationships with providers are purely commercial arrangements
governed by their contracts, including without cause termination clauses. Advocates for
physicians argue that the common law which evolved around exclusions from hospital medical
staffs and other peer organizations is equally applicable to managed care organizations
which increasingly possess great market power. This view has been gaining currency with
the courts. In 1996 both the New Hampshire and Connecticut supreme courts found a right to
a hearing in the cases of Napoletano v. Cigna (Connecticut) and Harper v. Healthsource New
Hampshire Inc. (New Hampshire). Two other California decisions, Ambrosino v. Metropolitan
Life Insurance and Delta Dental Plan v. Banasky also appear to graft the hospital medical
staff common law onto expulsions from managed care provider panels.
Brock Phillips, July 1997
Bad Faith Wrongful Termination Defined
In Cotran v.
Rollins Hudig Hall Intl., Inc. (1998) 98 CDOS 58, plaintiff, hired under an implied
agreement not to be dismissed except for good cause, was terminated for sexual harassment.
He strongly denied harassing fellow employees and sued his employer for wrongful
termination.
The California
Supreme Court held that the jury was not to decide whether the plaintiff actually harassed
the employees, but whether the factual basis on which the employer concluded a
dischargable act had been committed was reached honestly, after an appropriate
investigation, and for reasons that are not arbitrary or pretextual.
When an employee is
fired for misconduct and sues, the employer's actions are judged by not whether the
misconduct actually occurred, but by whether the employer's response to the allegations of
misconduct were fair, honest, reasonable, and in good faith.
Delbert
Gee, February 1998
Investigation By Attorney Not Privileged
In Wellpoint
Health Networks v. Superior Court (1997) 97 CDOS 8639, the Court of Appeal held that
an investigation by a law firm retained by an employer to investigate allegations of a
hostile work environment by an employee was not protected from discovery by the
attorney-client or attorney work product privileges in a subsequent employment
discrimination action where the employer contended that it took reasonable corrective or
remedial action upon learning of the allegations since the investigation could be evidence
of its reasonableness.
The Court also held
that if the employee contends that the attorney did not perform the investigation as an
attorney, but as part of the employer's normal method of dealing with such allegations,
the employee must also present evidence of the employer's routine assignment of
investigations to its outside counsel.
Delbert
C. Gee, December 1997
Supreme Court Agrees to Hear Guz
v. Bechtel
The California Supreme Court granted
the petition for hearing on the Guz v. Bechtel National case on August 27, 1997. The
Court of Appeal's decision was vacated and the Supreme Court will now take up the issue of
defining what is "at will employment".
Delbert Gee, August 1997
Court Defines At-Will Employment
In Guz v. Bechtel National, Inc.
(97 CDOS 3552), the First Appellate District of the Court of Appeal held that evidence of
long-term employment, consistent promotions, salary increases, and recognition for
outstanding work, coupled with personnel policies indicating that employment should be
terminated only for cause, created a triable issue of fact as to whether a terminated
employee was an at-will employee.
The absence of any of the above evidence is not determinative of at-will employment. The
question of whether employment is at-will is determined by the totality of the
circumstances.
The Court held that the absence of oral assurances of continued employment for good work
alone was not determinative of at-will employment.
Delbert C. Gee, July 1997
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