In
Copyright Since September 11,
2000
This web site is in no manner affiliated with any Kaiser entity and the for profit Permanente Permission is granted to mirror this web site - Please acknowledge where the material was obtained. Link for Translation of the Kaiser Papers kaiserpapers.com/legalstuff/ Mirrored here for historical purposes from: http://www.leagle.com/xmlResult.aspx?xmldoc=In%20CACO%2020120215050.xml&docbase=CSLWAR3-2007-CURR See also: Kaiser ordered to pay woman more than $28 million http://www.latimes.com/business/la-fi-jury-awards-kaiser-cancer-patient-20150326-story.html This case did not go to arbitration. https://kaiserpapers.com/legalstuff/anna-rahm-did-not-go-to-arbitration.html https://kaiserpapers.com/legalstuff/pdfs/Reporter's Transcript - 12-8-10.pdf https://kaiserpapers.com/legalstuff/pdfs/Answer to Petition to Compel Arbitration.doc for additional understanding of the situation: https://kaiserpapers.com/legalstuff/pdfs/USCOURTS-caed-2_07-cv-00520-0.pdf
Arnold
& Porter, Lawrence
A. Cox, Brian
K. Condon; Taylor
Blessey, N.
Denise Taylor
and Jennifer
A. Scher
for Petitioners.
Cole
Pedroza, Curtis
A. Cole and Cassidy
E. Cole for
California Medical Association, California Hospital Association and
California Dental Association, as Amici Curiae on behalf of Petitioners.
No
appearance for Respondent.
Schernoff
Bidart Echeverria, Michael
J. Bidart, Ricardo
Echeverria, Steven
Schuetze;
The Ehrlich Law Firm and Jeffrey
Isaac Ehrlich
for Real Parties in Interest.
ZELON, J.
Anna Rahm and her parents, Lynnette and James
Rahm, filed a complaint against Kaiser Foundation Health Plan and two
Kaiser health care providers. The complaint alleged that the defendants
had devised an insurance compensation scheme that induced Kaiser's
physicians to deny costly medical services to plan members. Plaintiffs
asserted that, as a result of the scheme, Kaiser's health care
providers had improperly delayed an MRI for Anna, resulting in
significant injuries. The complaint included four causes of action
against each defendant and sought punitive damages for breach of the
implied covenant of good faith and fair dealing and intentional
infliction of emotional distress.
Defendants filed a motion to strike the
punitive damages allegations arguing that plaintiffs had failed to
comply with the requirements of Code of Civil Procedure section 425.13,
subdivision (a). The trial court ruled that statute did not apply to
plaintiffs' punitive damages claims and denied the motion.
Defendants filed a petition for writ of mandate
seeking an order directing the superior court to grant the motion to
strike. We summarily denied the petition and defendants filed a
petition for review in the California Supreme Court. While defendants'
petition for review was pending, plaintiffs dismissed their punitive
damages claims against the Kaiser health care providers. The Supreme
Court granted review and directed this court to issue an order to show
cause; this court issued that order on August 25, 2011.
We now conclude that plaintiffs were not
required to comply with section 425.13 because: (1) the statute does
not apply to plaintiffs' claims against Kaiser Foundation Health Plan,
and (2) plaintiffs have dismissed their punitive damages claims against
the health care provider defendants.
A. Summary of Facts Preceding
Plaintiffs' Lawsuit1
Anna Rahm is a member of the Kaiser Permanente
Traditional Plan (the plan), which provides its members medically
necessary health care in exchange for monthly premiums. In August of
2008, Anna began experiencing back pain. Anna's parents, Lynnette and
James Rahm, took Anna to a chiropractor. After the treatments failed to
alleviate Anna's pain, the chiropractor recommended that Anna "consult
with a medical doctor because she was in need of an MRI."
In March of 2009, Anna met with Charlene Huang,
a primary care physician at Kaiser. Lynnette accompanied Anna to the
appointment and requested that her daughter receive an MRI. Although
Huang acknowledged that Anna's chiropractor had determined that her
back pain was "`severe,'" Huang refused to order an MRI. Huang referred
Anna "to the physical medicine department at [Kaiser] and also
prescribed pain medications and steroids, a much less expensive
treatment than an MRI. . . ." Anna took the prescribed medications but
her pain persisted.
Two weeks later, on March 24, 2009, Anna met
with Ngan Vuong, a physical medicine doctor at Kaiser. Lynnette
accompanied Anna to the appointment and again requested that Anna
receive an MRI. Vuong, however, recommended that Anna receive an
epidural and suggested that her pain could be remedied through changes
to her nutrition and exercise habits. Lynnette told Vuong she did not
want her daughter to receive an epidural and renewed her request for an
MRI. Voung refused to authorize an MRI.
In April of 2009, Anna sought acupuncture
treatment for her pain. The treatments were unsuccessful and the
acupuncturist recommended that Anna request an MRI from her doctor.
Lynnette called Vuong and informed her that Anna's acupuncturist had
recommended an MRI. Vuong again declined an MRI and referred Anna to
Kaiser's physical therapy department.
In May and June of 2009, Anna continued her
acupuncture treatments. Two different acupuncturists concluded that
Anna was in need of an MRI. Anna also attended several physical therapy
sessions at Kaiser, but was forced to discontinue the treatments
because they were too painful. Kaiser's physical therapy department
"recommended that [Anna] receive an MRI."
Lynette called Vuong again and explained that a
chiropractor, two acupuncturists and Kaiser's physical therapy
department had all recommended an MRI. Vuong rejected these
recommendations because they were not made by medical doctors, but
invited the Rahms to seek a second opinion.
Lynnette elected to schedule a meeting with
another doctor. Prior to the appointment, Lynnette contacted Huang,
Anna's primary care physician, "as a last ditch effort" to get an MRI.
Lynnette summarized the treatments Anna had undergone since her initial
visit with Huang. Huang finally agreed to authorize an MRI, which was
performed on July 2, 2009.
Anna's MRI indicated that she had an
"aggressive mass" in her pelvis. A biopsy revealed that Anna was
suffering from a "high grade" osteosarcoma, which is "one of the
fastest growing types of osteosarcoma, meaning that [Kaiser's] three
month delay in ordering [Anna's] MRI allowed the cancer to spread and
ultimately substantially contributed to [Anna's] poor prognosis." Anna
underwent chemotherapy and had numerous surgeries that resulted in the
loss of her right leg and portions of her pelvis and spine.
B. Plaintiffs' Complaint
On July 15, 2010, Anna and her parents filed a
complaint against Kaiser Foundation Health Plan (Kaiser Health Plan or
Health Plan), which administered Anna's health care plan. The complaint
also named Kaiser Foundation Hospitals (Kaiser Hospitals) and Southern
California Permanente Medical Group (SCPMG), which contract with Kaiser
Health Plan to provide hospital and medical services to the Plan's
insureds. The complaint asserted four causes of action against each
defendant: (1) breach of the implied covenant of good faith and fair
dealing; (2) breach of contract; (3) negligent infliction of emotional
distress; and (4) intentional infliction of emotional distress.
Plaintiffs alleged that the defendants, who
were collectively referred to as "KAISER," had devised "a system of
withholding benefits from insureds which necessarily results in KAISER
unreasonably depriving its insureds the benefits of their contacts with
KAISER. This system is one where KAISER has bestowed upon its
contracted physicians the responsibility of determining whether or not
to give insureds benefits under their contracts. Underlying this system
is a cost saving component: each determination a KAISER physician makes
must be based, in part, upon the cost to KAISER of the treatment or
care requested. [¶] . . . [T]his system, with a heavy emphasis on cost
saving to KAISER, results in pressures on KAISER's physicians that
removes (sic) the physicians' abilities to give
medical care which is in the patient's best interests. This system also
results in little or no investigation by KAISER as to whether a patient
is in need of certain medical care and/or treatment. This system is
concealed from KAISER's insureds and ultimately causes them harm."
The complaint further alleged that Kaiser's
"physicians are rewarded for adhering to the cost saving system that
KAISER has put into place. Specifically, that the physicians receive
bonuses which are dependent upon the cost savings realized by KAISER
due to the physicians withholding of treatment and or care of the
insureds."
In describing their individual causes of
action, plaintiffs alleged that defendants had breached the implied
covenant of good faith and fair dealing by: (1) "unreasonably denying
and delaying care and treatment to Anna that was covered under [the
plan]"; (2) "unreasonably avoiding incurring expenses for diagnostic
testing . . . for its own financial gain by ignoring the seriousness of
Anna's medical condition and needs"; (3) "placing its own financial
interests ahead of Anna's health care"; and (4) "unreasonably engaging
in a pattern and practice of failing to conduct a thorough, fair and
balanced investigation in evaluating requests for benefits and/or
services for its members under [the plan]."
Plaintiffs' claim for intentional infliction of
emotional distress alleged that the defendants "refus[ed] to grant
[Anna's] requests for diagnostic testing, even though defendants knew,
or should have known, that the medically necessary diagnostic testing
was covered under the [plan]. Defendants knew, or should have known,
that their refusal to approve diagnostic testing for [Anna] caused
[Anna, Lynnette and James] to be fearful and extremely worried about
[Anna's] condition." The complaint further asserted that defendants
"intentionally . . . and unfairly refused to provide [Anna] with the
requested, medically necessary care," thereby causing Lynnette, James
and Anna to "suffer[] fear, depression, humiliation, and severe mental
anguish and emotional and physical distress."
Plaintiffs' claims for breach of the implied
covenant and intentional infliction of emotional distress each included
an allegation asserting that the defendants' misconduct "constitute[d]
malice, oppression or fraud under California Civil Code section 3294,
thereby entitling plaintiffs to punitive damages in an amount
appropriate to punish or set an example of defendants."
C. Defendants' Motion to
Strike
On January 7, 2010, defendants filed a motion
to strike the punitive damages allegations. Defendants argued that
plaintiffs had failed to comply with Code of Civil Procedure section
425.13. subdivision, (a) which states: "In any action for damages
arising out of the professional negligence of a health care provider,
no claim for punitive damages shall be included in a complaint or other
pleading unless the court enters an order allowing an amended pleading
that includes a claim for punitive damages to be filed." The section
further provides that the trial court may allow an amended pleading
claiming punitive damages only if the plaintiff submits evidence
establishing "that there is a substantial probability that the
plaintiff will prevail on the claim pursuant to Section 3294 of the
Civil Code."
Defendants argued that plaintiffs were required
to comply with section 425.13 because they were seeking "punitive
damages `for an injury that is directly related to the professional
services provided by a health care provider acting in its capacity as
such. . . .'"2 Plaintiffs, however,
argued that their claims did not arise out of defendants' professional
medical services, but rather from defendants'"insurance decisions and
practices." Plaintiffs contended that, in essence, their tort claims
alleged that defendants had improperly withheld "insurance policy
benefits" by denying necessary medical treatments and "creat[ing] a
system whereby [their] financial interests were put ahead of Anna's
life."
On April 14, 2001, the trial court heard oral
argument on the motion to strike and ruled that section 425.13 was
inapplicable to plaintiffs' claims, explaining: "this is an insurance
bad faith case against an insurance company . . . it's a different
animal [from medical malpractice]." In a subsequent minute order, the
trial court stated that section 425.13 did not apply because
plaintiffs' suit was not "merely an action for professional negligence."
D. Petition for Writ of
Mandate
On June 16, 2011, defendants filed a petition
for writ of mandate seeking an order from this court directing the
superior court "to vacate its order . . . denying [p]etitioners' motion
to strike [plaintiffs'] punitive damages claims and to enter a new
order granting the [m]otion to strike the punitive damages claims." On
June 23, 2011, we summarily denied defendants' petition. Defendants
then filed a petition for review in the California Supreme Court.
While defendants' petition for review was
pending in the Supreme Court, plaintiffs dismissed their punitive
damages claims against Kaiser Hospitals and SCPMG without prejudice. In
their opposition to defendants' petition for review, plaintiffs argued
that, in light of the dismissals, the court need not reach "the merits
of the denial of the motion to strike with respect to . . . [Kaiser
Hospitals and SCPMG]." Plaintiffs further argued that section 425.13
did not apply to their claims against Kaiser Health Plan because it was
not a health care provider.
On August 10, 2011, the Supreme Court granted
defendants' petition for review and entered an order directing this
court to vacate our "order denying mandate and to issue an order
directing respondent superior court to show cause why the relief sought
in the petition should not be granted." In compliance with that order,
we vacated our order dated June 23, 2011 and issued an order to show
cause.
A. Standard of Review
"The standard of review for an order on a
motion to strike punitive damages allegations is de novo. [Citation.]
`In passing on the correctness of a ruling on a motion to strike,
judges read allegations of a pleading subject to a motion to strike as
a whole, all parts in their context, and assume their truth.'
[Citation.]" (Turman, supra, 191 Cal.App.4th at p.
63.)
B. Summary of Cases
Interpreting the Scope of Section 425.13
"Section 425.13(a) establishes a procedure for
claiming punitive damages in certain cases. It provides, `In any action
for damages arising out of the professional negligence of a health care
provider, no claim for punitive damages shall be included in a
complaint or other pleading unless the court enters an order allowing
an amended pleading that includes a claim for punitive damages to be
filed. The court may allow the filing of an amended pleading claiming
punitive damages on a motion by the party seeking the amended pleading
and on the basis of the supporting and opposing affidavits presented
that the plaintiff has established that there is a substantial
probability that the plaintiff will prevail on the claim pursuant to
Section 3294 of the Civil Code. . . .'" (Central Pathology
Service Medical Clinic, Inc. v. Superior Court (1992) 3
Cal.4th 181, 186 (Central Pathology)
[italics omitted].)
In Central Pathology, supra, 3
Cal.4th 181, the California Supreme Court considered the
scope of claims subject to section 425.13. The plaintiffs, Constance
and Michael Hull, filed a complaint against a pathology clinic and a
physician for negligence and loss of consortium. Two months before
trial, plaintiffs moved to amend their complaint "to add causes of
action for fraud and intentional infliction of emotional distress. The
new causes of action alleged that [the physician] performed a pap smear
on Constance, which was sent to [the pathology clinic] for analysis. It
was further alleged that despite the presence of abnormal cells,
defendants failed to notify Constance that she was developing cancer. .
. and that [the physician] denied using [the pathology clinic] in an
effort to cover up her medical negligence. The cause of action for
intentional infliction of emotional distress alleged that defendants
acted in an outrageous manner with the intent to cause severe emotional
distress. Plaintiffs sought punitive damages under the new causes of
action." (Id. at p. 185.)
The pathology clinic filed a motion arguing
that the trial court was required to strike plaintiffs' punitive
damages allegations because they had failed to comply with section
425.13. Plaintiffs, however, contended that section 425.13 was limited
to claims "arising out of . . . professional negligence" and therefore
did not apply to their intentional tort claims. The trial court agreed
with plaintiffs and denied the motion. The appellate court denied the
defendants' petition for writ of mandate. The California Supreme Court
granted review.
The Supreme Court began its analysis by
considering the language of section 425.13. Concluding that it was
unclear whether the phrase "action for damages arising out of the
professional negligence of a health care provider" was intended to
encompass claims for "intentional torts allegedly committed by health
care providers" (Central Pathology, supra, 3 Cal.4th
at p. 186), the court reviewed the legislative history for further
guidance.
In summarizing the legislative history, the
court noted that a comment from the Assembly Subcommittee on the
Administration of Justice indicated that section 425.13 was intended to
"`provide protection to health practitioners in their
capacity as practitioners.'" (Central Pathology,
supra, 3 Cal.4th at p. 189.) The comment emphasized that
"lawsuits unrelated to a practitioner's conduct in
providing health care related services were intended to be excluded
from the ambit of section 425.13." (Id. at p. 190.)
The court concluded that these comments demonstrated that the statute
was not meant to apply solely to medical malpractice claims asserted
against health care providers. Rather, according to the court, the
Legislature intended section 425.13 to apply "whenever an injured party
seeks punitive damages for an injury that is directly related to the
professional services provided by a health care provider acting in its
capacity as such . . . ." (Central Pathology, supra,
3 Cal.4th at p. 191.) The court clarified that, in making this
determination, "[t]he allegations that identify the nature and cause of
a plaintiff's injury must be examined to determine whether each is
directly related to the manner in which professional services were
provided." (Id. at p. 192.)
The court then applied its interpretation of
section 425.13 to plaintiffs' tort claims and found that the statute
applied: "Plaintiffs' cause of action for fraud in this case is
directly related to the manner in which defendants provided
professional services. The claim emanates from the manner in which
defendants performed and communicated the results of medical tests, a
matter that is an ordinary and usual part of medical professional
services. It is therefore governed by section 425.13(a). Plaintiffs'
cause of action for intentional infliction of emotional distress is
predicated on the same alleged acts as the fraud claim. Therefore, it
too is directly related to defendants' performance of professional
services and is governed by section 425.13(a)." (Id.
at pp. 192-193.)
The holding in Central Pathology
has been applied to numerous other types of tort claims brought against
medical care providers. For example, in Davis v. Superior
Court (1994) 27
Cal.App.4th 623 (Davis), the plaintiff
sued his employer's workers' compensation carrier and a physician who
treated injuries the plaintiff sustained during the course of his
employment. Plaintiff alleged that the carrier and the doctors it
contracted with entered into a conspiracy whereby the doctors agreed to
provide medical advice and treatment to patients below the standard of
care. In exchange, the carrier agreed to continue sending patients to
the doctors. Plaintiff further alleged that his treating physician had
participated in this scheme by providing substandard care at the
direction of the carrier. Plaintiff asserted that the physician's "acts
were designed to curtail expensive treatment needed by [p]laintiff,"
thereby "ensur[ing] that [the physician] would continue to get business
from [the carrier]." (Id. at p. 626.) The complaint
included claims for fraud and conspiracy, and sought punitive damages
against each defendant on both claims.
The physician filed a motion arguing that the
trial court should strike the punitive damages allegations asserted
against him because the plaintiff had failed to comply with section
425.13, subdivision (a). In opposition, plaintiff argued that his
claims were not subject to the statute because he sought "damages based
on criminal conduct — conduct which cannot be considered to have arisen
out of . . . professional negligence." (Davis, supra,
27 Cal.App.4th at p. 627.) The trial court agreed with the plaintiff
and denied the motion.
The appellate court reversed, holding that the
circumstances of the case were indistinguishable from Central
Pathology. The court explained that "[the physician
defendant] is accused of misrepresenting that he would properly treat
[the plaintiff], and that he was qualified to perform certain medical
procedures. It is also alleged he lied about [plaintiff's] medical
condition and falsified his findings. Even if, as [plaintiff] alleges,
[the carrier] directed [the physician] to conduct himself in this
manner, the fact remains that [plaintiff] is seeking damages for an
injury that is directly related to the professional services rendered
by [the physician] acting in his capacity as a health care provider.
The conduct of which [the physician] is accused, if true, is unethical,
illegal and immoral. It is, however, no more outrageous than the
conduct of the Central Pathology defendant
physician. [Plaintiff] was, therefore, required to comply with the
requirements of section 425.13(a)." (Davis, supra,
27 Cal.App.4th at p. 629.)
Similarly, in Palmer v. Superior Court
(2002) 103
Cal.App.4th 953 (Palmer), the court
concluded that section 425.13 applied to claims arising from a health
care provider's recommendation that certain health care services were
not medically necessary. The plaintiff, William Palmer, filed a
complaint against his medical insurer, PacifiCare, and his primary
health care provider, Sharp Rees-Stealy Medical Group (SRS). SRS
performed various medical services for PacifiCare's insureds, which
included "`making decisions as to whether requested medical services
equipment and supplies for PacifiCare members [we]re "medically
necessary."'" (Id. at p. 958.)
Palmer, who had lost his right leg to a
bacterial infection, alleged that his prosthetist recommended that SRS
provide Palmer with a new type of prosthetic leg that was engineered
from ultra-light components. SRS informed Palmer that its utilization
review department had determined that the prosthetic leg was not
medically necessary and referred him to the PacifiCare appeals process.
Palmer alleged that an SRS employee later informed him that the costs
of the prosthetic leg greatly exceeded the fixed amount that SRS
received from PacifiCare to provide Palmer with care. Palmer pursued
authorization for the prosthetic through PacifiCare's appeals process,
but PacifiCare continued to deny the request.
Palmer's complaint alleged that PacifiCare had
breached "the implied covenant of good faith and fair dealing in the
subscriber agreement . . . [through its] denial of the requested
medical services and equipment." (Palmer, supra, 103
Cal.App.4th at p. 960.) The complaint also alleged intentional and
negligent infliction of emotional distress against SRS "due to the
manner in which plaintiff's request for the medical services and
equipment was processed. Palmer claim[ed] that SRS intentionally and
willfully found that the prostheses were not medically necessary when
they were, in fact, medically necessary . . . ." (Ibid.)
SRS moved to strike the punitive damages allegations appearing in the
intentional infliction of emotional distress claim, arguing that the
plaintiff had failed to comply with section 425.13. The trial court
granted the motion.
On appeal, Palmer argued that section 425.13
was inapplicable to his claim against SRS claim because "the services
SRS was performing on behalf of PacifiCare, i.e., conducting
utilization review services by evaluating Palmer's request for medical
services . . . to determine their medical necessity," did not qualify
as "health care services." (Id. at p. 967, 968.)
Rather, according Palmer, "his injuries relate[d] to actions taken by
SRS and PacifiCare in administering the HMO subscriber agreement, and
those actions operated to prevent him from receiving the requested
health care services." (Id. at p. 968.)
The appellate court rejected the argument,
explaining: "the allegedly injurious utilization review . . . conducted
by . . . SRS . . . amounted to a medical clinical judgment such as
would arguably arise out of professional negligence. We disagree with
Palmer that this was a purely administrative or economic role played by
SRS. Rather, the . . . utilization review[s] [are] conducted by medical
professionals . . . [who] carry out these functions by exercising
medical judgment and applying clinical standards. [Citations.] Recall,
Palmer's chief complaint is with the substance and conduct of the
PacifiCare appeals process, and he is pursuing that claim through his
cause of action against PacifiCare for the breach of the implied
covenant of good faith and fair dealing in the subscriber agreement.
That is the proper forum for those claims. However, to the extent
Palmer seeks to plead intentional infliction of emotional distress
against SRS for its part in those decisions, he was required to comply
with the pleadings procedure of section 425.13 . . . ." (Palmer,
supra, 103 Cal.App.4th at p. 972.)
C. Section 425.13 Does Not
Apply to Any Claims Remaining in This Suit
As originally filed, plaintiffs' complaint
included punitive damages allegations against two different types of
entities. First, the complaint sought punitive damages from Kaiser
Foundation Health Plan, which is a "licensed health care service plan"
under California's Knox-Keene Health Care Service Plan Act of 1975
(Health & Saf. Code, § 1340 et seq.) The Knox-Keene Act defines
a health care service plan as: "[a]ny person who undertakes to arrange
for the provision of health care services to subscribers or enrollees,
or to pay for or to reimburse any part of the cost for those services,
in return for a prepaid or periodic charge paid by or on behalf of the
subscribers or enrollees." (Health & Saf. Code, § 1345, subd.
(f)(1).) In its role as a health care service plan, Kaiser Health Plan
does not directly provide medical care to its subscribers. Instead, the
Health Plan contracts with other Kaiser entities to deliver medical
care to subscribers who enroll in its plans.
The complaint also sought punitive damages from
Kaiser Hospitals and SCPMG, which are health care providers that
contract with Kaiser Health Plan to provide medical services to Plan
members. The phrase "health care providers" generally applies to
"licensed medical practitioners [and medical groups comprised of such
practitioners] . . . who provide direct medical services to patients." (Palmer,
supra, 103 Cal.App.4th at p. 967.)3
Defendants contend that section 425.13 applies
to claims against both health care services plans and health care
providers and, as a result, the trial court should have struck all of
the punitive damages allegations in plaintiffs' complaint. We
independently consider whether section 425.13 applies to claims
against: (1) health care service plans, and (2) health care providers.
1. Section 425.13 does not apply to
claims against health care service plans
Plaintiffs argue that section 425.13 does not
apply to their claims against Kaiser Health Plan because the statute is
limited to claims against health care providers. Defendants, however,
argue that section 425.13 applies to any claim against a health care
service plan that seeks compensation for injuries that are directly
related to the quality and nature of medical services rendered by a
medical care provider. Defendants further contend that plaintiffs'
claims against Kaiser Health Plan are predicated on injuries caused by
Kaiser health care providers' refusal to administer proper care,
thereby triggering section 425.13's requirements.
A superficial reading of section 425.13
suggests that it could be reasonably interpreted in the manner proposed
by defendants. The text of the statute does not state that it is
limited to claims against medical care providers. Rather, the statute
says it applies to "any action for damages arising out of the
professional negligence of a health care provider. . . ." Based on this
language, section 425.13 could be interpreted to apply to claims
against any type of defendant — including health care service plans —
if those claims "arise out" of the professional negligence of a medical
care provider.
The California Supreme Court has repeatedly
stated, however, that the intended scope of section 425.13 cannot be
determined based solely on the language of the statute. (College
Hospital Inc. v. Superior Court (1994) 8
Cal.4th 704, 709 (College Hospital) ["the
language of section 425.13(a) is uncertain . . ."].) For example, in Central
Pathology, the court ruled that the "words of the statute"
did not "clarif[y]" whether "intentional tort causes of action can
`arise out' of professional negligence." (Central Pathology,
supra, 3 Cal.4th at p. 188.) Similarly, in Covenant
Care v. Superior Court (2004) 32
Cal.4th 771 (Covenant Care), the court
concluded that the language of section 425.13 was inconclusive as to
whether an "elder abuse claim is one `arising out of the professional
negligence of a health care provider' . . . ." (Id.
at p. 780.) In both cases, the court consulted the legislative history
to aid in determining whether the precise type of claim at issue was
subject to the statute.
Consistent with those decisions, we conclude
that the text of the statute is unclear as to whether section 425.13 is
intended to apply only to claims against health care providers, or
whether it was intended to apply to claims against any type of
defendant — including claims against health care service plans — that
seek punitive damages for injuries that are directly related to
professional services rendered by a health care provider. We therefore
turn to the legislative history for guidance.
As originally drafted, section 425.13 left no
ambiguity as to whether it was intended to extend to claims asserted
against defendants other than medical care providers. The original
version of the statute "provided, `No claim for punitive damages against
a health care provider shall be included in a complaint or
other pleading unless the court enters an order allowing an amended
pleading that includes a claim for punitive damages to be filed.'
[Citation.]" (Central Pathology, supra, 3 Cal.4th at
p. at 188 [emphasis added].) However, the statute was later "amended .
. . by incorporating former section 425.13 into new subdivision (a) of
that section and by altering the first sentence to read, `In any action
for damages arising out of the professional negligence of a health care
provider, no claim for punitive damages shall be included . . . .'
[Citation.]" (Id. at p. 189.) According to the
Legislature, "`this amendment was [intended to be] declaratory of
existing law. [Citation.]'" (Id. at p.189.)
The purpose of the Legislature's amendment was
to address concerns that "the original version of section 425.13 was
overbroad." (Central Pathology, supra, 3 Cal.4th at
p. at 189.) An assembly subcommittee comment regarding the amendment
explained that "`as [originally] written, Section 4215.13 [sic]
could apply to any lawsuit against any health care provider . . .
Arguably, this could include lawsuits unrelated to the practitioner's
practice, such as defamation, fraud, and intentional torts. [¶] The
author [of the original version of section 425.13] asserts that the
intention . . . was to provide protection to health practitioners in
their capacity as practitioners. Specifically, relief was sought from
unsubstantiated claims of punitive damages in actions alleging
professional negligence. There was no intent to protect practitioners
in any other capacity. [The amendment] limits the application of
Section [425.13(a)] to lawsuits involving allegations of a health
practitioner's "professional negligence."' [Citation.]" (Ibid.
[emphasis omitted].)
This legislative history clearly implies that,
as originally drafted and as amended, section 425.13 was only intended
to apply to medical care providers. The original version of section
425.13 specifically limited the statute to claims against medical care
providers. Although this language was subsequently amended in a manner
suggesting that the section might apply to a broader category of
defendants, the Legislature's comments regarding that amendment
demonstrate that was not its intent.
First, the legislative comments noted that the
amendment was "declaratory of existing law," thereby indicating that
the amendment was not meant to broaden the scope of the statute beyond
claims against medical care providers. (Lone Star Security
& Video, Inc. v. Bureau of Security and Investigatory Services
(2009) 176
Cal.App.4th 1249, 1256 ["declaration by the Legislature that
a statutory amendment is declaratory of existing law is . . . . a
factor entitled to due consideration"].) Second, the legislative
history demonstrates that the purpose of the amendment was to preserve
the original intent of the statute, which was "`to provide protection
to health practitioners in their capacity as practitioners.'" (Central
Pathology, supra, 3 Cal.4th at p. at 189 [italics omitted].)
More specifically, the amendment was intended to clarify that the
statute did not apply to claims "`unrelated to the practitioner's
practice, such as defamation.'" (Ibid. [italics
omitted].) Nothing in the history of the amendment suggests that the
Legislature meant to broaden section 425.13's applicability to claims
against any type of defendant that arose from the professional
negligence of a health care provider. Rather, the clear intent was to
protect health care providers in their professional capacity as such.
Our conclusion that the Legislature intended
section 425.13 to apply to claims against medical care providers, as
opposed to other classes of defendants, finds substantial support in
the case law. For example, in Central Pathology,
the Supreme Court concluded that that the legislative history of
section 425.13 demonstrated that the statute was passed "because [the
Legislature] was concerned that unsubstantiated claims for punitive
damages were being included in complaints against health care
providers." (Central Pathology, supra, 3
Cal.4th at p. at p. 189 [emphasis added].) The court emphasized that
"the essential purpose" of the amendment to section 425.13 was "to
restrict the application of section 425.13 to lawsuits brought against
health practitioners `in their capacity as practitioners.'" (Id.
at p. 190 [emphasis added]; see also id. at p. 192
["The clear intent of the Legislature is that any claim for punitive
damages in an action against a health care provider
be subject to the statute if the injury that is the basis for the claim
was caused by conduct that was directly related to the rendition of
professional services"] [emphasis added].)
In subsequent decisions, the Supreme Court has
reiterated that the central purpose of the statute is to protect
medical care providers. For example, in College Hospital,
supra, 8
Cal.4th 704, the court stated: "Although the language of
section 425.13(a) is uncertain, its prophylactic purpose is clear — to
protect health care providers from the onerous burden of defending
against meritless punitive damage claims." (Id. at
p. 709.) College Hospital also "emphasized that the
primary purpose of section 425.13(a) was to establish a pretrial
mechanism that bars `"unsubstantiated"' punitive damage claims brought
against health care providers `"in their [professional] capacity."'
[Citation.]" (Id. at p. 714.) Similarly, in Covenant
Care, Inc. v. Superior Court, supra, 32
Cal.4th 771, the court explained that "the Legislature's
intent in enacting the statute was to protect health care providers (or
practitioners) . . . in their professional capacity as
providers." (Id. at p. 785.)
Numerous appellate courts have made similar
statements regarding the intended scope of section 425.13. For example,
in Little Co. of Mary Hospital v. Superior Court
(2008) 162
Cal.App.4th 261, this division stated that the language of
section 425.13 demonstrated that the statute's application was "limited
both by the identity of the defendant [i.e., medical care providers]
and the nature of the plaintiff's claim." (Id. at p.
269.) In Johnson v. Superior Court (2002) 101
Cal.App.4th 869, another division in this district concluded
that the statute "was . . . adopted to protect health care providers"
by "provid[ing] health care practitioners with a procedural hurdle
designed to weed out meritless punitive damage claims." (Id.
at pp. 878-879.) Numerous other appellate decisions include similar
language. (See Hung v. Wang (1992) 8
Cal.App.4th 908, 920 ["Code of Civil Procedure section 425.13
requires that a plaintiff seeking punitive damages against a health
care provider obtain court permission before pleading that
allegation"]; Community Care and Rehabilitation Center v.
Superior Court (2000) 79
Cal.App.4th 787, 791 [section 425.13 was "enacted [as] a
protection for medical professionals"] [disapproved of on other grounds
in Covenant Care, supra, 32 Cal.4th at p. 791, fn.
12]; Palmer, supra, 103 Cal.App.4th at p. 961 ["the
Legislature added section 425.13 . . . due to related policy concerns
`"that unsubstantiated claims for punitive damages were being included
in complaints against health care providers"' [Citation.]"].)
Defendants' argument that section 425.13 may be
applied to claims against health care services plans, rather than
health care providers, is also in conflict with other sections of the
California Code. Civil Code section 3428, subdivision (c) states that
"[h]ealth care service plans . . . are not health care providers under
any provision of law, including, but not limited to . . . section [] .
. . 425.13 . . . of the Code of Civil Procedure." Likewise, Health and
Safety Code section 1367.01, subdivision (m) clarifies that a health
care service plan's role in determining the medical necessity of a
requested procedure "shall [not] cause a health care service plan to be
defined as a health care provider for purposes of any provision of law,
including . . . Section[] . . . 425.13 of the Code of Civil Procedure."
The language of these statutes demonstrates a clear intent to exclude
health care service plans from the procedures required under section
425.13.
Defendants have not cited a single decision
that has applied section 425.13 to claims pleaded against a health care
service plan or any other type of entity that was not a medical care
provider. They argue, however, that the facts of this case cannot be
meaningfully distinguished from Davis v. Superior Court,
supra, 27
Cal.App.4th 623, or Palmer v. Superior Court, supra, 103
Cal.App.4th 953. As discussed above, the plaintiff in Davis
alleged that his physician had conspired with his workers' compensation
carrier to provide substandard medical care to the carrier's members.
In Palmer, the plaintiff sued his health care
service plan and his primary care physician for falsely stating that
certain services were not medically necessary, and therefore not
covered by the plaintiff's health plan. In both cases, the court
concluded that the plaintiffs' claims against the medical care
providers were subject to section 425.13 because they were directly
related to the nature and quality of the medical care provider's
professional services.
Although there are similarities between the
Rahms' claims and those alleged in Palmer and Davis,
defendants overlook a critical distinction: in both Palmer
and Davis only the medical care providers moved to
strike the punitive damages allegations pleaded against them; neither
opinion considered or decided whether section 425.13 applied to the
other defendants in the cases, who were not medical care providers.
Therefore, neither decision has any relevance to the issue presented
here: whether the statute applies to claims asserted against a health
care service plan.
Defendants next assert that, even if section
425.13 does not generally apply to health care service plans, we should
apply the statute under the circumstances of this case because
plaintiffs' claims against Kaiser Health Plan "derive[]" entirely from
"decisions of Kaiser's [health care providers]." Stated more simply,
defendants contend that section 425.13 applies to claims that seek to
hold a health care service plan vicariously liable for the acts of a
health care provider. There are several reasons why this argument fails.
First, as explained above, the legislative
history of section 425.13 and other statutes regulating the medical
care industry demonstrate that section 425.13 was not intended to apply
to health care service plans. Defendants have cited no authority
indicating that the Legislature intended the statute to apply to such
entities in instances where a plaintiff proceeds under a theory of
vicarious liability. We decline to read such an exception into the
statute.
Second, extending section 425.13 in the manner
suggested by defendants would serve no purpose because the California
Code immunizes health care service plans from liability for acts
committed by medical care providers. Health and Safety Code section
1371.25 states that "[a] plan, any entity contracting with a plan, and
providers are each responsible for their own acts or omissions, and are
not liable for the acts or omissions of . . . others." This statute has
been interpreted as "prevent[ing] a health care service plan from being
held vicariously liable for a medical provider's acts or omissions." (Martin
v. PacifiCare of California (2011) 198
Cal.App.4th 1390, 1393 (Martin); see also Watanabe
v. California Physicians' Service (2008) 169
Cal.App.4th 56, 63-64.) Extending section 425.13 to claims
that seek to impose vicarious liability on health care services plans
for the acts of their providers would therefore serve no purpose
because the Legislature has expressly prohibited such claims.
Third, even if we were to accept defendants'
contention that section 425.13 may apply to claims seeking to hold a
health care plan vicariously liable for professional services rendered
by a health care provider, that is not what plaintiffs have alleged
here. "A claim is based on vicarious liability when a party free from
fault is held liable for another party's acts or omissions. [Citation.]
A claim is based on direct liability when a party is held liable for
its own acts or omissions." (Martin, supra, 198
Cal.App.4th at p. 1407.) According to defendants, plaintiffs' claims
against Kaiser Health Plan allege that it "engaged in conduct with
respect to [plaintiffs] that is derivative of, and not separate or
independent from, the actions of Kaiser's physicians."
We disagree with defendants' characterization
of plaintiffs' claims. A fair reading of the complaint indicates that
plaintiffs allege that Kaiser Health Plan devised a compensation scheme
that encouraged Kaiser health care providers to withhold medically
necessary services from plan members. This scheme allegedly required
Kaiser's physicians to take into account "the cost . . . of the
[requested] treatment" when determining whether the care was medically
necessary. The physicians, in turn, were paid "bonuses which [we]re
dependent upon the cost savings realized . . . . due to the physicians
withholding of treatment and/or care of the insureds." Thus, liberally
construed,4 the complaint does
not merely assert that Kaiser Health Plan is liable for the improper
medical decisions made by Kaiser's physicians (delaying authorization
of an MRI of Anna's back.) Rather, the complaint asserts that Kaiser
Health Plan induced such conduct by providing financial incentives to
deny expensive medical treatments.
Finally, defendants argue that section 425.13
applies to claims against Kaiser Health Plan because the Plan is part
of "a fully integrated medical services program" that includes medical
care providers such as Kaiser Hospital and SCPMG. In support,
defendants cite language from the health plan service agreement stating
that "Kaiser Permanente provides Services directly to our members
through an integrated medical care program [in which] Health Plan, Plan
Hospitals, and the Medical Group work together to provide our Members
with quality care." Defendants appear to contend that section 425.13
applies whenever a plaintiff asserts claims against a health care
service plan that is part of a larger group of entities that includes
medical care providers.5 We disagree.
The legislative history of section 425.13 and
various provisions in the California Code demonstrate that the
procedural requirements described in the statute do not apply to claims
against health care service plans. Because defendants admit that Kaiser
Health Plan is a health care services plan, rather than a health care
provider, the trial court did not err in refusing to strike the
punitive damages allegations asserted against the Health Plan.
2. Plaintiffs have dismissed their
punitive damages allegations against Kaiser's health care providers
The defendants' petition for writ of mandate
also argues that the trial court erred in failing to strike plaintiffs'
punitive damages allegations against Kaiser Hospitals and SCPMG, which
are both health care providers. However, after defendants filed their
petition, plaintiffs dismissed their punitive damages claims against
Kaiser Hospitals and SCPMG without prejudice. Plaintiffs argue that, in
light of those dismissals, "the merits of the denial of the motion to
strike with respect to [Kaiser Hospitals and SCPMG] are no longer an
issue in the case." The defendants' reply brief, which was filed after
plaintiffs dismissed their punitive damages allegations, does not state
any grounds for review of the portion of the trial court's ruling that
pertains to the health care providers. Instead, defendants' reply brief
argues only that section 425.13 applies to plaintiffs' claims against
Kaiser Health Plan.
Currently, there are no punitive damages
allegations pending against Kaiser Hospitals or SCPMG. Therefore,
ordering the trial court to strike such allegations would serve no
purpose. We decline to review an issue that will have no effect on the
parties. (See Civ. Code, § 3532 ["The law neither does nor requires
idle acts"]; Garibaldi v. Daly City (1943) 61
Cal.App.2d 514, 517 ["An appellate court will not determine a question
which will no effect upon the status of the parties"].)
The petition is denied. The parties shall bear
their own costs on appeal.
PERLUSS, P. J. and WOODS, J., concurs.
Footnotes1.
This factual summary is based on allegations in plaintiffs' complaint,
which we assume to be true for the purposes of reviewing the trial
court's order denying defendants' motion to strike. (See Turman
v. Turning Point of Central California, Inc. (2010) 191
Cal.App.4th 53, 63 (Turman) ["`In passing
on the correctness of a ruling on a motion to strike [punitive damages
allegations], judges read allegations of a pleading subject to a motion
to strike as a whole, all parts in their context, and assume their
truth.' [Citation.]"].)
2.
Defendants' motion to strike also argued that the facts pleaded in the
complaint were insufficient to support punitive damages and that
numerous other portions of the complaint should be stricken. None of
these alternative arguments are relevant to defendants' petition for
writ of mandate, which is predicated solely on the question of whether
plaintiffs' claims are subject to section 425.13, subdivision (a).
3.
The Knox-Keene Act defines "providers" as "any professional person,
organization, health facility, or other person or institution licensed
by the state to deliver or furnish health care services." (Health
& Saf. Code, § 1345, subd. (i).) Section 425.13 subdivision (b)
contains a similar definition: "For the purposes of this section,
`health care provider' means any person licensed or certified pursuant
to Division 2 (commencing with Section 500) of the Business and
Professions Code, or licensed pursuant to the Osteopathic Initiative
Act, or the Chiropractic Initiative Act, or licensed pursuant to
Chapter 2.5 (commencing with Section 1440) of Division 2 of the Health
and Safety Code; and any clinic, health dispensary, or health facility,
licensed pursuant to Division 2 (commencing with Section 1200) of the
Health and Safety Code. `Health care provider' includes the legal
representatives of a health care provider."
4.
Code of Civil Procedure section 452 requires that, when "determining
[the] . . . effect [of a pleading]," its "allegations must be liberally
construed . . . ."
5.
The record contains no evidence concerning the relationship or
corporate structure that exists between Kaiser Health Plan, Kaiser
Hospitals and SCPMG. The only allegation regarding the nature of these
entities is that Kaiser Health Plan contracts with Kaiser Hospital and
SCPMG to provide medical services to Plan members.
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