Health Law Daily Doctors not required to exhaust judicial remedy of mandamus before suing for civil damages
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Tuesday, October 6, 2020

Doctors not required to exhaust judicial remedy of mandamus before suing for civil damages

By Jeffrey H. Brochin, J.D.

Although termination of an individual physician is deemed an administrative decision classified as "quasi-judicial" and review is by administrative mandamus, where physician privileges have been curtailed because of the implementation of a "policy" of the hospital, the action is classified as "quasi-legislative" and is reviewable by traditional mandamus.

An appeals court in the State of California has reversed and remanded the decision of a trial court to grant demurrer to hospitals affiliated with the University of Southern California (hospitals) in a lawsuit brought by physicians whose "on-call panel" was dissolved after they complained about an alleged kick-back scheme involving self-referrals among the hospitals involved. The doctors were not required to first exhaust the judicial remedy of a writ of mandamus before proceeding to file suit for civil damages. However, their cause of action pursuant to the California False Claims Act (CFCA) was properly dismissed because of failure to connect the wrongdoing with any alleged false claims (Alborzi v. University of Southern California, September 29, 2020, Collins, A.).

Infectious Disease specialist panel. Dr. Alborzi, an infectious disease specialist whose practice was comprised of other such specialists, had medical staff privileges at Verdugo Hills Hospital (VHH) which is owned by the University of Southern California (USC). The physicians in his practice were on the infectious disease (I.D.) call panel at VHH, meaning that when patients who required immediate emergency infectious disease treatment were admitted at VHH, the patients would be assigned to an infectious disease specialist from the I.D. call panel. The physicians on the I.D. call panel were on a rotating schedule, typically created months in advance.

Drop-off in assignments. Beginning in August 2017 the physicians found that the number of patients assigned to them via the I.D. call panel "slowed significantly," and that an unusual number of patient consultations began to be referred to two specific infectious disease specialists, Dr. H. and Dr. M., who were not part of their practice. They suspected that Dr. M. entered into a financial arrangement with Dr. H. wherein Dr. M. received a percentage of Dr. H.’s reimbursements for medical services. This was alleged to be a kickback arrangement in violation of the Anti-Kickback Statute. The physicians also alleged that Dr. H. was employed either directly or as a contractor by another hospital that benefitted financially from self-referring VHH patients to Dr. H. for infectious disease consultations.

Dissolution of I.D. call panel. Dr. Alborzi reported his concerns to the CEO of VHH in February and April 2018, and also reported his concerns to the Chief Medical Officer of VHH in May 2018. In July 2018, the physicians received notice that the I.D. call panel had been terminated entirely. The physicians alleged that termination of the on-call panel was a retaliatory act by VHH because of reporting concerns about the "illegal financial arrangements" among the hospitals. They filed suit alleging violations of California’s Health and Safety Code section 1278.5, a health care whistleblower statute; Government Code section 12653, which is part of the California False Claims Act; and Business and Professions Code section 17200; and the Unfair Competition Law.

USC demurred to the complaint, asserting that the physicians were required to exhaust all judicial remedies by filing a petition for writ of mandamus under Code of Civil Procedure section 1085 prior to filing an action for damages. The trial court sustained the demurrer on that basis and entered judgment for the hospitals, and the instant appeal ensued.

Quasi-judicial versus quasi-legislative. USC argued that VHH’s decision to contract with the hospital where Dr. H. worked and to dissolve the on-call panel were quasi-legislative rules because their application was not limited to Dr. Alborzi or his group’s physicians; rather, the decision would be applicable to any physician who practiced at VHH, and it was a quasi-legislative decision, as opposed to a quasi-judicial action impacting a particular doctor. USC further argued that quasi-legislative actions must be challenged by a writ of mandate, and could not be challenged in an action for damages.

The trial court impliedly agreed that USC’s actions were quasi-legislative, and that as a result, the physicians were required to exhaust judicial remedies by bringing a petition for writ of mandamus rather than filing a civil action. The trial court embraced USC’s reasoning that staffing decisions affecting an entire department—such as dissolving the I.D. call panel—are quasi-legislative. However, the appeals court disagreed, finding that the attempts to cast VHH’s decision as a run-of-the-mill staffing decision contradicted the facts alleged in the complaint, which asserted that VHH’s action was targeted at the physicians and was therefore retaliatory. The appeals court therefore reversed and remanded as to the demurrer by the trial court.

CFCA not sufficiently pleaded. However, as to the claim pursuant to the CFCA, the appeals court found that the physicians did not include allegations that the laws were violated with respect to Medicare claims. Although they alleged that they were attempting to address financial wrongdoing, they did not connect that wrongdoing with any alleged false claims. Therefore, they failed to allege facts sufficient to state a cause of action under the CFCA.

The case is No. B299067.

Attorneys: Henry R. Fenton (Fenton Law Group, LLP) for Arash Alborzi. Mark S. Hardimans (Nelson Hardiman, LLP) for University of Southern California.

Companies: University of Southern California

MainStory: TopStory CaseDecisions CMSNews FCANews FraudNews CaliforniaNews

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