In a strongly-worded opinion released Wednesday, May 2, 2007, the Court of Appeal instructed Superior Courts not to meddle in ongoing administrative proceedings.  Eight physicians contesting disciplinary charges brought against them by the Medical Executive Committee (MEC) of a hospital where they held privileges were unhappy with procedural rulings by the hearing officers and convinced a Superior Court judge to issue a writ of mandate directing that the hearings change course.  The Court of Appeal told the Superior Court it has no power to interfere in the administrative process until that process is fully complete within the lower body. (Acme successfully represented the MEC in this appeal.)

The Court of Appealís decision is important not only to hospital, physician, and medical peer review groups but also to educational, union, and other peer review bodies whose ability to function would have been undermined if the Superior Courtís decision had become the law.

The case arose when eight members of the hospitalís medical staff left -- on only two daysí notice -- for another hospital.  Their precipitous departure, which could have jeopardized patient safety and undermined public confidence in the hospital, led to corrective action investigations and the institution of disciplinary proceedings against each of the physicians.  The proceedings were conducted pursuant to the hospitalís bylaws, which, like the bylaws of many if not most such organizations, provide for individual hearings and expressly require medical staff members to exhaust all administrative remedies before resorting to legal action.

The physicians requested individual hearings.  After the Medical Executive Committee had nominated eight hearing officers and eight Judicial Review Committee panels to hear each case separately, the physicians reversed course and demanded that the proceedings be consolidated.  Their demands were rejected by seven of the eight hearing officers and by the Medical Executive Committee.  Dissatisfied with these procedural rulings, the physicians aborted the administrative process and asked the Superior Court to order consolidation.  The Superior Court did so, strongly criticizing the Medical Executive Committee for what the court thought was unreasonable and prejudiced conduct.

The Court of Appeal reversed that order, holding that ìthe courtís views on matters such as whether the MEC should have negotiated an agreement on consolidation Ö or deferred to a hearing officer on that issue did not entitle it to intervene in the incomplete administrative proceedings and micromanage a process entrusted in the first instance to hospitals and their self-governing medical staffs, not to the courts.î  (Emphasis added).  The Court explained that as case law ìmakes clear, a courtís role with respect to a hospitalís disciplinary procedures is confined to safeguarding basic due process rights, which do not include consolidation of hearings, or procedures employed in deciding a consolidation issue.î  The Court was not persuaded by the physiciansí arguments that failure to consolidate the individual proceedings would prejudice them and expose them to prohibitive costs:

…         Unsupported Claim of Prejudice Insufficient:  ìThe Physicians submit that their cases on the merits will be prejudiced by the failure to consolidate their hearings because they have no subpoena power and might not be able to marshal their witnesses for all of the individual hearings.  The record does not demonstrate that any crucial witness will in fact be unavailable Ö and any potential problems stemming from the lack of subpoena power will be faced equally by both sides in the proceedings.  The mere will-o-the-wisp potential for prejudice at this stage is insufficient to overcome the requirement of exhaustion of remedies.î  (Emphasis added).

…         Cost of individual hearings does not excuse compliance with exhaustion requirement:  ìThe other irreparable harm the Physicians allege is the cost of the individual hearings. Ö [T]he Physicians each submitted a declaration stating that they would ëprobablyí be unable to pursue separate hearings because the cost would be prohibitive.î  Citing California case law explaining that ì[a] remedy will not be deemed inadequate merely because additional time and effort would be consumed by its being pursued through the ordinary course of lawî and federal case law holding that ìlitigation expenses, however substantial and nonrecoverable, which are normal incidents of participation in the agency process do not constitute irreparable injury,î the Court held that ì[t]he expenses the Physicians seek to avoid are thus ënormal incidentsí of the administrative process, and they are not excepted from the exhaustion requirement by their failure to receive a group discount.î  (Emphasis added).

The Court reaffirmed long-settled California law making the exhaustion of administrative remedies a jurisdictional prerequisite to judicial intervention in private administrative proceedings.  As the Courtís decision in Eight Unnamed Physicians v. Medical Executive Committee of the Medical Staff of Washington Township Hospital, No. A 113456, recognizes and as the California Legislature has declared, ìit is the policy of this state that peer review be performed by licentiates.î  The rationale behind this policy is that medical competence and ethics issues are best resolved by medical professionals who possess the specialized qualifications such decisions require.  The courts will not and indeed may not intervene until all remedies afforded by the medical staffís or other peer review bodyís administrative process have been exhausted.

Winston Carlyle III is a partner at Acme with over 30 years' experience in complex litigation.  He can be reached at (415) 438-7279 or wc3i@acmelaw.com.

Gladys Towels Route is a senior associate in the firmís Litigation practice, specializing in coverage, environmental, and appellate matters.  She can be reached at (415) 438-7254 or gtr@acmelaw.com.