Case number C055056
IN THE COURT OF APPEAL OF CALIFORNIA
THIRD APPELLATE DISTRICT
CALIFORNIA CONSUMER HEALTH CARE COUNCIL, INC., et al
CALIFORNIA DEPARTMENT OF MANAGED HEALTH CARE, et al
APPELLANTS’ OPENING BRIEF
Appeal from the Superior Court for Sacramento County
Hon. Gail D. Ohanesian, Judge
Case No. 01CS01286
HARVEY S. FREY, ESQ.
Table of Contents
2. Legal Arguments
The Superior Court has ruled that the Department of Managed Health Care (DMHC), a state agency, is not legally required to abide by the Information Practices Act (IPA) (Civil Code(CC) §1798 et seq), and that it may legally adjudicate complaints based on possibly false ex parte communications ( Demurrer of 7/16/04, NewApp. p.81). It has also ruled that DMHC may legally refuse to accept medical record releases (and therefore complaints) from children and beneficiaries of deceased members of health care service plans (HCSPs) (Order entered 12/18/06, NewApp. p.170) .
Appellants submit that these rulings constitute plain error, and seek to have them, and the resulting assessment of costs, reversed. If this court reaches a decision favorable to appellants and it is published, appellants will accept that as declaratory relief, and not request remand. If a favorable decision is reached but not published, appellants request remand so that they can pursue their petition for writ of mandate.
The underlying issue in the case is that the DMHC procedures in question, apart from unjustifiably violating the law, seriously disadvantage HCSP enrollees, the very group which the Knox-Keene Act intended to protect by creating DMHC in the first place (Health & Safety Code (HSC) §1342).
Appellants had originally petitioned for a writ of mandate, injunction, or declaratory relief on 9/11/2001. (See Appendix accompanying prior appeal (Hereafter "OldApp") p.1) The petition was rejected on demurrer, and this court, in Case number C041091 (See Appendix accompanying this appeal (Hereafter ("NewApp") p.1), reversed the demurrer and remanded the case on 9/5/2003. This appeal is taken from a subsequent demurrer without leave to amend (NewApp p.81), and a dismissal on summary judgment (NewApp p.175). No facts are at issue in this appeal.
In considering these issues of patient access to records, which refer to them, held by state agencies, appellants ask that the court take notice of the recent relevant amendment to Art. 1 §3(b)(2) of the California Constitution:
"A statute, court rule, or other authority, including those in effect on the effective date of this subdivision, shall be broadly construed if it furthers the people's right of access,and narrowly construed if it limits the right of access. "
Appellants are 1) enrollees of various California health care service plans ("HCSP"s or "plans"), who have filed complaints against their plans with DMHC, and 2) the California Consumer Health Care Council, Inc. (CCHCC), a non-profit patient advocacy organization of which the other plaintiffs are members, which has been assisting them in their dealings with respondent.
Respondents are the California Department of Managed Health Care and its prior director, Daniel Zingale.
Petitioner/appellants were denied needed medical care by their HCSPs. They applied to DMHC for assistance, and there were improperly denied a fair adjudication compliant with the statutory grievance procedure the Legislature commanded DMHC to provide. During or after this grievance procedure, some of the appellants asked to review the records that DMHC had concerning themselves. DMHC refused to provide the records.
In the mandamus petitions (OldApp pp.1, 121, 127, and 226) preceding the prior appeal in this case (C041091) petitioners raised 5 issues:
1. DMHC should be required to obey HSC §1368(b)(5), requiring it to explain its decisions to complainants.
2. DMHC should be required to enforce HSC §1374.30(n) et seq, requiring plans to send patients copies of material submitted for Independent Medical Review (Hereafter "IMR").
3. DMHC's adjudications based on ex parte documents violated patients' due process rights.
4. DMHC's refusal to disclose patients records violated the Information Practices Act (Hereafter "IPA"), CC §1798 et seq.
5. If DMHC has the discretion to disobey statutory rules, it should at least be required to obey the Administrative Procedures Act (Hereafter "APA") (Government Code (Hereafter "GC") §11340 et seq. ) in promulgating such rule changes.
In the original lower court case preceding the prior appeal, the first two issues were dismissed on demurrer without leave to amend, and the court refused to consider the others. (OldApp. pp. 143, 217, 286, 290)
In the prior appeal (C041091), this court (NewApp p.1)
1. Rejected appellants' view that DMHC had a mandatory duty to penalize plans for disobeying HSC§1374.30(n), analogizing it to prosecutorial discretion.
2. Stated that DMHC had a mandatory duty to obey HSC§1368(b)(5), and remanded for a trial on the facts.
3. Allowed appellants to amend their complaint to address the other issues.
In the second amended complaint after remand (NewApp. p.23), petitioners raised the issues:
1. DMHC should be required to obey HSC§1368(b)(5).
2. DMHC's refusal to disclose patients records violated the IPA.
3. DMHC's adjudications based on ex parte documents violated patients' due process rights.
4. If DMHC has the discretion to disobey statutory rules, it should at least be required to obey the APA, to formalize that decision.
5. Petitioners argued that, even though DMHC as quasi-prosecutor couldn't be compelled to force plans to provide complainants with IMR documents as required by HSC§1374.30(n), it should, in its quasi-judicial role, refuse to adjudicate on the basis of those ex parte, possibly false, documents, unseen and unrebutted by complainants.
The lower court in the case being appealed here:
1. By demurrer without leave to amend, (NewApp p.83, l.24) Dismissed the IPA issue , stating only that "the IPA is a separate statutory scheme" and "plaintiffs have not alleged a demand pursuant to the IPA."
2. Dismissed the APA issue, (NewApp p.83, l. 27), stating only that "Petitioners have not alleged facts showing that the Respondent has "issued, utilized, enforced, or attempted to enforce any guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule" in violation of the APA"
3. Dismissed the due process issues (NewApp p.83, l.26), stating only that "Petitioners have not alleged a sufficient liberty or property interest entitling them to due process protections."
4. Dismissed the HSC§1368(b)(5) issue at summary judgment (NewApp p.170) on primarily factual grounds inappropriate for appeal.
5. However, part of that decision depended on the holding that a child and beneficiary of a deceased plan member is not entitled to release his medical records, if she is not the designated representative of his estate. (NewApp p.173, l.17)
Each of the allegations below represents a case in which a plan presented false information to DMHC or withheld material information, DMHC was informed of the falsification before or after making its decision, but did not correct the records, and used the false information in performing its adjudicatory function, thereby causing injury to the patients.
The allegations have all been made in the prior appeal, and are documented at Old App. pp. 123-126, 128, 129, 135-139, and 229-233.
Gerry Goldshine and his daughter Rachel are members of Pacificare, both suffering from severe Crohn's disease. Gerry informed DMHC on 8/9/01 that Pacificare would no longer allow them see their long-time gastroenterologist. A reply on 8/16/01 stated: "Dept. contacted the medical group, who said that Dr. Steady was currently seeing patients in a local office....Based on Pacificare's response the Dept. closed your complaint ...because...the medical group secured the services of a new specialist ...inside your geographic area." DMHC made no attempt to verify Pacificare's representations with Goldshine before making its decision.
In fact Pacificare's statement was false. The doctor they mentioned was not seeing any patients in the Goldshines' geographic area, and they would have had to travel far beyond the distance specified in 28 CCR 1300.51.
DMHC was informed of this falsehood, but took no further action to allow the Goldshines to correct the falsehoods placed in the record by Pacificare, or to correct its decision based on those false records. The Goldshines have been injured by their inability to see a specialist for their serious illness and by DMHC’s actions in failing to comply with the statutes at issue here.
Jeff La Marca complained to DMHC about failure of his HealthNet psychiatrist to return his phone calls when he had a sudden severe withdrawal reaction from a medication. HealthNet informed DMHC on 12/29/00 that his calls HAD been returned, so DMHC took no action. John Metz of CCHCC, at Mr. La Marca’s request, wrote DMHC on 2/28/01 that this information was false. DMHC took no action to correct the records, to verify HealthNet's false statements, to allow La Marca to correct the records, or to change its action based on the false information.
Mr. La Marca also complained that medication was prescribed for him on 2/2/98, but HealthNet refused to authorize the pharmacist to dispense it. HealthNet told DMHC that they had authorized the drug on 2/8/98, but neither Mr. La Marca nor the pharmacists were ever informed of any authorization, and Mr. LaMarca has been unable to fill the prescription to this very day. The HCSP's ex parte representations were false, but DMHC never corrected the records nor took appropriate action. Mr. La Marca has been harmed by his inability to receive appropriate covered treatment for his serious illness and by DMHC's actions in failing to comply with the statutes at issue here.
Shirley Milligan is a member of Kaiser Permanente Health Plan. Her complaint was closed by Office of Enforcement on 11/16/00. She requested a 1368(b)(5) summary letter on 8/6/01. DMHC’s response said only: "Office of Enforcement decided not to pursue formal enforcement action.", and "the Department's investigation...will be treated as confidential." In other words, they refused to release records regarding her complaint.
Victoria Travis complained to DMHC that a Kaiser Nursing Home killed her father by giving unneeded and unwanted morphine. DMHC refused to accept her release of her father's records, or to accept her grievance, on the basis that, though she was the deceased's daughter and heir, she was not the executor of his estate.
Kelley Turner complained to DMHC about long-standing mistreatment by Kaiser and falsification of the medical records. Kaiser told DMHC that they were "looking into" her case, and would contact her. DMHC conveyed this information to Ms. Turner in a letter of 3/12/01 and a telephone conversation of 3/16/01. In fact Kaiser never contacted her, and when she finally contacted them on 8/30/01, denied that they had ever talked to DMHC or were looking into her case. Ms. Turner informed DMHC of this. Nevertheless, rather than correct their records, and in reliance on the false ex parte information Kaiser had given them, DMHC suspended the investigation.
Ms. Turner made many allegations against Kaiser to DMHC, submitting, at DMHC's urging, 2100 pages of documents. Kaiser led DMHC to believe that all these had been handled in their arbitration system, whereas only 2 relatively minor issues had been addressed there. DMHC made no attempt to verify these ex parte allegations with Ms. Turner. The records were not corrected, and Ms. Turner's case was closed. DMHC’s final summary dated 3/12/01 stated that Kaiser's referral of her complaints to its internal peer review process satisfied its responsibilities, so the case was closed. In response to a request for further information on why her case had been closed, DMHC’s letter of 8/22/01 merely stated conclusorily that "I have not identified any violations of the Knox-Keene Act.", that her allegations of alterations of her medical record had been reviewed by a nurse, who concluded, without explanation, that "no further action was warranted.", and that DMHC would not respond to further inquiries from her on the matter.
The case of Bobbie Jenke, a member of CCHCC and of Kaiser, was submitted for IMR on 6/22/01 . She received no records from Kaiser as required by HSC §1374.30. On 6/31/01 she asked DMHC to require Kaiser to send her the records. They did not do so. She was ruled against by the IMR panel. She finally received some incomplete and misleading records from DMHC, too late to be of any benefit in her case, but making it clear why the panel had ruled against her. Favorable evidence had been omitted, and contrary evidence overstated.
In a letter of 7/28/01 to DMHC she pointed out several falsehoods in documents submitted by Kaiser to IMR, for example: to justify its refusal to provide definitive diagnostic or therapeutic care, the Kaiser Summary said that outside consultants "all...recommended [only] chronic pain management". In fact: One outside expert had recommended diagnostic tests including scalene block and Electromyogram, and possibly enzymatic neurolysis of the brachial plexus. Another expert had recommended surgery, scalene block, and MRI of the brachial plexus. Kaiser had omitted evidence in her favor, and overstated contrary evidence, making it clear why the panel had ruled against her.
These Kaiser falsehoods were material, because denial of diagnosis and treatment was the very issue Ms. Jenke had complained to DMHC about. Rather than allow her to correct the records, DMHC adopted the rejection which the IMR panel had made in reliance on these false documents.
CCHCC emailed DMHC on 8/2/01, demanding access to the records on which DMHC based its decision. DMHC’s Director of Enforcement, Joan Cavanagh emailed Metz on 8/2/01 verifying that: "The department's policy is to notify an enrollee that we have closed the complaint or investigation. The Department does not provide the information you have requested." (OldApp. p.138 l.22) (Emphasis added.) DMHC's refusal to obey the the Knox Keene Act ("KKA") and the IPA was thus admitted to be the official policy of DMHC.
Vivian Hankin is a member of CCHCC and Kaiser. She informed DMHC of many falsifications to her records made by Kaiser, including failing to reveal that on July 23, 1999, while undergoing a myelogram at a Kaiser facility, she suddenly suffered paralysis and anesthesia of her lower body, becoming incontinent and nauseated. This entire episode was expunged from the records Kaiser sent to DMHC. Ms. Hankin requested copies of the documents submitted to DMHC by Kaiser in order to be able to point out and rebut falsifications, but was denied access to them. She was not aware of this spoliation of evidence till after DMHC had closed her case, based on the false ex parte evidence. She has been harmed by her inability to receive appropriate covered treatment for her serious illness and by DMHC's actions in failing to comply with the statutes at issue here.
First Issue Presented - Is DMHC required to obey the Information Practices Act, Civil Code §1798 et seq? (Discussed at Section 2.1 below.)
Second Issue Presented - If so, is DMHC relieved of that obligation if laypersons requesting their records fail to explicitly cite CC §1798?
Third issue presented - Does DMHC, acting in its quasi-judicial capacity, have the discretion to ignore a party's rights to see and rebut evidence presented by the opposing party to an adjudication? (Section 2.2 and 2.3 below)
Fourth Issue Presented - If DMHC has discretion to ignore these legislative rules and constitutional rights, may the omissions nevertheless represent abuse of discretion? (Section 2.4 below)
Fifth Issue Presented - If DMHC has discretion to nullify these legislative rules and due process rights, may the nullification be done without formal rule-making pursuant to the APA? (Section 2.5 below)
Sixth Issue Presented - May DMHC refuse to accept a record release and complaint from a child/beneficiary of a deceased enrollee of a HCSP? (Section 2.6 below)
The Legislature's mandatory language in the Information Practices Act act clearly demonstrates that it had no intention that compliance with it be discretionary, and intended that failure of compliance by an agency would be subject to the supervision of the courts. (Underlining added)
... each agency shall permit any individual ... to inspect all
the personal information in any record containing personal information and maintained by reference to an identifying particular
assigned to the individual ...
CC § 1798.34(a)
"The agency shall permit the individual . . . to inspect all the personal information in the record and have an exact copy made."
CC § 1798.34(b)
DMHC's refusals to allow Plaintiffs to correct their records were additional violations of the Act, to wit:
"Each agency shall permit an individual to request . . . an amendment of a record and shall
within 30 days . . .:
(a) Make each correction in accordance with the individual's request . . . , or
(b) Inform the individual of its . . . reason for refusal, the procedures . . . to request a review, . . . and the . . .[name of the] reviewing official."
CC § 1798.35
The lower court was in error when it approved a demurrer to Petitioners' causes of action based on violations of the Act, since the Legislature explicitly allowed such actions:
"An individual may bring a civil action against an agency [if it]:
(a) Refuses to comply with a . . . request to inspect pursuant to CC §1798.34(a)
(b) Fails to maintain any record . . . with such accuracy . . . and completeness as is necessary to assure fairness in any determination relating to the . . . rights, opportunities of, or benefits to the individual . . .
(c) Fails to comply with any other provision of this chapter . . . in such a way as to have an adverse effect on the individual."
DMHC's refusal to let patients see and correct their records, and its adjudications based on these erroneous records, deprived petitioners of timely access to the medical care that they were entitled to, and which they would very likely have received if they had been able to present the complete, corrected records at a fair hearing. The refusal thus had a clear adverse effect on them.
The lower court had the power to correct DMHC's violations, but refused to consider such action:
"(a) The court may enjoin the agency from withholding the records . . .
(b) The court shall assess against the agency reasonable attorney's fees and other litigation costs . . ."
The reasons given by the lower court (NewApp p.83, l.24) for approving the demurrer were incorrect.
The first was that "the IPA is a separate statutory scheme". The decision didn't say what the IPA is separate from, but one must assume that the court meant that the HSC somehow excused DMHC from obeying the IPA.
However, the HSC itself explicitly says the opposite:
... this chapter does not do any of the following: ...
(c) Relieve government agencies of the requirements of the Information Practices Act of 1977 (Title 1.8 (commencing with Section 1798) of Part 4 of Division 3 of the Civil Code).
The Information Practices Act of 1977 (Title 1.8
(commencing with Section 1798) of Part 4 of Division 3 of the Civil
Code) shall prevail over this chapter with respect to records
maintained by a state agency.
If the court below meant that it was the Public Records Act which overrode the IPA, the IPA itself makes clear that that is also not the case:
"This chapter shall be construed to supersede any other provision
of state law, including Section 6253.5 of the Government Code [California
Public Records Act], or any exemption in Section 6254 or
6255 of the Government Code, which authorizes any agency to withhold
from an individual any record containing personal information which
is otherwise accessible under the provisions of this chapter."
CC §1798.70 (underline added)
The second reason given by the court below for dismissing appellants' IPA cause of action was that "plaintiffs have not alleged a demand pursuant to the IPA."
This presumes that an agency is relieved of the obligation to obey the IPA if a layperson is too unsophisticated to utter the magic password "Information Practices Act" or "CC §1798".
But the IPA makes it clear that it is the agency's obligation to help the requester, not play bureaucratic games:
"Agencies shall take reasonable steps to assist individuals in making their requests sufficiently specific"
It is thus clear that DMHC had an affirmative duty to treat patient requests in conformity with the IPA, but it did not. It is not proper for a government agency, entrusted with the protection of patients, to use the laypersons' ignorance of specific code section numbers as a shibboleth to deny them the rights the legislature provided.
The lower court's dismissal of petitioners' IPA cause of action should therefore be reversed.
The court below dismissed this due process issue (NewApp p.83, l. 26), the only stated ground being that "Petitioners have not alleged a sufficient liberty or property interest entitling them to due process protections."
The Legislature established DMHC to, among other things, adjudicate patient complaints against HCSPs, either directly (HSC §1368(b)) or through an Independent Medical Review process (HSC §1374.30), for the express purpose (HSC §1341(a)) of protecting patients from improper denials of care by HCSPs and relieving them of the necessity of attempting to find a lawyer and going through an expensive and drawn out legal proceeding.
The DMHC review procedure is inevitably adversarial, and depends on DMHC receiving accurate records from HCSPs to review.
Though the adjudication is informal, not requiring a hearing, it does affect the members' access to medical care, the financial benefits owed to the member pursuant to the promises made by the HCSP, and is thus a State action affecting his life and property interests, thereby triggering the due process protections of the 5th and 14th Amendments of the United States Constitution, and Article 1 Section 7 of the California Constitution.
Allowing the HCSP to see and rebut the enrollees' filings, but denying enrollees the opportunity to see or rebut the HCSPs' filings, and making adjudicatory decisions based on these asymmetric filings, is clearly a state agency's denial of the Equal Protection of the Laws guaranteed by the 14th Amendment of the United States Constitution.
The refusal of a HCSP to provide contracted for and needed medical care, may cause the patient to spend large amounts of money for it himself (a "property" interest), and if he doesn't have the money to do so, to suffer progressive disease, pain, and dysfunction, which may prevent gainful employment and shorten his life (a "life" interest.).
Realizing the difficulties in obtaining legal representation, and the expenses and delays even if representation is available, and the uncertainty of the outcome, regardless of the true facts and applicable law, it was the purpose of the legislature in creating DMHC to provide a mechanism to prevent these serious problems. It is difficult to understand how the court below could consider the denial of this statutory assistance not to be "a sufficient liberty or property interest entitling them to due process protections."
The HCSP member denied costly and possibly life-saving medical care to which he is entitled has a need even more "brutal" than a welfare recipient denied financial aid. (Goldberg v. Kelly (1970) 397 US 254, 262), and his "overpowering need in this unique situation not to be deprived of assistance" similarly triggers a pre-decision due process requirement.
In addition, the specific statutes cited below indicate the legislature's explicit intent to require a minimal level of due process at the agency level, to include at least:
1) disclosure to complainants of opposing party's documentary evidence, and
2) opportunity to comment on and to identify and rebut in writing any false statements therein.
Such false information, when uncorrected, inevitably skews the findings of DMHC and the IMR against the complainant, and has done so in these cases. It also leads to incorrect diagnoses and treatment when future medical providers, unwittingly or otherwise, rely upon the false information.
It is imperative that complainants are able to see these documents before they are used as the basis for adjudicating their complaints, to be able to identify any false information, make corrections before any additional harm is caused to the complainants by DMHC’s reliance on this false information, and to permit DMHC to render an informed decision.
Many Complainants, including the Petitioners, concerned about falsifications in the records submitted to DMHC by their HCSP, have sought copies of their records to ensure that any such falsifications were made known to DMHC. Complainants, including some of the Petitioners, have discovered falsifications in records, and complained of them to DMHC, and even then, were not afforded the opportunity to rebut the falsifications. DMHC and their contracted IMROs have instead routinely allowed such ex parte contacts by HCSPs, adopted and acted on the corrupt, unverified, concealed HCSP records, to the detriment of the patients' health, finances, and potentially even lives.
Thus, the basic elements of due process have been denied claimants by DMHC, whether DMHC is making the decision itself, or adopting the decision of an IMRO. Their decisions, based on unverified ex parte communications and supported by no or wholly inadequate written justification, define the very outer limits of "arbitrary and capricious".
Though this court has declined to direct DMHC, in its prosecutorial capacity, to penalize HCSPs for violating these laws allowing complainants to see and rebut records submitted in evidence against their claims, it should nevertheless require DMHC, in its adjudicatory capacity, to refuse to make its quasi-judicial decisions based on such ex parte submissions.
The grievance procedures specified by HSC §1368(b) and §1374.30 are designed to determine the Rights of Complainants and the Duties of HCSPs under existing law, and therefore DMHC's adjudications are "quasi-judicial proceedings" within the meaning of Government Code §11440.60:
"(a) For purposes of this section, the following terms have the following meaning:
(1) "Quasi-judicial proceeding" means any of the following:
(A) A proceeding to determine the rights or duties of a person under existing laws, regulations, or policies.
(C) A proceeding to enforce compliance with existing law or to impose sanctions for violations of existing law."
Government Code §11440.60
Ex parte communications in such administrative proceedings are prohibited by the Government Code, to wit:
"(a) While the proceeding is pending there shall be no communication, direct or indirect, regarding any issue in the proceeding, to the presiding officer from an employee or representative of an agency that is a party or from an interested person outside the agency, without notice and opportunity for all parties to participate in the communication. ...
(c) For the purpose of this section, a proceeding is pending from ... an application for an agency decision ..."
"(a) If a presiding officer receives a communication in violation of this article, the presiding officer shall make all of the following a part of the record in the proceeding:
(1) If the communication is written, the writing and any written response of the presiding officer to the communication.
(2) If the communication is oral, a memorandum stating the substance of the communication, any response made by the presiding officer, and the identity of each person from whom the presiding officer received the communication.
(b) The presiding officer shall notify all parties that a communication described in this section has been made a part of the record.
(c) If a party requests an opportunity to address the communication within 10 days after receipt of notice of the communication:
(1) The party shall be allowed to comment on the communication.
(2) The presiding officer has discretion to allow the party to present evidence concerning the subject of the communication, including discretion to reopen a hearing that has been concluded."
"Receipt by the presiding officer of a communication in violation of this article may be grounds for disqualification of the presiding officer. ..."
"(a) ... the provisions of this article governing ex parte communications to the presiding officer also govern ex parte communications in an adjudicative proceeding to the agency head or other person or body to which the power to hear or decide in the proceeding is delegated."
Since there are no oral arguments in DMHC's adjudication procedure, it had an even greater obligation to read, consider, and study plaintiff's rebuttals of HCSP-submitted documentary evidence. Instead, DMHC failed even to allow plaintiffs to look at, much less rebut it, denying them their procedural due process rights and making a mockery of the right to the meaningful adjudication prescribed by the legislature.
Administrative Adjudicators are subject to Judicial ethical standards which bar ex parte communications. Since, under HSC §1341(c), the Director (Agency Head) of DMHC is "responsible for the performance of all
duties, the exercise of all powers and jurisdiction, and the assumption and discharge of all responsibilities vested by law in the department", the departmental staff carrying out the adjudication are bound by the rules binding the Agency Head, in whose name they act, to wit:
"A hearing officer (administrative law judge) should be considered a "judge" within the meaning of rule 7-108(B). While agency heads and the members of the board commission constituting the agency are not for most purposes "judges" within the meaning of rule 7-108(B), neither the attorney for the interested party nor the trial attorney for the agency should communicate ex parte with the agency head during an adjudicatory proceeding during that period of time when the agency is itself hearing a contested case or when the adoption, modification or rejection of the proposed decision by the hearing officer is pending, except in a manner consistent with rule 7-108(B)." [NOTE: Old rule 7-108 is current rule 5-300]
Digest, Formal Opinion No. 1984-82"
Standing Committee on Professional Responsibility and Conduct
The State Bar of California
"(B) [An attorney] shall not directly or indirectly communicate or argue to a judge or judicial officer upon the merits of a contested matter ..., except: ... (4) In writing with a copy thereof furnished to such other counsel; ...
(C) As used in this rule, "judge" and "judicial officer" shall include law clerks, research attorneys, or other court personnel who participate in the decision making process."
California Rules of Professional Conduct.
"... A Judge shall not initiate, permit, or consider ex parte communications, or consider other communications made to the Judge outside the presence of the parties concerning a pending or impending proceeding, except as follows: [exceptions inapplicable]"
American Bar Association Code of Judicial conduct (1990)
Admission of ex parte evidence is a violation of Due Process per se and an abuse of discretion.
“[The ban on ex parte communications] is, in essence, a rule of fairness meant to insure that all interested sides will be heard on an issue."
Heavey v. State Bar (1976) 17 Cal. 3d 553, 559
When an administrative adjudicator uses "evidence" outside the record there is a denial of a fair hearing because, as to that "evidence," there has been no hearing at all, for the disadvantaged party has not been heard. (See, e.g., English v. City of Long Beach (1950) 35 Cal. 2d 155, 158-159)
The prohibitions against improper ex parte communications are measures imposed to avert this kind of due process violation. They also aid in preserving the due process requirement of an unbiased tribunal and the related public interest in avoiding the appearance of bias on the part of public decision-makers.
If a DMHC adjudicator knew that a communication was improper and that he was obliged to disclose its substance to the other party, and he refused to do so, this would afford a strong presumption of prejudice on the ground of "actual bias." (See generally, People v. Cooper (1991) 53 Cal. 3d 771, 835)
In reviewing administrative proceedings, abuse of discretion is established "if the agency has not proceeded in the manner required by law ...” (CCP § 1094.5 (b))"
Thus, DMHC’s refusal to comply with CC §1798 and HSC §1374.30, and the resulting denial of due process, represent an abuse of discretion as a matter of law.
DMHC has suggested in its pleadings below that, after it has made a disastrously erroneous decision, based on false ex parte evidence, the untreated, now moribund, patient should sue the HCSP for violation of §1374.30. Of course, the patient might be dead before such a suit was heard.
Were administrative agency procedural due process violations "curable" by a subsequent full hearing or review before the trial or appellate court, administrative bodies would have no incentive to provide a fair hearing - indeed agency proceedings would be relegated to the realm of meaningless exercises. Parties are entitled to fair administrative hearings in the first instance. (See Samann v. Trustees of Cal. State University & Colleges (1983) 150 Cal.App.3d 646, 662; Rosenblit v. Superior Court, (1991), 231 Cal.App.3d 1434, 1442- 1443.)
HCSPs are required by the KKA to create, maintain, and submit complete and accurate patient records and summaries to patients, DMHC and to the IMR Organization ("IMRO") when IMR is ordered (HSC §1374.30). The HCSP is required by HSC §1374.30 (n) (1)(b) ("The plan shall concurrently provide a copy of medical records required by this subparagraph to the enrollee") & (3) ("The plan shall concurrently provide a copy of documents required by this paragraph ... to the enrollee ...") and (for urgent requests) HSC §1374.31(b) ("The plan shall promptly issue a notification to the enrollee ... that includes an annotated list of documents submitted and offer the enrollee the opportunity to request copies of those documents from the plan.") to provide copies to patients of all material sent to the IMRO. DMHC, as the agency with the statutory duty to enforce the KKA, has the duty to require HCSPs to comply. ( "The director shall be responsible for the performance of all duties ... and the assumption and discharge of all responsibilities vested by law in the department." HSC §1341(c)).
The Appellate Court has held previously in this case that DMHC has the prosecutorial discretion to refrain from prosecuting HCSPs which refuse to provide patients with copies of material submitted to IMR, but this Court explicitly refrained from holding that DMHC had not abused that discretion by refusing to enforce the law (NewApp. p.16). Nor did it hold that DMHC has the discretion to base its own adjudications on evidence obtained in violation of the rule and of complainants’ due process rights to see, comment on, and correct false information in evidence submitted against them. In fact, in IMR cases, DMHC does makes judgments based on Ex Parte Evidence.
Plaintiffs frequently have requested that DMHC require the HCSPs to provide, them with copies of materials submitted to IMROs by the HCSPs, as required by HSC §1374.30(n) and §1374.31(b), and DMHC has always refused, but has nevertheless proceeded to base its decisions on that ex parte evidence. The factual allegations of Sec. 1.3 above are included here by reference, with that of Barbara Jenke being an especially clear example.
Even though this court has ruled that DMHC cannot be required by law to prosecute HCSPs which violate §1374.30, it should at least be required, in its adjudicatory, quasi-judicial role, to refuse to proceed with IMR until the HCSP is in compliance, and if it fails to come into compliance, to refuse to adopt the IMR decision which was based on the ex parte evidence, and to apply terminating sanctions in favor of the patient. This evidence preclusion power of an adjudicator is well-established, to wit:
[T]rial courts regularly exercise their 'basic power to insure that all parties receive a fair trial' by precluding evidence. ... Moreover, there is no intrinsic limitation on the court's inherent power of evidence preclusion which would enable preclusion in cases of evidence destruction, but leave the court powerless to remedy other forms of litigation abuse. ... Faced with this sort of abuse of the litigation process, the trial court may act to prevent the taking of an unfair advantage and to preserve the integrity of the judicial system.
Peat, Marwick, Mitchell & Co. v. Superior Court (1988) 200 Cal. App. 3d 272, 288-9
Throughout its opposition to this case, DMHC has made plain that it will not enforce §1374.30, and will thus, as a matter of policy, continue to adjudicate on the basis of ex parte evidence.
It is difficult to conceive of any procedure complying with due process which allows one party to win, based on evidence the other party is not allowed to see. It is even more difficult to imagine a government agency systematically colluding with corporate parties to withhold vital evidence from individual parties and from the decision maker, yet this is what DMHC claims is its right.
Consistent with this court's prior decision, Petitioners do NOT insist that DMHC has a mandatory duty to prosecute HCSPs for violating §1374.30. They do ask, however, that DMHC's invariable refusal to enforce the law be reviewed for failure to exercise and abuse of discretion, and they ask that DMHC not be allowed to make any decision based on evidence which claimants have not had the opportunity to see and rebut, and not to accept or enforce IMR decisions based on such ex-parte evidence.
This cause of action was explicitly allowed by this appellate court in its prior decision:
"Although the Department's discretion is great, it cannot decline to consider requests for enforcement action under section 1374.30 for no reason or for an improper reason....the complaint does not allege a failure to exercise discretion."
(NewApp p.16, 17)
Appellants know of no cases where DMHC has ever enforced the patient disclosure requirements of §1374.30, and DMHC has never alleged that is has ever done so. DMHC has never proffered any reason for its refusal to enforce §1374.30. The appellate court raised the possibility of inadequate funds, but DMHC has never pled that, nor given any indication of what expenses might be incurred, or how such expenses would outweigh the overriding necessity of providing fair adjudications.
It would be as if this court’s funds were cut in half, so it decided to save money by routinely reading only the pleadings from defendants, and discarding those of plaintiffs. An "inadequate funds" argument suggests that it would be acceptable for DMHC to save money by refusing to allow plaintiffs to see or rebut evidence submitted by plans, while allowing plans to see and comment on plaintiff’s evidence. This is certainly “an improper reason.”
In addition, this appellate court did not address, and therefore did not judge, whether DMHC’s refusal to require plans to comply with HSC §1374.30 was an abuse of its discretion, as alleged here.
Even if DMHC does have the discretion to refuse to enforce the laws, that refusal is an abuse of discretion where that enforcement is necessary for the benefit of third parties, to wit:
[W]here the purpose of the law is to cloth [sic] public officers with power to be exercised for the benefit of third persons, or for the public at large--that is, where the public interest or private right requires that a thing should be done--then the language, though permissive in form, is peremptory."
(County of Los Angeles v. State, 64 Cal.App. 290, 295 )
Words permissive in form, when a public duty is involved, are considered as mandatory.
(Uhl v. Badaracco, 199 Cal. 270, 282 )
Where persons or the public have an interest in having an act done by a public body 'may' in a statute means 'must.'
(Harless v. Carter (1954) 42 Cal. 2d 352, 356
If a public duty, such as DMHC's duty to enforce HSC §1374.30 so that it can provide due process in its adjudications, which the Knox-Keene Act introduced for the benefit of HCSP enrollees, makes even grammatically permissive language mandatory, how much stronger must be the presumption that in such cases, clearly grammatically mandatory commands must be interpreted as mandatory?
DMHC has never offered, and cannot provide, any justification for its refusal to provide elementary due process. It cannot be justified on financial grounds. There would be no extra cost to DMHC if it simply refused to accept filings not accompanied by an affidavit verifying that copies have been provided to the other party, in either the direct or IMR-mediated adjudications. Its pertinacious resistance to this policy, so important to the proper execution of the duties imposed upon it by the Legislature, is difficult to explain except as a schoolyard example of bureaucratic turf protection: "I don't have to do it and you can't make me!"
DMHC's refusal to enforce HSC §1374.30 makes it impossible for it to carry out its core responsibility of providing a fair adjudication in grievances requiring IMR. As such, Appellants ask this court to find it an abuse of discretion.
As alleged in section 1.3 above, which we ask this court to accept as true for purposes of this appeal (Sklar v. Franchise Tax Board (1986) 185 Cal. App. 3d 616, 621), DMHC has on multiple occasions verified that it does not release information as required by the IPA, does not enforce HSC §1374.30, and does not enforce the rules against ex parte submissions. These are the de facto rules under which the department operates.
DMHC claims that the courts should defer to its policies nullifying the statutes it has the responsibility for enforcing, but the department has not made a formal rule of nullification complying with the Administrative Procedures Act (APA) (Gov. Code §11340 et seq).
Petitioners allege that there has been no notice of rule-making, publication of proposed rules, public hearings, submission to the Office of Administrative Law, or publication of final rules as required by Gov. Code §§11340 et seq, to support these ad hoc rules abrogating record disclosure and due process. It is unclear who made the decisions or how, and they were disclosed only when appellants asked that the laws be enforced, and received letters stating that the department would not enforce them.
"[n]o state agency shall issue, utilize, enforce, or attempt to enforce any guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule, which is a regulation ... , unless [it] has been adopted as a regulation and filed with the Secretary of State pursuant to this chapter."
Gov. Code §11340.5 (underlines added)
DMHC has argued, however, that its decisions to nullify sections of the Act are not regulations, so not subject to the APA. It would be an odd principle which would deny deference to a formal regulation, but afford it to an anonymous unpublished ad hoc fiat. However, the court below, in one of the errors which is the basis for this appeal, agreed with DMHC, stating: (NewApp p.83, l. 27) "Petitioners have not alleged facts showing that the Respondent has "issued, utilized, enforced, or attempted to enforce any guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule" in violation of the APA"
However, GC §11342.600 demonstrates the court's error:
""Regulation" means every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of [same] adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure."
Gov. Code 11342.600 (underlining added)
See also Tidewater Marine Western v. Bradshaw (1996) 14 Cal. 4th 557, 575
DMHC's letters to Appellants, uniformly refusing to enforce these laws, clearly are evidence of a "standard of general application" adopted "to govern its procedure".
Exemptions to formal rule-making are found only in "limited situations where substantial rights are not at stake."(American Hospital Ass'n v. Bowen (1987) 843 F.2d 1037, 1045). Here, not only the patient's loss of the right of due process, but massive medical costs, the patient's health, and even life itself are at stake, "substantial rights" indeed, which would require that they not be so cavalierly denied.
The U.S. Supreme Court has also determined that administrative opinions or interpretations that are not contained in formal regulations, or are otherwise not the product of a formal rule-making, notice and comment process, are not accorded Chevron-style deference, but are entitled to respect only on the basis of their merits. (Christensen v. Harris County (2000) 529 U.S. 576, 587 )
Our Supreme Court has reached the same conclusion:
"[the board's manual] does not govern or guide us here because it is an invalid rule ... because it was not duly promulgated and has not been duly published in compliance with chapter 4.5 of the California Administrative Practices Act." (underline added)
Armistead v. State Personnel Board (1978) 22 Cal 3d 198, 201
It is just because of the lack of public notice and comment that "interpretive rules" which have not gone through the formal rule-making process, are subject to full judicial scrutiny, without deference. The administrative rule at issue in Armistead was actually printed and disseminated. Surely the Supreme Court would have dealt even more harshly with rules such as those at issue here, which were not given even that meager measure of formality.
Appellants therefore ask the court to reject these arbitrary and capricious ad hoc unwritten DMHC rules which abrogate such important patient rights.
As alleged above, Victoria Travis was not allowed to submit a claim on behalf of her deceased father because DMHC refused to accept her release of his records, in spite of proof that she was his daughter and heir.
The court below agreed with DMHC's position, stating conclusorily (NewApp. p.173, l.17): "...Victoria Travis failed to demonstrate that she was a person entitled to receive information or copies of documents concerning the care provided to her father."
However, the very section governing DMHC grievances, HSC §1368(b)(2) states:
If the subscriber ... is ... incapacitated, the ... relative ... may submit the grievance to the department as the agent of the subscriber or enrollee. ... For purposes of this section, a "relative" includes the ... daughter ... of the subscriber or enrollee. (underlines added)
There would seem no rational reason that "incapacitated" would not include the ultimate incapacitation of death. The number of places throughout the California codes where "incapacitated" and "deceased" parties are treated identically are too numerous to cite.
And Evidence Code §1158 states:
Whenever, prior to the filing of any action ... an attorney at law or his or her representative presents a written authorization therefor signed by ... an heir of a deceased patient, ... a physician and surgeon ... shall make all of the patient's records under his, hers or its custody or control available for inspection and copying ...
Similarly, this demonstrates the legislature's intent that heirs may legally release the records of deceased patients.
These two examples, plus the imperative of Art. 1 §3(b)(2) of the California Constitution: "A statute ... shall be broadly construed if it furthers the people's right of access ...", should encourage this court to rule that a relative and/or heir of a deceased patient may file a grievance for that patient, and sign a valid record release to allow that grievance to be investigated.
For all of the above reasons, Appellants ask that the cited orders of the court below be reversed, either by writ of mandate or as declaratory relief, and that the decision be published, so that this long-running litigation may finally be brought to a close.