In a colorful and blunt opinion, the California Court of Appeal spared few words in saying what it thought about a hospital’s legal strategy to defeat a suit brought by a physicians group alleging unfair competition. Physician-hospital policy wonks, read on.
At issue is a legal defense called an “anti-SLAPP” motion. “SLAPP” stands for “strategic lawsuit against public participation” and the motion allows defendants to seek an early dismissal of harassing lawsuits concerning protected rights of a defendant. If the motion shows that the activity complained of is a protected activity, such as free speech in connection with a public issue, and that there is little likelihood the plaintiff will ultimately prevail, a judge can strike the complaint completely. Anti-SLAPP motions can be successful when hospitals use them to defend against suits that arise out of peer review activity.
In Central Valley Hospitalists v. Dignity Health, a group of hospitalists sued Dignity Health alleging unfair business practices, intentional interference with contractual and prospective economic relations, and breach of contract. In its pleadings, the medical group, CVH, claimed that St. Joseph’s Medical Center in Stockton, operated by Dignity Health, induced certain physicians to leave CVH, harassed CVH physicians while at the hospital, discouraged physicians from working with CVH, and referred CVH patients to Dignity Health-related home healthcare providers without appropriate CVH physician orders. (At this point in the litigation, no allegations have been proven.)
In its final general allegation, the suit states: “This Complaint does not allege wrongs or facts arising from any privileged peer review activities. Any reading of this Complaint which would implicate such activities is disavowed as excluded from this specific litigation.”
Despite that statement (and despite an offer from CVH’s lawyer to Dignity Health’s lawyer to amend the complaint if there was any confusion on the peer review issue), Dignity Health filed an anti-SLAPP motion to strike the complaint that argued: “Specifically, this lawsuit challenges protected activity because it arises out of the physician peer review process – which the California Supreme Court has confirmed is an ‘official proceeding authorized by law’ – and thus it falls within the scope of [the anti-SLAPP statute].”
CVH opposed the motion, arguing the complaint was not based on peer review and filing declarations from three physicians and CVH’s attorney himself. In denying the anti-SLAPP motion, the trial court judge commented on the absence of any actual acts or facts alleged by CVH to support its contentions but said such an absence of facts does not allow a defendant to insert its own.
“Dignity Health cites no authority, nor could I locate any, that permits a defendant making an anti-SLAPP motion to satisfy its . . . burden by its own evidence of what it believes the plaintiff’s claims are based on,” the judge wrote. “If there are no acts alleged, there can be no showing that alleged acts arise from protected activity.”
In pursuing their fight, Dignity Health’s lawyers met a skeptical panel at the First District Court of Appeal in San Francisco. In its written opinion, the appellate court noted that though the complaint was “factually inadequate in supporting detail” the essence of the medical group’s complaint could be gleaned from it and from the eclarations filed with the court. “That case includes among other things Dignity Health interfered with the hiring and/or retention of CVH staff by inducing key physicians to quit CVH and work for Dignity Health’s partner, Sound Physicians; harassed CVH physicians to the point they quit; refused to provide privileges application paperwork to physicians who wanted to join CVH; meddled in patient care in ways that endangered patient safety and increased malpractice risks; and inappropriately targeted CVH’s primary care patients.” That was what CVH’s case was about, the court said.
“Not only that, CVH said it was not suing about peer review; expressly excluded peer review from the complaint; offered to stipulate that there would be no discovery as to peer review; and offered to amend the complaint to clarify the bases of the business torts at issue,” the court continues, its sarcasm evident.
“No matter to Dignity Health. Ignore all that. Ignore what was pleaded. The case was peer review.”
In supporting the trial court judge’s original decision to deny Dignity Health’s anti-SLAPP motion, the Court of Appeal lamented the resources spent over the argument. “So here we are 22 months – and untold attorney fees – later, addressing defendant’s appeal. We affirm.”
Gordon Ownby is CAP’s General Counsel. Questions or comments related to “Case of the Month” should be directed to gownby@CAPphysicians.com.