Appellate Updates

Gutierrez v. Tostado (July 31, 2025, S283128) __ Cal.5th __ [2025 WL 2169453]

Francisco Gutierrez was injured when an ambulance transporting a patient rear ended his vehicle. Nearly two years later, Gutierrez filed a negligence complaint against Uriel Tostado, the EMT who drove the ambulance. Tostado moved for summary judgment on the ground that Gutierrez’s claim was time barred under MICRA’s one-year statute of limitations in Code of Civil Procedure section 340.5, which applies to actions “against a health care provider based upon such person’s alleged professional negligence.” The trial court granted Tostado’s motion, ruling that the MICRA statute of limitations applied because he was a healthcare provider who was rendering professional medical services within the scope of his license at the time of the accident. Gutierrez appealed, and a divided Court of Appeal affirmed. The Supreme Court granted Gutierrez’s petition for review.

The Supreme Court reversed, holding that MICRA’s one-year statute of limitations does not apply where a plaintiff sues a healthcare provider for breach of a duty owed to the public generally, as opposed to a violation of professional obligations owed to patients. The Court explained that the definition of “professional negligence” in section 340.5 “suggests the statute is only concerned with injuries resulting directly from the negligent rendering of medical care, as opposed to all injuries that might occur during or that arise out of the provision of medical care.” Because the ambulance driver’s alleged failure to follow traffic laws was connected not to a professional medical duty but to the general duty all drivers have to operate their vehicles safely, the two-year general negligence statute of limitations applied.

Although the Court did not decide whether the patient riding in the ambulance would have faced the shorter MICRA statute of limitations had they sued for injuries sustained in the accident, it stated that “the plaintiff’s status as a patient or nonpatient is not necessarily determinative.” The Court explained that the “possibility of different plaintiffs being subject to different statutes of limitation is neither unworkable nor inherently unfair.” The Court also explained that the claims of non-patients may be covered by MICRA, provided those claims stemmed from the negligent provision of medical care. The Court acknowledged that professional duties may overlap with general duties owed to the public, but nonetheless perceived a “fundamental distinction between claims involving ‘professional negligence . . . and claims involving only general negligence.” In the case of ambulance services, the Court held that, while the “existence of an emergency may affect what will constitute ordinary care, it does not fundamentally alter the fact that the ambulance driver’s duty to other drivers is one of ordinary care.”

Finally, the Court disapproved two prior decisions—Canister v. Emergency Ambulance Service, Inc. (2008) 160 Cal.App.4th 388 and Lopez v. American Medical Response West (2023) 89 Cal.App.5th 336. The Court explained that Canister and Lopez incorrectly suggested “that a plaintiff’s claim sounds in professional negligence whenever the plaintiff’s injuries ‘occur[ed] during the rendering of services’ to a patient.” The Court emphasized that MICRA requires more than just an injury occurring during medical services—the professional negligence must be the proximate cause of the injury, meaning there must be a breach of a professional obligation owed to a patient.

Medina v. Planned Parenthood South Atlantic, 606 U.S. ___, 2025 WL 1758505 (June 26, 2025, No. 23-1275)

Based on state law prohibiting public funds for abortion, South Carolina barred Planned Parenthood from participating in the state’s Medicaid program. Planned Parenthood and a patient sued the director of the state’s Department of Health and Human Services, bringing a putative class action under § 1983 to “vindicate rights secured by federal Medicaid statutes.” They claimed the exclusion violated Medicaid’s any-qualified-provider provision (42 U.S.C. § 1396a(a)(23)(A)), which conditions federal Medicaid funding on the states’ agreement that beneficiaries may obtain care from “any qualified provider.” The patient alleged she needed Medicaid coverage and preferred Planned Parenthood provide her gynecological care. The district court granted summary judgment for plaintiffs and enjoined the exclusion, and the Fourth Circuit affirmed. The Supreme Court vacated and remanded in light of Health and Hospital Corporation of Marion County v. Talevski, 599 U.S. 166 (2023), which addressed whether a spending-power statute created enforceable rights under § 1983. The Fourth Circuit reaffirmed.

The Supreme Court again granted certiorari, reversed, and remanded. The 6-justice majority explained that spending-power statutes, like Medicaid, rarely confer enforceable rights because Congress’s spending power, attributable to Article I, section eight, clause one of the U.S. Constitution, does not expressly give Congress the power to regulate conduct. For that reason, the Court has long distinguished between mere benefits and rights that are enforceable under § 1983. Moreover, the federal government’s conditional grants to states are akin to treaties between sovereigns. It follows that Congress alone has the power to enforce grant conditions unless it “clearly and unambiguously” alerted the States in advance that responding to private lawsuits was a condition of the offer. As explained in Talevski, statutes creating enforceable individual rights must do so in “clear and unambiguous terms” using “rights creating terms” and displaying an “unmistakable focus” on individuals. The majority held that Medicaid’s “any qualified provider” provision failed to meet this stringent standard and therefore created no individually enforceable right under § 1983. While undoubtedly seeking to benefit both providers and patients, the statute contains no clear and unambiguous rights-creating language; instead, it focuses on what states must do to participate in Medicaid and explains that failure to meet certain standards may result in a loss of federal funding.

Dameron Hospital Association v. Progressive Cas. Ins. Co. (May 27, 2025, C099467) __ Cal.App.5th __, 2025 WL 1502017

M.G. was treated at Dameron Hospital following a car accident. Dameron required her to sign its standard conditions of admissions (COA) form, which included a provision assigning M.G.’s underinsured motorist (UM) auto insurance benefits to Dameron and directing her auto insurer (Progressive) to pay those benefits directly to Dameron. Although M.G. had Medi-Cal coverage, Dameron demanded that Progressive pay UM benefits toward her medical services at Dameron’s full billed rate, rather than at the lower rates Medi-Cal would pay. After Progressive declined, Dameron filed suit against Progressive seeking damages, an injunction enjoining Progressive from ignoring the assignment of benefits, and a declaration that the assignment of benefits was enforceable. The trial court sustained Progressive’s demurrer, relying on Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th 971 (AAA), which held the same COA form was beyond patients’ reasonable expectations and an unenforceable contract of adhesion. Dameron appealed.

The Court of Appeal affirmed. Dameron argued that AAA was distinguishable because it addressed patients who had private health insurance or were uninsured, not patients covered by Medi-Cal.  The court disagreed, holding that the COA were still an unenforceable adhesion contract because “it is not within the reasonable expectation of a Medi-Cal patient that a COA will contain an assignment of UM benefits to the facility providing him or her with emergency care, particularly an assignment that allows the hospital to collect its full bill without ever presenting a bill to Medi-Cal.” The court explained that providers must submit a claim to Medi-Cal for reimbursement when a patient has Medi-Cal coverage and must not seek payment from anyone other than the Department of Healthcare Services or third-party payors who provide contractual or legal entitlement to healthcare services. Because a UM insurer does not provide entitlement to healthcare services, a provider cannot seek payment from UM insurance. The court rejected Dameron’s argument that Medi-Cal priority of payments laws (making Medi-Cal a “payor of last resort”) compelled a different result because those laws require state plans to seek recovery from liable third parties and compel an assignment to the state of a beneficiary’s right to third-party payments for medical care. In sum, while M.G. might be expected to use some portion of her UM benefits to pay medical expenses, she would not reasonably expect Dameron to use its COA assignment of benefits to collect its full hospital bill from her limited UM coverage—which was intended to cover her lost wages, pain and suffering, and other damages—without submitting a mandatory Medi-Cal claim.

Naranjo v. Doctors Medical Center of Modesto, Inc. (May 23, 2025, F083197) ___ Cal.App.5th ___ [2025 WL 1482842]

After emergency treatment at Doctors Medical Center of Modesto (the Hospital), Joshua Naranjo filed a class action alleging that the Hospital’s failure to disclose its emergency room evaluation and management service (EMS) fee violated the Consumer Legal Remedies Act (CLRA) and the unfair competition law (UCL). The trial court sustained the Hospital’s demurrer, and Naranjo appealed. The Court of Appeal reversed and remanded so the trial court could decide whether to allow Naranjo to assert a breach of contract claim. The California Supreme Court granted the Hospital’s petition for review and transferred the case back to the Court of Appeal with directions to reconsider its decision in light of Capito v. San Jose Healthcare Systems, LP (2024) 17 Cal.5th 273, which held that hospitals have no duty to disclose to patients EMS fees other than those specified by statute.

On remand, the Court of Appeal adhered to its earlier disposition. The court held that Capito bars UCL and CLRA claims, but does not bar causes of action that are not premised on an alleged duty to disclose fees before providing emergency treatment. Thus, the court concluded that Capito did not bar Naranjo’s potential breach of contract claim based on events that arose after the Hospital completed its emergency care. Naranjo argued that the Conditions of Admission (COA) obligate him to pay only for “services” and that the EMS fee is not a charge for any services he received. The court concluded that, because the term “services” is reasonably susceptible to the meaning ascribed to it by Naranjo, he could state a viable contract-based cause of action to determine whether the Hospital billed him for more than the COA obligated him to pay by charging the EMS Fee, and he should be given leave to amend his complaint to state that claim.

Advocate Christ Medical Center v. Kennedy, 605 U.S. ___ (2025) [2025 WL 1224342]

The government reimburses hospitals that provide inpatient care to Medicare recipients. Hospitals that treat a disproportionate share of low-income patients typically have higher Medicare costs, and are reimbursed at a higher rate as determined by a “disproportionate-share” formula. The formula is the sum of two fractions: the Medicare fraction (the proportion of a hospital’s Medicare patients with low incomes) and the Medicaid fraction (the proportion of a hospital’s low-income patients who are eligible for Medicaid, but not for Medicare). The larger the fraction, the more funding the hospital receives.

A group of hospitals challenged how the Department of Health and Human Services (HHS) calculates the numerator of the Medicare fraction, which represents the “number of patient days attributable to Medicare patients who were ‘entitled to benefits under [Medicare] part A’ and were ‘entitled to supplementary security income [(SSI)] benefits . . . under subchapter XVI.’ ” HHS interpreted the phrase entitled to SSI benefits to refer to patients who are entitled to receive SSI benefits during the month they were hospitalized. The hospitals disagreed, insisting that the phrase encompasses all patients enrolled in the SSI system at the time of their hospitalizations, regardless whether they were entitled to an SSI payment that month. The hospitals argued HHS underfunded them by misinterpreting the Medicare fraction.  The district court rejected the hospitals’ claims and granted summary judgment to HHS.  The D.C. Circuit affirmed, and the Supreme Court granted a writ of certiorari to decide what it means to be “entitled” to SSI benefits in this context.

The Supreme Court affirmed the D.C. Circuit decision: a person is “entitled” to SSI benefits when she is eligible to receive a cash payment during the month of her hospitalization. The Court distinguished Becerra v. Empire Health Foundation, 597 U.S. 424 (2022), which held that the phrase “entitled to benefits under [Medicare] Part A” means qualifying for them, whether or not a payment was actually received. The majority noted that Medicare Part A’s “entitlement is automatic and ongoing,” while “the SSI [monthly cash] benefit is neither: Recipients must apply for and be deemed eligible for benefits, and recipients can (and do) fluctuate in and out of eligibility depending on their income and resources from one month to the next.” Finally, the majority explained that Congress’s choice of formula, though imperfect, balances multiple competing interests, including administrability and efficiency.

Justice Jackson dissented, joined by Justice Sotomayor. The dissent interpreted “entitled” to SSI benefits to refer to all patients enrolled in SSI at the time of hospitalization, reasoning that “the true ‘benefit’ of SSI” is the assurance of having an annual income above the federal minimum guaranteed to all enrollees, regardless whether payments come from salary or the Government.

Montoya v. Superior Court (Feb. 28, 2025, G064459) ___ Cal. App.5th ___, 2025 WL 654642, ordered published March 21, 2025

Kimberly Montoya filed a medical malpractice lawsuit against Dr. Aaron Fowler, alleging that he negligently failed to order a CT scan, despite observing signs of potential stroke, at a time when she might have been a candidate for treatment to reduce the long-term damage from her stroke. Shortly before trial, the trial court denied Montoya’s request for a burden-shifting jury instruction on the issue of causation, and Montoya sought writ relief. 

The Court of Appeal stayed the trial and issued a writ of mandate directing the trial court to vacate its order denying Montoya’s proposed instruction and to reconsider whether to give such an instruction based on the evidence introduced at trial. The court explained that the burden of proving causation may shift to the defendant when evidence establishes that the defendant’s alleged negligence makes it practically impossible for plaintiff to prove causation due to a lack of critical evidence. In such circumstances, “ ‘it is more appropriate to hold the defendant liable than to deny an innocent plaintiff recovery, unless the defendant can prove that his negligence was not a cause of the injury.’ ” Shifting the burden of proof on causation prevents a negligent defendant from taking advantage of the lack of proof resulting from his own negligence.

United States v. Enriquez, ___ F.4th ___, No. 23-4424, 2025 WL 838279 (9th Cir. March 18, 2025)

Pharmacy technician Juan Enriquez was indicted by federal prosecutors for receiving, and conspiring with his employer to receive, kickbacks in exchange for referring Medicare and Medi-Cal beneficiaries to his employer’s pharmacies in violation of the anti-kickback statute (AKS), 18 U.S.C. § 371. He moved to dismiss the indictment for lack of specificity and failure to state an offense because it did not negate the AKS safe harbor exception for a bona fide employment relationship. 42 U.S.C. § 1320a-7b(b)(3)(B). After the district court denied the motion, Enriquez pleaded guilty while reserving his right to appeal and appealed to the Ninth Circuit. 

The Ninth Circuit affirmed, rejecting Enriquez’s reliance on Ruan v. United States, 597 U.S. 450 (2022). The court distinguished Ruan because it concerned a safe harbor provision in the Controlled Substances Act (CSA). The CSA prohibits the knowing or intentional manufacture, distribution, or dispensing of controlled substances, “except as authorized,” a clause that protects doctors who lawfully prescribe them for medical purposes. Thus, the CSA includes its authorization exception, mens rea clause, and prohibited act in a single provision, while the AKS has a separate subsection listing numerous safe harbor provisions distinct from the prohibited conduct.  Therefore, while the CSA exception functions as an element that the government must prove beyond a reasonable doubt, the AKS exceptions are affirmative defenses that need not be pleaded in an indictment. Thus, the government was not required to disprove, at the indictment stage, the bona fide employment relationship exception to the AKS offense that was adequately charged against Enriquez.

Ryan v. County of Los Angeles (Feb. 28, 2025, B320677) ___ Cal.App.5th ___ [2025 WL 653610]

Dr. Timothy Ryan was a vascular surgeon on the Harbor-UCLA Medical Center’s medical staff. In late 2013, he treated a patient with medication, believing surgery was unnecessary. He was then copied on an email suggesting the patient was coached to return to the emergency room feigning chest pain. The patient did so and underwent surgery, during which she suffered a stroke. Dr. Ryan believed that the Chief of Vascular Surgery had encouraged the surgery because he received financial incentives from a stent manufacturer, and that he falsified the patient’s medical records to justify the surgery. Dr. Ryan reported his concerns to several County of Los Angeles officials. More than a year later, the vascular surgery chief sent a letter to the medical center’s Professional Staff Association (PSA) asking it to take action against Dr. Ryan for engaging in unprofessional, disruptive conduct that was deleterious to Medical Center operations, including improperly seeking confidential medical records of the chief’s patients, attempting to read the chief’s files, and engaging in a “continuing pattern of harassment.”  During the ensuing investigation, Dr. Ryan’s staff privileges came up for renewal, but he refused to reapply because the application included release-of-liability provisions. After several extensions of the application deadline, the medical center terminated Dr. Ryan because his staff privileges had lapsed and were not renewed.

Dr. Ryan sued the County for retaliation in violation of Health and Safety Code section 1278.5, Labor Code section 1102.5, and the California False Claims Act (CFCA; Gov. Code, § 12650 et seq.). After the trial court sustained the County’s demurrer to the Health and Safety Code claim, a jury found for the County on Dr. Ryan’s Labor Code claim and for Dr. Ryan on his CFCA claim, awarding him $2.1 million. The trial court awarded Dr. Ryan costs and attorney fees totaling more than $3.2 million. Both Dr. Ryan and the County appealed.

The Court of Appeal affirmed in part and reversed in part. The court held the County was entitled to judgment on Dr. Ryan’s CFCA anti-retaliation claim (Gov. Code, § 12653).  The court explained that, under Wells v. One2One Learning Foundation (2006) 39 Cal.4th 1164, public entities may not be sued under the CFCA for submitting false claims. It followed that a section 12653 claim for retaliation based on false claims actionable under the CFCA likewise cannot be pursued against public entities. Because the CFCA claim was the only cause of action Ryan prevailed on, the Court of Appeal also reversed the award of attorney fees and costs.

The court then held that the trial court erred by sustaining the County’s demurrer to Dr. Ryan’s Health and Safety Code section 1278.5 claim. Section 1278.5 prohibits discrimination and retaliation against a whistleblower by a health facility. The statutory definition of “health facilities” includes some public entities while excluding others.  These provisions would have been unnecessary if the Legislature had intended to exclude all publicly owned hospitals from section 1278.5 claims, as the trial court ruled. The court therefore remanded for further proceedings on Dr. Ryan’s section 1278.5 claim.

California Healthcare & Rehabilitation Center v. Baass (Feb. 11, 2025, C098043) __ Cal.App.5th __ [2025 WL 751429]

A group of skilled nursing facilities challenged the Department of Health Care Services’ (DHCS) formula for calculating Medi-Cal reimbursement overpayments. Some patients who are covered by both Medi-Cal and Medicare may receive both general subacute services and ancillary services. Medi-Cal pays facilities an all-inclusive per-diem rate while Medicare pays on a per-item basis, which may result in duplicate payments. The facilities filed a petition for traditional (as opposed to administrative) writ of mandate and a complaint for declaratory relief, arguing that DHCS violated a ministerial duty and adopted a reimbursement regulation in violation of the Administrative Procedure Act (APA) (Gov. Code, § 11340 et seq.) by utilizing an overpayment formula based on the amount Medicare paid for ancillary services instead of the amount Medi-Cal overpaid for those services.  They asserted that DHCS’s formula was an unlawful underground regulation because it was adopted in violation of APA requirements.  The trial court sustained DHCS’s demurrer without leave to amend, ruling the plaintiffs’ claim was not cognizable in a writ of mandate proceeding and that plaintiffs failed to state a claim that DHCS adopted an underground regulation.

The Court of Appeal reversed and remanded for further proceedings. The court explained that a writ of mandate applies to challenge an agency’s quasi-legislative decision to formulate a rule that applies to all future cases, holding that agencies are required to follow the APA when adopting regulations. An agency policy is a regulation subject to the APA if (1) the agency intends its rule to apply generally, such that it declares how a certain class of cases will be decided; and (2) the rule implements, interprets, or makes specific the law enforced or administered by the agency, or governs the agency’s procedure. Here, plaintiffs adequately alleged that the DHCS reimbursement rule applied generally to calculate Medi-Cal reimbursement overpayments for all ancillary services using the entirety of the Medicare reimbursement as the Medi-Cal reimbursement overpayment regardless whether the contracted Medi-Cal per diem rate fully compensated the facilities for the actual cost of the services provided to particular patients. Plaintiffs also adequately alleged that the challenged rule implemented overpayment laws that the DHCS administers. And plaintiffs had sufficiently pleaded that the overpayment formula constitutes an underground regulation because the DHCS had not complied with the APA before utilizing the overpayment formula. Finally, the court held that the facilities did not need to exhaust any administrative remedies before challenging the DHCS overpayment formula as an unlawful underground regulation.

Siskiyou Hospital, Inc. v. County of Siskiyou (Feb. 25, 2025, C097671, C098311) ___ Cal.App.5th ___ [2025 WL 601168]

Siskiyou Hospital, Inc., doing business as Fairchild Medical Center (Fairchild), sued the County of Siskiyou, challenging the County’s practice of bringing individuals with psychiatric emergencies to its emergency department under section 5150 of the Lanterman-Petris-Short (LPS) Act (Welf. & Inst. Code, § 5000 et seq.). Section 5150 provides that persons who pose a danger to themselves or others because of a mental disorder may be taken to “a facility designated by the county for evaluation and treatment and approved by the State Department of Health Care Services” or an acute care hospital. Fairchild sought an order preventing the County from bringing 5150 patients to its emergency department and requiring those persons to be held for up to 72 hours when they require specialty mental health services and treatment but not any emergency care for a physical ailment. Fairchild also sought damages for breach of an implied contract to pay Fairchild’s full billed charges for its services to the 5150 patients and a traditional writ of mandate, alleging violations of the LPS Act, section 17000 of the Welfare and Institutions Code, Medicaid laws, disability discrimination laws, and mental health parity laws. The trial court sustained the County’s demurrers without leave to amend and denied Fairchild’s motion for a preliminary injunction. Fairchild appealed.

The Court of Appeal affirmed the trial court’s judgment of dismissal. The court held that, because Fairchild’s complaint identified no mandatory or ministerial duty that the County had failed to perform, a writ of mandate was unavailable; and no alleged fact supported an implied agreement that the County would pay Fairfield’s full billed charges. The court dismissed as moot Fairchild’s appeal from the denial of injunctive relief because no viable cause of action supported its request for a preliminary injunction.