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California Law Update – April 2016

By April 29, 2016July 8th, 2017Law Updates
  1. (Employee Seating) California Supreme Court clarifies when employers must provide employees a seat, settling Industrial Welfare Commission’s seating provisions. Kilby v. CVS Pharmacy Inc. (No. S215614, California Supreme Court, April 4, 2016).
  2. (Medicare Obligations) Hospitals have no power to alter legal obligations with Medicare under their provider agreements by attempting to circumvent continuity of obligations through assets-only purchase. Mission Hospital Regional Medical Center v. Burwell. (No. 13-56264, D.C. No. 8:12-cv-01171-AGJPR, United States Court of Appeals, Ninth Circuit, April 11, 2016).
  3. (Release Agreements) Settlement agreement properly enforced where, contrary to defendant’s argument, plaintiff’s payment of lien obligations was not condition precedent to timely payment settlement proceeds. Karpinski v. Smitty’s Bar Inc. (No. A143381, Marin County Super. Ct. No. CIV-1205504, California Courts of Appeal, First Appellate District, Division Two, April, 12, 2016).
  4. (Terminating Sanctions) Trial court lacked authority to issue terminating sanctions due to noncompliance with discovery order compelling production of ‘managing agent’ that turned out to be invalid. Lopez v. Watchtower Bible and Tract Society of New York, Inc. (No. D066388, Super. Ct. No. 37-2012-00099849-CU-PO-CTL, California Courts of Appeal, Fourth Appellate District, Division One, April 14, 2016).
  5. (Attorney Disqualification) Denial of motion to disqualify attorney due to improper use of privileged communications is overturned where trial court erroneously reviewed contents of communications to determine whether privilege applied. DP Pham LLC v. Cheadle. (No. G050964, Super. Ct. No. 30-2013-00645166, California Courts of Appeal, Fourth Appellate District, Division Three, April 15, 2016).
  6. (Arbitration) Erroneous exclusion, as untimely, of declaration establishing existence of agreement to arbitrate results in reversal of denial of petition to compel arbitration and remand. Espejo v. Southern California Permanente Medical Group. (No. B262717, Los Angeles Super. Ct. No. BC562377, California Courts of Appeal, Second Appellate District, Division Four, April 22, 2016).
  7. (Statutory Offer to Compromise) Reversal and remand result in part, from court’s failure to hold Code of Civil Procedure Section 998 offer invalid for improperly requesting settlement agreement. Sanford v. Rasnick. (No. A145704, Alameda County Super. Ct. No. RG13668115, California Courts of Appeal, First Appellate District, Division Two, April 25, 2016).
  8. (Medical Staff/Vexatious Litigant) Doctor challenging hospital’s decision to terminate her from medical staff properly deemed a vexatious litigant after repeated filing of unsubstantiated motions. Goodrich v. Sierra Vista Regional Medical Center. (2d Civil No. B259724, Super. Ct. No. CV130053, San Luis Obispo County, California Courts of Appeal, Second Appellate District, Division Six, April 27, 2016).

The above referenced matters have come to our attention during this month. We thought you might be interested in a brief summary of these matters. Please let us know if you would like to receive a copy of any of these recently reported court decisions.

  1. (Employee Seating) California Supreme Court clarifies when employers must provide employees a seat, settling Industrial Welfare Commission’s seating provisions. Kilby v. CVS Pharmacy Inc. (No. S215614, California Supreme Court, April 4, 2016).

The California Supreme Court was requested to answer three questions presented by the United States Ninth Circuit Court of Appeals involving two Industrial Welfare Commission wage orders related to what factors to consider in determining whether the nature of a person’s work “reasonably permits” use of a seat as well as what type of proof is needed to show a violation of the seating provision.

By way of background the above wage orders provide “all working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.”

The California Supreme Court ruled that the seat may be called for where the employee’s tasks at a particular location reasonably permit seating and providing one would not otherwise interfere with the employee’s other duties. Secondly, the totality of the circumstances must be considered in determining whether the nature of the work reasonably permits sitting, with an emphasis on the nature of the work. Work place layout and the employer’s business judgment are not dispositive factors. Where the employer argues that no suitable seating is available, the employer bears the burden of proving unavailability.

  1. (Medicare Obligations) Hospitals have no power to alter legal obligations with Medicare under their provider agreements by attempting to circumvent continuity of obligations through assets-only purchase. Mission Hospital Regional Medical Center v. Burwell. (No. 13-56264, D.C. No. 8:12-cv-01171-AGJPR, United States Court of Appeals, Ninth Circuit, April 11, 2016).

Petitioner in an attempt to only purchase the assets of a hospital system sought to avoid potential liabilities owed by the seller’s Medicare provider agreement. These liabilities encompassed potential mandated reimbursement to Medicare for any previous overpayments made by the seller.

As a consequence of the petitioner’s decision to purchase only the assets of the hospital, the United States Department of Health and Human Services (HHS) determined that the petitioner was not entitled to bill Medicare for patient services at its new facility until that facility had a provider agreement of its own. The decision blocked the petitioner from collecting monies for services rendered for a period of time shortly after purchase of the assets. Seeking remuneration for services provided, petitioner appealed the HHS decision to the Department of Health and Human Services Civil Remedies Division. An Administrative Law Judge ruled in favor of HHS. The petitioner appealed the decision of the Administrative Law Judge to the Departmental Appeals Board, losing once again. The United States District Court also decided in favor of HHS. The Ninth Circuit Court of Appeals affirmed finding that the petitioner was not entitled to Medicare payments until the new facility became a credited and properly enrolled.

  1. (Release Agreements) Settlement agreement properly enforced where, contrary to defendant’s argument, plaintiff’s payment of lien obligations was not condition precedent to timely payment settlement proceeds. Karpinski v. Smitty’s Bar Inc. (No. A143381, Marin County Super. Ct. No. CIV-1205504, California Courts of Appeal, First Appellate District, Division Two, April, 12, 2016).

In a California Appellate Court decision of first impression, an appeals court affirmed a finding that where there was nothing in a settlement agreement demonstrating the existence of a condition precedent with regard to payment of Medicare liens out of settlement funds, plaintiff was entitled to enforce the settlement and have an order requiring defendant to pay the full sum of the settlement directly to the plaintiff without having to first honor an obligation to reimburse Medicare.

  1. (Terminating Sanctions) Trial court lacked authority to issue terminating sanctions due to noncompliance with discovery order compelling production of ‘managing agent’ that turned out to be invalid. Lopez v. Watchtower Bible and Tract Society of New York, Inc. (No. D066388, Super. Ct. No. 37-2012-00099849-CU-PO-CTL, California Courts of Appeal, Fourth Appellate District, Division One, April 14, 2016).

Plaintiff sued defendant organization alleging that he was sexually abused by a former instructor as a child. The trial court issued two discovery orders against the defendant one of which compelled defendant to produce an individual for deposition whom the court found to be defendant’s “managing agent” under California Code of Civil Procedure § 2025.280(a). Defendant failed to comply with the orders, resulting in the imposition of monetary and terminating sanctions related to the nonattendance of this witness. Ultimately, the court entered defendant’s default.

The appeals court reversed. The witness was the longest serving member of the defendant’s governing body, which then had a policy making function that issued guidelines regarding child abuse prevention and reporting. Though the witness arguably was involved in exercising judgment and discretion in dealing with corporate matters as well as anticipated to identify himself with the interest of the corporation, the plaintiff failed to produce evidence that the witness could be expected to comply with defendant’s directive to appear. The appeals court found therefore that the witness did not meet the definition of “a managing agent” and that the order compelling the witness’s production was invalid and, consequently the trial court erred in sanctioning defendant for the witness’s nonattendance.

  1. (Attorney Disqualification) Denial of motion to disqualify attorney due to improper use of privileged communications is overturned where trial court erroneously reviewed contents of communications to determine whether privilege applied. DP Pham LLC v. Cheadle. (No. G050964, Super. Ct. No. 30-2013-00645166, California Courts of Appeal, Fourth Appellate District, Division Three, April 15, 2016).

Defendant contended that plaintiff’s counsel improperly obtained copies of privileged communications and used those communications to oppose another party’s summary adjudication motion in the case. The trial court denied the disqualification motion because it concluded the communications were not privileged.

The appeals court found that the trial court erred in reviewing the contents of the communication to determine whether the attorney-client privilege protected that communication. The appeals court stated that the attorney-client privilege is an absolute privilege that prevents disclosure, no matter how necessary or relevant to the lawsuit. The privilege attaches to all confidential communications between an attorney and a client regardless of whether the information communicated is in fact privileged. Accordingly, the court found that it was neither necessary nor appropriate to review a communication to determine whether the attorney-client privilege protects it. Once the proponent of the privilege makes a prima facie showing of a confidential attorney-client communication, it is presumed the communication is privileged and the burden shifts to the opponent to establish waiver, an exception, or that the privilege does not for some other reason apply. The opponent may not rely on the communication’s content to make that showing. In this matter the trial court relied exclusively on the content of the communications to conclude they were not privileged and the plaintiff pointed to no other evidence to support the trial court’s determination. The trial court concluded the communications fell with certain statutory exceptions that Evidence Code § 915 establishes for the privilege. The appeals court concluded the trial court erred in applying these statutory exceptions because to do so would expand them well beyond their intended scope.

  1. (Arbitration) Erroneous exclusion, as untimely, of declaration establishing existence of agreement to arbitrate results in reversal of denial of petition to compel arbitration and remand. Espejo v. Southern California Permanente Medical Group. (No. B262717, Los Angeles Super. Ct. No. BC562377, California Courts of Appeal, Second Appellate District, Division Four, April 22, 2016).

Plaintiff physician sued defendant medical group alleging wrongful termination and whistleblower retaliation. The defendants petitioned to compel arbitration pursuant to the employment agreement and associated documents which purportedly were signed electronically by the physician. The trial court denied the petition, finding that the defendants failed to establish the existence of an enforceable arbitration agreement between the parties. The defendants submitted a declaration from a consultant who stated that the plaintiff had electronically signed the documents. The defendants also filed a supplemental declaration supplying additional details regarding its electronic signature process. In denying the petition, the trial court struck the supplemental declaration as untimely filed and denied defendants petition finding that it failed to establish the existence of an enforceable arbitration agreement.

The appeals court reversed and remanded the action finding that the defendants met their burden by attaching to their petition a copy of the reported arbitration agreement containing the plaintiff’s electronic signature. The supplemental declaration was also found to be timely because defendants were not required to file the declaration establishing the authenticity of the plaintiff’s signature until he challenged it in his opposition. Moreover, the supplemental declaration provided the necessary factual details to properly authenticate the document. Thus, the denial of the petition to compel arbitration was reversed.

  1. (Statutory Offer to Compromise) Reversal and remand result in part, from court’s failure to hold Code of Civil Procedure Section 998 offer invalid for improperly requesting settlement agreement. Sanford v. Rasnick. (No. A145704, Alameda County Super. Ct. No. RG13668115, California Courts of Appeal, First Appellate District, Division Two, April 25, 2016).

The plaintiff was injured when his motorcycle was struck by a car owned and operated by the defendants. Plaintiff’s sued both the defendants who made joint Code of Civil Procedure § 998 offers. The offer lapsed, the case went to trial and a jury returned a verdict for less than the statutory offer.

The trial court held the statutory offer pursuant to California Code of Civil Procedure § 998 was valid and ordered that the defendants could recover expert fees and other costs.

Plaintiff appealed from the order contending that the statutory offer to compromise was not valid since it included a condition that the plaintiff execute a settlement agreement. The Court of Appeal found that the defendants failed to cite, nor could the court find a case holding that a valid 998 offer could include a settlement agreement, “let alone one undescribed and unexplained.” The terms of the required settlement agreement were not described or revealed within the statutory offer leaving the plaintiff with no understanding of what he would have to agree to. Therefore, the inclusion of the settlement agreement requirement invalidated the offer.

  1. (Medical Staff/Vexatious Litigant) Doctor challenging hospital’s decision to terminate her from medical staff properly deemed a vexatious litigant after repeated filing of unsubstantiated motions. Goodrich v. Sierra Vista Regional Medical Center. (2d Civil No. B259724, Super. Ct. No. CV130053, San Luis Obispo County, California Courts of Appeal, Second Appellate District, Division Six, April 27, 2016).

The trial court denied plaintiff physician’s petition for writ of administrative mandate challenging the decision of a hospital to terminate her from its medical staff. The plaintiff acting in pro per, filed three motions attempting to relitigate the court’s final judgment on the petition. The court denied the motions and declared her to be a vexatious litigant under Code of Civil Procedure § 391, subdivision (b) (2) and (3).

On appeal, plaintiff contended that the filing of three motions was insufficient to justify the vexatious litigant determination. The appeals court concluded that there was substantial evidence to support the finding of the trial court. The trial court, after denying the second motion, admonished the plaintiff that she could be declared a vexatious litigant “if similar unsubstantiated motions continue to be filed without any reasonable likelihood of success.” The plaintiff failed to heed this admonition and filed yet another unmeritorious motion. Thus, the appeal court found that there was sufficient evidence supporting the trial court’s vexatious litigant determination.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.
Sincerely,

DUMMIT, BUCHHOLZ & TRAPP
Scott D. Buchholz