Monday, March 12, 2012

Anti-SLAPP: New California Appellate Decision Reinforces the Need to Exhaust Administrative Remedies

In Nesson v. Northern Inyo County Local Hospital District, (4th Dist., Div 2, March 6, 2012) Case No. SICVCV1049815, the California Court of Appeal affirmed the trial court’s grant of the hospital’s anti-SLAPP motion and held that (1) the trial court properly found that all causes of action arose from alleged actions and conduct by the hospital during medical peer review that qualify as official proceedings under the anti-SLAPP statute; (2) all causes of action were barred due to the plaintiff's failure to exhaust his administrative and judicial remedies before filing suit; and (3) even if the plaintiff had exhausted his remedies, he failed to meet his burden to establish a probability he would prevail on any of his claims.

Plaintiff John Nesson, a radiologist, sued defendant Northern Inyo County Local Hospital District (hospital) after the medical executive committee (MEC) summarily suspended his medical staff privileges and the Hospital terminated his contract to provide radiology services because the hospital deemed that it would be impossible for Nesson to comply with the requirements of his contract with the hospital without the medical staff privileges. Nesson filed a complaint against the hospital for breach of contract, breach of the covenant of good faith and fair dealing, violation of Health and Safety Code section 1278.5, violation of the Unruh Civil Rights Act, and violation of the Fair Employment and Housing Act. In response, the hospital filed a special motion to strike pursuant to the Code of Civil Procedure section 425.16 (hereinafter, “the anti-SLAPP statute”). The Legislature enacted the anti-SLAPP statute to provide a procedural remedy to dispose of lawsuits that are brought to chill the valid exercise of constitutional rights.

The anti-SLAPP statute establishes a two-step procedure. First, the defendant is required to show that the cause of action arises from protected activity, i.e., activity by the defendant in furtherance of his constitutional right of petition or free speech. Statements and activity made in connection with an “official proceeding authorized by law” fall within the scope of the first prong of anti-SLAPP. In this case, the court held that the adverse employment actions were protected because the termination of employment and privileges arose from the hospital’s peer review process, which is an official proceeding required by a comprehensive statutory scheme and subject to review by the courts in administrative mandamus proceedings.

Second, if the defendant meets the initial burden, then the burden shifts to plaintiff to demonstrate a reasonable probability of prevailing on the merits of his cause of action. The court emphasized that a plaintiff, who has failed to exhaust his administrative and judicial remedies, cannot prove a probability of prevailing on any claim, irrespective of how it is labeled. More specifically the court outlined specific steps that a physician, who is a victim of faulty medical peer review, must take to rectify the situation prior to filing a lawsuit. First, the physician must fully exhaust his internal hospital administrative remedies. Second, if the physician has fully exhausted his administrative remedies at the hospital but has failed to overturn the hospital’s peer review negative disciplinary action against him, the physician is required to petition for issuance of a writ of mandamus under Code of Civil Procedure section 1094.5. Only after the physician has obtained a writ of mandamus setting aside the hospital’s discipline of him, may the aggrieved physician file a civil lawsuit asserting state law claims against the hospital and its associated defendants. Here, the court held Nesson’s claims are barred because he failed to exhaust his administrative and judicial remedies. He did not request a timely hearing as required by the hospital bylaws; refused to cooperate with the evaluations requested by the peer review committee; refused to cooperate with the investigation undertaken by the medical staff; and did not file a petition for writ of mandamus to set aside the hospital’s adverse actions.