California Advocates for Nursing Home Reform v. Smith CA1/3
A145267
| Cal. Ct. App. | Aug 9, 2016Background
- Plaintiffs: California Advocates for Nursing Home Reform (nonprofit) and two individuals whose relatives died after residency in skilled nursing facilities managed under agreements with Country Villa Service Corp. (CVSC).
- Defendants: CVSC (management company), licensed facility licensees (Country Villa East L.P., C.V. Westwood SPE, LLC), owners, and the Director of the California Department of Public Health (department).
- Allegations: CVSC entered management agreements with licensees that effectively delegated operational control to an unlicensed management company; the department approved these agreements. Plaintiffs claim agreements are invalid under Health & Safety Code and that fees paid are unlawful, deplete resources, and contribute to inadequate care.
- Procedural posture: Trial court sustained demurrers without leave to amend for lack of standing and entered dismissal; plaintiffs appealed.
- Outcome below: Court of Appeal reversed as to plaintiffs’ first and fourth causes of action (declaratory and injunctive relief against the Director regarding approval of unlicensed management agreements) and affirmed dismissal as to all other claims for lack of standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs have standing to seek declaratory and injunctive relief compelling the Director to stop approving management agreements that let unlicensed entities operate skilled nursing facilities | Plaintiffs: as citizens and organizations, they may challenge the department’s practice because the public duty to enforce licensing is “sharp and weighty” and they seek enforcement of a public right | Director: plaintiffs lack standing; alternatively, California law permits approval of unlicensed management companies so claim fails on the merits | Held: Plaintiffs have standing to bring declaratory and injunctive claims against the Director; merits should be decided in trial court (demurrer inappropriate) |
| Whether plaintiffs have standing to pursue Business & Professions Code § 17200 and related claims challenging management fees and alleging that agreements caused inadequate care and financial injury | Plaintiffs: family members suffered injury while at CVSC-managed facilities; fees diverted funds and caused substandard care and state losses | Defendants: plaintiffs fail to plead causation or injury in fact tied to the management agreements; statute requires lost money/property or concrete injury | Held: Plaintiffs failed to plead injury and causation for these claims; standing lacking; dismissal affirmed. |
| Whether plaintiffs (or their organization) may pursue declaratory relief about other statutory/regulatory violations tied to care standards without direct injury | Plaintiffs: broad public-right interest and organizational representation of member residents justify relief | Defendants: claims raise complex factual and regulatory questions and require concrete injury | Held: Court limited exception for public-duty claims to the narrow issue of department approval of unlicensed managers; other claims require concrete injury and were dismissed |
| Whether demurrer was the proper vehicle to resolve the statutory interpretation question about department authority to approve unlicensed managers | Plaintiffs: statutory interpretation is complex and should not be resolved on demurrer; discovery may be needed | Defendants: demurrer appropriate to test legal sufficiency | Held: Demurrer is not the proper vehicle to resolve the statutory interpretation dispute; trial court should address merits after further proceedings |
Key Cases Cited
- Hervey v. Mercury Casualty Co., 185 Cal.App.4th 954 (2010) (standards for reviewing demurrer and pleading sufficiency)
- California Assn. of Psychology Providers v. Rank, 51 Cal.3d 1 (1990) (declaratory relief can provide relief equivalent to writ of mandate)
- Common Cause v. Board of Supervisors, 49 Cal.3d 432 (1989) (citizen standing for enforcement of public duties without special legal interest)
- Green v. Obledo, 29 Cal.3d 126 (1981) (public-right exception to standing where duty is sharp and public need is weighty)
- Qualified Patients Assn v. City of Anaheim, 187 Cal.App.4th 734 (2010) (abuse of discretion to sustain demurrer to legally sufficient declaratory relief claim)
- AIDS Healthcare Foundation v. Los Angeles County Dept. of Public Health, 197 Cal.App.4th 693 (2011) (mandamus available to compel a public agency’s ministerial duty)
- County of San Diego v. San Diego NORML, 165 Cal.App.4th 798 (2008) (plaintiff must allege concrete, nonconjectural interest to have standing)
- Fladeboe v. American Isuzu Motors Inc., 150 Cal.App.4th 42 (2007) (standing to seek declaratory relief under a contract requires party or third-party beneficiary status)