Missionary Guadalupanas of the Holy Spirit Inc. v. Rouillard
251 Cal. Rptr. 3d 1
Cal. Ct. App. 5th2019Background
- In 2014 the Director of California's Department of Managed Health Care sent corrective letters to seven Knox‑Keene licensed health plans directing them to remove contract language that limited or excluded coverage for legal abortions and to file amended plan documents.
- Letters stated the Knox‑Keene Act requires plans to provide "basic health care services" and that California constitutional and statutory law prohibits discrimination against women who choose to terminate a pregnancy.
- Missionary Guadalupanas (petitioner), a religious nonprofit, sued claiming the letters were an "underground regulation" adopted without APA rulemaking; petitioner argued "voluntary/elective" abortions are not "medically necessary" and thus need not be covered.
- Trial court denied the petition, holding the Department’s letters were the only legally tenable interpretation of the statute and regulation; petitioner’s new‑trial motion (based on a federal court filing suggesting limited exemptions) was denied.
- On appeal the Court of Appeal affirmed: it held (1) abortions fall within the statutory categories of "basic health care services," (2) the regulatory phrase "where medically necessary" does not unambiguously exclude voluntary abortions, and (3) the Department need not use APA rulemaking for the letters because they embodied the only legally tenable interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Director’s letters were an underground regulation adopted in violation of the APA | The letters changed coverage rules by interpreting "medically necessary" to include abortions and thus should have been adopted through APA rulemaking | Letters simply restated the only legally tenable interpretation of the Knox‑Keene Act and the Department’s regulation, so APA procedures were not required | Letters were not invalid underground regulations because they embodied the only legally tenable interpretation; APA rulemaking not required |
| Whether abortions are "basic health care services" under the Knox‑Keene Act | "Voluntary" or "elective" abortions are not "medically necessary" and thus not required plan benefits | "Basic health care services" list is broad; abortion procedures fall within physician/hospital/preventive services and thus are included | Abortion services unambiguously fall within the statute’s broad categories of basic health care services |
| Whether the regulatory qualifier "where medically necessary" excludes voluntary abortions | The regulation’s use of "medically necessary" narrows coverage to therapeutic/life‑saving abortions only | Medically necessary should be read to mean medical services appropriate to treat pregnancy; both delivery and abortion can be medically necessary and voluntarily chosen | Regulation is not ambiguous here; "medically necessary" can include abortions chosen by the patient to treat pregnancy, so exclusion of voluntary abortions is impermissible |
| Whether the new evidence (federal filing referencing limited exemptions) warranted a new trial | The footnote shows the Department allowed limited exemptions, which is newly discovered material evidence that could change result | Evidence was discoverable with reasonable diligence from the related case record and, in any event, would not likely alter the legal conclusion because the Director has explicit statutory exemption authority | Trial court did not abuse discretion denying new trial: evidence was not sufficiently newly discovered nor likely to produce a different result |
Key Cases Cited
- Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (explains APA/regulation definition and purposes)
- Morning Star Co. v. State Bd. of Equalization, 38 Cal.4th 324 (describes exception when agency action embodies the only legally tenable interpretation)
- Capen v. Shewry, 155 Cal.App.4th 378 (discusses when agency interpretation resolving statutory ambiguity triggers APA rulemaking)
- Carmona v. Division of Industrial Safety, 13 Cal.3d 303 (agency statutory interpretation is a question for courts)
- Kings Rehabilitation Center, Inc. v. Premo, 69 Cal.App.4th 215 (underground regulation doctrine and APA compliance)
- Center for Biological Diversity v. Department of Fish & Wildlife, 234 Cal.App.4th 214 (limits of the "only legally tenable interpretation" exception)