Natarajan v. Dignity Health, 492 P.3d 294

California's peer review statute (Bus. & Prof. Code § 809 et seq.) guarantees physicians a hearing before an impartial trier of fact; hearing officers may preside and rule on procedure/evidence but may not vote, and neither panel members nor hearing officers may gain a “direct financial benefit from the outcome.”
Dr. Sundar Natarajan faced loss of staff privileges at St. Joseph’s (a Dignity Health hospital); the hospital president appointed A. Robert Singer, a semiretired attorney, as hearing officer.
Natarajan challenged Singer under § 809.2(c), arguing financial bias from the prospect of future appointments (relying on Haas); Singer denied the challenge, the panel revoked privileges, and lower tribunals denied relief.
The Court considered whether the possibility of future hearing-officer employment constitutes a “direct financial benefit” under § 809.2(b), and whether Haas’s due-process analysis controls peer review disqualification.
The Supreme Court held prospect of future employment may be disqualifying in some circumstances but is not categorically so; on these facts (Singer had a three‑year bar on reappointment at St. Joseph’s and no evidence Dignity Health controlled the appointment), the risk of bias was not intolerable and disqualification was not required; the Court affirmed the Court of Appeal and disapproved Yaqub to the extent it treated appearance alone as sufficient.

Issue	Plaintiff's Argument (Natarajan)	Defendant's Argument (Dignity Health)	Held
Whether the prospect of future employment by the hospital/network is a “direct financial benefit” under § 809.2(b)	Future appointments create a financial incentive to favor the hospital and require disqualification	Possible future appointments are not a direct financial benefit and are insufficient to disqualify a nonvoting hearing officer	Prospect of future employment can be disqualifying in some circumstances but is not automatically so; inquiry is context‑sensitive
Whether Haas’s due‑process rule governing ad hoc administrative judges controls peer review hearings	Haas applies: ad hoc appointments create an impermissible temptation to favor the hiring entity	Haas is distinguishable; importing it would disqualify most experienced ad hoc hearing officers	Haas is instructive about risk from future employment but does not control; peer review context differs and requires a fact‑sensitive analysis
Whether Singer’s appointment required disqualification on these facts	Singer’s history of Dignity appointments and network structure created an intolerable risk; three‑year bar insufficient	Singer’s three‑year bar at St. Joseph’s and absence of evidence that Dignity controlled selection dispelled any intolerable financial temptation	No disqualification: three‑year bar plus record showing St. Joseph’s (not Dignity) appointed Singer eliminated an intolerable risk of bias; affirmed

Haas v. County of San Bernardino, 27 Cal.4th 1017 (Cal. 2002) (due‑process rule condemning ad hoc appointments that create pecuniary temptation for future employment)
El‑Attar v. Hollywood Presbyterian Med. Ctr., 56 Cal.4th 976 (Cal. 2013) (peer review statute codifies common‑law fair‑procedure protections)
Mileikowsky v. West Hills Hosp. & Med. Ctr., 45 Cal.4th 1259 (Cal. 2009) (describing peer review statute goals and structure)
Yaqub v. Salinas Valley Mem. Healthcare Sys., 122 Cal.App.4th 474 (Cal. Ct. App. 2004) (court held ad hoc hearing officer appointments could create disqualifying bias; disapproved to extent it required appearance alone)
Tumey v. Ohio, 273 U.S. 510 (U.S. 1927) (decision‑maker with a direct pecuniary interest presents due‑process violation)
Gibson v. Berryhill, 411 U.S. 564 (U.S. 1973) (financial stake need not be as direct as Tumey to be disqualifying)
Hackethal v. California Medical Assn., 138 Cal.App.3d 435 (Cal. Ct. App. 1982) (disqualification required where adjudicator has direct pecuniary interest)