The University of California at Los Angeles Medical Center likely broke state laws in controlling physician practices, a California judge said.
Consequently, the California Medical Association's lawsuit against the prestigious teaching hospital can go forward, the judge ruled, rejecting UCLA's motion to dismiss the case.
"There is a likelihood that the plaintiffs will prevail on the merits of one or more of the causes of action," including laws banning the corporate practice of medicine and unfair competition, said Los Angeles County Superior Court Judge Judith Chirlin in a July 23 ruling.
However, the judge dismissed several of the suit's complaints, including false advertising and interference with the right to practice a profession. Chirlin has scheduled a pretrial status hearing for Sept. 1 pending the results of an appeal by UCLA Medical Center.
In a case that will test the contractual relationships between teaching hospitals and their physicians, the CMA and a group of aggrieved physicians sued UCLA last December, alleging the medical center's acquisition of local physician practices violated the state's corporate practice of medicine law (Dec. 14, 1998, p. 14).
That state law, which has been in effect for decades, bans the ownership of medical practices by corporations that are not run by physicians.
The lawsuit also alleges that UCLA is restraining the trade of nonaffiliated physicians by requiring network physicians to refer patients only to other network physicians or facilities.
The plaintiffs in the case include 14-physician Santa Monica (Calif.) Anesthesia Medical Group, which has privileges to provide anesthesiology services at 221-bed Santa Monica-UCLA Medical Center, a community hospital the university hospital purchased in 1995.
The suit alleges that UCLA wants to illegally compel the anesthesiologists to become its employees or to replace them with a group employed by the university.
Chirlin also granted the anesthesiologist group's motion for a preliminary injunction that bars Santa Monica-UCLA Medical Center from replacing them.
UCLA and the anesthesiologists tentatively agreed to settle the case in late March, but the 34,000-doctor CMA declined to go along because the proposed settlement would have left unanswered central legal questions about the university's alleged exemption from the corporate practice of medicine law (April 19, p. 40).
Arthur Chenen, a lawyer for the anesthesiologists, said the settlement would have allowed the doctors to practice at the hospital for five years without becoming employees but would have allowed the university to revisit the issue in 2004.
UCLA's position is that as a public organization and a teaching institution, it is exempt from the prohibition against the corporate practice of medicine.
But Chirlin said UCLA's argument that virtually all its medical activities are teaching-related "strains credulity."