Leon v. Watsonville Hosp. Corp. (Summary)

EMERGENCY DEPARTMENT

Leon v. Watsonville Hosp. Corp., No. H037288 (Ca. Ct. App. May 9, 2013)

The Court of Appeal for the Sixth District of California affirmed a lower court’s grant of summary judgment in favor of a hospital.  A couple brought suit against the hospital for, among many claims, breach of contract and breach of the implied covenant of good faith and fair dealing, after being billed for multiple visits to the emergency room.  The emergency room physicians who treated the couple were not hospital employees but were part of the group that had a contract with the hospital.  The emergency room physicians were non-participating providers under the couple’s health insurance.  The couple claimed that the hospital had a duty to warn them that the physicians in the emergency room were not participating providers under their health plan or had a duty to ensure that only participating providers staffed the emergency room.

The appellate court affirmed the trial court’s decision regarding the breach of contract claim, stating that the Conditions of Admission and Consent for Medical Treatment (“COA”) forms signed by the patient made a specific distinction between physicians who were hospital-employed personnel from those who simply treat patients at the hospital.  One paragraph specifically states that some services may be performed by independent contractors who are not hospital personnel.  The court also rejected the couple’s argument that the consent forms contained a promise that physicians would only charge regular rates.

The appellate court also upheld the lower court’s decision regarding the breach of the implied covenant of good faith and fair dealing.  The court stated that the implied covenant cannot impose upon the contracting parties – the patient and the hospital by the COA – additional duties that were not in the terms of the contract.  As the COA was unambiguous as to its terms, did not require the hospital to ensure that the physicians accept the couple’s health insurance or contain a promise to ensure that the physicians charged regular rates, the implied covenant could not be used to impose such a duty.