Saint Francis Memorial Hospital v. State Department of Public Health (June 29, 2020, S249132) __ Cal.5th __ [2020 WL 3526741]

Supreme Court clarifies equitable tolling principles applicable to challenges to DPH rulings.

After a surgical sponge was inadvertently left inside a patient, the State Department of Public Health fined Saint Francis Memorial Hospital for failing to develop and implement a sponge count procedure and a policy for properly training its staff. Saint Francis sought administrative review. The administrative law judge issued a proposed decision reversing the fine on the ground that Saint Francis had adequate surgical safety policies in place and the governing regulations did not impose strict liability for deviations from those policies. On administrative appeal, the Department reversed, ruling that the fine was appropriate because Saint Francis necessarily failed to “implement” its sponge count policy. 

Because the Department’s appellate decision was “effective immediately,” it triggered the 30-day deadline to file a petition for writ of administrative mandate. But Saint Francis sought reconsideration, which the Department denied on the ground reconsideration was unavailable because its decision was final immediately. Saint Francis then filed a petition for a writ of administrative mandamus. The writ petition was filed within 30 days of the denial of reconsideration, but more than 30 days after the Department’s initial appellate decision. The Department demurred to Saint Francis’s writ petition, arguing it was untimely. The trial court sustained the demurrer, agreeing with the Department and rejecting Saint Francis’s mistake of law argument.  (See Gov. Code, § 11523.)  The Court of Appeal affirmed, holding that, because Saint Francis’s request for reconsideration was not a “timely pursuit of an available remedy,” equitable tolling of the writ deadline was unavailable. 

The Supreme Court granted review, reversed the Court of Appeal, and remanded for further proceedings on whether the limitations period was equitably tolled. In doing so, the Supreme Court clarified equitable tolling law. Initially, the Court explained that equitable tolling is presumptively available unless the Legislature clearly forbids it. It then held that equitable tolling may apply to petitions filed under section 11523 because nothing in the text or legislative history of that statute expressly forbids tolling. 

Next, the Court explained that, regardless whether a litigant had pursued a viable alternative remedy, equitable tolling may apply if three elements are satisfied:  (1) timely notice to the defendant of the plaintiff’s claim, (2) a lack of prejudice to the defendant’s ability to address the merits of the claim, and (3) the reasonable and good faith conduct of the plaintiff. Here, Saint Francis could potentially satisfy all three elements. 

First, Saint Francis’s request for reconsideration, although defective, gave the Department adequate and timely notice of its claim. Second, the Department’s ability to contest the merits of Saint Francis’s claim would be unimpaired by tolling. Third, whether Saint Francis’s actions were reasonable and in good faith depends on its ability to establish both that its late filing was objectively reasonable under the circumstances and that it acted with subjective good faith (i.e., the result of an honest mistake). Because the record was undeveloped, the Court remanded the case for a determination whether Saint Francis satisfied the third element.

The bulletin describing the Court of Appeal’s decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.