In this appeal, Horvitz & Levy LLP helped defeat a lawsuit seeking to hold a healthcare insurer responsible for allegations of medical malpractice.
Siasmorn Gopal was admitted to the emergency room at Kaiser Foundation Hospitals (Kaiser Hospitals) and died after she was transferred to another hospital. Gopal’s husband filed a wrongful death and negligence lawsuit against the hospitals where Gopal was treated and also against Kaiser Foundation Health Plan (Health Plan), alleging that Gopal was unlawfully treated differently than she would have been treated had she been a member of Health Plan and that the different treatment caused her death. The trial granted Health Plan’s motion for summary judgment. Plaintiff appealed, arguing that Health Plan was potentially liable under the “enterprise liability” theory for any breach of duty by the Kaiser Hospital where Gopal was initially admitted. or by physician members of Southern California Permanente Medical Group (SCPMG) practicing there, because the operations of Health Plan are so closely intertwined with the operations of these other Kaiser-related entities.
The California Court of Appeal (Second District, Division One) affirmed, holding that the trial court correctly rejected the enterprise theory of liability. The appellate court explained that that (1) the enterprise liability theory necessarily implicates the alter ego doctrine, (2) alter ego requires such a unity of interest and ownership that the separate corporate personalities are merged, (3) the unity of interests or ownership between Health Plan and its health care providers, Kaiser Hospitals and SCPMG, is authorized by the Knox-Keene Health Care Service Plan Act of 1975 (Health & Saf. Code, § 1340 et seq.), (4) alter ego also requires an inequitable result if the acts in question are treated as those of one corporation alone, and (5) there is nothing inequitable about requiring victims of medical malpractice to seek compensation from their health care providers, not their health plans—“[t]he fact that health care providers, and not health plans, are subject to MICRA is not an inequitable result, but a public policy determination made by the Legislature.” The opinion was initially unpublished but Horvitz & Levy and an amicus curiae submitted requests for publication, which the Court of Appeal granted.