People v. Superior Court (Sahlolbei) (June 26, 2017, S232639) __ Cal.5th __ [2017 WL 2729540].
A District Attorney criminally charged a surgeon under Government Code section 1090, which prohibits public officers and employees from making contracts in which they have a financial interest when they act in their official capacities. The surgeon was a member (and sometimes chief of staff) of a public hospital’s medical executive committee. The surgeon negotiated a contract with an anesthesiologist to receive $36,000 per month plus benefits to work at the hospital. Then the surgeon allegedly pressured the hospital into hiring the anesthesiologist for $48,000 per month plus benefits and arranged to receive the greater sum and remit the lesser sum to the anesthesiologist. (The hospital was allegedly unaware of this arrangement.) The trial court dismissed the section 1090 count, ruling (under People v. Christiansen (2013) 216 Cal.App.4th 1181) that the statute covers employees only, and that independent contractors like the surgeon cannot be held criminally liable. The Court of Appeal affirmed.
The Supreme Court granted review and reversed. The Court held that section 1090 is not confined to public employees. Disapproving Christiansen, the Court examined the legislative history of section 1090 and an Attorney General opinion, and found that the Legislature intended the statute to cover certain independent contractors—those that “have duties to engage in or advise on public contracting that they are expected to carry out on the government’s behalf.” The Court rejected an argument by the California Medical Association (as amicus) that section 1090 should not be applied to members of a medical staff because of the unique nature of their relationships with hospitals. The Court explained that section 1090 would not criminalize much of what physicians currently do because related statutes exempt personal financial interests “that are remote or minute.” The Court added there was nothing unreasonable about subjecting physicians to criminal liability under section 1090 if they enter into more significant self-interested transactions. The Court also dismissed the surgeon’s rule-of-lenity and related arguments, and remanded to allow the Court of Appeal to consider the surgeon’s fallback argument that (due to his own lapsed contract) he was not even an independent contractor when he negotiated the anesthesiologist’s contract.
Prepared by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy, LLP
California Society for Healthcare Attorneys
1215 K Street, Suite 700
Sacramento, CA 95814
