Peterson v. Sutter Medical Foundation

Background

Ralph Peterson brought the case against Sutter Bay Medical Foundation, Sutter Bay Hospitals, and physicians Neil Stollman, Rod Perry, and Philip Rich. The claims arose from events surrounding Peterson’s resignation from employment with Sutter in April 2009. Before resigning, Peterson’s hospital privileges were suspended after concerns about patient coverage and related issues. Rich reported the circumstances of Peterson’s resignation to the Medical Board of California as required by law.

After earlier rulings on motions to dismiss, the remaining claims alleged that the defendants violated Peterson’s First Amendment rights and his Due Process rights. Peterson’s theory was that the defendants participated in a policy of paying kickbacks and steering less profitable patients away from Sutter, and that they disciplined him because he refused to participate and advocated for patients using Medi-Cal insurance. He also claimed that he unknowingly gave up his medical privileges and that the disciplinary proceedings were affected by fabrication and fraud.

The defendants moved for summary judgment. Summary judgment is a decision entered without a trial when the record shows no genuine dispute over a fact that could affect the result and the moving party is entitled to judgment under the law. Peterson opposed the motion.

Statute of Limitations

The court held that the claims accrued in April 2009, when Peterson was subjected to the disciplinary proceedings and resigned, or at the latest by April 2013, when he described similar theories in an earlier lawsuit. Because the applicable limitations period for these federal civil-rights claims was two years, the claims were untimely.

The court rejected Peterson’s arguments for delaying or pausing that period. The discovery rule did not help him because he knew, or had reason to know, of the injuries underlying his claims before learning the alleged kickback scheme’s specific details. Equitable tolling also did not apply. The court further found that Peterson had not shown a continuing violation. The court concluded that the materials concerning a later whistleblower case and media reports contained allegations or information about investigations, not evidence establishing a kickback policy connected to Peterson’s injuries.

Action Under State Law

The court also held that Peterson could not establish a required element of his claims under 42 U.S.C. § 1983: that the defendants acted under color of state law. Although private parties can sometimes be liable under Section 1983 when they act jointly with the government or when their conduct is fairly treated as government action, the evidence showed that the defendants initiated the disciplinary proceedings independently to address coverage and patient-safety concerns.

The court found no evidence that the Medical Board of California jointly participated in the defendants’ actions, coerced or encouraged them, or had a sufficiently close connection with them. The filing of a report required by law did not establish state action. The court also found no evidence that a kickback scheme existed or that it caused Peterson’s injuries.

First Amendment Claim

The court considered Peterson’s First Amendment claim as a retaliation claim. Even assuming the claim was timely and the defendants acted under state law, the court found that Peterson had not produced evidence supporting the required elements. He did not identify evidence showing what protected advocacy he performed, and he did not show that the defendants knew about such advocacy before his resignation. His alternative theory concerning testimony on behalf of another physician was also unsupported by evidence connecting the defendants to the alleged injury or showing causation.

The court therefore granted summary judgment on the First Amendment claim.

Due Process Claim

The court assumed, without deciding, that Peterson’s medical privileges were a constitutionally protected property interest. It nevertheless found no evidence that the defendants acted under state law or that Peterson was denied required process. Peterson did not provide evidence that kickbacks existed, that his refusal to accept them affected the disciplinary proceedings or his decision to resign, or that the defendants or the Medical Board fabricated anything or otherwise failed to provide required procedures.

Disposition

Judge William H. Orrick granted the defendants’ motion for summary judgment. The court stated that judgment would be entered accordingly.