Frost Street Med. Assocs. v. San Diego Internal Med. Group (Summary)

EXCLUSIVE CONTRACT

Frost Street Med. Assocs. v. San Diego Internal Med. Group, No. 37-2010-00101456-CU-BT-CTL (Cal. Ct. App. 4^th Dist. Sept. 18, 2014)

The California Court of Appeals for the Fourth District denied a physician group’s action that challenged a hospital’s determination to enter into an exclusive agreement with a rival physician group. The court held that the hospital’s determination was quasi-legislative and managerial in nature, to be given deference, and found that the hospital acted rationally and in good faith.

The court reviewed the key steps of the process used to determine who should be given the exclusive contract. This included a demonstrated need for the exclusive contract, the criteria determined for a request for proposal, and the procedural processes used throughout the endeavor. The court found that the hospital and physician groups involved acted reasonably and that it was not the court’s place to second-guess rationally based hospital managerial, quasi-legislative decisions. The court noted the appropriateness of deference to be given to the decisionmakers’ special expertise in the field of hospital administration.