Court Opinion

ID: 9542610
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:36:32.584024+00
Date Added: 2024-06-11T15:08:25.823100
License: Public Domain

TOBRINER, J.
I dissent. The majority, in concluding that the State Department of Health need not afford a hearing to Paramount before declining to renew its Medi-Cal provider contract, embraces an unjustifiably restrictive conception of that property which the due process clause protects. The majority’s opinion begins, as it should, with a reference to Board of Regents v. Roth (1972) 408 U.S. 564 [33 L.Ed.2d 548, 92 S.Ct. 2701]. Roth distinguished unilateral expectations, which fall without the ambit of the. due process clause, from legitimate claims of entitlement, which command due process protection. Because I see no alternative to the conclusion that Paramount stands statutorily entitled to the renewal of its contract with the department so long as certain conditions are satisfied, I must dissent from the court’s opinion.
The due process clause has long constituted a bulwark against arbitrary government infringement upon private property rights. In recent years, the realization that the common law concept of property proved ill-suited to an economy characterized by massive government intervention through contract and subsidy called for an expansion of the species of property protected by the due process clause. (See Reich, Individual Rights and Social Welfare: The Emerging Legal Issues (1965) *50274 Yale L.J. 1245.) The United States Supreme Court lent judicial imprimatur to this expanded notion of property in Goldberg v. Kelly (1970) 397 U.S. 254 [25 L.Ed.2d 287, 90 S.Ct. 1011], when it required New York to provide welfare recipients a hearing prior to the termination of their welfare benefits.
Perry v. Sindermann (1972) 408 U.S. 593 [33 L.Ed.2d 570, 92 S.Ct. 2964], a companion case of Roth, later indicated that property interests short of formal contractual agreements or explicit statutory guarantees could implicate the due process clause. In Perry, the court required a college to provide a hearing to a nontenured teacher before refusing to renew his one-year contract. The practices and regulations of the college, the court concluded, secured a legitimate claim of entitlement to continued employment, the absence of a contractual guarantee notwithstanding.
Paramount stands entitled to a hearing as certainly as the welfare recipients in Goldberg and more so than the teacher in Perry. Like the plaintiffs in Goldberg, Paramount roots its claim of entitlement in explicit statutory language. The regulations governing Medi-Cal speak in mandatory terms: any nursing home that complies with the regulations may participate in the program (Cal. Admin. Code, tit. 22, § 51451) and the department “shall” enter into a contract with every- qualified nursing home. (§ 51215.) These mandatory provisions confer upon Paramount a statutory right to participate in the program, subject only to its compliance with the apposite regulations. The clear import of Goldberg, then, is that the department cannot exclude-it from the program without offering it an opportunity to demonstrate its compliance with those regulations.
The majority concedes that “[a]t first blush these mandatory provisions lend encouragement to Paramount.” (Majority opn., ante, at p. 496.) For two reasons, however, it concludes that these regulations confer no property right upon Paramount. Paramount’s position does not pale so rapidly in the face of these arguments as the majority would have it.
The majority submits first that Paramount, unlike the plaintiffs in Perry and Goldberg, is not the intended beneficiary of the statutory entitlement. Medi-Cal, the argument goes, is intended to protect the patients, not enrich the nursing homes. Consequently, the program bestows no claim of entitlement upon any nursing home. Although the *503factual premise of the argument is no doubt correct, it hardly casts Paramount’s interest in the renewal of its contract beyond the purview of the due process clause. Three conceptual hurdles stand between that premise and the conclusion the majority culls from it.
First, the majority should have crafted its inquiry into statutory intent more narrowly. The Medi-Cal program surely sprang from a concern about patients, not nursing homes. The possibility remains, however, that the mandatory language in the specific sections that give rise to Paramount’s claim of entitlement emanates from a legislative purpose to allocate the incidental benefits to nursing homes in an equitable manner. The majority makes little attempt to divine the purposes that actuated these specific sections, but largely contents itself with a recital of the purposes of Medi-Cal as a whole. While the majority does note that these regulations effectuate the goal of Medi-Cal that patients have as wide a choice of nursing homes as possible, it simply assumes that that was the sole motive behind the mandatory provisions. I am not so prepared summarily to dismiss the possibility that the Legislature intended to curtail caprice in the distribution of government bounty.
Second, the department should afford Paramount a hearing even if the due process clause is concerned exclusively with effecting statutory intent and the statute’s sole purpose is to protect nursing home patients. The court acknowledges that Medi-Cal endeavors to enhance the welfare of patients by providing a wide choice of nursing homes. An árbitrary refusal to contract with a qualified home subverts that legislative design. The most straightforward way to protect the freedom of choice of the patients is to recognize the right of the home to establish its compliance with the relevant regulations at a fair hearing.1
Third, and most fundamentally, the court’s argument misconceives the doctrinal posture of the due process clause. That clause does not serve merely as a judicial vehicle for effecting legislative intent. Its role is more general and more basic: it strives to curtail arbitrary government deprivation of rights in life, liberty, and property.2 Consequently, the *504sole inquiry becomes whether Paramount possesses a property right in the renewal of its provider contract. This much the majority acknowledges. Roth tells us that legitimate claims of entitlement are protected property interests. The inevitable conclusion is that Paramount has a right to a hearing if it is “entitled” to the renewal of its contract. The majority does not deny that Paramount is so entitled; indeed, it confesses that “a nursing home is entitled to participate in the Medi-Cal program if it meets the standards set forth in . . that title.” (Majority opn., ante, at pp. 495-496, italics added.) Rather, the majority imposes the additional requirement—neither contemplated by the federal cases nor reconcilable with them—that the entitlement arise from a program designed to benefit the party asserting it.
It is not surprising that the majority finds no language in Goldberg, Roth, or Perry to support its novel proposition.3 The due process clause protects all property; the fact that the property arose from a government program designed primarily to benefit someone else is, perforce, inconsequential. The only conceivable basis for the majority’s opinion would be the untenable theory that some entitlements are not property. Roth surely put that hypothesis to rest. (408 U.S. 564, 577 [33 L.Ed.2d 548, 560-561]; see also Goldberg v. Kelly, supra, 397 U.S. at p. 262, fn. 8 [25 L.Ed.2d at pp. 295-296].) The passage from Roth quoted by the majority renders transparent the weakness of such a theory: “It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims.” (408 U.S. 564, 577 [33 L.Ed.2d 548, 561].) Roth bottomed its conclusion that legitimate claims of entitlement merit due process protection squarely on notions of reliance—not of effecting statutory goals. Considerations of fairness and the realities of the marketplace both impel the conclusion that nursing homes rely upon the government’s compliance with regulations that have impact upon those homes, even if the regulations are designed to benefit third parties.
I frankly doubt that this court would be willing to follow the majority to the point where the principle it espouses might lead it. For example, it *505is not at all inconceivable that some welfare programs spring primarily from a concern for the well-being of persons other than the welfare recipients; the potential victims of those whom poverty forces to crime, the children of impoverished parents, and the ordinary citizen who—revulsed by the manifestations of poverty—would rather eradicate it than face it. If welfare programs devolved primarily from such non-egalitarian motives, the court’s paradigm would leave helpless an individual whom the government arbitrarily refused to aid. I find it difficult to believe, however, that the court would have the judiciary ignore blatant refusals to aid those who satisfy the eligibility criteria. Since the relevant statute confers them with a legitimate claim of entitlement, they must be accorded a hearing. Paramount deserves no less.
The majority proffers a second reason for denying Paramount’s statutory claim of entitlement to due process protection. It insists that requiring a hearing prior to refusing to renew a provider contract would preclude compliance with the statutory requirements that contracts be limited to one year and that no new contract be executed before a nursing home complies with the regulations. This argument is misdirected. Although the pragmatic difficulties that would attend granting Paramount a hearing properly bear upon the form and timing of that hearing, they are of no consequence in the threshold determination whether some form of due process hearing is required. (Board of Regents v. Roth (1972) 408 U.S. 564, 570-571, fns. 7, 8 [33 L.Ed.2d 548, 556-557, 92 S.Ct. 2701].) At most, the majority’s argument justifies carefully contouring the required hearing to permit satisfaction of the federal regulations.
Neither of the. arguments the majority adduces suffices to cast Paramount’s entitlement beyond the pale of due process. Consequently, it stands entitled to some form of hearing in connection with the department’s refusal to renew its provider contract. The majority’s contrary conclusion conflicts with the pronouncement of a lower federal court. In Ross v. State of Wisconsin Dept. of Health & Social Serv. (E.D.Wis. 1973) 369 F.Supp. 570, the court invalidated a statute providing for the immediate removal from a nursing home of patients receiving public assistance upon a determination that the home’s failure to comply with certain standards endangered the health and safety of the patients. The court reasoned that the nursing home had, by virtue of statutory entitlement, a property interest in retaining these patients of which it could not be divested without notice and hearing absent a true *506emergency. Although Ross did not deal with the. renewal of provider contracts, it nonetheless applies to the present case since, it recognizes- a property interest of the nursing home in retaining public assistance patients according to the terms of the relevant statute.4
While the Fourteenth Amendment posits the right- to due process in unequivocal terms, it leaves less clear precisely how much process is due. In most cases, the due process clause guarantees a hearing prior to a final deprivation of property. (Goss v. Lopez (1975) 419 U.S. 565, 579 [42 L.Ed.2d 725, 737, 95 S.Ct. 729]; Board of Regents v. Roth (1972) 408 U.S. 564, 570, fn. 7 [33 L.Ed.2d 548, 556, 92 S.Ct. 2701]; Goldberg v. Kelly (1970) 397 U.S. 254 [25 L.Ed.2d 287, 90 S.Ct. 1011].) Sufficiently exigent circumstances, however, can justify the provision of only an after-the-fact hearing. (Board of Regents v. Roth, supra, 408 U.S. 564, 570, fn. 7; Boddie v. Connecticut (1971) 401 U.S. 371, 377 [28 L.Ed.2d 113, 118, 91 S.Ct. 780].) It remains to inquire, then, whether the circumstances of this case justify the provision of a hearing only after the refusal to renew the contract.
The majority opines that it would be impossible for the department to inspect nursing home facilities late enough to be assured that the home complied with the germane regulations at the time the new contract was executed and early enough to permit the conduct of a hearing before the old contract expired. The majority, I think, overplays the difficulty of accommodating compliance with the federal regulations and provision of the pretermination hearing. The department currently inspects nursing homes within 90 days of the expiration of the extant provider contract. In the period between the initial inspection and the contract’s expiration, the department receives from the home a plan to correct any deficiencies, gives the home time to effect the corrections, and inspects the facility again to ensure the corrections have been completed. I see no reason why the department could not commence this process 100 days, rather than 90 days, before the contract expires or expedite each of the steps in the process by a few days.5 By either process the department will have ample time prior to the expiration of the old contract to conduct the requisite *507hearing.6 Moreover, the federal regulations permit two-month extensions of the provider contracts where necessary to prevent irreparable harm to facilities. (45 C.F.R. § 249.33(a)(6).) The accommodation of a preexpiration hearing with the federal regulations should not, therefore, prove intractable.
A more plausible warrant for affording only a post-expiration hearing stems from a concern for a patient residing in a substandard facility. If the purported violations constituted a grave and immediate danger to the welfare of patients, the state might be justified in providing only a post-expiration hearing. The instant matter, however, does not present such a case. In the absence of a true emergency, Paramount should be heard before the expiration of its provider contract. (Ross v. State of Wisconsin Dept. of Health & Social Serv., supra, 369 F.Supp. 570, 572.) This conclusion draws further support from the singular impact of a refusal to renew the provider contract upon Paramount’s operations.7 (Goldberg v. Kelly, supra, 397 U.S. 254.)
In sum, I conclude that the mandatory language of the Medi-Cal regulations invests Paramount with a property interest of which it cannot be deprived without due process of law. I find that Paramount deserves a hearing prior to the expiration of its provider contract.
Respondent’s petition for a rehearing was denied December 17, 1975. Tobriner, J., was of the opinion that the petition should be granted.

The nursing home clearly has a more compelling interest in promptly and persuasively defending its right to contract renewal than any of its residents. Moreover, only the nursing home can effectively protect the interests of future nursing home residents who might opt for this particular nursing home.

See, e.g.. Fuentes v. Shevin (1972) 407 U.S. 67 [32 L.Ed.2d 556, 92 S.Ct. 1983] (goods bought under conditional sales contracts); Goldberg v. Kelly, supra (welfare benefits); Armstrong v. Manzo (1965) 380 U.S. 545 [14 L.Ed.2d 62, 85 S.Ct. 1187] (child custody); Greene v. McElroy (1959) 360 U.S. 474 [3 L.Ed.2d 1377, 79 S.Ct. 1400] (employment).

It is not even clear that Perry, would have come out as it did had the majority’s test been applied. In part, the court based the finding of a de facto tenure system on the common practice of rehiring teachers. The rehiring of teachers as a matter of course may have reflected nothing more than administrative convenience; consequently, it is questionable whether the teacher in Perry was an intended beneficiary of that practice.

Shady Acres Nursing Home, Inc. v. Canary (1973) 39 Ohio App.2d 47 [68 Ohio Ops.2d 210, 316 N.E.2d 481], cited by the majority at page 500, ante, arrives at a contrary conclusion, but does not discuss Roth, Perry, or Goldberg. Its persuasive value, therefore, is limited.

In the present action the department apparently had time to go through the entire process twice.

Before-the-fact hearings need not feature all the procedural embellishments of their after-the-fact counterparts. Gagnon v. Scarpelli (1973) 411 U.S. 778, 786 [36 L.Ed.2d 656, 664, 93 S.Ct. 1756]; Goldberg v. Kelly, supra, 397 U.S. 254, 270 [25 L.Ed.2d 287. 300].) Consequently, they should not consume inordinate time. Nor should the parties require much time to prepare for them. The entire inspection-correction-reinspection process is, in effect, preparation for the hearing.

As Paramount notes, it cannot continue to operate without a provider contract. Consequently, the refusal to renew the provider contract emasculates the value of Paramount’s license. Yet the state could not strip Paramount of its license without a prior hearing. It seems questionable to allow the state to effect the same result through the medium of not renewing the provider contract.