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JOHN F. MURPHY, M.D. and BLUE CROSS BLUE SHIELD OF ARIZONA,
Plaintiffs-Appellants,
Cross Appellees, v. BOARD OF MEDICAL
EXAMINERS OF THE STATE OF
ARIZONA, and MARK R. SPEICHER, its
Acting
Executive Director, Defendants-Appellees, Cross
Appellants.
1 CA-CV 95-0327, 1 CA-CV 96-0182, (Consolidated)
COURT OF
APPEALS OF ARIZONA, DIVISION ONE, DEPARTMENT A
1997 Ariz. App. LEXIS 115
July 15, 1997, Filed
NOTICE: THIS DECISION IS SUBJECT TO FURTHER APPELLATE
REVIEW. MOTIONS FOR RECONSIDERATION OR PETITIONS FOR REVIEW TO THE
ARIZONA SUPREME COURT MAY BE PENDING. COUNSEL IS CAUTIONED TO MAKE
AN INDEPENDENT DETERMINATION OF THE STATUS OF THIS CASE.
PRIOR HISTORY: Appeal from the Superior Court of Maricopa County.
Cause Nos. CV 94-11501 and CV 94-18953. The Honorable William T.
Moroney, Judge, The Honorable Rebecca A. Albrecht, Judge.
DISPOSITION: AFFIRMED IN PART; VACATED IN PART; REVERSED AND
REMANDED IN PART.
COUNSEL: Grant Woods, Attorney General, by Nancy J. Beck and James
M. McGee, Assistant Attorneys General, %Attorneys for
Defendants/Appellees/Cross-Appellants, Phoenix.
Jones, Skelton & Hochuli, by Bruce Crawford, Michael Hensley, and
Eileen J. Dennis, Attorneys for
Plaintiffs/Appellants/Cross-Appellees, Phoenix.
Ulrich, Kessler & Anger, P.C., by Paul G. Ulrich and Donn G.
Kessler, Attorneys for Amicus Curia, Federation of State Medical
Boards of the United States, Inc., Phoenix.
Osborn, Maledon, P.A., by G. Murray Snow, Attorneys for Amici
Curiae, Arizona Physicians IPA and Mercy Care Plan, Phoenix.
Lewis and Roca, by Patricia K. Norris and Karen Carter Owens,
Attorneys for Amicus Curia, HealthPartners Health Plans of
Arizona, Inc., Phoenix.
Fennemore Craig, P.C., by Timothy Berg and James J. Trimble,
Attorneys for Amici Curiae, Humana Inc. and Health Insurance
Association of America, Phoenix.
JUDGES: MICHAEL D. RYAN, Judge. CONCURRING: NOEL FIDEL, Acting
Presiding Judge, SARAH D. GRANT, Judge.
OPINIONBY: MICHAEL D. RYAN
OPINION: OPINION
RYAN, Judge
The central question in this appeal is whether the Arizona Board of
Medical Examiners ("BOMEX" or "Board") has jurisdiction to
investigate complaints arising from medical pre-certification
decisions John Murphy, M.D. ("Dr. Murphy"), makes as medical
director of insurance for Blue Cross Blue Shield of Arizona ("Blue
Cross") (collectively "plaintiffs"). We hold, as did the trial
court, that the Board does have such jurisdiction. We also hold that
the trial court exceeded its authority by enjoining the Board from
issuing a letter of concern to Dr. Murphy. Other issues raised by
the parties are discussed below.
FACTS AND PROCEDURAL HISTORY
Dr. Murphy is licensed by BOMEX to practice medicine in Arizona.
n1 He does not actively practice, but he is the medical director of
Blue Cross, and as such, he makes decisions authorizing or
denying pre-certification of medical procedures for persons Blue
Cross insures.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n1 Arizona Revised Statutes Annotated ("A.R.S.") section
32-1401(21) (formerly (17)) defines the practice of medicine as "the
diagnosis, the treatment or the correction of or the attempt or the
holding of oneself out as being able to diagnose, treat or correct
any and all human diseases."
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
When Dr. Murphy authorizes pre-certification, it is not a
guarantee of payment, but the patient can reasonably expect that
Blue Cross will pay for all or part of the medical procedure costs
according to schedules in the insurance contract. When Dr. Murphy
denies pre-certification, however, the patient must either find
means other than Blue Cross insurance benefits to pay for the
requested medical procedure or forgo it altogether.
On December 29, 1992, Dr. Murphy refused to pre-certify patient
S.B.'s "laparoscopic cholecystectomy" (gallbladder surgery), finding
that it was not "medically necessary." n2 He later explained this
decision in part as follows:
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n2 Blue Cross's contract explains:
For purposes of this Benefit Plan, services or supplies . . . are
Medically Necessary if [Blue Cross] determines them to be all of the
following:
1. appropriate for the symptoms and diagnosis or treatment of the
Condition, illness, disease or injury;
2. provided for the diagnosis or direct care and treatment of the
Condition, illness, disease or injury;
3. in accordance with standards of good medical practice in Arizona;
4. not primarily for the convenience of the Employee or Dependent or
a Provider; and
5. the most appropriate site (i.e., location), supply, or level of
service that can safely be provided. [Terms beginning with capital
letters are defined elsewhere in the contract.]
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
The determination that medical necessity . . . was not met was based
on the records provided by Doctors Johnson and Jonas as well as
telephone conversations with them. There was prior history of
similar complaints attributed to irritable colon syndrome.
Blood work including white cell count, liver function and amylase
were all within normal limits. The gallbladder ultrasound showed no
evidence of stones. The temperature was reported to be normal, and
the physical examination findings do not indicate a surgical abdomen.
This decision contradicted the advice of S.B.'s surgeon, David C.
Johnson, M.D. ("Dr. Johnson"), and her referring physician, Richard
Jonas, M.D. Dr. Murphy offered to submit the matter to a third-party
specialist for review at Blue Cross's expense, but the patient and
Dr. Johnson declined the offer. Dr. Johnson performed the surgery
despite Blue Cross's refusal to pre-certify it. Blue Cross
ultimately paid the claim when post-surgery pathology reports
substantiated the need for the surgery.
S.B. filed a complaint with the Arizona Department of Insurance
("ADI") alleging that plaintiffs failed to honor the Blue Cross
insurance contract. ADI investigated S.B.'s claim, found no
violation under the insurance statutes, n3 and apparently dismissed
the complaint.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n3 A.R.S. @@ 20-115 and -461; see generally A.R.S. @@ 20-101
through 20-2804.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
Dr. Johnson chose a different course; he sent BOMEX a letter
complaining of Dr. Murphy's "unprofessional conduct" and "medical
incompetence" associated with the rejection of S.B.'s
pre-certification request. Dr. Johnson alleged that Dr. Murphy's
decision caused S.B. to question Dr. Johnson's professional judgment
and to waver in her decision to proceed with surgery that was not
covered by insurance. Dr. Johnson also maintained that the
physician-patient relationship he established with S.B. suffered "to
a dangerous degree."
In February 1993 BOMEX sent Dr. Murphy a copy of Dr. Johnson's
complaint and requested a response and documentation. Dr. Murphy
responded with a letter that questioned whether he was subject to
BOMEX review because he was "not involved in patient care and not
involved in the practice of medicine." However, "as a courtesy" and
to avoid a "claim of unprofessional conduct," he provided the
requested information.
At its October 1993 meeting, the Board discussed Dr. Johnson's
complaint but reached no resolution. The Board voted to invite Dr.
Murphy to an "informal interview" but never extended the invitation.
After further consideration, the Board ordered the investigation
continued, and it subpoenaed Blue Cross documents concerning
twenty cases in which Dr. Murphy denied pre-certification.
Plaintiffs objected to the subpoena, claiming, among other things,
that BOMEX lacked jurisdiction to investigate Dr. Murphy because he
worked for an insurance company and was therefore under ADI's sole
jurisdiction, and because he was not "practicing medicine." See
A.R.S. @ 32-1401(21). n4
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n4 Plaintiffs also asserted that, because S.B. received Blue
Cross coverage under an employment contract, federal Employee
Retirement Income Security Act provisions preempted Arizona
regulatory mandates. See 29 U.S.C. @ 1001 et seq. However, the trial
court did not rule on this issue, and only amici curiae, not the
parties, raised it on appeal. Thus, we need not consider it. See,
e.g., Town of Chino Valley v. City of Prescott, 131 Ariz. 78, 84,
638 P.2d 1324, 1330 (1981); Ariz. R. Civ. P. 13(a)(6).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
BOMEX notified counsel for plaintiffs that its authority to issue
the subpoena would be considered at its July 15, 1994,
meeting in Tucson. On July 13 the Board's assistant director, Mark
Speicher, delivered a letter by facsimile to plaintiffs' counsel
stating that the agenda had been revised to include further
discussion of Dr. Johnson's complaint against Dr. Murphy. Speicher
wrote: "Possible resolutions may include dismissal, a letter of
concern, inviting Dr. Murphy to an Informal Interview or other
actions as provided by law."
Counsel for plaintiffs attended the July 15 meeting, but Dr.
Murphy did not. The Board discussed the complaint's charges of
unprofessional conduct and medical incompetence. Portions of Dr.
Murphy's letter justifying his decision to deny S.B.'s
pre-certification for gallbladder surgery were read into the record.
The Board voted to resolve the case by issuing Dr. Murphy an
advisory letter of concern regarding "an inappropriate medical
decision which could have caused harm to a patient." Plaintiffs'
counsel argued against the Board's resolution, contending the Board
had no jurisdiction to take any action with respect to Dr. Murphy.
Plaintiffs filed a lawsuit in superior court one week later
seeking judicial review of BOMEX's jurisdiction over Dr.
Murphy's insurance-related decisions. n5 Plaintiffs also requested a
temporary restraining order ("TRO"), a preliminary injunction, and a
stay of the Board's decision to issue the letter of concern. Because
Dr. Murphy was absent from the meeting at which the Board voted to
issue the letter of concern, plaintiffs argued that BOMEX violated
his due process rights to notice and an opportunity to be heard.
BOMEX filed a motion to dismiss the complaint, claiming that the
court lacked subject matter jurisdiction on two grounds: the Board's
decision to issue a letter of concern was not reviewable under the
Administrative Review Act, A.R.S. sections 12-901 through -914
("ARA"); and, because plaintiffs' motion for review was still
pending before the Board, plaintiffs had yet to exhaust
administrative remedies and therefore judicial review was barred. n6
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n5 Maricopa County Superior Court No. CV 94-11501; 1 CA-CV
95-0327.
n6 In late July 1994 plaintiffs filed a motion for review with
BOMEX challenging the letter of concern; the Board denied that
motion on October 19, 1994, and the denial formed the basis for
plaintiffs' second lawsuit. BOMEX decided to refrain from issuing
the letter of concern until litigation was completed.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
On December 13, 1994, the court denied plaintiffs' motion for a
TRO and found no need for a preliminary injunction. The court denied
BOMEX's motion to dismiss but ruled that BOMEX held limited
jurisdiction over Dr. Murphy's medical decisions:
The Board is limited to a Review of whether the decision was
medically reasonable in light of the record given Dr. Murphy to
review . . . .
In the present case, the jurisdiction of [the Board] is limited
to whether or not Dr. Murphy's opinion that the surgery was not
necessary was a reasonable one.
Finding that "the decision to issue a letter of concern is a
decision subject to appeal" under the ARA, the court further held
that plaintiffs had exhausted their administrative remedies. Because
Dr. Murphy did not attend the July 15, 1994, meeting at which BOMEX
voted to issue the letter of concern, the court enjoined BOMEX from
issuing the letter until Dr. Murphy was provided due process in the
form of notice and a hearing.
While the first lawsuit was still pending, plaintiffs filed a
second complaint in superior court seeking judicial review of
BOMEX's issuance of the letter of concern. n7 The only difference in
the second complaint is that to show exhaustion of
administrative remedies, plaintiffs incorporated BOMEX's denial of
their motion to review the July 15, 1994, decision. Plaintiffs
served the complaint on February 1, 1995.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n7 Maricopa County Superior Court No. CV 94-18953; 1 CA-CV
96-0182.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
In a March 10, 1995, minute entry order labeled with case numbers
from both the first and second lawsuits, the court denied
plaintiffs' motion to consolidate because "CV 94-11501 has been
decided. The Court sees nothing to be gained by consolidating a live
case into one that is dead or nearly dead." The court declared
plaintiffs the prevailing party in the first lawsuit, but because
plaintiffs did not prevail on all issues, the court reduced the
amount of attorneys' fees and costs awarded. With regard to the due
process requirement, the court explained that its decision did not
mean that all letters of concern required notice and a hearing, but
only those letters "which would reasonably reflect upon a
physician's professional reputation." Final judgment in
the first lawsuit was entered on May 15, 1995. The court adopted
findings of fact and conclusions of law as set forth in its December
13, 1994, and March 10, 1995, minute entries. Plaintiffs were
awarded their costs and attorneys' fees of $ 18,264.50.
Plaintiffs appealed that portion of the court's order recognizing
BOMEX's limited jurisdiction to review Dr. Murphy's decisions. They
also appealed the court's denial of their motion to consolidate.
BOMEX cross-appealed those portions of the court's order enjoining
it from issuing the letter of concern until Dr. Murphy received
notice and a hearing, denying its motion to dismiss, and awarding
costs and fees to plaintiffs.
Meanwhile, BOMEX moved to dismiss the second complaint; another
court denied the motion and ruled against reconsideration. Both
parties then asked for summary judgment. The court found the
decision in the first lawsuit binding on the parties, granted
plaintiffs' motion for summary judgment, and awarded plaintiffs
attorneys' fees and costs. Final judgment was entered on February 7,
1996.
BOMEX appealed the court's grant of summary judgment to
plaintiffs. Plaintiffs cross-appealed adverse rulings from
the first lawsuit which were incorporated by reference into the
second lawsuit. This court consolidated the two appeals. We have
jurisdiction under A.R.S. section 12-2101(B) and (F).
ISSUES
The central issue is whether BOMEX has jurisdiction to regulate
the conduct of a licensed physician whose position as medical
director for a managed health care company requires him to render
decisions that potentially affect patients' medical care. The
parties also raise the following issues:
1. whether the superior court lacks authority under the ARA to
review a nondisciplinary letter of concern or to enjoin BOMEX from
issuing one;
2. whether the trial judge committed an abuse of discretion by
refusing to consolidate the second lawsuit with the first;
3. whether the court abused its discretion by awarding plaintiffs
attorneys' fees and costs;
4. whether the court in the second lawsuit improperly granted
summary judgment to plaintiffs based on the first court's judgment;
and
5. whether BOMEX, not plaintiffs, is entitled to summary judgment in
the second lawsuit on res judicata grounds because the first lawsuit
decided the jurisdiction issue in BOMEX's favor.
DISCUSSION
I. BOMEX Jurisdiction n8
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n8 We review jurisdictional issues de novo. R.A.J. v. L.B.V., 169
Ariz. 92, 94, 817 P.2d 37, 39 (App. 1991).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
Plaintiffs maintain that BOMEX lacks statutory authority to
intercede in any way in insurance matters regulated by ADI,
including pre-certification decisions made by Dr. Murphy. They
assert that Dr. Murphy is not engaged in the "practice of medicine"
as defined by A.R.S. section 32-1401(21), nor does he provide
medical care for patients. Plaintiffs also contend that Dr. Murphy's
decision affected insurance benefits only and in no way posed harm
to S.B. or caused her to forgo surgery.
BOMEX, on the other hand, maintains that statutes and public
policy grant it power to intercede in the medical decisions of Blue
Cross's medical director when those decisions could adversely affect
the health of a patient. BOMEX contends that ADI jurisdiction does
not preclude BOMEX from reviewing the medical decisions of a
licensed physician for unprofessional conduct.
We conclude that the trial court correctly found that BOMEX has
jurisdiction over Dr. Murphy. Dr. Murphy is a BOMEX licensee. BOMEX
is the state agency that licenses and regulates medical doctors in
Arizona. See A.R.S. @@ 32-1401 through -1457; Arizona Bd. of Med.
Exam'rs v. Moos, 186 Ariz. 360, 361-62, 922 P.2d 924, 925-26 (App.
1996). BOMEX's primary duty is "to protect the public from unlawful,
incompetent, unqualified, impaired or unprofessional practitioners"
of medicine in the state. A.R.S. @ 32-1403(A); Moos, 186 Ariz. at
362, 922 P.2d at 926. Also, BOMEX is authorized to initiate
investigations of alleged unprofessional conduct or medical
incompetence and to discipline and rehabilitate physicians. A.R.S. @
32-1403(A); Moos, 186 Ariz. at 362, 922 P.2d at 926.
Although Dr. Murphy is not engaged in the traditional practice of
medicine, to the extent that he renders medical decisions his
conduct is reviewable by BOMEX. Here, Dr. Murphy evaluated
information provided by both the patient's primary physician and her
surgeon. He disagreed with their decision that gallbladder surgery
would alleviate her ongoing symptoms. S.B.'s doctors
diagnosed a medical condition and proposed a non-experimental course
of treatment. Dr. Murphy substituted his medical judgment for theirs
and determined that the surgery was "not medically necessary." There
is no other way to characterize Dr. Murphy's decision: it was a
"medical" decision.
Nothing in the insurance statutes prevents BOMEX from reviewing
medical decisions made by a state-licensed physician performing
duties as a medical director for an insurance company. See A.R.S. @@
20-101 through -2801. Plaintiffs' reliance on A.R.S. section
20-115(A) is misplaced. That statute states in part:
Any person or other entity that provides coverage in this state for
medical . . . expenses . . . is presumed to be subject to the
jurisdiction of the department unless the person or other entity
shows that while providing coverage it is subject to the
jurisdiction of another agency of this state . . . .
Dr. Murphy is not a provider of insurance. Instead, Dr. Murphy is an
employee who makes medical decisions for his employer on whether
surgeries or other non-experimental procedures are medically
necessary. Such decisions are not insurance decisions but rather
medical decisions because they require Dr. Murphy to
determine whether the procedure is "appropriate for the symptoms and
diagnosis of the condition," whether it is to be "provided for the
diagnosis," care or treatment, and whether it is "in accordance with
standards of good medical practice in Arizona." n9 Thus, the
presumption of A.R.S. section 20-115(A) does not apply to Dr. Murphy
in his individual capacity.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n9 See Blue Cross contract provision at fn. 2, supra.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
Moreover, before patients can obtain relief from ADI, they must
first show that failure to pay for reasonable and necessary medical
services occurs "with such a frequency to indicate [] a general
business practice." A.R.S. @ 20-461(A)(16). This statutory
limitation hinders patients such as S.B. who are complaining of
single occurrences from obtaining any relief from ADI.
BOMEX therefore has jurisdiction to review the complaint filed
against Dr. Murphy, a licensee, to determine whether he committed an
act subject to discipline under A.R.S. sections 32-1401
through -1491, specifically, sections 32-1403(A)(2) and -1451(A),
(C), and (E). The trial court correctly ruled on this issue.
Plaintiffs and their amici support their position with
significant policy reasons. They predict that if BOMEX has
jurisdiction over the medical decisions of an insurance company's
director in charge of pre-certification requests, a flood of
complaints by disgruntled doctors and patients who dispute the
insurer's denial of benefits as "not medically necessary" will
result. On the other hand, the Board and its amici caution that if
we reject BOMEX's jurisdiction, we would frustrate consumers who
purchase health insurance yet find themselves facing a stone wall
when their insurer opposes their physicians' treatment
recommendations. According to BOMEX, patients without insurance
coverage find the cost of medical procedures prohibitive, and denial
of pre-certification has the practical effect of causing patients to
forgo treatment. We leave it to the legislature to consider the
consequences predicted by the parties and resolve underlying policy
conflicts presented by this situation. See Coleman v. Industrial
Comm'n, 14 Ariz. App. 573, 575, 485 P.2d 296, 298 (1971)
("This Court is not endowed with any legal authority to amend or
ignore valid legislative enactments. Any request for change in the
public policy expressed in such statutes must be addressed to the
legislature. . . .").
We next examine the other issues on appeal in light of our
holding that BOMEX has jurisdiction to review Dr. Murphy's medical
decisions.
II. Superior Court Review
BOMEX argues that the superior court had no power to enjoin the
Board from filing a letter of concern because it is a
"nondisciplinary action" that affects no rights or privileges. BOMEX
consequently contends that the filing of a letter of concern does
not constitute a "decision" from which an appeal can be taken.
Plaintiffs counter that the letter of concern affects Dr. Murphy's
professional reputation, and thus his rights and privileges, because
a letter of concern is public and may be used against him in future
disciplinary actions. See A.R.S. @ 32-1451(K). Plaintiffs thus
characterize the letter of concern as a final decision under A.R.S.
section 12-901(2) which is subject to judicial review.
The superior court has authority to review administrative agency
proceedings only if (1) the challenged agency action
constitutes a "decision" appealable under the ARA and the
challenging party has exhausted administrative avenues of appeal, or
(2) the agency's jurisdiction is being challenged. A.R.S. @
12-902(B); Collins v. State, 166 Ariz. 409, 411, 803 P.2d 130, 132
(App. 1990).
If after investigating a licensee the Board finds nothing "of
sufficient seriousness to merit direct action against the license,"
it has three options: dismiss the complaint, file a letter of
concern, or file a letter of reprimand. A.R.S. @ 32-1451(E) and
(G)(1), (2) and (3). According to A.R.S. section 32-1401(14)
(formerly (13)), a letter of concern is
a nondisciplinary advisory letter to notify a physician that, while
there is insufficient evidence to support disciplinary action, the
board believes the physician should modify or eliminate certain
practices and that continuation of the activities which led to the
information being submitted to the board may result in action
against the physician's license.
A letter of concern is also "a public document and may be used in
future disciplinary actions against a doctor of medicine." A.R.S. @
32-1451(K).
To be reviewable, the letter of concern must constitute a
decision. "Decision" is defined as
any decision, order or determination of an administrative agency
rendered in a case which affects the legal rights, duties or
privileges of persons and which terminates the proceeding before the
administrative agency.
A.R.S. @ 12-901(2).
Plaintiffs fail to identify any legal right or privilege affected
by the Board's placement of the letter in Dr. Murphy's file; their
allegations of harm are purely speculative and involve no property
rights triggering due process concerns. See Colorado Bd. of Med.
Exam'rs v. B.L.L., 820 P.2d 1190, 1191 (Colo. App. 1991)
(confidential letter of concern ending inquiry is not a disciplinary
action subject to judicial review); cf. Davis v. Arizona State
Dental Bd., 57 Ariz. 255, 261, 112 P.2d 877, 880 (1941) (license
revocation); Bigelsen v. Board of Med. Exam'rs, 175 Ariz. 86, 89,
853 P.2d 1133, 1136 (App. 1993) ($ 1000 administrative penalty);
Tabora v. State, 150 Ariz. 262, 268-69, 722 P.2d 989, 995-96 (App.
1986) (restitution order); Huls v. Arizona State Bd. of Osteopathic
Exam'rs, 26 Ariz. App. 236, 239, 547 P.2d 507, 510 (1976)
(license suspension); Joseph v. District of Columbia Bd. of Med.,
587 A.2d 1085, 1090 n.5 (D.C. 1991) (reprimand and fine).
Although the Board's case against Dr. Murphy arising from Dr.
Johnson's complaint terminated when the Board voted to issue the
advisory letter of concern, see A.R.S. @ 12-901(2), the letter does
not materially affect Dr. Murphy's legal rights, duties, or
privileges. Moreover, issuance of a letter of concern is not an
adjudicative decision of the Board. Instead, it was a discretionary
decision to end the investigation initiated by Dr. Johnson's letter.
Cf. Arizona Bd. of Regents v. State, 160 Ariz. 150, 154, 771 P.2d
880, 884 (App. 1989) (discussing the definition of "administrative
decision"). Thus, issuance of a letter of concern is not a final
decision subject to review before the agency or superior court. See
A.R.S. @ 12-901(2); Ariz. Admin. Code. R4-16-102(A) and (C).
The trial court therefore lacked statutory authority to review
plaintiffs' challenges to the issuance of a letter of concern, and
it had no authority to enjoin BOMEX from issuing the letter. We thus
vacate the court's order enjoining the Board from issuing a
letter of concern to Dr. Murphy.
Plaintiffs maintain that the trial court correctly found that the
Board deprived Dr. Murphy of due process by deciding to issue the
letter of concern at a hearing from which he was absent. Because the
trial court had no authority to make such a determination, we need
not reach this issue. But we note that even if the court had such
authority, because this case involves no deprivation of legal rights
or privileges, minimal process would be due. See, e.g., Mathews v.
Eldridge, 424 U.S. 319, 334, 47 L. Ed. 2d 18, 96 S. Ct. 893 (1976)
(Due process is not a technical concept with fixed content unrelated
to time, place and circumstances; rather, it is flexible and calls
for such procedural protections as the particular situation
demands.); Paul v. Davis, 424 U.S. 693, 711-12, 47 L. Ed. 2d 405, 96
S. Ct. 1155 (1976) (alleged harm to reputation alone does not
trigger due process clause).
III. The Second Lawsuit
Plaintiffs argue that the first court abused its discretion by
failing to consolidate the two lawsuits. BOMEX contends that once
judgment was entered in the first lawsuit, the second should have
been barred by res judicata. We agree with BOMEX.
"Under the doctrine of res judicata, a judgment on the
merits in a prior suit involving the same parties or their privies
bars a second suit based on the same cause of action." Gilbert v.
Board of Med. Exam'rs, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App.
1987). Res judicata bars the later suit even when the judgment is
entered after the second action was filed. Day v. Wiswall's Estate,
93 Ariz. 400, 402, 381 P.2d 217, 219 (1963). In Arizona, a judgment
is final when entered, even if it may be appealed. See Arizona Downs
v. Superior Ct., 128 Ariz. 73, 76, 623 P.2d 1229, 1232 (1981).
Because the second lawsuit involved the same issues and parties
and was concededly filed only to preclude an argument that
plaintiffs failed to exhaust their administrative remedies, once
judgment was entered in the first suit, the second action was
barred. See Day, 93 Ariz. at 402, 381 P.2d at 219; RESTATEMENT
(SECOND) OF JUDGMENTS @ 18. Accordingly, summary judgment should
have been granted for BOMEX. See Day, 93 Ariz. at 402, 381 P.2d at
219; Gilbert, 155 Ariz. at 174, 745 P.2d at 622. The court erred in
granting summary judgment for plaintiffs, and we thus reverse and
remand to the trial court for entry of judgment in favor of
BOMEX. n10
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - -
n10 In light of this holding, we find it unnecessary to discuss
whether the trial court abused its discretion by declining to
consolidate the two cases.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - -
IV. Attorneys' Fees and Costs
The trial court awarded plaintiffs partial attorneys' fees and costs
of $ 18,264.50. The court found for BOMEX when it ruled that the
agency had limited jurisdiction to review Dr. Murphy's medical
decision in S.B.'s case. Because plaintiffs did not prevail in the
superior court, nor in this court, we reverse the award of fees and
costs.
CONCLUSION
We affirm the trial court's ruling that BOMEX has jurisdiction to
review medical decisions which could affect the health or safety of
a patient or the public, including decisions Dr. Murphy renders as
medical director for Blue Cross. We vacate the trial court's order
enjoining the Board from issuing a letter of concern to Dr. Murphy.
The trial court erred in granting summary judgment for plaintiffs in
the second lawsuit and we reverse and remand for entry of
judgment in favor of BOMEX. Plaintiffs did not prevail on the merits
in superior court and we reverse the trial court's awards of fees
and costs under A.R.S. section 12-348(A)(2).
MICHAEL D. RYAN, Judge
CONCURRING:
NOEL FIDEL, Acting Presiding Judge
SARAH D. GRANT, Judge
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