Calif. Trial Judge Rules Prop. 64 Is Not Retroactive In Case Against State Fund

July 27, 2005

A San Francisco trial court judge recently ruled in the case Palm Medical v. State Compensation Insurance Fund (SCIF) that Prop. 64 is not retroactive, allowing the plaintiff to pursue injunctive relief on behalf the general public which—in this case—includes all occupational clinics and physicians in the state of California.

Proposition 64, which amended the state’s 70-year-old Unfair Competition Law, Section 17200, prevents the filing of lawsuits by private attorney generals without evidence of harm or financial loss; and stops the use of Section 17200 to file ‘representative lawsuits’ on behalf of the general public.

Pursuant to the Business & Professional Code 17200, Palm Medical, Inc. filed suit against State Fund in 2003 on behalf of all occupational medical clinics and physicians in California, requiring SCIF to institute fair procedures when admitting medical clinics into its preferred provider network.

Since 1998, State Fund has reportedly consistently refused to admit Palm Medical Group Inc. into its network without providing fair procedures, said attorney Drew Pomerance of Los Angeles-based Roxborough, Pomerance & Nye. According to Pomerance, SCIF’s action is in direct violation of the common law doctrine of “Fair Procedure” which requires that—when a private business has substantial economic power and the use of that power can affect one’s ability to earn a living—the decision-making “must be both substantively rational and procedurally fair.” The plaintiffs claim State Fund failed to do so.

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