Court of Appeal Upholds Dismissal of $3M PAGA Claim for Mental Health Hospital

in News by Stephen Raucher

 

In a critical victory for a private behavioral health hospital, Partner Steve Raucher of Reuben Raucher & Blum successfully defended the client against a PAGA claim seeking over $3 million in penalties. The plaintiff physician alleged that the hospital had misclassified its doctors as independent contractors and claimed that all employees were entitled to recover penalties for alleged Cal-OSHA violations related to COVID protocols.

The trial court granted judgment on the pleadings in favor of the hospital, ruling that the physician lacked standing to pursue PAGA claims. Raucher defended the ruling on appeal by successfully arguing that the plaintiff could not be classified as an employee under the Corporate Practice of Medicine doctrine, which bars hospitals from directly employing physicians.

The Court of Appeal affirmed the judgment, solidifying the hospital’s defense and preventing it from facing significant financial liability. This decision reinforces critical protections for healthcare institutions navigating the complex interplay between employment law and medical practice regulations.