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Is medical negligence a “deceptive business practice” made unlawful by Civil Code � 1770? The plaintiffs bar is beginning to make such allegations in an attempt to eviscerate or circumvent medical negligence case law and the statutory protections afforded health care providers by MICRA. However, the history of � 1770 — part of the California Consumer’s Legal Remedies Act — clearly reveals that this statute was never intended to apply to medical negligence, but rather to “only those types of shady practices engaged in by merchants trying to get a fast buck by deceiving the unknowing public.” Although most CLRA causes of action in medical malpractice cases do not specifically allege which subdivision of � 1770 has been violated, it appears that plaintiffs are relying on � 1770(a)(7): “The following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer are unlawful. . . . (7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.” For example, plaintiff alleges he retained defendant health care provider’s services for the purpose of providing diagnosis, care and treatment of an illness. Plaintiff alleges that defendant represented and informed plaintiff that all care and treatment rendered would be given in a competent fashion and according to community standards. Finally, plaintiff alleges that the care and treatment rendered were not competently given in accordance with those standards, thereby violating Civil Code � 1770. However, before applying � 1770 to a medical negligence claim, the court should look to the history and circumstances surrounding the drafting and enactment of the CLRA. What becomes readily apparent is that the Legislature was focused on a categorically different problem from medical negligence when it enacted that statute. James Reed, chief counsel for the California Assembly Judiciary Committee in 1970, when the CLRA was enacted, recalled recently that, “No person who was involved with the [CLRA] legislation as it went through the process ever read the bill to apply to transactions involving personal health care. Construing the CLRA to apply to medical malpractice or any other form of professional negligence would be far beyond the intent of the Legislature.” A RESPONSE TO CIVIL UNREST On July 27, 1967, in the wake of civil unrest in America’s inner cities, President Lyndon Johnson appointed the National Advisory Commission on Civil Disorders to be chaired by Illinois Gov. Otto Kerner. Following the Watts riots of 1969, the California Legislature investigated the root causes of that disaster, as the Kerner Commission was doing at the federal level. Both the California Assembly Judiciary Committee and the Kerner Commission found that much of the violence had been directed at commercial establishments in poorer neighborhoods. Rioters focused on stores operated by merchants who, they believed, had been charging exorbitant prices for inferior goods or indulging in other unfair business practices or using techniques like “bait and switch.” Credit purchases were the norm, interest rates were excessive, and defaults were common. Unpaid or delinquent debts were often ruthlessly enforced. The Judiciary Committee also found that advertising campaigns were often deceptive. Under the direction of the Judiciary Committee, AB 292 was drafted, which became known as the Consumer Legal Remedies Act. AB 292 was adapted in large part from provisions in a tentative draft of the National Consumer Act. James Hayes, the chairman of the Assembly Judiciary Committee, noted at the time that the Kerner Commission had “found unethical and deceptive practices of merchants in low-income areas to be factors contributing to the disturbances in our cities in recent years. This bill [AB 292] gives citizens in those areas the right to seek redress in the courts as individuals, without having to ask the government — state or federal — for assistance. It is my opinion and desire that the legislation of this type will have a substantial deterrent effect as to the deceptive practices it makes unlawful, and that it will, as a result, aid in establishing better relations between the businessman and the consumer.” Chairman Hayes explained, “The Consumer Legal Remedies Act is designed to provide affirmative remedies for consumers which will protect them from unscrupulous business practices while insulating responsible businessmen from spurious or vexatious lawsuits.” Chairman Hayes later affirmed this scope of the CLRA upon presentation of the bill to Gov. Ronald Reagan for signing when he said, “AB 292 was drafted with the complete cooperation and assistance of consumer groups and the entire business community in order to prevent frivolous and harassing lawsuits against businessmen conducting their affairs in a proper and an orderly manner. It is designed to reach only those types of shady practices engaged in by merchants trying to get a fast buck by deceiving the unknowing public.” The CLRA was intended, therefore, to protect consumers from merchants employing specific, deceptive business practices in connection with the sale of goods and services. As former Judiciary Committee Chief Counsel Reed now notes, it was never intended to apply to health care providers providing medical care and treatment. In testimony given in a medical malpractice case last year, Reed explained that, for the purposes of the act, “a ‘consumer’ is an individual who purchases goods or services for personal, family or household purposes. Examples of ‘services’ are the sale and repair of goods. In short, the CLRA is and was aimed at normal consumer transactions in the marketplace. Medical malpractice does not emanate from a normal consumer transaction in the market place.” Indeed, in the Assembly Daily Journal, the Judiciary Committee forecast how � 1770(a)(7) would be applied: “This section would be violated by actually representing that there is an industrywide system of grading tires when there isn’t, and actually representing that the tire being sold meets those standards. Actually representing that the tires are used or approved by Parnelli Jones or Mario Andretti would also be violations.” That is the kind of “shady practice” from which the CLRA was designed to protect the “unknowing public.” ADEQUATE REMEDY EXISTS The CLRA was the Legislature’s response to a situation in which existing law did not provide a satisfactory remedy against the deceptive practices of merchants. Under then-existing law, consumers who were the victims of unscrupulous business practices were forced either to sue on a contract or for fraud. The former remedy presupposes that there existed a contract and provides limited contract remedies. The latter remedy bears a difficult burden of proof. With the CLRA, the Legislature moved to fill this void. However, construing the CLRA to apply to a medical negligence claim would produce the absurd consequence of circumventing existing medical negligence law when that law is adequate to protect patients’ rights. In the context of medical negligence, an adequate remedy has existed for many years. Claimants can, and do, sue health care providers for medical negligence under a well-defined body of tort law. It is noteworthy that negligence itself, i.e. that the act complained of was not intentional, is part of a defense to a � 1770 cause of action (Civil Code � 1784). Application of � 1770 to medical negligence would obviate the need for existing medical negligence law. Arguably, only a � 1770 cause of action would be necessary for medical malpractice claimants. The ramifications of that slippery slope are devastating. First, under � 1770, plaintiff’s only burden of proof may be to show that a “merchant’s” representation was made and not met. Second, the statute of limitations for medical negligence found in Code of Civil Procedure � 340.5 and its incorporation of the “discovery rule” may no longer apply, and a full three years could be the limitations period regardless of discovery of the injury and its cause. Third, the CLRA mandates the recovery of attorneys fees for a prevailing plaintiff, while it only makes permissible the recovery of fees for a prevailing defendant upon a showing that plaintiff’s prosecution of the action was not in good faith. This is an onerous burden and an unfair lack of reciprocity in this context. Regardless, such a remedy imports the recovery of attorneys fees into a negligence action, where they are not now allowed. Fourth, the most absurd and potentially damaging consequence in applying the CLRA to medical negligence is that it may allow claimants to make an end run around the non-economic damages limit ($250,000) enacted as part of the Medical Injury Compensation Reform Act of 1975. Under � 1770, general compensatory damages, including non-economic damages, have no ceiling. Subjecting health care providers to unlimited liability for non-economic damages thwarts the Legislature’s MICRA goal of containing insurance costs. Finally, a consumer bringing an action under the CLRA can also claim punitive damages without leave of court. This is contradictory to C.C.P. � 425.13, which allows punitive damages to be pleaded in medical negligence cases only upon court order. In today’s litigation environment, other states and even the U.S. Congress are looking to California’s MICRA as an example of legislative success in curbing insurance costs and keeping good doctors in practice. To conclude that the California Legislature enacted MICRA for those very reasons only to have it be rendered moot by the previously enacted CLRA is ludicrous and counterintuitive. Plaintiffs’ counsel should, indeed, be on the lookout for “those types of shady practices engaged in by merchants trying to get a fast buck by deceiving the unknowing public.” They perform a service for us all by doing so. But medical negligence is not a “deceptive business practice,” nor was it ever intended by the Legislature to be considered such. The Legislature would not have enacted MICRA if it believed that. The Consumer’s Legal Remedies Act has no place in medical malpractice actions. Alan J. Zacharin is an associate at Andrada & Schanzenbach, an Oakland firm that defends medical malpractice cases.

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