Bulletin 94-4

July 14, 1994

Superior Court Lacks Jurisdiction in Suit Against DWC

On May 25, 1994, the Sacramento Superior Court dismissed a complaint filed by the California Association of Hospitals and Health Systems against the Division of Workers' Compensation, seeking to enjoin the enforcement of the Division's Official Medical Fee Schedule against the Association's member hospitals. The complaint also sought a declaration from the court that the regulations pertaining to the fee schedule were invalid as applied to hospital outpatient services.

Superior Court Judge Joe S. Gray granted the Division's demurrer (motion to dismiss) on the ground that the court lacked subject matter jurisdiction over the Association's complaint. The demurrer was granted without leave to amend, which means that the case was dismissed in its entirety, and that the Association cannot re-file its complaint.

Judge Gray based his ruling on the recent California Supreme Court decision, Greener v. W.C.A.B. (1993), 6 Cal. 4th. 1028. In Greener, the Supreme Court held that the superior court did not have subject matter jurisdiction over an action by unlicensed attorneys who challenged statutory amendments which precluded the Workers' Compensation Appeals Board from awarding them attorney's fees.

The Greener court's decision was based on the legislature's power to establish and define the workers' compensation system granted by Article XIV, Section 4 of the California Constitution. Pursuant to this constitutional grant of authority, Labor Code Section 5955 provides that no court, other than the Supreme Court and the courts of appeal, has jurisdiction to interfere with the Workers' Compensation Appeals Board in the performance of the Board's duties.

In ruling in the Division's favor, Judge Gray found that the Greener decision applied squarely to the facts presented in the hospitals' suit. This is because Labor Code Section 5304 provides the Board with exclusive jurisdiction over controversies concerning medical treatment in workers' compensation cases. If the superior court enjoined the administrative director from enforcing its regulation and fee schedule, the effect would be to interfere with the Board in carrying out its statutory duty. Such interference would constitute a violation of Labor Code Section 5955, and the California Constitution.

Based on Judge Gray's ruling, the Association cannot attack the validity of the Official Medical Fees Schedule in superior court, but must first raise the issue before the Board. If the Association is aggrieved by a decision of the Board, it can seek a writ of review by the court of appeal.

Judge Gray's ruling is significant in that it demonstrates the broad reach of the Greener decision. Based on this decision, virtually any action filed in superior court which seeks to invalidate or enjoin application of a statute or regulation, the enforcement of which is within the jurisdiction of the Board, is subject to dismissal.

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