Court-Appointed Receiver Not Immune From Suit

(CN) - A prison health-care administrator that claims it was stiffed on payment can sue the court-appointed receiver who oversees California inmate medical care, the 9th Circuit ruled.

The appellate panel in San Francisco ruled that judicial immunity doesn't shield the receiver from being sued by Medical Development International (MDI), a private health-care administrator that claims it wasn't fully paid for its services.

The receiver was put into place in June 2005 by a federal judge, who blasted the California Department of Corrections and Rehabilitation for its "inability ... to competently perform the basic functions necessary to deliver constitutionally adequate medical health care."

Under the receivership system, the Florida-based MDI provided health-care services for the California State Penitentiary and the California Correctional Institution. Staff members grew concerned that MDI wasn't licensed to practice medicine in California, the receiver ordered the department of corrections to stop all payments to MDI. Though MDI tried to demonstrate its legitimacy, the receiver terminated all contact with MDI and expelled it from the two prisons in April 2007.

MDI sued the receiver and the department, claiming they owed it for some of the services it provided.

The district court dismissed the lawsuit, and MDI sought leave to sue the receivers in state court. A federal judge in Sacramento denied the request, saying the receivers were immune from suit.

The 9th Circuit disagreed and ruled that the receiver could be sued in his official capacity.

"A receivership does not create a liability-free zone for the business or organization that is the subject of the receivership," Judge Clifton wrote.

"If MDI has a valid claim, something we have to assume at this point, it cannot be left out in the cold with nowhere to turn."

The court reinstated the lawsuit and remanded.

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