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17 Whittier L. Rev. 47, *

Copyright (c) 1995 Whittier Law Review

Whittier Law Review

Fall, 1995

17 Whittier L. Rev. 47

LENGTH: 20046 words

ARTICLE: LEGAL IMPEDIMENTS TO COST EFFECTIVE PROVISION OF EMERGENCY MEDICAL

SERVICES IN CALIFORNIA: WHY AMBULANCE FRANCHISING AND OTHER INNOVATIONS TO CONTROL
EMS COSTS MAY FAIL

Byron K. Toma*

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* Deputy County Counsel, County of Sonoma; Association Representative of Smoley

Task Force, California County Counsel. J.D., University of Santa Clara School of
Law; A.B., Stanford University.

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SUMMARY:
... When an ambulance is called, everyone is aware that there is a crisis. ...
For instance, what if an EMS provider has been sold to another ambulance company
since January 1, 1981? Will such an entity still be regarded as an existing
provider engaged in the provision of services in the same manner and scope? When
does the "existing provider" first need to exist? In 1981 or at the time of the
proposed franchise? What if intervening providers have arisen in the historical
area served? What if a number of providers merge and become one business that
serves the original historical service area subject to a possible grandfathered-in
franchise? The only guidance given by the Court of Appeal in Petaluma regarding
these matters is that California Health & Safety Code Section 1797.6 "encourages a
liberal construction favoring antitrust immunity for activities undertaken by
local EMS agencies under section 1797.224." ... For instance, if a para hospital
system decides to use BLS ambulances to respond to 911 calls that are ultimately
routed to a clinic rather than to an acute care hospital, can this type of
transport be the proper subject for a franchise of emergency ambulance services?
An exclusive operating area is defined as: ...

TEXT:
[*47]
I. Introduction

When an ambulance is called, everyone is aware that there is a crisis. Red lights
and sirens obviously indicate that someone needs help. What is less obvious is
that the provision of ambulance service in California is generally in crisis and
in need of help. It is less a crisis of quality than a crisis of cost. In many
markets, over-competition has driven ambulance costs up dramatically. n1 The means
of dealing with [*48] spiraling costs are unfortunately very limited.

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n1 This phenomenon has been explained in earlier articles by the author in the
following manner:

This occurs because ambulances have fixed costs for being on call 24 hours a day.
An area may only generate a few emergency calls a day. With more competitors, the
patients must be charged a higher price for each ambulance run since the fixed
overhead of the ambulance company must be spread among ever fewer patients. Like
hospital beds, an excess supply of ambulances may have an adverse affect upon
service cost.

Byron K. Toma, The Decline of Emergency Medical Services Coordination in

California: Why Cities are at War with Counties over Illusory Ambulance
Monopolies, 23 Sw. U. L. Rev. 285, 289 n.25 (1994).

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Historically, one of the principal strategies to control emergency medical service

costs has been to treat such services like utilities, thereby limiting competition
to permit consumers to enjoy monopoly economies of scale. An alternative approach
has been to treat emergency medical services like other medical services subject
to utilization review. n2 This strategy aims to provide the patient with the exact
amount of service they require. Although both strategies hold the promise of cost
containment, they also face serious legal problems in implementation due to the
ambiguity of the statutory scheme.

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n2 "Utilization review" is a component of quality assurance in hospitals. In

hospitals it entails discharge planning. It is commonly the part of quality
assurance that health care insurers are most concerned about. It "assures" the
insurance companies that the patient is not getting more quality than he or she
may actually need in terms of health care.

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In this article, the author will attempt to summarize the legal obstacles to
ambulance franchising today, the legal obstacles to other cost containment
strategies, and the desirability of securing appropriate legislative reforms in
these areas to permit the increasingly antiquated EMS Act to keep pace with the
winds of change.

II. Ambulance Franchising Is in Transition

Once upon a time, "ambulance franchising" n3 in California was simple. In 1984,
enabling legislation n4 placed the EMS Authority n5 in charge of supervising the
creation of ambulance monopolies. n6 This was done to facilitate state-action
antitrust immunity. n7 Any county desiring to create an ambulance monopoly within
an "exclusive operating area" merely read the EMS Act n8 and obtained the
Authority's blessing n9 up- [*49] on the proposed plan n10 for the provision of
regional emergency medical response. Selection of an exclusive ambulance provider
was relatively straight forward and safe.

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n3 The term refers to the creation of regional ambulance monopolies by local EMS
agencies who have elected to supplant competition with regulation as authorized by
law.

n4 Cal. Health & Safety Code sections 1797.224, 1797.85, 1797.6 (West 1990).

n5 Cal. Health & Safety Code section 1797.54 (West 1990).

n6 Such monopolies are referred to as "exclusive operating areas" within the

language of the statutory scheme of the EMS Act. Cal. Health & Safety Code section
1797.85 (West 1990).

n7 Community Communications Co., Inc. v. City of Boulder, 455 U.S. 40 (1982), made
it clear that local governments can only claim state-action antitrust immunity
where there is direct state supervision of the scheme supplanting competition with
regulation.

n8 Cal. Health & Safety Code section 1797 (West 1990).

n9 Cal. Health & Safety Code section 1797.1 (West 1990). The Authority is charged
with responsibility for "the coordination and integration of all state activities
concerning emergency medical services."

n10 Cal. Health & Safety Code sections 1797.76 & 1797.85 (West 1990).

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However, times have changed. During the past several years, the scope of the EMS
Act and the legislation authorizing ambulance monopolies in California (i.e., Cal.
Health & Safety Code section1797.224) has come under serious challenge.
Traditional views held by the EMS Authority have been placed under rigorous court
scrutiny. They have not always proven to be compelling. Some questions regarding
exclusive operating areas have already been answered by the courts. Many questions
are waiting to be answered. Still many other questions have not even been asked.

This portion of the article will discuss the legal issues addressed by recent case
law, what issues are currently in litigation or pending appellate review, and what
new legal issues must be considered before counties franchise ambulance services
for the first time or once again.

A. Grandfathering Existing Providers into Exclusive Operating Areas Is Easier

Today Than in 1984, but It May Be Subject to an "All or Nothing" Election for the
Entire EMS Area Under the Equal Protection Doctrine

When Sonoma County first considered the franchising of emergency/ALS ambulance

services in its core metropolitan area in 1990, the franchising of existing
providers pursuant to the "Grandfathering" provisions of California Health and
Safety Code Section 1797.224 n11 appeared to be out of the question. The EMS
Authority had historically taken the position that such "Grandfathering" merely
permitted the continuation of whatever legally exclusive operations had been in
existence. In other words, even if an ambulance company was the only provider in
the area, it would still be unable to qualify as a "grandfathered in" exclusive
provider in the absence of some legal status conferring a monopoly. The EMS
Authority reasoned that if "Grandfathering" was merely the authorized continuation
of the "existing form," it stands to reason that the "existing form" must involve
a [*50] legal component that authorizes the exclusion of other providers. n12

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n11 "No competitive process is required if the local EMS agency develops or
implements a local plan that continues the use of existing providers operating
within a local EMS area in the manner and scope in which the services have been
provided without interruption since January 1, 1981." Cal. Health & Safety Code
section 1797.224 (West 1990).

n12 This theory is credited to Richard Narad, currently an Associate Professor of

Health Services Administration at California State University at Chico.

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This reasoning is not without logical and legal appeal. The theory was embraced by
the EMS Authority in its early years and had remained a compelling position of the
EMS Authority until the California Court of Appeal expressed its reservations
about this view in City of Petaluma v. County of Sonoma n13 in 1993.

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n13 15 Cal. Rptr. 2d 617 (1993).

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In Petaluma, the Court of Appeal expressly discounted the harsh and restrictive
reading of "Grandfathering" adopted by the EMS Authority and the trial court and
noted:

In reversing the trial court's judgment on this point, we simply hold, very
narrowly, that section 1797.224 does not prohibit County from using City to
provide EMS services in an exclusive operating area without a competitive process
merely because City was not previously the legally authorized exclusive provider.
n14

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n14 Id. at 622.

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In short, the Court held that the term "manner and scope" within California Health
and Safety Code Section 1797.224 referred only to the continuation of an
operational system of de facto exclusivity, not a legally authorized system of
exclusivity. It further intimated that the interpretation of "manner and scope"
should be liberally construed to accomplish the purposes of conferring antitrust
immunity.
"Manner and scope" are now merely factual findings regarding the type and level of
services provided by the 201 entities on June 1, 1980. Still, certain facts may be
difficult to assess. For instance, what if an EMS provider has been sold to
another ambulance company since January 1, 1981? Will such an entity still be
regarded as an existing provider engaged in the provision of services in the same
manner and scope? When does the "existing provider" first need to exist? In 1981
or at the time of the proposed franchise? What if intervening providers have
arisen in the historical area served? What if a number of providers merge and
become one business that serves the original historical service area subject to a
possible grandfathered-in franchise? The only guidance given by the Court of
Appeal in Petaluma regarding these matters is that California Health & Safety Code
Section 1797.6 "encourages a liberal construction favoring antitrust immunity for
activities undertaken by local EMS agencies under section 1797.224." n15

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n15 Id.

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[*51]

"Grandfathering" existing providers into exclusive operating areas in all but the
clearest cases may still expose a county to litigation. If a county undertakes to
grandfather a provider, it should recognize that it may be on its own. The EMS
Authority has been increasingly cautious about issuing opinions regarding "manner
and scope." With a limited budget, the cost of litigating "manner and scope"
issues across the state is not appealing to the Authority. Indeed, Michael
Hammang, Deputy Attorney General, has counseled the Authority to defer to local
legal counsel regarding interpretations of "manner and scope" to the extent such
conclusions depend upon the findings of the local agency.

Still, "Grandfathering" an ambulance provider into an exclusive operating area

appears to be a relatively easy way to limit over-competition in an ambulance-
saturated area. n16 The alternative competitive method of establishing ambulance
monopolies is much more complex and, more likely than not, substantially more
costly in terms of consulting services and possible litigation. Unfortunately,
recent case law proves that "Grandfathering" is still a very tricky proposition.
One only needs to look at the preliminary injunction ruling in Lifecare Medical
Transportation v. County of Riverside n17 to see the untapped reserve of confusion
and unpredictability Section 1797.224 still holds in store.

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n16 As in the case of competing utilities, aggressive competition may increase

ambulance costs rather than drive them down.

n17 No. CV 95-0056 (E.D. Cal. Sept. 1, 1995) (order granting preliminary
injunction).

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In Lifecare, the U.S. District Court, Central District of California, ruled with
regard to the issuance of a preliminary injunction, that either a local EMS agency
grandfathers all qualified existing providers in the EMS area, or it does not. n18
The Court adopted the view that it was a violation of due process and equal
protection to permit several cities to secure grandfathered into exclusive
operating areas without extending the same right to a private ambulance company
that would have qualified for such grandfathering. n19 Since the language of
Section 1797.224, in the opinion of the district court, speaks in terms of the
entire EMS area regarding grandfathering, grandfathering was an all or nothing
proposition throughout the entire jurisdiction of the local EMS agency. n20 In a
competitive process, the court reasoned that the language of 1797.224 supported
multiple exclusive operating areas within the EMS area. n21

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n18 Id.

n19 Id.

n20 Id.

n21 Id.

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[*52]

This raises an interesting series of inferences regarding 201 cities. Arguably,

under the district court's reasoning, one cannot grandfather just a single city
into an exclusive operating area in an EMS area at a time. If you grandfather any
qualified existing provider, you must grandfather all of them. Under the federal
court's view, a city has no right to be grandfathered into an exclusive operating
area unless all qualified existing providers receive equal treatment. Hence, if
one qualified city seeks to be grandfathered, it would be a violation of equal
protection for a county to award an exclusive operating area to such a city
without doing so for all other qualified entities. Arguably, if portions of the
EMS area are competitively awarded to exclusive providers, thus superseding some
areas served by existing providers, then no existing providers could be given
exclusive operating areas by grandfathering without a violation of due process and
equal protection. Under these circumstances, "grandfathering", once said to be too
harshly restricted as in the Petaluma case, n22 is again rendered largely
unavailable by the unusually harsh ruling in Lifecare.

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n22 15 Cal. Rptr. 2d 617 (1993).

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In the author's opinion, until this issue is resolved, counties would be foolish
to grandfather unless they are prepared to do so for the entire EMS area as a
whole. It is also inadvisable to grandfather any entity into an exclusive
operating area if a portion of the EMS area has already been franchised via a
competitive process.

B. The Rights Accompanying an Exclusive Operating Area Are Less Certain Today Than
in 1984

Certain issues regarding ambulance franchising are settled. Under Community

Communications Co., Inc. v. City of Boulder, n23 state-action antitrust immunity
under the Parker Doctrine requires local governments to act under a clearly
articulated state intention to supplant competition with regulation. Under Gold
Cross Ambulance v. Kansas City, n24 local governments have a right to regulate
ambulance rates provided the local government makes its decision to regulate in a
manner that satisfies the rational relationship test. Under Mercy-Peninsula
Ambulance, Inc. v. County of San Mateo, n25 it was stated that "virtually any
anti-competitive effect, including exclusive contracts with primary [*53]
providers and elimination of backup ambulance services altogether, would appear to
be well within the statute's [Cal. Health and Safety Code section 1797.6]
contemplation." The specific parameters of the right to franchise ambulance
services, however, are still very much in dispute in California.

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n23 455 U.S. 40 (1982).

n24 538 F. Supp. 956 (W.D. Mo. 1982), aff'd, 705 F.2d 1005 (8th Cir. 1983).

n25 791 F.2d 755, 758 (9th Cir. 1986).

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In 1984, few cities challenged the authority of the local EMS agency to regulate
ambulances within their incorporated boundaries. n26 It was even less common for
anyone to challenge the authority of local EMS agencies to franchise interfacility
(hospital-to-hospital) transports. n27 Today, both issues are in litigation.

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n26 The City of Cotati challenged the County of Sonoma's entitlement to dispatch
an ambulance provider that had failed to secure a Cotati business license into its
boundaries in 1989. That case was dismissed by the City prior to trial.

n27 A number of jurisdictions such as Fresno and Monterey Counties felt that such
franchising was financially necessary. Their plans received the backing of the
Authority.

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1. Interfacility Transports

Whether hospital-to-hospital transportation of patients is within the scope of the

EMS Act is a paramount issue in ambulance franchising. The issue is currently in
litigation in RELS v. County of Sonoma n28 and on appeal in A-1 Ambulance v.
County of Monterey. n29 A number of ambulance companies have argued that the EMS
Authority only has jurisdiction in pre-hospital emergency medical situations. Once
a patient has arrived at a hospital or a physician has become involved in the
process of determining appropriate medical care, it has been argued that the EMS
Authority no longer has jurisdiction over patient transportation. As a
consequence, interfacility transports are arguably not the appropriate subject
matter of a franchise. The counties argue that interfacility transports are within
the jurisdiction of the EMS system. The counties cite to the express reference in
Section 1797.52 that advanced life support services may be provided "during
interfacility transfers," n30 and ALS services can only be provided within a local
EMS system. It is also noteworthy that Section 1797.103, describing the planning
and implementation guidelines for emergency medical services systems, speaks
broadly about transportation, not merely "prehospital" transportation. n31

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n28 No. C 91-1665 (N.D. Cal.).

n29 No. C 89-20157 (N.D. Cal. Oct. 14, 1993). The appellate briefs have been filed
but no date for oral argument before the Ninth Circuit has been scheduled at this
time.

n30 Cal. Health & Safety Code section 1797.52 (West 1990).

n31 Cal. Health & Safety Code section 1797.103(c) (West 1990).

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[*54]

Whether interfacility transports are a part of the EMS system is also being
litigated in the state courts. In Schaefer's Ambulance Serv. v. County of San
Bernardino, n32 the County has been sued over its EMS agency's refusal to permit
Schaefer's Ambulance to provide interfacility transport outside of its authorized
area. Discovery is proceeding and no determinative motions have been filed at this
time. Again, the issue is whether the EMS agency has jurisdiction over
interfacility transportation.

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n32 No. SCV 16421 (San Bernardino Co., Cal. Sup. Ct.).

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In an unrelated matter, the County of San Bernardino may be brought into yet
another dispute between a private ambulance company and a hospital regarding the
regulatory power of the EMS agency to govern ALS interfacility transports. Valley
Medical Transport, the exclusive provider of ambulance services for the Apple
Valley area under the San Bernardino EMS Plan, will be seeking to enjoin the use
of fire district-owned ambulances leased to a local hospital for interfacility
transportation.

Whether interfacility transports are part of the EMS system turns on the issue of
whether paramedics can take direction from a doctor other than a base hospital
physician for their authorized scope of service. n33 If hospital physicians are
authorized to provide supervision over EMT-Ps, then the supervision of base
hospital physicians will be unnecessary and such interfacility transports may not
need to be within the EMS system. However, recent legislation indicates that
interfacility transports in urban areas must be maintained under the EMS system,
not under hospital physicians. Senate Bill 422, approved by the Governor on July
31, 1995, enacts Section 1797.195 of the Health and Safety Code. n34 That section
permits, under crisis situations on a temporary basis, the use of EMT-Is, EMT-IIs,
and EMT-Ps who are on duty with [*55] an emergency medical care provide (i.e.
ambulance company or fire service) in rural n35 hospital emergency rooms. These
EMTs would be under the medical direction of the hospital pursuant to hospital
protocols developed in consultation with the medical director of the local EMS
agency and the emergency medical care committee, if a committee has been formed.
n36 Section 1797.195(c) n37 and Section 3 of SB 422 n38 make it clear that this
rule is narrowly tailored to address a very pressing need only in small and rural
hospitals. In enacting this section, the lawmakers have clearly implemented the
"Expressio Unius" n39 doctrine. In effect, to the extent that this section creates
an affirmatively expressed exception to the general rule, it should be regarded as
a complete articulation of the legislature's intentions and no other exceptions to
the rule may be presumed as a matter of statutory construction. n40 Until this
issue is settled, it would be prudent to avoid offering interfacility transports
as a part of the proposed exclusive operating area in an ambulance franchise.

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n33 Cal. Health & Safety Code section 1797.84 (West 1990) broadly describes an
emer- gency medical technician-paramedic's scope of practice.

"Emergency Medical Technician-Paramedic," "EMT-P," "paramedic," or "mobile

intensive care paramedic" means an individual whose scope of practice to provide
advanced life support is according to standards prescribed by this division and
who has a valid certificate issued pursuant to this division. Cal. Health & Safety
Code section 1797.84 (West 1990).

Section 1797.52 describes what is entailed within the term "Advanced Life
Support". The section makes it very clear all these ALS services must be
"administered by authorized personnel under the direct supervision of a base
hospital as part of a local EMS system at the scene of an emergency, during
transport to an acute care hospital, during interfacility transfer, and while in
the emergency department of an acute care hospital until responsibility is assumed
by the emergency or other medical staff of that hospital." Cal. Health & Safety
Code section 1797.52 (West 1990).

n34 1995 Cal. Legis. Serv. 4, 697 (West).

n35 Where the hospital is located in a community of 20,000 or less since 1980.
Cal. Health & Safety Code section 1797.195(a) (West 1990).

n36 Cal. Health & Safety Code section 1797.195(b) (West 1990).

n37 "(c) Although this section authorizes the provision of services in an

emergency department of certain small and rural hospitals, nothing in this section
is intended to expand or restrict the types of services or care to be provided by
EMT-I, EMT-II, or EMT-P pursuant to this article." Cal. Health & Safety Code
section 1797.195(c) (West 1990).

n38 This section provides:

SEC. 3. Due to the unique circumstances concerning the very limited resources of
small and rural hospitals and the need for temporary personnel in emergency
departments of those hospitals and the need for temporary personnel in emergency
departments of those hospitals, it is necessary to permit the use of EMS personnel
to meet this need, and the Legislature finds and declares that a general statute
cannot be made applicable within the meaning of Section 16 of Article IV of the
California Constitution."

1995 Cal. Legis. Serv. 4, 697 (West).

The California Constitution provides in relevant part: "(a) All laws of a general
nature have uniform operation. (b) A local or special statute is invalid in any
case if a general statute can be made applicable.

Cal. Const., art. IV, section 16 (amended 1974).

n39 A shortened form for the Latin phrase "Expressio unius est exclusio alterius."
n40 Sutherland on Statutory Construction notes: "As the maxim is applied to
statutory interpretation, where a form of conduct, the manner of its performance
and operation, and the persons and things to which it refers are designated, there
is an inference that all omissions should be understood as exclusions." See 2A
Sutherland Stat. Const. section 47.23. See also, County of Madera v. Superior
Court of Madera County, 114 Cal. Rptr. 283 (1974).

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[*56]

2. Areas Within Cities and Fire Districts.

It has long been presumed that cities and fire districts are within the
jurisdiction of local EMS agencies. Are cities and fire districts entitled to
stand outside the scope of EMS regulation if they have not formally opted into the
EMS area or plan? The EMS Authority says "no", n41 but this view is under
challenge in a case argued before the California Court of Appeal earlier this
month. Most trial courts have accepted the concept that cities are within the
jurisdiction of the local EMS area automatically under the statutory scheme of the
EMS Act unless they opt out through an exercise of their "201" rights. In County
of San Bernardino v. City of San Bernardino, n42 however, the trial court opined
that a city had to "opt into" the EMS area for the EMS agency to secure its
regulatory jurisdiction over emergency ambulances within incorporated areas. n43
The trial court in that case set the common reading of Section 1797.201 (that it
must be affirmatively invoked) on its head. The Court of Appeal has apparently
concurred in the view that EMS areas require a JPA in order to include
incorporated areas within the jurisdictional reach of the local EMS agency. n44 At
the same time, the court acknowledged that such cities are still within the EMS
system. n45 This is not as inconsistent as it may first appear. The court believes
the EMS system is intended to include cities and counties. However, 201 cities,
though within the system, are outside local EMS agency regulatory control without
an agreement evidencing their choice to be governed by this foreign governmental
entity. The only other reported appellate case, City of Petaluma v. County of
Sonoma, n46 is silent on this point since the City of Petaluma had acknowledged
that it had been in the county's regulatory control, in the local EMS system, and
was opting out.

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n41 Letter from Daniel R. Smiley, Interim Director, EMS Authority, to Gail Cooper,
Chief, EMS Division of San Diego County (Dec. 6, 1990): "The argument that the
provisions of a city's charter may give the city sufficient authority over
ambulance services within its jurisdiction which may be outside the provisions of
the Health and Safety Code, is without merit."

n42 46 Cal. Rptr. 2d 209 (1995).

n43 Id. at 213.

n44 Id. at 224.

n45 Id.

n46 15 Cal. Rptr. 2d 617 (1993).

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Similar arguments have been made in the RELS n47 case by a los- [*57] ing bidder
upon the Sonoma County RFP. RELS argued that local EMS agencies did not have the
power to franchise exclusive operating areas encompassing incorporated areas
without joint powers agreements with cities memorializing the city's intent to
"opt into" the EMS area. n48 It is unclear whether the federal court will abstain
from ruling on this point until the California Court of Appeal rules on the same
issue in County of San Bernardino. An identical claim has been made in A-1
Ambulance n49 currently on appeal before the Ninth Circuit.

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n47 No. C 91-1665 (N.D. Cal.).

n48 Id.

n49 No. C 89-20157 (N.D. Cal. Oct. 14, 1993).

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In awaiting the resolution of this issue, counties should do all within their
power to memorialize municipal assent to the authority of the local EMS agency.
While entering into JPAs may give weight to the argument that such agreements are
necessary, acts short of such JPAs evidencing consent to the proposed franchise
may aid in possible future litigation regarding this issue.

3. "201" Cities and Fire Districts.

As opposed to the unusual argument raised in City of San Bernardino, RELS, and A-1
that all cities are outside EMS regulation until they "opt in" as participants in
an EMS plan, cities commonly argue they are entitled to "opt out" of established
EMS areas. To qualify for the exemption, certain conditions must be shown. At the
present time, a series of "201" cases are pending trial or are on appeal. However,
the County of San Bernardino is engaged in the only pending appeal in the state
courts of a "201" case, County of San Bernardino v. City of San Bernardino. n50 In
the Court of Appeal's tentative decision issued in late August, 1995, the Judge
ruled that the City of San Bernardino enjoyed broad administrative powers over its
emergency medical service system as a "201" entity, therefore it was free to
elevate its level of service at any time without local EMS agency consent and that
it could raise this right at any time. n51 The court also gave a very narrow
interpretation to the term "medical control," the power remaining with counties
relative to 201 cities continuing the administration of their emergency medical
service system. n52 All of these rulings are plausible and unsurprising.

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n50 County of San Bernardino v. City of San Bernardino, No. E012673 (Cal. Ct. App.
Aug. 1995)(tentative decision). At the time of publication, the California Court
of Appeal, Fourth Appellate District, had published its opinion at 46 Cal. Rptr.
2d 209 (Oct. 17, 1995).

n51 No. E012673 (Cal. Ct. App. Aug. 1995) (tentative decision).

n52 Id.

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[*58]

Objectively, the decision is quite cogent and thorough in addressing virtually

every issue left on the table regarding "201" powers. Unfortunately for the
Authority, each and every position taken by it regarding "201" cities has been
overturned. The silver lining in the decision for counties may be relief from
administrative responsibility for all but a narrow series of duties left to the
local EMS agency regarding "medical control" within 201 cities.

The most implausible and surprising element of the decision was the portion of the
ruling that permits a "201" city to assert a right to an exclusive operating area.
This is in direct conflict with the ruling in Petaluma where the Court of Appeal
for the First District ruled that nothing in the language of Section 1797.201
suggested a right to an exclusive operating area. n53 The California Court of
Appeal, Fourth District, in its justification for finding a right to exclude
private competitors from 201 cities, seemed quite concerned about the waste of
municipal funds. n54 This echoes the Ninth Circuit's concern in Springs Ambulance
Serv. v. City of Rancho Mirage. n55 What is paradoxical is the concern the
appellate court in San Bernardino had for the public investment of cities in their
201 systems. The Fourth District appears to have disregarded the public costs that
would be incurred by counties in order to dismantle ambulance franchises and the
sophisticated countywide EMS systems organized to serve them. It is notable that
no such balance had to be struck in the Springs Ambulance case. It is interesting
to consider whether the Ninth Circuit would tilt in favor of counties with heavy
EMS investments or in favor of the cities with lesser investments if a new Springs
Ambulance-type case were litigated today. Also interesting to consider is whether
today's pro private sector Ninth Circuit would tolerate cities usurping the realm
of private enterprise with such a tenuous basis as is advanced by the cities. In
the opinion of the author, this is the issue where counties must hold the line. If
"201" entities can safely supplant private ambulance companies within their
jurisdiction, then all cities will be happy to claim their "201" rights and to
exercise them.

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n53 15 Cal. Rptr. 2d 617 (1993).

n54 46 Cal. Rptr. 2d 209, 225 (1995).

n55 745 F.2d 1270 (9th Cir. 1984). In this case involving pre-EMS Act operations,
the Ninth Circuit Court of Appeals reasoned that it would be implausible for the
taxpayers to support free public ambulances if the lawmakers did not intend to
authorize such ambulances to rid cities of unwanted private competitors. The Ninth
Circuit, hence, ruled in favor of the city.

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Another troubling issue in the Fourth District's ruling lies in the [*59]
appellate court's expansive reading of two cases involving the City of Lomita,
California. n56 Nowhere did those cases suggest that counties are responsible for
more than medical transport costs related to indigent health care. The Fourth
District Court of Appeal's broad statement that counties have a historical "duty
to pay for emergency ambulance costs for all county residents, including indigent
persons in a city" n57 is incorrect. In accordance with Lomita I, counties are
responsible for indigent health care under California Health & Safety Code section
1444 n58 and California Government Code section 29606, n59 but here the court errs
in suggesting that counties are duty-bound to pay for ambulance costs for all non-
indigent county residents. Counties, with failing general fund budgets, and county
hospitals in dire financial straits, cannot permit this misconception to take
root. Lomita II is also somewhat perplexing, but appears to stand for the
proposition that fiscal inquiries into the ability of patients to pay are
secondary to appropriate medical care, and the counties, as the local governmental
entities responsible for ambulance cost payment for indigents, should be involved
in provision of ambulance services to cities. n60

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n56 City of Lomita v. Superior Court, 230 Cal. Rptr. 790 (1986); City of Lomita v.
County of Los Angeles, 196 Cal. Rptr. 221 (1983).

n57 46 Cal. Rptr. 2d 209, 223 (1995).

n58 Cal. Health & Safety Code section 1444 (West 1990).

n59 Cal. Gov't Code section 29606 (West 1983).

n60 230 Cal. Rptr. 790 (1986).

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Ironically, the court in Lomita II notes that the County may "contract with the
cities or local agencies located within the county to provide necessary emergency
ambulance services to the residents of the county found within such city or cities
. . . ." n61 It could be argued that a city which refuses to contract with the
county for provision of such services cannot expect payment for indigent care. The
county has a legitimate interest in seeking an agreement before becoming liable
for costs incurred by cities. Indeed, Lomita II may suggest that cities which
refuse to contract with the County may be unable to collect for indigent ambulance
services. If a County decides that it would be more cost effective to use private
ambulances n62 for indigent health care in 201 cities, could 201 cities
legitimately block such an option when the right to secure such alternative
services are plainly given by the Court of Appeal in Lomita II?

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n61 City of Lomita v. Superior Court, 230 Cal. Rptr. 790, 791 (1986) (see option
3).

n62 Id. at 791 (see option 4).

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Another troubling portion of the Fourth District's opinion lies with [*60] its
view of "who is in charge of patient care at the scene of a medical emergency."
n63 It concluded pursuant to section 1798.6(c) that "authority for the management
of the scene of an emergency shall be vested in the appropriate public safety
agency having primary investigative authority." n64 The court confuses scene
management, a law enforcement role, with medical management of the scene. The
court ignores the dictate of section 1798.6(a) that patient health care management
lies in the most medically qualified person. n65 A firefighter is not qualified to
supersede the directives of a base hospital physician through whom paramedics must
secure their licensure. This portion of the court's decision will certainly reek
havoc at medical emergency scenes. Surrendering medical control-related
administration to cities with regard to equipment, personnel, staffing, fire
equipment used by paramedics, scene management, and dispatch n66 virtually "guts"
the concept of "medical control". It is not at all clear how city and fire
district paramedics will be able to continue certification under a medical
director's licensure from whom the court gives them full independence. A base
hospital physician or EMS medical director cannot be expected to assume liability
for actions of paramedics over whom them have little or no control. That would be
tantamount to paralegals practicing their craft without any accountability to the
lawyer under whose license they are able to engage in their profession. Cities and
fire districts may need to secure their own medical directors. If they do so, such
medical personnel will not necessarily enjoy EMS immunities. n67

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n63 46 Cal. Rptr. 2d 209, 221 (1995).

n64 Id. See also Cal. Health & Safety Code section 1798.6(c) (West 1990).

n65 Cal. Health & Safety Code section 1798.6(a) (West 1990).

n66 46 Cal. Rptr. 2d 209, 221 (1995), wherein the court prunes the term "medical
control" down to little more than what the 201 cities do not want to do for
themselves.

n67 See Cal. Health & Safety Code section 1799.108 (West 1990). Arguably,
immunities are only conferred when the certified medical personnel secure their
permits within the EMS Act. See note 76, infra.

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At least on the exclusive operating area issue, the stage may be set for an appeal
to the California Supreme Court to resolve the conflict between the two appellate
districts regarding whether "201" rights confer a right to an exclusive operating
area. If the San Bernardino case is allowed to stand, the whole nature of the
provision of EMS services in California will change. Cities will have the right to
govern their own insular EMS systems. Counties will only be left with the
administration of what remains in the unincorporated portions of the County
together with county-wide medical control. It is questionable, [*61] however,
what degree of medical control will be left to the counties. The Fourth District
only appears to leave local EMS agencies with certification of personnel,
standards for training, and EMS standards in the unincorporated areas.

If medical control over "201" areas is minimized by the San Bernardino decision,
counties would do well to accept the offered freedom from responsibility for
medical control systems not entirely within their control. Counties may even
consider abandonment of ALS certification for the cities (or the county as a
whole) without an agreement from the cities that they will abide by local EMS
agency regulation regarding medical control. This is arguably permissible because
the Court of Appeal noted the EMS Act does not preempt the field since counties
are not compelled to create local EMS agencies. n68 The question remains whether
the Authority will permit counties to create local EMS agencies only for the
unincorporated areas of the County and those portions of the County where cities
have agreed to participate within the EMS system. Arguably, what the Authority
wants may not matter. The Authority may have to accept a marginal, perhaps even
vestigial, role in emergency medical services if the decision of the Court of
Appeal is not overturned. n69 After all, while counties must submit a local EMS
plan to continue in the provision of ALS services, the plan can only encompass the
"EMS area", n70 the area subject to the local EMS agency's jurisdiction. If
counties cannot administratively manage incorporated areas, then counties cannot
include such areas in their plan without a JPA. n71 If medical control is
compromised regard- [*62] ing 201 entities, should counties even attempt to
regulate medical control in city-administered EMS systems?

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n68 46 Cal. Rptr. 2d 209, 215-16 (1995).

n69 In large part, the EMS Authority has played the role of the U.N. in the
"balkanization" of EMS services in California. While the battles between the
cities and counties rage, the Authority takes the moral high ground but does
little to genuinely resolve the conflicts except to issue edicts and commands.
Like the U.N., it has few resources to call its own and it is too politically
compromised by its ties to the warring factions (the California Ambulance
Association and the Fire Fighter's Association) to do anything that does not meet
with the approval of both.

n70 Cal. Health & Safety Code section 1797.74 (West 1990), defines "EMS area" as
"the geographical area within the jurisdiction of the designated local EMS
agency."

n71 The Counties' legal footing with regard to fire protection districts lying
within their general jurisdiction may be somewhat better. While Cal. Health &
Safety Code section 1797.201 (West 1990) gives such districts a right to "opt out"
of EMS regulation, districts are generally within the police power of county
governments. Arguably, setting medical control standards in unincorporated areas
of the County are within the domain of the Board of Supervisors under Cal. Gov't
Code section 26227 (West 1990). Cal. Health & Safety Code sections 13861, 13862
(West 1990) (setting out the powers of fire protection districts do not speak in
terms of "medical control", but only in terms of "Emergency medical services" and
"Ambulance Services," pursuant to Division 2.5 (commencing with Section 1797)).

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The other "201" case San Bernardino County recently tried was resolved favorably
to the County and has not been appealed. n72 In that case, the trial court drew a
distinction between transport and non-transport prehospital EMS response. While
the trial judge acknowledged that Section 1797.201 may allow the level of pre-
hospital emergency medical services to be increased, the level of service could
only be increased for the type of service provided by a "201" entity on June 1,
1980. Hence, a fire district with a BLS ambulance could increase its level of
ambulance care to ALS, but a fire district not engaged in ambulance services on
June 1, 1980 cannot subsequently implement an ambulance program.

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n72 County of San Bernardino v. City of Colton, No. 224288 (Riv. Sup. Ct. filed
July 21, 1994) (originally filed in the San Bernardino County Superior Court as
Case No. SCV 268490).

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Not all courts have ruled in such a reasoned manner. Similar issues were addressed
by the Mendocino Superior Court in City of Ukiah v. County of Mendocino. n73 There
the court ruled that the City of Ukiah had not been engaged in ambulance services
in 1980 or subsequently thereafter, and the County EMS agency had appropriate
jurisdiction. n74 Strangely, the court ordered the city and county back to the
bargaining table, broadly alluding to a city entitlement under Section 1797.224
and Section 1797.201 to some exclusivity within its boundaries. n75 The court's
reasoning is unclear. While grandfathering a city into an exclusive operating area
is possible according to the ruling in Petaluma, it is impossible given the trial
court's finding that the City of Ukiah was not engaged in ambulance services on or
since January 1, 1981. Confusion over the meaning of Section 1797.201 is
widespread.

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n73 City of Ukiah v. County of Mendocino, Nos. 65575 and 65248 (Men. Sup. Ct.)
(consolidated).

n74 Id.

n75 Id.

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Unfortunately, the confusion appears to be spreading even farther. Santa Clara

County is in a "201" dispute with the City of Santa Clara and recently settled a
dispute with the City of San Jose. Marin County is fighting a dispute with a fire
district in Corte Madera. The ambulance franchisee for Sacramento, AMR, is
fighting a "201" dispute with the City of Sacramento and a number of fire
districts. n76 The Ninth [*63] Circuit review of the District Court's denial of
the preliminary injunction is interesting insofar as it reflects that the Court of
Appeal does not appear aware that cities, under the state statutory scheme, are
not entitled to claim antitrust immunity simply because they are "201" entities.
n77 Perhaps the dicta from City of Petaluma indicating that "201" rights do not
confer rights under Section 1797.224 was not mentioned in the argument by AMR. n78

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n76 911 Emergency Servs., Inc. v. Sacramento Regional Fire/EMS Communications

Ctr., 56 F.3d 72 (9th Cir. 1995).

n77 Id. "Given the likelihood that Parker state action immunity will be a complete
defense, Parker v. Brown, 317 U.S. 341 (1943), Traweek v. City and County of San
Francisco, 920 F.2d 589, 591-92 (9th Cir. 1990) (state statute confers antitrust
immunity on city if it is foreseeable that city may engage in anti-competitive
activity), Cal. Health & Safety Code section 1797.201 (West 1990) (allowing cities
that provided prehospital emergency services as of June 1, 1980 to retain
administration of those services, pending entry into a contract with the county);
Mercy-Peninsula Ambulance, Inc. v. County of San Mateo, 791 F.2d 755, 757-58 (9th
Cir. 1986) (California legislature intended to displace competition with
regulation in emergency ambulance service market, the nature of AMR's injury, and
the public interest involved, the district court did not err in concluding that
the balance of hardships did not tip sharply enough in AMR's favor to warrant the
relief requested. AFFIRMED.).

n78 What is frequently overlooked in City of Petaluma is that the trial court's
ruling that "201" areas are not exclusive operating areas as described within
Section 1797.224 was upheld by the Court of Appeal. As the Court of Appeal noted:
"Be that as it may, no version [of Section 1797.201] mentions explicitly, or
impliedly concerns, exclusivity of EMS services provided in historical service
areas." City of Petaluma, 12 Cal. App. 4th at 1246.

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Some of these "201" claimants clearly fail to meet the requirements of the Section
1797.201. They have arguably been encouraged to stretch the reasoning in the City
of Petaluma's ruling that "manner and scope" should be liberally construed. n79
However, the court's remarks regarding the granting of "grandfathered-in"
exclusive operating areas should be noted. This has no correlation with "201"
rights. The Court believed liberal construction of "manner and scope" was
necessary to accomplish the purpose of the legislation, namely to give full
antitrust immunity to those entities granted ambulance monopolies. n80 There is no
reason to apply liberal construction to a provision like Section 1797.201 that
threatens to undermine the state's system of uniform regulation and is not
intended to provide antitrust immunities.

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n79 15 Cal. Rptr. 2d 617, 622 (1993).

n80 Id.

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Nevertheless, cities that have only recently begun transport ambulance services
are belatedly claiming a right to raise their prior level of EMS service (often
first responder fire services) to paramedic ambulance services. In some "201"
trials, the courts have been unwilling to state that first-responder services by a
city are insufficient to secure a right to transportation services as a matter of
public policy. n81 The [*64] rights of "201" claimants will have to be resolved
on a case-by-case basis until the appellate case law regarding "201" rights
becomes more defined.

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n81 See City of Sonoma v. County of Sonoma, No. 111910 (Solano Sup. Ct. Feb. 19,
1993).

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Until the 201 controversy has been settled, proposed exclusive operating areas
should exclude those cities claiming 201 rights. Even those cities that may claim
such rights in the future should be excluded from proposed exclusive operating
areas. Caution dictates that any EMS plan that purports to include cities,
especially within a franchise, have full city support. An agreement, or at least a
consent to the EMS agency's jurisdiction, would be a prudent measure against
possible future succession. With respect to medical control within city
boundaries, it may be best for counties to take a minimalist approach and merely
set county-wide medical control standards. Beyond promulgating medical control
standards, the more counties attempt to do, the less likely they are to succeed
given the cities' administrative free hand.

4. Potential for Immediate Medical Attention Transports (Code "1" Calls)

The Sonoma County ambulance franchise awards the right to respond to Code "1"
calls. Such calls are those where there is a potential need for immediate medical
attention. They are typically less urgent than Code "2" calls, but involve a
perception by a public service agency (such as a PSAP dispatcher) that immediate
medical attention may be necessary. Whether such Code "1" calls, as opposed to
Code "2" or Code "3" calls, can be franchised must await the outcome of the RELS
case. n82 Whether so-called "non-emergency but potential for emergency" calls can
be franchised must await the outcome of the A-1 Ambulance Case. n83 There is a
slight distinction between the cases. In the Code "1" call, there is a perception
of a potential need for immediate medical attention at the outset. In the Monterey
franchise, the "non-emergency but potential for immediate medical attention" call
anticipates the need for immediate medical attention, although it need not exist
at the inception of the dispatch. It is more a matter of hypothetical
possibilities rather than perception. It may be a distinction without a difference
as far as the federal courts will are concerned.

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n82 No. C 91-1665 (N.D. Cal.).

n83 No. C 89-20157 (N.D. Cal. Oct. 14, 1993).

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In Lifecare Medical Transportation v. County of Riverside, n84 the [*65] County

of Riverside nearly averted a preliminary injunction finding that the RFP awarded
non-emergency medical transportation services. The RFP skillfully indicated that
"this procurement does not include exclusive rights to non-emergency
transportation services within the exclusive operating area, although the
Contractor may market and conduct such business as a part of this contract and
will be the provider of such service to any such requests that are received by the
local dispatching entity and are located within the exclusive operating area." n85
The federal court noted this was facially in compliance with the law. n86
Unfortunately, as applied, the court believed the franchisee actually received, in
practice, non-emergency calls since it was entitled to "scheduled" as opposed to
dispatched calls. n87 To the court this was forbidden even if the "scheduled"
calls require emergency levels of services. n88 At the present moment, caution
dictates that counties should not franchise Code "1" or similar less-than-
emergency calls until the controversy in this area has been settled.

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n84 No. CV 95-0056 (E.D. Cal. Sept. 1, 1995)(order granting preliminary

injunction).

n85 Id.

n86 Id.

n87 Id.

n88 Id.

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5. Due Process, Fair Return-on-Investment and Rate-Setting.

A unique issue raised by A-1 Ambulance is the manner in which ambulance rates must
be established. On that issue, the court ruled that "the County's failure to
provide constitutional safeguards in its rate-setting process violated Plaintiff's
right to substantive due process and Plaintiff A-1 is therefore entitled to
judgment against the County of Monterey on its Section 1983 claim." n89

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n89 No. C 89-20157 (N.D. Cal. Oct. 14, 1993) (Memorandum of Decision at 21).
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The court was addressing the apparent failure of Monterey County to factor into
consideration in the rate-setting process a balancing of investor and consumer
interests. n90 It noted that: "It is clear from the record that the interest of
investors in receiving a return on their investment within a zone of
reasonableness was never considered or even suggested to the rate makers who
enacted the ordinance." n91

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n90 No. C 89-20157 (N.D. Cal. Oct. 14, 1993)(Memorandum of Decision at page 19,
lines 14-20, inclusive, in which the court stated: "In order to be
constitutionally acceptable, such a rate must reflect a just and reasonable
balance between the consumer interest in non-exploitative rates and the investor
interest in maintaining a fair return on investment and financial integrity for
the regulated entity. The governmental rate fixer must balance these interests and
make factual findings supported by substantive evidence which must be memorialized
in a medium sufficient for judicial review.").

n91 No. C 89-20157 (N.D. Cal. Oct. 14, 1993) (Memorandum of Decision at page 20,
lines 5-8, inclusive).

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[*66]

The Ninth Circuit rule regarding rate-setting appears to be that "substantive" due
process requires investments by a regulated entity to enjoy a "fair return." n92
This applies even to incremental increases in investment. n93 Hence, it is
arguable that the purchase of a new ambulance during the course of a lengthy
franchise should alert the local EMS agency that a hearing for a rate adjustment
or other compensation to the provider may be appropriate. Failure to hold hearings
or engage in a process to determine whether there is a "fair return upon
investment" may expose the County to a regulatory taking claim pursuant to the
holding in Sierra Lake Reserve v. City of Rocklin. n94

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n92 See Guaranty National Insurance Company v. Gates, 916 F.2d 508 (9th Cir.
1990). Judge Ingram summarized this case as standing for the proposition that it
is not enough to break even, that rate legislation only passes constitutional
muster if it provides for a fair rate to investors.

n93 Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951 (9th Cir. 1991) is a
mobile home rent control case best known for its holding regarding vacancy
control. The Ninth Circuit's original decision was set aside, in part, by the U.S.
Supreme Court ruling in Yee v. City of Escondido, 112 S.Ct. 1522, (1992) wherein
vacancy control was not found to constitute a "physical taking" of property
without just compensation. The part of the case that is relevant here, however,
continues to maintain that incremental investments by an entity subject to rate-
fixing are entitled to a fair return upon investment. It should be noted that some
federal court judges have broadly expanded upon the "fair return" doctrine in
Sierra Lake and ruled that profit must always be provided for all additional
expenditures by an entity subject to fixed rates. In Hillsboro Properties v. City
of Rohnert Park, U.S. District Court, Northern District of California, Case No. C-
93-1723-FMS, the court ruled: "Sierra Lake demands that the profit always be
provided. Since Ordinance 494 fails to provide a mechanism which necessarily
affords landlords the opportunity to receive a profit on their capital improvement
investments, it violates substantive due process on its face, and plaintiff's
motion for summary judgment is GRANTED." Id.

The author believes Judge Smith's articulation of the ruling in Sierra Lake lacks
a "real world" perspective on investment returns. Not all incremental investments
generate a profit in dollars and cents. For example, the purchase of new
ambulances by a franchisee should not necessarily require a rate increase if it
could be shown that there were other "returns" to the investor such as savings
from reduced maintenance, repairs, injuries, and/or insurance upon the old
vehicles. Other returns might result from more favorable financing of the new
vehicles at a lower borrowing rate than may have existed for the old vehicles.
Finally, speedier vehicles may be better able to meet response times and avoid
costly penalties under a franchise agreement. All these types of "returns" may
meet the Ninth Circuit rule mandating a fair return upon investment.

n94 938 F.2d 951 (9th Cir. 1991), modified, 987 F.2d 662 (9th Cir. 1993) (vacated
Part I of the earlier opinion dealing with regard to the "physical taking" issue).

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Presently, it is uncertain whether the Ninth Circuit will reverse the lower
court's finding that the Monterey County Board of Supervisors failed to balance
investor and consumer interests in arriving at a fair return upon investment in
adopting the interim ambulance rate for the franchise. Counties considering
franchising would be well advised to [*67] prepare extensive documentation to
prove that the due process safeguards discussed in the court's memorandum of
decision n95 are being observed and implemented. This part of the court's ruling
appears to address procedural rather than substantive due process. The argument
has been raised that such procedural deficiencies become moot and irrelevant once
a fixed-rate franchise agreement has been hammered out, because the rate-making
will become a matter for negotiation. A-1 Ambulance is arguing that this argument
is new upon appeal rather than merely one that was not strongly asserted at trial.

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n95 In criticizing Monterey County, the court commented:

In the instant case there is no record at all. No hearings were held of which
formal records are in evidence; at such hearings as were held no due process
safeguards such as cross-examination were in effect. The County's decision to
adopt a rate which was 34% less than the median of comparable counties is not
supported by any factual evidence at all and in fact it is not clear from the
record the respect to which those counties on the list were even comparable to
Monterey County. Apparently the list of comparable counties was issued for a
variety of purposes, including adoption of a salary schedule and the like, and has
no specific reference to rate fixing or ambulance services."

No. C 89-20157 (N.D. Cal. Oct. 14, 1993) (Memorandum of Decision at pages 19-20
beginning at line 21 on page 19 and ending on line 5 of page 20).

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It is difficult to conceive how rates can be easily set in advance of a franchise
winner being selected and still satisfy the "fair return upon investment"
requirement alluded to by Judge Ingram. The investment of each bidder in equipment
will necessarily differ. Is it appropriate to presume that each bidder will
provide for a comfortable rate of return upon investment? What if the bidder
guesses incorrectly?

It may be best to defer ambulance rate-setting until a franchisee has been chosen
and a franchise agreement is under negotiation. Then the necessary "fair return"
analysis can take place with appropriate documentation of both procedural and
substantive due process. Regulatory taking law is very active in the Ninth
Circuit, and it would be prudent for counties to follow the developing law in the
utility and rent control cases in the months prior to franchising.

IV. "Managed Care Reforms," Para Hospital Joint Powers Agreements, and "922" Calls
Within Exclusive Operating Areas as Additional Techniques for Cost-Containment

The possible future problems surrounding ambulance franchising are as varied as

the future routes health care reform may take in this nation. At the present time,
there are no laws that prohibit a local EMS [*68] agency from setting rates that
must be paid by all ambulance customers. n96 New federal and state legislation
supporting and facilitating managed care reforms may weaken the existing power to
set rates. Future franchises of emergency ambulance services should anticipate
changes in the law to the extent possible. Counties must be careful not to award
more rights contractually to an ambulance provider than the county will be able to
honor due to subsequent legislative reforms to encourage managed health care.
Express disclaimers and limitations should be carefully drafted and acknowledged
by the parties to an ambulance franchise agreement.

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n96 There are, of course, limits as to how much certain payers (such as Medicare
and insurance companies) will be willing to pay as coverage benefits for ambulance
services.

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To the extent that requests for proposals may be non-committal as to the nature of
rights being awarded to exclusive providers, counties should not be surprised by
lower than expected interest by ambulance providers. Investment in an exclusive
operating area can be quite costly, and to the extent that return upon the
investment may be uncertain, few providers may want to commit their resources for
long periods of time with no real expectation of generating a profit.

Counties considering franchising should also anticipate a change in the

operational manner in which health care, particularly prehospital emergency
medical care, will be provided in future years. One vision of that future is being
considered in Solano County and is entitled a Para Hospital Joint Powers
Agreement. n97 It would bring all governmental entities providing first responder
services under one funding broker, and approach all the large "consumers" of first
responder medical services (i.e. insurers and HMOs) to negotiate a capitated
managed care approach to payment for such services.

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n97 This entity is known by the acronym "SEMSC" which stands for "Solano Emergency
Medical Services Cooperative."
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The Para Hospital JPA is an intriguing and innovative county response to (1) the
wasteful allocation of limited EMS resources and (2) the continuing battle between
fire services and EMS agencies spawned by the 201 controversy. n98 It seeks to
address the catalyst of [*69] the 201 rebellion, namely a perception that the
fire services are being shortchanged of the funds to pay for emergency medical
care, by bringing fire services within the fold of providers who are paid for
services rendered. Such JPAs are arguably the type of agreements contemplated in
Section 1797.201 to transition 201 cities into EMS Plans. n99 However, they
present a number of new issues regarding the scope of emergency/ALS franchising.

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n98 SEMSC summarizes the ills of the present system it is attempting to address as
follows:

1) A maximal response to minimal stimuli; (2) A system oriented to exclusion of

providers rather than inclusion; (3) A development scheme which has largely
ignored the question of cost vs. outcome; (4) A fee-for-service model inconsistent
with current trends to capitation; (5) A frequent duplication of services while
failing to maximize public resources including dispatch service, first responders,
etc. These problems are further exacerbated by the inherently complex arrangement
of interdependent agencies and interests which collectively produce emergency
medical services.

The Solano Emergency Medical Services Cooperative (SEMSC): A Proposal for the
Implementation and Delivery of Parahospital Medical Services, at p.18 (Draft June
20, 1995).

n99 The exact nature of what qualifies as a "201" agreement for purposes of
committing a city to a local EMS agency's jurisdiction has not been established by
case law. In the City of Sonoma v. County of Sonoma suit, the agreement granting
the City of Sonoma ALS authorization was not found to be a sufficient instrument
to bind the City to the jurisdiction of the County EMS plan. See No. 111910
(Sonoma Sup. Ct. Feb. 19, 1993)(Transcript of Trial Proceeding at pp. 284-86).

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In the para hospital model, patients who do not need hospitalization are rerouted
to an authorized health care facility that will provide the most appropriate level
of medical care with an eye toward cost control. This may mean 911 callers will be
routed to urgent care clinics instead of hospital emergency rooms, or to doctors'
offices rather than to an acute care hospital. This is the reason why HMOs and
insurers may be willing to fund first-responder (i.e., fire department) calls on a
"capitated" basis. HMOs and insurers will save money in expensive acute care
hospital costs through the adoption of a para hospital system of dispatch. Are
such responses within the scope of the EMS Act? n100 The EMS Authority has advised
the County of Solano that it is within [*70] the scope of the EMS Act. n101 The
RELS and A-1 cases referenced above may ultimately decide whether the optimism of
the Authority is warranted. Until then, it may be prudent not to mix the para
hospital model within ambulance franchises. To do so may require counties to deal
with a number of perplexing legal issues.
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n100 The only provision of the EMS Act that addresses cooperation with group
practice prepayment health care service plans is Health & Safety Code Section
1797.106. Cal. Health & Safety Code section 1797.106 (West 1990). It permits the
transport and transfer of a plan member to "a hospital that contracts with the
plan when the base hospital determines that the condition of the member permits
the transport or when the condition of the member permits the transport, except
that when the dispatching agency determines that the transport by a transport unit
would unreasonably remove the transport unit from the area, the member may be
transported to the nearest hospital capable of treating the member." Hospital, as
used within Section 1797.106(b) refers to an acute care hospital. Cal. Health &
Safety Code section 1797.88 (West 1990). There is a broader grant of authority,
however, under Section 1797.106(a) which states: "Regulations, standards, and
guidelines adopted by the authority and by local EMS agencies pursuant to the
provisions of this division shall not prohibit hospitals which contract with group
practice prepayment health care service plans from providing necessary medical
services for the members of those plans." Cal. Health & Safety Code section
1797.106(a) (West 1990). Arguably section (a) permits working with acute care
hospitals to develop regulations and policies that will facilitate use of urgent
care centers and other type of triage medical services.

n101 Letter from Joseph E. Morales, MD, MPA, the Director of the Emergency Medical
Services Authority, to Michael Frenn, Administrator, Solano County EMS Agency
(March 27, 1995). Dr. Morales states: "In our opinion, a local EMS medical
director does have the authority to permit transport of patients to destinations
other than acute care hospitals and may formulate policies to implement that
alternate destination decision." Dr. Morales bases his opinion on the authority
local EMS agencies and medical directors have to develop policies and procedures
relating to patient care, including those that relate to treatment and triage
under Cal. Health & Safety Code Section 1797.220 and CCR 100146.

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For instance, if a para hospital system decides to use BLS ambulances to respond
to 911 calls that are ultimately routed to a clinic rather than to an acute care
hospital, can this type of transport be the proper subject for a franchise of
emergency ambulance services? An exclusive operating area is defined as:

an EMS area or subarea defined by the emergency medical services plan for which a
local EMS agency, upon the recommendation of a county, restricts operations to one
or more emergency ambulance services or providers of limited advanced life support
or advanced life support. n102

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n102 Cal. Health & Safety Code section 1797.85 (West 1990).

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If the type of ambulance service used is not LALS or ALS, counties must be careful
that all responses are, in fact, "emergency" ambulance responses. When an
ambulance does not have to take a person to an "emergency" room, does such a
transport still fall within the scope of pre-hospital emergency medical services?
n103 Would a transport initiated through the 911 system and routed to a doctor's
office still be an "emergency" n104 for purposes of Health & Safety Code Section
[*71] 1797.224 if it was originally perceived in that way? Would the
administration of first aid by a para hospital resource such as a mobile intensive
care nurse be within the regulatory power of the EMS Act and subject to EMS
franchising? This could turn on the court's interpretation of the term "emergency"
in the EMS Act.

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n103 Letter from Joseph Morales to EMS Medical Directors, EMS Administrators, and
Other Interested Parties (Apr. 5, 1995). Dr. Morales states:

We believe that the references to "transport to a general acute care hospital"

found in 1797.52 and 1797.218 are permissive and non-specific. Because of the
overriding need to allow flexibility for EMS medical directors, HSC 1797.220
prevails. HSC 1798.101 addresses problems of rural areas where, for geographic or
other extenuating circumstances, as determined by the authority, arrangements may
be made for patients to be taken to other appropriate non-hospital facilities.
Yet, we find that there is nothing in statute which restricts the destination of
patients in other than rural areas to hospitals. Presumably, as in the rural
areas, the local agency medical director would determine which patients are
appropriate for those alternate facilities.

It is arguable the "expressio unius" doctrine works against the view that an
alternative site other than hospitals may be permissible under the statutory
scheme in other than rural areas. It is something to consider before taking the
Authority's position upon faith.

n104 Under Cal. Health & Safety Code section 1797.70 (West 1990), "emergency means
a condition or situation in which an individual has a need for immediate medical
attention, or where the potential for such need is perceived by emergency medical
personnel or a public safety agency."

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Arguably, the "emergency" jurisdiction of the EMS Act is merely perceptual rather
than one that must exist in reality and fact. Hopefully the courts will recognize
that this has always been the case. It is also conceivable that it has always been
part of the role of the EMS Authority to address the issues of less-than-emergency
care raised by para hospitals. Section 1797.102 states:

The authority, utilizing regional and local information, shall assess each EMS
area or the system's service area for the purpose of determining the need for
additional emergency medical services, coordination of emergency medical services,
and the effectiveness of emergency medical services. n105

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n105 Cal. Health & Safety Code section 1797.102 (West 1990).

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Para hospitals raise the issue of what to do with the arguably less- than-
emergency situation that was initially perceived as an emergency that may still
require some level of urgent care or prompt scheduling for medical follow-up. It
raises the same issue as the County of Sonoma's Code "1" calls that invoke
response to the "potential need" for immediate medical attention. n106 Hopefully,
answers regarding whether such services are within the EMS Authority's
jurisdiction will be provided by the courts in the very near future.

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n106 Since its initial adoption, the County of Sonoma has abandoned Code "1" calls
as an element of its Emergency Medical Services Ordinance and its core EOA by
ordinance amendment.

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Another innovation spawned by managed care that the Authority must address are
"922" systems that permit a pre-screening of the dispatch of "911" resources to
real medical emergencies. Not only do such systems preserve limited emergency
medical services, but they cut health care costs. n107 They accomplish this by
transporting appropriate [*72] patients n108 to alternative non-hospital sites
for care. n109 In some cases, a patient care decision may be made that transport
may not be necessary. n110

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n107 Today, if a patient calls into "911" and complains of breathing problems, an
ALS ambulance is dispatched. The patient is picked up and a paramedic administers
oxygen under the supervision and direction of the base hospital physician or
mobile intensive care nurse. The patient is transported to an emergency room. A
trauma surgeon looks at the patient and prescribes an asthma shot. The ambulance
service costs $ 900, paramedic services and oxygen costs $ 300, the hospital
charge is $ 1,200, and the surgeon's services are another $ 200. In a "922"
referral, a screening nurse may ask a few questions, and send a nurse practitioner
to your home or schedule a doctor's visit for $ 100. In effect, you get a bag of
peanuts when you mention you're hungry rather than a ten course meal. "922"
dispatch will arguably not always be "prehospital" or "emergency". "922" dispatch
will not necessarily involve transportation, EMTs or paramedics. The question is
whether such services are prehospital emergency medical services and whether
Health & Safety Code Section 1797.224 authorizes franchising of such non-transport
medical services.

n108 In effect, sub-acute care patients.

n109 In the April 5, 1995 letter, supra note 103, Dr. Morales notes:

For several years, selected 9-1-1 patients in the inner-city of Los Angeles County
have been transported to urgent care centers attached to Comprehensive Health
Centers, The EMS personnel function under protocols and are capable of deciding
which patients are appropriate for transport to the urgent care centers. The
urgent care centers are under contract with the local agency to receive
appropriate 9-1-1 patients.

Id. (on page 2 of 3).

n110 In the April 5, 1995 letter, supra note 103, Dr. Morales notes:
There is no requirement in Division 2.5 or regulations that all persons who enter
the 9-1-1 system must be transported. Each system has the authority to develop
protocols and policies to address the situation where a patient either does not
need transport or refuses transport.

Id. (on page 1 of 3).

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Some HMOs have already invested substantial resources into what are known as
"PCAPs", Private Center Answering Points, to accomplish the same purpose as
proposed "922" systems in an effort to save funds. These PCAPs may be subject to
the Emergency Medical Treatment and Active Labor Act (EMTALA) n111 and COBRA/OBRA
n112 health care financing regulations to the extent the PCAP sponsor is a
hospital that has entered into Medicare provider agreements with HCFA. n113
Hospitals participating in Medicare that also offer emergency services are obliged
to provide screening and stabilizing treatment within the scope of their
capabilities. n114

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n111 See 42 U.S.C. section 1395dd (1992).

n112 Pub. L. 99-272. COBRA stands for Consolidated Omnibus Budget Reconciliation
Act. Pub. L. 101-239 and Pub. L. 101-508 respectively. OBRA stands for Omnibus
Budget Reconciliation Act. COBRA was enacted on April 7, 1986. OBRA was enacted as
OBRA 89 and OBRA 90 on December 19, 1989 and November 5, 1990, respectively. All
three laws are still in effect and address "patient dumping".

n113 Health Care Financing Administration.

n114 42 U.S.C. 1395dd(a) & (b) (1992).

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Hospitals and HMOs operating PCAPs must be very careful regarding the appropriate
screening of the patient to ensure that acute patients receive appropriate
treatment, and that patients sent other than [*73] to an acute care hospital's
emergency department are sent in accord with all applicable federal regulations.
n115 To do otherwise may constitute "patient dumping" in violation of 42 U.S.C.
section 1395dd. n116 Arguably para hospitals, that maintain a fiction of being a
hospital, may also be subject to HCFA regulations. n117 Para hospitals may also be
subject to the prohibitions of Section 1798.172 against "patient dumping". n118
Arguably, Section 1798.170 permits "appropriate designated facilities" other than
general acute care hospitals to be used in triage and transfer protocols within an
EMS area. n119 However, the [*74] scope of this provision is not clear.
Subsections (a), (b) and (c) of Section 1798.170 all relate to one type of
facility, namely a general acute care hospital. n120 Legislative clarification
here would be helpful. California Health & Safety Code Section 1317.2 may also be
applicable although it addresses transfers subsequent to initial admission into a
hospital. n121 Arguably, if para hospitals are regarded to be extensions of the
emergency room, it can be argued that this section applies as well. In most cases,
the hospitals will not own the ambulances. In fact, even where a county hospital
is the destination, and the county owns the ambulance in a three-way lease held by
a franchisee, the ambulances may not be deemed an extension of the emergency room
to the extent they operate under different licenses. n122

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n115 See 42 CFR section 489.24 (1994).

n116 See 59 Fed. Reg. 32098 (1994):

We believe that section 1867 of the Act also applies to all individuals who
attempt to gain access to the hospital for emergency care. An individual may not
be denied services simply because the person failed to actually enter the
facility's designated emergency department. To read the statute in such a narrow
fashion would in our view frustrate the objectives of the statute in many cases
and lead to arbitrary results. For the same reason, a facility may not prevent an
individual from gaining access to the facility in order to circumvent these
requirements. If an individual is on a facility's property, which includes
ambulances owned and operated by the facility, even if the ambulance is not on
hospital property and a request is made on the individual's behalf for examination
or treatment for a medical condition, we believe the statute reasonably requires
the facility to provide a screening examination and treatment or transfer in
accordance with section 1867 of the statute.

Id.

n117 This notion is not as far-fetched as it sounds. HCFA has taken an expansive
view of its jurisdiction against patient dumping. In the same page of the Federal
Register noted above, HCFA notes that "an individual in a non-hospital-owned
ambulance on hospital property is considered to have come to the hospital's
emergency department." Id.

The good news is that non-hospital owned ambulances not on hospital property are
not regarded as having come to the hospital's emergency department even if there
were communications with the hospital by ambulance staff indicating a desire for
examination and treatment at the hospital. At least one Seventh Circuit case has
drawn a distinction between a hospital operated telemetry system and the
hospital's emergency department for purposes of Section 1867 of the Act. See
Johnson v. University of Chicago Hospitals, 982 F.2d 230 (7th Cir. 1992). But what
happens when a non-hospital owned ambulance takes a patient to a hospital owned
urgent care clinic? Will the parent hospital be required to deal with the patient
in its emergency department? Who is liable for the error in initial assessment and
screening? Will HCFA fines and penalties attach for errors made by field
personnel? Against whom?

n118 Cal. Health & Safety Code section 1798.172(b) (West 1990) notes:

Notwithstanding subdivision (a), and in addition to Section 1317, a general acute

care hospital licensed under Chapter 2 (commencing with Section 1250) of Division
2 shall not transfer a person for nonmedical reasons to another health facility
unless that other facility receiving the person agrees in advance of the transfer
to accept the transfer.
n119 Cal. Health & Safety Code section 1797.74 (West 1990) states "EMS area" means
the geographical area within the jurisdiction of the designated local EMS agency.

n120 Cal. Health & Safety Code section 1798.170(a), (b) and (c) (West 1990).

n121 Cal. Health & Safety Code section 1317.2 (West 1990).

n122 It is, however, unclear what would happen if the county hospital also
happened to be the base hospital, and the base hospital physician was an employee
of the County hospital. At a certain point, HCFA may argue that a county ambulance
is a proxy for the hospital's emergency room under such circumstances.

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A "922" system dispenses with any fiction of functioning within a "virtual

hospital" setting and may be free of HCFA regulations. n123 However, this presents
its own set of problems regarding whether such services are "pre-hospital." Many
calls may be requesting medical aid in clearly non-emergency situations. n124 Will
"922" dispatches be part [*75] of the EMS system? Will ambulance franchisees be
entitled to those "922" calls ultimately screened as emergency or ALS calls? Will
"922" calls to a governmental entity that contracts with a hospital to provide
emergency call screening be regarded as falling under the jurisdiction of EMTALA
and COBRA for purposes of patient dumping, Medicare and health care financing? All
these considerations must be worked out or at least considered in the franchise
agreement with future exclusive emergency ambulance providers.

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n123 See Johnson v. University of Chicago Hospitals, 982 F.2d 230 (7th Cir. 1992).

n124 While the State EMS Authority will probably argue that such calls fall within
the scope of Health and Safety Code Section 1797.220, Counties should consider
their actions regarding urgent/less-than-immediate need for medical attention
calls very carefully. It may be questionable whether non-emergency BLS response to
such calls are within the EMS system. ALS response to such calls has a better
chance of succeeding, however, the viability of such an argument may turn upon the
Federal Court's ruling on this very issue in RELS v. County of Sonoma, No. C 91-
1665 VRW (N.D. Cal.). In the end, how the courts view the term "emergency" will
likely define the scope of the EMS system. If the courts defer to medical
practitioners to make judgments regarding the "potential for" immediate medical
attention being necessary as opposed to requiring a finding of immediate need,
then such urgent calls will be a part of the EMS system. Then innovations like
"922" systems and para hospitals will be deemed a part of the system of patient
care management authorized under Health and Safety Code Section 1798.6. That
section permits the establishment of a unified command structure for patient
management at the scene of an emergency under the umbrella of "medical control."
See Health & Safety Code section1798.6(a) (West 1990). Additional support of the
EMS system's authority to engage in other than emergency hospital room transports
is provided in Health and Safety Code Section 1797.274 which addresses the
emergency medical care committee's power to review "emergency medical care offered
within the County." See Health & Safety Code section1797.274 (West 1990). Section
1798.172 addresses "formal transfer agreements between hospitals with varying
levels of care . . . ." If an ambulance can transfer a potential-for but less-
than-emergency patient from an acute care hospital to a convalescent hospital,
then it stands to reason (or is, at least, arguable) that the EMS Act has
jurisdiction in transports to convalescent hospitals directly. See Health & Safety
Code section1798.172 (West 1990).

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The para hospital and other new managed care innovations will not always be easily
harmonized within an EMS franchise. The EMS franchise is market regulatory, while
the para hospital is only operationally regulatory and a marketing/funding
vehicle. The JPA functions as a broker of emergency medical services. n125 A "922"
system is a screening device somewhat akin to an HMO's advice nurse. What aspects
of an EMS system accommodating para hospital dispatch or "922" screening will be
held to be a part of a Section 1797.224 exclusive operating area is unclear. It
may ultimately become the subject matter of future litigation between local EMS
agencies, ambulance providers, and para hospital JPAs. To the extent counties and
local EMS agencies can seek legislative clarification of the power of the EMS
Authority for para hospital services and other innovations such as "922"
screening, counties may avert unnecessary and protracted future litigation. Short
of legislation, the EMS Authority should be asked to develop regulations in
anticipation of the questions that will ultimately be raised by health care
reform. Until then, these new innovative systems should not be offered as a part
of a ambulance franchise. They can, however, be pursued outside ambulance
franchises as a distinct [*76] cost containment strategy.

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n125 See The Solano Emergency Medical Services Cooperative (SEMSC), A Proposal for
the Implementation and Delivery of Parahospital Medical Services at p.18 (Draft
June 20, 1995). The document notes that:

Generally, the Solano EMS Cooperative (SEMSC) will act as a broker between the
payors for EMS and the providers of EMS. The medical and quality assurance
standards under which all parties operate will continue to be set and monitored by
the county. The SEMSC will be geared towards provision of a comprehensive range of
services including, but not limited to BLS First Response, ALS First Response,
EMT-Defibrillation/Intubation, Priority Medical Dispatch, Patient Repatriation,
etc. These "parahospital" services will be provided in a flexible fashion designed
to meet the needs of both the public and the payors. This could include transport
to In-Plan Facilities or approved destinations alternative to emergency
departments; Infield Treat and Release of Patients; procedures for Physician
Referral; implementation of Preventive Health programs, etc.

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It is noteworthy that even if the EMS Act is ultimately determined by the courts
not to cover the scope of activities within para hospitals and "922" systems,
nothing precludes cities and counties from utilizing their police powers to
implement such administrative systems in a JPA. Some of the immunities for the
operations of a para hospital or "922" system are already available under Section
1799.107 of the Health and Safety Code. That statute grants qualified immunity to
public entities or personnel engaging in the provision of "emergency services".
The term "emergency services" is defined in Section 1799.107(e) as follows:

(e) For purposes of this section, "emergency services" includes, but is not
limited to, first aid and medical services, rescue procedures and transportation,
or other related activities necessary to insure the health or safety of a person
in imminent peril. n126

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n126 Cal. Health & Safety Code section 1797.107(e) (West 1990).

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Since the scope of "emergency services" is clearly broader than the definition of
"emergency medical services" under section 1797.72, at least qualified immunities
would be available to "emergency rescue personnel." The term "emergency rescue
personnel" really only appears to address firefighters engaged in providing
emergency services, and does not appear to include private ambulance providers.
When a para hospital or "922" transport is made with private ambulances, will any
immunities apply? Arguably Health & Safety Code section1799.108 would provide
immunities to persons who have certificates issued pursuant to the EMS Act in the
provision of pre-hospital emergency field care at the scene of "an emergency".
n127 Those immunities will not, however, extend to emergency departments and other
places where medical care is usually offered. n128 Physicians and surgeons
providing emergency medical coverage receive their immunities under a separate
section. n129 [*77] Again, the key questions is whether an "emergency" is
defined retroactively, after the fact, or prospectively, when the initial call for
help is made.

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n127 Cal. Health & Safety Code section 1799.108 (West 1990) states: "Any person
who has a certificate issued pursuant to this division from a certifying agency to
provide pre-hospital emergency field care treatment at the scene of an emergency,
as defined in Section 1799.102, shall be liable for civil damages only for acts or
omissions performed in a grossly negligent manner or acts or omissions not
performed in good faith."

n128 Cal. Health & Safety Code section 1799.102 (West 1990) states, in pertinent
part: "The scene of an emergency shall not include emergency departments and other
places where medical care is usually offered."

n129 See Cal. Health & Safety Code section 1799.110 (West 1990). In James v. St.
Elizabeth Community Hospital, 30 Cal. App. 4th 73 (1994), the Third District Court
of Appeal indicated that the scope of immunity afforded under this statute extends
to more than "emergency medical services." The Court noted that the immunity
should be construed as being applicable whenever physicians are engaged in
"emergency medical coverage" which the Court interpreted as applying "whenever an
emergency room physician treats a patient in a general acute care hospital
emergency department." Id. at 80. Interestingly, the Court appeared to suggest in
a footnote that the immunity may enjoy an even more expansive reading than to
merely "emergency room physicians". Id. at 80 n.4.

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What is unclear is whether emergency medical services dispatchers (EMSD) are

intended to be covered by the phrase "related activities necessary to insure the
health or safety of a person in imminent peril." Strong immunities regarding EMS
dispatch services are essential to implement para hospital and "922" systems. The
most important discretionary decisions regarding the level of care to be provided
in either para hospital or "922" systems may be made by the medical dispatcher.
Governments may not implement such innovative systems if they are analyzed as
creating significant liability exposure. Express EMSD immunities, as opposed to
implied immunities, do not exist at this time. n130 Past proposals for EMSD
immunities have failed largely due to the opposition of the state's trial lawyers
n131 who view such immunities as obstacles to their clientele being made whole.
n132 Unfortunate- [*78] ly, the absence of immunities has prevented some
dispatch centers from electing to offer higher levels of counseling services due
to the potential for liability. New EMSD immunities legislation should also
provide immunities for transport diversion decisions made by dispatchers,
immunities for down-grading "911" calls to "922" calls, and the approved protocols
for making such decisions.

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n130 A number of attempts have been made in the past to adopt qualified immunities
that would cover emergency medical dispatchers. In 1992, State Senator Royce
introduced SB 1694 that would have extended the scope of the qualified immunity
given to "emergency rescue personnel" to include "a fully or partly paid officer,
employee, member, or volunteer of a federal, state, or local entity that is
responsible for receiving and processing calls for emergency assistance, for
dispatching personnel to respond to the calls, for providing advice or assistance
pending arrival of the responding personnel; or for any combination of these
services, including, but not limited to, any person who is a fully or partly paid
officer, employee, or member or is a volunteer of a fire department or fire
protection or firefighting agency of those governmental entities while engaged in
providing emergency medical services." In addition, the legislation would have
modified the definition of "emergency services" to "include receiving and
processing calls for emergency assistance, dispatching personnel to respond to the
calls, or providing advice or assistance pending arrival of the responding
personnel." In 1995, State Senator Campbell introduced SB 312 which would have
conferred immunity upon public employees for injuries caused by cardiopulmonary
resuscitation instructions, or instructions for the Heimlich maneuver or for other
medical emergencies given in good faith in the operation of a local "911" system,
except for acts of gross negligence. It was vetoed by the Governor on August 10,
1995.

n131 While the trial or "Consumer" bar is definitely self-interested, all the
contending factions in the EMS dispute have vested, narrow interests. Fire
services need a new role as home fires decline. The cities must preserve their
autonomy from counties that appear to be usurping their municipal prerogatives.
Counties must prevent themselves from incurring liability for failure to perform
duties imposed upon them by the State EMS Authority. If the State EMS system is a
mere fantasy, then the Authority has no justification for funding.

n132 The Consumer Bar should be careful in opposing measures to promote medical
cost containment. Trial attorneys may be an unwilling part of the next strategy to
control costs. Continuously rising health care costs may again give rise to Dan
Quayle's cry for "tort reform," especially at a time when the Republican Party
controls Congress.

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What will happen if a new hospital, HMO, or insurer will not participate in the
para hospital system? Arguably, the para hospital JPA will not have to provide
alternate dispatch services, and may continue to implement regular dispatch of
patients to an acute care hospital's emergency department. With a "922" system, it
may depend upon the manner in which the system is designed. "911" systems are
authorized by the Warren-911-Emergency Assistance Act. n133 The Warren Act is
silent on the use of "922" systems except in noting that 911 systems can include
"other emergency services, in the discretion of the affected local public agency.
. . ." n134 Will ambulances transporting patients to urgent care clinics rather
than acute care hospitals rightfully be within such systems? It is unclear.
"Ambulance services" are referenced in Section 53110 of the Government Code as
services to be included in "911" systems. It is specifically noted there that "the
system may incorporate private ambulance service." n135 It makes no reference to
whether there must be a medical emergency. The service itself appears to be viewed
as of the type that should be included within "911" systems. If local governments
have a choice regarding the establishment of a "922" system, it may be wiser to
set up a completely separate system for the dispatch of arguably non-emergency
services. Calls to "911" may legitimately be referred away under Government Code
Section 53106 to an "appropriate public safety agency." n136 It is noteworthy that
the Section 53106 authorizes the use of the referral method only for non-emergency
situations. If "922" calls are not viewed as a part of the "911" system, then
local governments can create medical dispatch cost-containment systems free from
the preemption of the statutory scheme established to regulate local emergency
telephone systems under the Warren-911-Emergency Assistance Act.

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n133 Cal. Gov't Code section 53100 (West 1983).

n134 Id.

n135 Id.

n136 Cal. Gov't Code section 53106 (West 1983).

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[*79]

V. Considerations for Re-Franchising

In re-franchising an exclusive operating area, there are certain problems that

must be addressed. First, there must be a level playing field for all the
competitors. The existing franchisee in a re-franchise will have a natural
advantage in terms of information regarding the business operations of the
exclusive operating area unless their statistical information is made equally
available to all bidders. It may be wise to adjust or alter the exclusive
operating area's specifications, service demands, and other features to insure
that there will be a level playing field in terms of the limiting the current
franchisee's insight into the operations of the next exclusive operating area.

Second, the County must avoid anti-competitive "tying" arrangements n137 regarding
the provision of ambulance services with county-owned resources (i.e., Sheriff's
dispatch services, county-owned ambulances, etc.). Arguably, requiring the lease
or purchase of county resources when other more cost-effective private sector
providers are available may be deemed anticompetitive and in violation of law.
n138 By virtue of their power to create exclusive operating areas for emergency
ambulances, counties arguably have market power in the market for emergency
medical services (the tying product). Conditioning the granting of such monopolies
upon the purchase or lease of county ambulances (the tied product) arguably
affects a substantial amount of commerce in the market for ambulances. n139 Since
emergency medical [*80] services and ambulances are distinctly different
products, it appears that the basic elements of per se illegality of the tying
arrangement are satisfied. n140 Such tying arrangements are banned because they
permit the holder of a legal monopoly in one market to use that market power to
monopolize another market to the detriment of competition. n141 While this may not
always be a problem, it at least raises an issue for analysis by specialists in
the field. At a minimum, requiring the use of existing arrangements may give the
current franchisee certain advantages over new providers regarding insight into
costs, maintenance, as well as other arrangements.

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n137 The concept of a "tying" arrangement is difficult to grasp without an

example. Suppose you want to buy a "McDonald's" franchise. You are offered one,
but with the condition that you only buy orange juice from McDonald's at a much
higher cost than you might pay to a third-party vendor. The effect of this kind of
arrangement is detrimental to the consumer and also anticompetitive, locking other
juice providers out of their market. The lock out is initiated by one with
superior market power. This is a classic "tying" arrangement. Arguably counties
have superior market power through their right to authorize ambulance monopolies.
While it may be argued that counties have no effect upon the market for
ambulances, that may not be true. On a national level, a county may have no effect
upon ambulance sales. However, in a county region, county-owned ambulances may
represent a significant portion of the ambulance market. In addition, requiring
the use of county-owned ambulances also has the appearance of seeking a hidden
return or "kick back", at least when there is a fee involved. If you don't charge
for the use of the county's ambulances, is it a gift of public funds? It may
depend on how the transaction is structured.

n138 Tie-in arrangements that involve either goods or services are addressed by
Section 1 of the Sherman Act. 15 U.S.C.A. section 1 (1973 & Supp. 1995). Tie-in
arrangements that involve commodities only are also addressed by Section 3 of the
Clayton Act. See 15 U.S.C.A. section 14 (1973 & Supp. 1995).

n139 While some may argue that the market for ambulances will not be affected by a
condition affecting a dozen ambulances, the local market for ambulances may be
significantly affected by such a tie-in. In some counties, twelve ambulances may
reflect half of the necessary ambulance fleet.

n140 See Grappone, Inc. v. Subaru of New England, Inc., 858 F.2d 792 (1st Cir.
1988).

n141 The Clayton Act, in pertinent part, makes it unlawful to lease or sell:
"goods, wares, merchandise, machinery, supplies, or other commodities, whether
patented or unpatented, . . . on the condition . . . that the lessee or purchaser
thereof shall not use or deal in the goods [etc.] . . . of a competitor or
competitors of the lessor or seller, where the effect of . . . such condition . .
. may be to substantially lessen competition or tend to create a monopoly in any
line of commerce." 15 U.S.C.A. section 14 (1973 & Supp. 1995).

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Third, in this time of uncertainty regarding health care reform, will a County be
able to offer any measure of financial security to a new ambulance franchisee?
When an emergency ambulance franchise may have indeterminate benefits of uncertain
duration, will starting new ambulance operations in any county appear to be a
worthwhile venture for a franchise award winner? In the next several years, it may
be preferable to grant short-term franchise extensions to responsible providers
rather than rebidding your exclusive operating areas for five to seven years.
Nothing in Section 1797.224 requires that a local EMS agency rebid franchises
within any predetermined time period. Periodic competition may be necessary under
the terms of Section 1797.224 (perhaps even as to grandfathered-in exclusive
operating areas), but a local government should have it within its prerogative to
determine when that competition will be set in motion in the public's best
interest. Public policy considerations may justify deferring a competitive process
until the dust of health care reform settles. In the final assessment, the most
legally defensible position may be to merely let the old franchises lapse when
they run their course.

VI. Conclusion

Ambulance franchising is a dangerous activity for counties. It [*81] should be

undertaken with great care under normal circumstances. In this era of health care
reform, emerging "managed care" systems, and the rising acceptance of the
"regulatory takings" doctrine by the federal courts, it is unusually hazardous.
The changing face of health care, however, also promises possible legislative
reforms. Fire and ambulance interests as well as cities and counties have been at
an impasse regarding amendments to the EMS Act. The promise of managed care may
provide the necessary funds through HMO and insurance cost-savings to satisfy the
fiscal needs of the fire services and ambulance interests. This may permit a
sufficient consensus to permit the lawmakers to revise the statutory language
regarding the scope of the EMS Act. Managed care can only effectively take place
under the broad auspices of a strong coordinating entity that has regulatory power
over all types of patient transport (emergency and non-emergency) and non-
transport care. All medical service providers may benefit from the expansion of
the EMS Authority's regulatory role. However, mere interpretations of the existing
legislation by the EMS Authority may be insufficient to satisfy the courts that
the EMS Act governs in all areas regarding emergency and non-emergency (but
urgent) health care. Legislative amendments are highly desirable to clearly
articulate the State's intentions regarding the EMS Act in relation to managed
care strategies and cost-saving procedures. n142

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n142 As Dr. Morales notes in his letter of April 5, 1995, supra note 103, Health
and Safety Code Section 1797.220, "last amended in 1988, is the latest statute
related to patient destination." It may be time for the counties to urge the
adoption of new legislation that contemplates managed care reforms.

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At present, ambulance franchising in California is simple. If one is not in place,

do not put one in place for a while. If one is in place, and it works well, a way
should be found to keep it going until it becomes clear what the future legal
landscape holds in store. Any other course will necessarily require careful
consideration of the points detailed above, and some very lucky guessing. If one
is contemplating franchising, one should be sure to secure the services of an able
consultant who is aware of the changing operational trends and legal terrain.
Franchising ambulance services to exclusive providers is a complex phenomenon. It
is possible to make very minor mistakes with very serious consequences. Even with
detailed planning and forethought, there is no accounting for the storm of
changing law and practices that will be ushered in with health care reform.

Taking a broader view, the time may have come to seek the repeal [*82] of the
present legislative scheme. The present EMS system is like a vine that has become
too twisted to be properly supported by its stalk. A good gardener would have cut
it back to encourage stalk growth. In the EMS system, the necessary pruning would
have been to clearly sunset or limit the provisions of Section 1797.201 before it
had deformed the entire structure. That opportunity has passed. Now that case law
has eliminated interpretive flexibility, the State and counties must decide
whether to continue tending the growing infirmity of the present regulatory
scheme, or start anew. The Fourth District's decision may someday be viewed as a
long overdue stroke of the hoe.

If San Bernardino is upheld on appeal, it is likely that the new face of emergency
medical services in California will be less egalitarian. There will be poorer
services in the rural and unincorporated areas, and faster services in the cities.
n143 Despite improvements in response times in urban areas, costs will rise to
city residents for ambulance services due to smaller economies of scale than those
that exist for county-wide systems. Lawmakers may demand cutting costs. This may
drive certain city managers to abandon fire engines in favor of smaller, less
costly ambulance units. City fire departments, hoping to secure more funding, may
be startled to find that the new EMS duties sought actually engender further
sacrifices to support the public's demand for services and the public's grudging
reluctance to pay for them. Regarding liability, the ruling of the court of appeal
that safety officers are responsible for scene management rather than the most
medically competent party, may be a windfall to personal injury attorneys. The
idea that firefighters or policemen will supersede the instructions of better
medically qualified personnel is clearly unreasonable. n144 Yet, the court of
appeal's decision makes local EMS agency medical control unwork- [*83] able.
What remains of the present medical control protocols is unclear. It is as if air
traffic controllers were admonished to recognize that they do not own the
airplanes seeking landing rights, and to let the pilots land without interference.
It is just a matter of time before there will be disasters that could have been
avoided with some coordination. Cities may be forced to find their own medical
directors upon whose licenses their paramedics can work. EMS medical directors
cannot be blamed for withdrawing their licenses from paramedics who are not
accountable to their medical direction. The new city medical directors, however,
outside the scope of the local EMS agency, may not have statutory immunity for
their regulatory decision-making. Finally, if counties are unable to exercise
their prerogatives under Lomita II to contract with private ambulances for cost-
effective indigent transports, cities may be unable to compel payment of their
bills except at sharply reduced rates of remuneration. Restructuring will be
painful for counties, but it may actually prove more painful for the fire services
and cities.

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n143 Regional EMS service is a sort of EMS "welfare." It ensures a safety net to
the EMS needy in more rural parts of a county. The demise of regional EMS planning
will likely cause greater EMS poverty in the countryside. HMOs and insurers should
be very concerned about this development. Poor response times in the outlying
regions of counties may cause the growth in use of highly expensive air ambulance
systems (for which HMOs may end up paying the bill). "911" dispatchers will not
waste time sending distant land ambulances in critical medical emergencies in
under-served areas. Increased air ambulance traffic to urban hospitals and the
noise they bring may be the price cities must pay to wrest control over EMS from
local EMS agencies. City councils, in appeasing their fire personnel, may have
angry citizens to deal with over overflight noise pollution near acute care
hospitals.

n144 See Memorial Hospitals Assoc. v. Randol, 45 Cal. Rptr 2d 547 (1995). In that
case, the Fifth Appellate District interpreted the purpose of the EMS Act as
intending those with "relevant professional expertise" to govern the making of
discretionary decisions of a medical nature. Id. at 550-54.

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In the opinion of the author, para hospitals and "922" systems are the future of
emergency medical services. Insurers, counties, cities, private ambulance
companies and the consumer bar should work out their differences in a new
statutory scheme for the provision of emergency medical services. The next system
must plainly address non-emergency transports. The next system should allow
flexibility at a local level. The next system should eliminate local government
tensions while accommodating the vested interests of some of the principal
players. n145 Hopefully, the Authority will take a leading role in crafting the
necessary enabling legislation. Para hospitals and other innovations require rock
solid foundations. To build such systems on existing legis- [*84] lation will be
akin to building sand castles in the surf. A wave of litigation is predictable,
and the community will be left without anything tangible for all its efforts. It
is time to build an EMS system upon something more dependable than shifting sands.

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n145 One solution may be to have the State take over regional administration of
emergency medical services in lieu of counties. Counties would then only have
their regular duties in the unincorporated areas of the counties, and tensions
with cities over local autonomy would be relieved. The State Authority would still
be able to implement broad regional dispatch policies acting through the existing
mechanism of city, fire and county staff serving as parts of a greater State
administrative system. Both State and local officials could retain their
functions, and perhaps, even profit by the elimination of the backward "local EMS
agency" attempting to enact laws within cities through county ordinances. State
mandated systems would clearly supersede municipal legislation. Preemption would
no longer be an issue. The author believes counties would welcome being freed from
their medical control liability over the growing ranks of "201" cities and fire
districts that are beyond their administrative control. Private ambulance
companies will undoubtedly prefer investing in a unified scheme of state
legislation rather than fighting one battle after another across the state before
a myriad of local lawmaking bodies. HMOs will have a chance to lobby for necessary
reforms facilitating managed care. What about the trial attorneys, er, Consumer
bar? Well, a complex new administrative system will certainly result in a
reasonable number of mistakes.

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Source: All Sources : States Legal - U.S. : Combined Restatement Rules, ALR,
Jurisprudences and Law Reviews
Terms: paramedic or emergency medical systems and negligence (Edit Search)
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