Opinion

Weinstein v. County of Los Angeles

  • 237 Cal. App. 4th 944
  • 188 Cal. Rptr. 3d 557
  • 2015 Cal. App. LEXIS 524
Court
California Court of Appeal
Filed
Jun 17, 2015
Status
Published
Author
Johnson
On the bench
Johnson, Rothschild, Bendix
Cited by
16 cases
Authority
More cited than 66.9%

The opinion

Filed 6/17/15

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

MICHAEL WEINSTEIN et al., B250857

Plaintiffs and Respondents, (Los Angeles County

Super. Ct. No. BS138053)

v.

COUNTY of LOS ANGELES et al.,

Defendants and Appellants.

APPEAL from a judgment of the Superior Court of Los Angeles County, Joanne B.

O’Donnell, Judge. Reversed with directions.

Ford, Walker, Haggerty & Behar, Renee E. Jensen; Greines, Martin, Stein & Richland,

Timothy T. Coates and Barbara W. Ravitz for Defendants and Appellants.

Strumwasser & Woocher, Gregory G. Luke, Beverly Grossman Palmer; AIDS

Healthcare Foundation, Thomas Meyers and Samantha Azulay for Plaintiffs and Respondents.

——————————

In February 2012, the County of Los Angeles (County) approved a no-bid contract

with Ramsell Public Health Rx, LLC (Ramsell) for pharmacy administrator services to assist

the County in implementing provisions of the Affordable Care Act (ACA). After AIDS

Health Foundation (AHF) challenged the award of the contract, the trial court invalidated the

contract in June 2012. Days later, the County approved another no-bid contract with Ramsell

substantially identical to the first contract, but which had a one-year term. AHF challenged

the second contract.

The trial court found that an exception in the County Code permitting no-bid contracts

where the contract was for personal services of an “extraordinary and technical nature” and

where the services were temporary did not apply because the County had not demonstrated

any specialized skills were required to administer the pharmacy benefits under the contract;

rather, rudimentary computer and organizational skills were sufficient.

On appeal, the County argues that the trial court failed to accord sufficient deference to

the County’s conclusion that the exception applied; the contract was exempt from competitive

bidding because it was a personal services contract that (1) could not be performed by County

employees in the time available; (2) involved services of an extraordinary professional or

technical nature, and (3) remedied an emergency situation that required quick action. Finally,

the County asserts that voiding the Ramsell contract on the very last day of its term made a

mockery of the equitable nature of the mandate remedy. We agree with the County that the

trial court failed to accord sufficient deference to the County’s evaluation of its needs for the

services of a pharmacy administrator who could provide the necessary data management and

provision of pharmaceuticals to address its needs in implementing provisions of the ACA, and

reverse with directions that the trial court enter judgment in the County’s favor.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

1. The Parties

AHF is a California nonprofit corporation and participant in the state’s Medi-Cal

program. AHF provides medicine and advocacy to persons with HIV/AIDS regardless of

ability to pay. AHF operates eleven healthcare centers and pharmacies throughout California

2

primarily serving low-income patients. AHF operates Positive Healthcare, a primary care

case management program for Medi-Cal patients with AIDS under a contract with the Los

Angeles County Department of Health Services (DHS). AHF is qualified to provide the same

pharmacy network administrative services as contemplated on the Ramsell contracts. Michael

Weinstein (Weinstein) is the president of AHF.

Ramsell is a California limited liability company located in Oakland, California.

Ramsell is an administrator that provides and manages 340B pharmacy programs,1 provides

pharmacy claims processing and adjudication, negotiates and manages contracts between

itself and its network pharmacies, provides 340B administrative services and provides for

other related pharmacy benefit administrative services.

The DHS is the County agency responsible for providing certain health services to

residents in Los Angeles County and operates hospitals throughout the County.

2. Governing Legal Principles.

Los Angeles County Code chapter 2.121, “Contracting With Private Businesses,”

provides that it applies to contracts “with private businesses to perform personal services

which are currently performed by county employees, or which could be performed by county

employees through the recruitment of additional personnel.” (L.A. County Code, § 2.121.250,

subd. (A).) Competitive bidding is designed to “invit[e] competition, to guard against

favoritism, improvidence, extravagance, fraud, and corruption, and to secure the best work or

supplies at the lowest price practicable.” (Domar Electric, Inc. v. City of Los Angeles (1994)

9 Cal.4th 161, 173.)

As a rule, such contracts are awarded by competitive sealed bidding “unless it is

determined in writing by the department recommending the award of a contract that this

method is not practicable.” (L.A. County Code, § 2.121.320, subd. (A).) If the use of

1The federal drug reimbursement program is known as the “340B program,” a

reference to the section of the Public Health Service Act that allows designated entities to

purchase certain drugs at substantially reduced prices negotiated by the federal

government. (42 U.S.C. § 256b.)

3

competitive sealed bidding is not practicable, “a contract may be awarded by competitive

negotiation.” (L.A. County Code, § 2.121.330, subd. (A).) “A contract may be made by

noncompetitive negotiation only when competition is not feasible, as determined in writing

prior to award by the department recommending award of the contract.” (L.A. County Code,

§ 2.121.350.)

There are two notable exceptions to the competitive bidding requirements of Los

Angeles County Code section 2.121. Relevant here, Los Angeles County Code section 2.121

does not apply in the first instance where, among other things, (1) “[t]he service cannot be

performed adequately or competently or satisfactorily by civil service employees and it is

impossible to recruit such personnel to perform such service for the period of time such

service is needed by the county”; or (2) “[t]he service is of an extraordinary professional

or technical nature and the services are of a temporary nature.” (L.A. County Code,

§ 2.121.250, subds. (B)(2), (B)(3).)

3. The Affordable Care Act and Transition of Patients from Ryan White to Low Income

Health Plan Based Drug Programs v

On March 23, 2010, the federal government passed the Affordable Care Act (42

U.S.C. § 300gg et seq.) (ACA) that anticipated the extension of Medicaid coverage in 2014 to

over one million previously uninsured California citizens. Under the ACA, beneficiaries

needed to be transferred from the Ryan White CARE Act (42 U.S.C. § 300gg-12 et seq.)

(Ryan White), which had provided pharmaceuticals, to the Low Income Health Plan (LIHP).

The County’s LIHP is known as “Healthy Way LA.” Healthy Way LA provided for the

creation of a pharmacy network to expand pharmacy access to patients with HIV/AIDS and to

streamline billing and federal reimbursement for healthcare providers who became part of the

network.

In November 2010, in anticipation of the changes made by the ACA, the California

Department of Health Services implemented a new state Medicaid program known as the

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“Bridge to Reform.” The Bridge to Reform employed a new Medicaid section 1115 Waiver2

to help the state meet the challenges of enrolling the significant number of patients who were

newly eligible under the ACA. In particular, the Bridge to Reform provided for the creation

of pharmacy networks that would expand pharmacy access to HIV/AIDS patients. At the

time, over 15,000 persons received benefits under Ryan White, while an additional 5,000

persons would be eligible for benefits under the LIHP program. The Bridge to Reform was

expected to end on December 31, 2013.

On July 22, 2011, the federal government notified California that the transition of such

patients would begin October 1, 2011 (later extended to July 1, 2012).

(A) RAMSELL I

In January 2012, DHS submitted a transition plan report to the County Board of

Supervisors in which it notified the Board that it was negotiating an agreement with a

pharmacy administrator to provide pharmacy network services to HIV/AIDS patients in

accordance with the Bridge to Reform.

On February 7, 2012, DHS recommended to the Board that it approve a sole-source,

$75 million 340B contract for pharmacy administrator services with Ramsell to administer the

pharmacy network. The DHS also recommended that the County award the contract without

engaging in a competitive bidding process. DHS asserted that it did not have time for a

standard RFP (request for proposals) process and that it was only aware of two entities

offering the necessary pharmacy administrative services, and of the two, one’s business model

was not compatible with DHS.

On March 15, 2012, the County entered into the Ramsell I contract, which had a three-

year term, with automatic renewal for successive one-year terms. (Ramsell I.)

2 “Waivers” are federally approved methods of testing new or existing ways to

deliver and pay for health care under Medicaid, and allow states to apply for flexibility in

such testing.

5

After AHF challenged the Ramsell I contract on the grounds it violated Los Angeles

County Code section 2.121, on June 6, 2012, the Los Angeles County Superior Court agreed

and granted plaintiffs’ application for writ of mandate voiding the Ramsell I Contract.

(B) RAMSELL II3

On June 15, 2012, the County published a notice under the Brown Act that it would

ask the Board at its regularly scheduled June 19, 2012 meeting to authorize the award and

execution of another $75 million no-bid contract to Ramsell to provide the same services

specified in the Ramsell I contract. The Ramsell II contact was identical to the first Ramsell

contract except for its duration. The Ramsell II contract would run on a month-to-month basis

for up to 12 months. The County argued that because the Ramsell II contract was temporary,

it qualified for an exception to competitive bidding requirements of Los Angeles County Code

section 2.121.250, subdivision (B)(3).

The Ramsell II contract’s salient provisions set forth that Ramsell is an administrator

and provides and manages 340B pharmacy programs, provides pharmacy claims processing

and adjudication, negotiates and manages contracts between itself and its network pharmacies,

provides 340B administrative services, and provides for other pharmacy benefits

administration services. Further, the services to be provided under the Ramsell II contract

included, among other things: claims processing; plan design, review and management; real-

3 After AHF initiated a separate proceeding to challenge the Ramsell II contract,

proceedings in Ramsell I continued in the trial court, with the County filing a return to the

Ramsell I writ in October 2012, stating that the Ramsell II contract complied with the writ

issued in Ramsell I. AHF objected, stating that the County had failed to adequately

demonstrate compliance with the writ. On November 9, 2012, the trial court, Ann I.

Jones, Judge, found in Ramsell I that there was insufficient evidence that the Ramsell II

contract was in violation of Proposition A. Judge Jones further found the proposed

pharmaceutical services were of an “‘extraordinary professional’” nature within the

meaning of Los Angeles County Code section 2.121.250, subdivision (B)(3). This order

discharged the writ in Ramsell I and concluded the writ proceedings, although Ramsell I

was later consolidated with Ramsell II, and AHF’s challenge to the Ramsell II contract

continued. Thus, there was never a final judgment in the Ramsell I proceedings, and due

to the consolidation of the two matters, Ramsell I is subsumed within the current appeal.

6

time review of drug utilization; reports of claims data; ongoing maintenance and reporting of

virtual inventory of 340B covered drugs at contract pharmacies; payment of 340B drug

acquisition costs and negotiated dispensing fees; ordering drugs; managing each individual

pharmacy’s inventory and generating replenishment orders; and providing electronic patient

and inventory recordkeeping.

The Ramsell II contract provided Ramsell would make available the use of Ramsell’s

proprietary software application by which the pharmacy could track inventory and purchases.

At the end of the term of the contract, Ramsell would assist the County in transitioning all

data collected to the County.

DHS sent a recommendation to the Board that the Board approve Ramsell II, and that

the contract was exempt from the competitive solicitation requirements of Los Angeles

County Code section 2.121.250, subdivision (B)(3) because the contract was temporary and

for a professional or technical service. The Ramsell II contract had a term of up to 12 months,

at an estimated cost not to exceed $5.9 million per month for pharmaceutical ingredient costs,

and $300,000 per month for transaction costs, and other fees, for a total not to exceed $75

million for one year.

DHS’s recommendation asserted that as many as 5,000 persons would be affected by

the transition to LIHP. The mandatory transition would begin July 1, 2012 when the state

would require LIHP eligibility screening as part of the Ryan White enrollment/reenrollment

process. Further, the California Department of Health Care (CDHC) intended to change its

computer system in June 2012 in preparation for this patient transaction; as a result,

commencing on July 1, 2012, Ryan White patients seeking recertification/renewal of their

benefits would automatically be screened for LIHP eligibility. Patients in Los Angeles

County’s LIHP (Healthy Way LA), would need to access medication through Healthy Way

LA networks because they would no longer have access to medications through Ryan White.

DHS pointed out that “[d]uring the transition, this temporary 340B Contract Pharmacy

Administrator Services Agreement with Ramsell is critical to maintaining the health of HIV

patients in Los Angeles County, and ensuring compliance with Federal 340B regulations.

7

Timely, uninterrupted access to medications is essential for HIV patients, and lack of access

could result in devastating health consequences for this vulnerable population. [¶] This

temporary agreement is Los Angeles County’s best mechanism to ensure pharmacy access for

HIV patients because it provides a broad pharmacy network to patients seen in [Healthy Way

LA] clinics, enabling compliance with Federal 340B regulations. . . . Without these 340B

pharmacy administrator services provided by Ramsell, [Ryan White] patients transitioning to

[Healthy Way LA] would be limited to accessing clinic onsite pharmacies, given current

federal regulations. [Healthy Way LA] clinics without onsite pharmacies would have

significant difficulty in providing 340B-compliant pharmacy access, given the complicated

federal requirements in place for use of 340B contract pharmacies. In this vulnerable

population, which often experiences challenges in areas such as transportation and childcare,

long pharmacy commutes and waiting times would likely result in delayed or missed

medications and serious health consequences.” Under the proposed Ramsell II contract, many

patients would not need to change pharmacies.

In its proposal for Ramsell II, DHS also explained the genesis of Ramsell I and the

urgent need for Ramsell’s services. In October 2011, DHS advised the board it was working

with the County Counsel to negotiate an agreement with a 340B contract pharmacy

administrator. DHS intended to transition Ryan White patients by November 1, 2012, and

“[t]hus, County DHS did not have time to complete a competitive selection process, which

typically takes one year or more to complete.” DHS explained that Ramsell II would provide

a temporary month-to-month agreement to permit DHS to provide essential pharmacy services

for up to a year while it undertook a competitive solicitation process.

DHS explained that Ramsell would receive administrative fees, not to exceed $60,000

per month, under the terms of Ramsell II. “It should be noted that the majority of costs under

this agreement are not related to Ramsell’s administrative fees but to the actual 340B costs of

the pharmaceuticals themselves and the expense of participating network pharmacies to

provide these drugs, which includes pharmacy dispensing fees and mail order/delivery costs.

Ramsell is not a provider of pharmaceuticals, but is simply the fiscal intermediary that will

8

arrange for the [Health Way LA] clinic to provide access to 340B-priced drugs through

contracted pharmacies across a vast array of pharmacy sites, including but not limited to

onsite clinic pharmacies, community retail pharmacies, and chain drug store pharmacies, all in

an effort to promote continuity and patient access. Thus, while it will pass through funds for

the County, it is entitled to reimbursement only for its administrative costs, up to $60,000 per

month.” The expected monthly pharmaceutical cost would be $5.9 million.

DHS asserted that the Ramsell II agreement was for “a temporary and professional or

technical service and, as such, is exempt from Proposition A, including [Proposition A’s]

competitive selection requirements.” DHS or Ramsell could terminate the agreement without

cause on 30 days’ notice to the other party; such termination provision would accommodate

DHS’s implementation of Ramsell’s successor. The Ramsell II agreement further contained a

provision on future solicitation under which Ramsell acknowledged that the County could

enter into an agreement with another entity for provision of the services contemplated in

Ramsell II.

4. The Plaintiff’s Petition for Writ of Mandate: Ramsell II

On June 18, 2012, plaintiffs filed a petition for writ of mandate seeking to enjoin the

County from entering into the Ramsell II contract; declaring the Ramsell II contract to be

invalid, void, and unenforceable; prohibiting the County from entering into a no-bid contract

unless and until the County justified its use of competitive negotiation or non-competitive

negotiation; and costs and attorney fees. AHF sought a temporary restraining order to stop

consummation of the Ramsell II contract.4

(A) AHF’S ARGUMENTS

AHF asserted that the ACA deadline of July 1, 2012 was not a hard deadline but

merely a goal, and failing to meet the deadline would not cost any additional County funds.

4 On June 19, 2012, the trial court denied the application for a temporary restraining

order on the basis the Ramsell II contract was short-term because it was for month-to-month

services, and the County may enter into a temporary contract for professional or technical

services. On November 7, 2012, the court set a briefing schedule and a hearing on the merits

for May 5, 2013.

9

Further, AHF was actively in the business of HIV/AIDS pharmaceutical administration and

understood the services that Ramsell would be providing. Although AHF used a paper-based

system, AHF was a 340B qualified covered entity, and could order wholesale

pharmaceuticals, distribute them to pharmacies, and electronically track and seek

reimbursement for drugs under 340B’s reduced pricing system on behalf of partner

pharmacies servicing 340B eligible HIV/AIDS patients. AHF already provided analogous

services to a portion of the same patient population to be served by Ramsell. The skills

required to perform these tasks could be performed by high school graduates, and AHF’s

personnel performing such tasks had computer skills and organizational skills, but did not

have any specialized professional skills. Further, the Ramsell contract did not require the

vendor to deploy hardware or programs that could be used only by persons with specialized

training, but required services that could be performed by persons with basic database

management skills. The only arguably specialized skill was familiarity with the basic lexicon

of pharmacy administration.

Donna Stidham, the Chief of Managed Care at AHF, asserted that she oversaw AHF’s

pharmacy benefit management contracts with different pharmacy benefit management

companies. Such contracts require five primary tasks: (1) maintaining a database of eligible

patients, (2) maintaining information regarding drugs covered by the plan, (3) coordination

with local pharmacies and the County to determine whether a claim qualifies for coverage,

(4) inventory management, and (5) reporting to the County. These tasks do not require any

specialized degree or training and only require computer and organizational skills. Her review

of the Ramsell II contract indicated it required the same five skills. More specifically, as set

forth in Stidham’s declaration:

1. Regarding maintaining a database, this task would not require the pharmacy benefit

manager to screen patients for eligibility because the list would be received from the County.

Patients would be added on a rolling basis based on the patient’s birth month, so the database

would grow at a measured pace of about 417 patients per month. (Ramsell II Contract,

section 2.12.)

10

2. Regarding maintaining a formulary, this task is ministerial, requiring only that the

pharmacy benefit manager implement decisions already made by the County concerning

covered drugs. The task only requires the comparison of drugs on the approved list and

requires no specialized pharmacy knowledge, and the pharmacy’s file of 340B drugs would be

maintained and any price changes updated. (Ramsell II Contract, section 2.2.)

3. Regarding claims processing, this task involves coordination with the patients’ local

pharmacies and requires the pharmacy benefit manager to verify that the patient is enrolled in

LIHP and eligible, that the requested medication is in the formulary, the patient is authorized

to receive the drug in question, and whether any refill is permitted, and the requested

medication does not exceed quantity limits or other contraindications. This task does not

require any specialized skill other than maintaining the database concerning enrolled patient

information. The pharmacy benefit manager must coordinate with the local pharmacy through

the internet. All rules for claims processing have been set by the County and the medical

profession, and no discretionary decisions are required. (Ramsell II Contract, section 2.2.)

4. Regarding inventory management, this task involves managing inventory at

contract pharmacies. The pharmacy benefit manager must make replacement orders to

replenish the pharmacies. Orders must be submitted to drug wholesalers under the 340B

program. The manager must transmit information between pharmacies and wholesalers, track

inventories utilizing software for this purpose. The pharmacy benefit management makes the

initial payment and invoices the County for costs. These tasks do not require specialized

training or education. (Ramsell II Contract, sections 2.2, 2.8, 2.9.)

5. Regarding reporting, this task requires the pharmacy benefit manager to report on a

monthly basis with data on drugs being dispensed. The pharmacy benefit manager must also

prepare a report using a standard report format established by the County as defined in the

Ramsell II contract. No discretion is required in the preparation of these reports. This task

requires the pharmacy benefit manager to provide the County and other participating entities

with a software system to track claims and maintain purchase order data. According to

Stidham, “[t]his type of inventory software is commercially available and could be purchased

11

by any [pharmacy benefit manager] from an appropriate vendor and easily adapted to fit the

purposes addressed in the Ramsell II contract.” The participating pharmacies referenced in

the Ramsell II contract are already 340B qualified, which “means that the pharmacies

themselves maintain the federal qualifications to receive the drugs that are part of the 340B

purchasing program at reduced rates,” and accordingly, the pharmacy benefit management

does not need to be 340B qualified; as a result, this task involves marketing but does not

involve extraordinary technical training. (Ramsell II contract, sections 2.3 and 2.11.)

“In sum, a [pharmacy benefit manager] acts as a data aggregator . . . [and] ease[s] the

administrative burden on the entity with whom they contract by maintaining the patient and

drug lists and sending out the invoices and drug-restocking orders. . . . An individual

pharmacy is typically connected to multiple [pharmacy benefit management] software systems

in order to carry out their day-to-day business and serve [their] customers.” “AHF is a section

340B-qualified entity [and] serves as an LIHP pharmacy under its extant contract with the

County . . . . [AHF] fills prescriptions [for] HIV/AIDS patients participating in LIHP and bills

the County directly for drugs dispensed to LIHP patients. AHF maintains its own ordering

and inventory of 340B drugs with its wholesaler.”

According to Scott Carruthers, the National Director of pharmacy at AHF, AHF, a

section 340B covered entity, can order, obtain from a wholesaler, distribute, electronically

track, and seek reimbursement for drugs under 340B. AHF already provides this service to

AHF pharmacies. The pharmacy administrative services of the Ramsell II contract primarily

require the provision and maintenance of an IT infrastructure and related databases. The

Ramsell II contract does not require a vendor to deploy computer hardware.

(B) THE COUNTY’S ARGUMENTS

In opposition, the County primarily argued that Los Angeles County Code section

2.121.250, subdivision (B)(3) exempted the Ramsell II contract from competitive bidding

because DHS did not have the infrastructure to provide pharmacy administrative services, the

service provided was of an extraordinary or technical nature, and AHF’s description of the

services provided did not adequately delineate their scope. The County also argued under Los

12

Angeles County Code section 2.121.250, subdivision (B)(2) that DHS did not have the

infrastructure to provide pharmacy administration services because it did not have the IT “to

comply with the federal regulatory requirements for contract pharmacy administration” and

“to electronically adjudicate the pharmacy claims to be submitted . . . for pharmacy

reimbursement.”

DHS asserted that “[g]iven the anticipated short timeline for the Ryan White to

[Healthy Way LA] transition, DHS had to identify a vendor that possessed the necessary

infrastructure and experience in handling a 340B contract pharmacy network amongst

multiple 340B covered entities and a variety of different retail pharmacies in an immediate

manner. For DHS, a solicitation typically requires one year to issue and complete.

Accordingly, there was insufficient time to issue a solicitation for this temporary service.”

DHS sought to identify a vendor with experience in managing 340B contract pharmacy

networks for separately owned, federal Health Resources Safety Administration (HRSA)

covered entities. DHS identified a vendor, but after negotiations fell through, DHS identified

Ramsell as a potential vendor. DHS asserted that there was no evidence “AHF had the

necessary software or systems set up to handle the 340B compliance when the clinic and the

pharmacy are not owned by the same entity, which would be the case for many of the

[Healthy Way LA] HIV clinic sites.”

For the County, Amy Gutierrez, Director of Pharmacy Affairs, stated that DHS

oversees the Healthy Way LA program. Because “DHS-owned and operated clinics do not

have sufficient capacity to provide access to all eligible county patients, DHS contracts with

over 160 community clinics to provide offsite care for approximately 61,000 [Healthy Way

LA] patients. Initially, the Healthy Way LA program managed clinic and associated

pharmaceutical reimbursement claims for community provider patients through a retroactive

reimbursement, paper-based claims process though a vendor.”

DHS held meetings in September and October 2011 concerning the transition of the

Ryan White patients to Healthy Way LA with the County’s HIV Community Partners clinics

(the County’s Healthy Way LA contractors). At the meetings, multiple clinics expressed

13

concerns over the current retroactive paper claims process, and the delay in obtaining

pharmaceutical reimbursement. “The majority of the clinics had not been historically

responsible for floating pharmaceutical costs, and expressed significant concerns over clinic

operational costs if HIV medications clinics were reimbursed retroactively through the [paper-

based] process.” Waiting for reimbursement for a $10 drug was different than waiting for

reimbursement of a $1,500 drug. The majority of the existing Community Partner clinics did

not operate onsite pharmacies and had utilized community pharmacies that billed the state

directly through the state’s AIDS Assistance Drug Program (ADAP). “From this meeting, it

was clear that DHS needed to identify a 340B contract pharmacy network strategy, and

[taking into] consider[ation] the size of the [Healthy Way LA] clinic/pharmacy network,” the

impact of access to medication in light of the Healthy Way LA program.”

Healthy Way LA’s pharmaceutical access goals were to (1) ensure access to the 340B

clinic pricing; (2) provide a method to ensure the clinic’s ability to adhere to HRSA 340B

regulations, (3) provide a method for real-time electronic claims adjudication for HIV

pharmaceuticals, and (4) minimize interruption to patient care services. Each Community

Partner clinic is considered a separate covered entity required to maintain separate inventory

transaction records to meet federal regulations, and therefore DHS concluded pharmacy

administrative services were necessary. Gutierrez determined that DHS did not have the

infrastructure necessary to perform the required services, namely, real-time claims

adjudication and virtual inventory software that would comply with the 340B processing, the

maintenance of multiple separate unrelated retail pharmacy 340B inventories, electronic

verification of formulary and clinical drug utilization review, and the ability to process

prospective claims. “Given that each separate entity is responsible for tracking compliance to

ensure that all 340B regulations are closely followed for each medication transaction, it was

considered critical to provide real-time online access to monitor 340B inventory use when the

clinic utilized multiple offset contract pharmacies that provide dug dispensing for all of its

outside business.” DHS elected to use those pharmacies already part of the Healthy Way LA

14

network rather than a single 340B entity in order to avoid disrupting patient-clinic

relationships and care access.

Healthy Way LA required a 340B program administrator who could perform the

following services that DHS was unable to perform due to lack of access to the necessary

infrastructure and a robust platform:

1. “340B contract pharmacy network management and development for in-house

retail, community, and chain pharmacies.”

2. “Ability to accept and manage real-time electronic claims from more than 60 retail

pharmacies across the network and adjudicate for patient eligibility, clinical, formulary, and

financial parameters for each separate clinic site.”

3. “Ability to maintain separate virtual 340B clinic medication inventories for 20

clinic sites, and more than 60 separate pharmacy locations, including the tracking of partial

inventory accumulation over a 6-month period.” Any “retail pharmacy site may handle

separate virtual inventory and wholesaler replenishment for one site, multiple sites, or all

[clinics].”

4. “Ability to track individual 340B clinic inventories across a multiple-pharmacy

contract network that complies with HRSA regulations.”

5. “Ability to order 340B drugs on behalf of the 340B covered entity to the drug

wholesaler, manage orders, and serve as the wholesaler fiscal intermediary of each clinic

incorporating ‘ship to-bill to’ logic.”5

6. “Ability to accept daily [Healthy Way LA] eligibility files, upload, and make

available for pharmacy claims adjudication on the same day of receipt to ensure that patients

[have] access to critical medication.”

7. “Ability to exchange eligibility data between ADAP and [Healthy Way LA]

programs to direct the [Healthy Way LA] contract pharmacy to the appropriate payor, and

prevent duplicate billing to state and County on the same transaction.”

5This terminology denotes that the good itself is sent to one address, while the

invoice is sent to another address.

15

8. “Ability to provide data management services and system for program invoicing

and reporting[, and] to ensure that each 340B covered entity had access to necessary contract

pharmacy reports in accordance with HRSA regulations.”

9. “Ability to assess and adjudicate claims based on ‘lesser of logic,’ [namely,]

running each claim through [three] potential claims scenarios and identifying the lowest cost

to [Healthy Way LA].”

10. “Ability to provide traditional pharmacy benefit management . . . services (help

desk, claims adjudication, maximum allowable cost . . . management, and pharmacy network

payment.”

Due to the shortened timeline for the Ryan White to Healthy Way LA transition, DHS

had to identify a vendor that possessed the necessary infrastructure and experience in handling

340B contract pharmacy network between multiple 340B covered entities and a variety of

different retail pharmacies. For DHS, a solicitation normally takes one year to complete, and

thus, there was insufficient time to issue a solicitation for this temporary service.

Ramsell had acted as a pharmacy administrator for the State of Oregon and Colorado,

as well as acted as California’s ADAP contract administrator. “Ramsell already had contracts

within all of the HIV specialty and retail pharmacy locations being considered for [Healthy

Way LA], and would be able to implement the 340B contract pharmacy administrator services

within 60 [to] 90 days of contract implementation, given the existing infrastructure already in

place.”

Gutierrez pointed out that AHF did not assert that it had software or systems in place to

handle the necessary 340B compliance when the clinic and the pharmacy are not owned by

the same entity, which is the case for many Healthy Way LA clinic sites. Finally, the drug

reimbursement the Ramsell system provides is the 340B drug cost at the time the drug is

dispensed, but the State has paid more historically under the ADAP program. Thus, the

Ramsell program would save money.

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(C) AHF’S REPLY

Donna Stidham’s reply declaration stated that the qualifications of Ramsell versus

AHF were not at issue in the litigation, but whether the contract requires extraordinary

professional or technical services, a fact that Gutierrez did not address. Further, AHF runs

each of its 10 pharmacies as a separate 340B entity and acts as a pharmacy benefit manager

for each of those pharmacies. Each pharmacy had its own inventory controls, ordering needs,

eligibility list, and drug reconciliations, all of which AHF managed and coordinated as any

pharmacy benefit manager would. In addition, AHF disputed whether a pharmacy benefit

management needed to be 340B qualified. Rather, it is the responsibility of the 340B-eligible

entity to ensure that its pharmacies comply with 340B, and it is not the responsibility of the

pharmacy benefit manager. Further, only 2,500 of the approximately 5,000 new LIHP

patients in Los Angeles County will be served by the Ramsell contract because AHF already

handles the other 2,500.

Primarily, however, AHF asserted that “the sole operational difference between the

existing paper-based system and the system contemplated under the Ramsell contract is that

the [pharmacy benefit manager] under the Ramsell contract organizes the relevant data on

computers. The County does not, and cannot, contend that the use of computers has added

any substantive duties to the task of pharmacy administration in Los Angeles County, much

less any ‘extraordinary professional or technical’ duties.” Further, the exemption for services

that cannot be performed by county employees did not refer to the availability of

infrastructure.

(D) TRIAL COURT RULING

On June 5, 2013, the trial court found the County had a ministerial duty to submit the

contract for competitive bidding pursuant to Los Angeles County Code section 2.121.310, and

that the County’s determination that it was not required to do so was not supported by

substantial evidence. The court found the exception for contracts to perform personal services

that were of an extraordinary professional or technical nature and were temporary (L.A.

County Code, § 2.121.250, subd. (B)(3)) did not apply. The court observed that “[a]lthough

17

an agency’s discretion is entitled to deference upon review, as explained above, deviations

from strict adherence to competitive bidding standards receive close judicial scrutiny” and

“exceptions to competitive bidding requirements should be strictly construed.”

The court noted that what constitutes a personal service contract is defined by the

traditional legal definition of a personal service, namely, “‘[a]n act done personally by an

individual. In this sense, a personal service is an economic service involving either the

intellectual or manual personal effort of an individual, as opposed to the saleable product of

the person’s skill,’’” and cited City of Monterey v. Carrnshimba (2013) 215 Cal.App.4th

1068, 1092. The County placed particular emphasis on Ramsell’s information technology and

organizational structure, but the County Code exclusion for personal services contracts “does

not appear to apply to a contract to purchase or lease information technology or a contract to

gain access to the preexisting organizational structure of a business.”

Further, even if the contract could be construed as one for personal services, the

exclusion would not apply because the service to be performed under the Ramsell II contract

was not of an extraordinary professional or technical nature. Donna Stidham’s declaration set

forth substantial familiarity with health plan administration and pharmacy benefit

administration, and “provides an accurate rendition and thorough explanation of most of the

contractual obligations of [Ramsell] under the contract.” Those tasks included:

1. Maintenance of a patient database. “The maintenance tasks are not extraordinary;

they essentially involve creating a database from a list of eligible patients already maintained

by [the County] and updating it on a monthly basis with patients enrolled . . . . The

determination of eligibility is not made by [Ramsell] but by the [County], [hence] the task

essentially amounts to transcribing names or importing an electronic file of names from

[Ramsell].” Due to Ramsell’s lack of discretion to determine eligibility, the service it

provided was not extraordinary. “Nor does it appear to be particularly professional or

technical, considering the basic level of computer skills that a modern worker is presumed to

possess.”

18

2. Maintaining a formulary. The maintenance of such a formulary was similarly

administrative and noncomplex. The determination of those drugs to be included in the

formulary, and ensuring that only those drugs included in the formulary are being prescribed,

were determined by the County, not Ramsell, and were thus not extraordinary or technical

tasks.

3. Claims processing. These tasks basically involved “verification and cross-checking

and intermediate level mathematical calculations based upon various parameters and lists

provided by the County,” including patient eligibility, the medication is part of the formulary,

the patient is authorized to receive the drug in question, any refill is permitted, and the

requested medication does not exceed quantity limits. “The tasks required by the contract

essentially involve the aggregation and organization of data from multiple sources and the

performance of basic logical calculations based on other parties’ guidelines.” “‘Real time

adjudication’” according to Stidham meant “not adjudication in any meaningful judicial sense,

but basically involves assessing whether a pharmacy should be given ‘the green light’ to

dispense the requested drugs to a patient based on an assessment of the requested prescription

in light of the eligibilities indicated in the lists provided by the County.” Thus, there was

nothing extraordinary about these services.

4. Inventory management. These tasks involved taking replenishment orders from

pharmacies and submitting them to drug wholesalers, tracking the inventories of contract

pharmacies with reference to processed claims and inventory levels. The court accepted

Stidman’s description of these services and her assertion that there were not extraordinary as

accurate. “These tasks appear to involve ordinary computer skills and ordinary management

and organization skills,” plus there was a level of automation in Ramsell’s information

technology which would aid the employees in performing these tasks.

5. Reporting. These tasks only require aggregation and transmission of information

that the system automatically collects, and is not an extraordinary or exceptional task.

With respect to the proprietary Ramsdell software, such software could be easily

duplicated by commercially available software. Finally, “Modern information technology

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makes management and administration of information such as the sort contemplated here a

task that is not extraordinary, even if its scale is extensive.”

In conclusion, the court stated that “[t]here is no indication in any of the [County’s]

papers that Respondent DHS ever undertook any serious analysis of whether the contract

qualified under [Los Angeles County Code section] 2.121.250[, subdivision] (B)(3) before

requesting approval of the contract from the Board.” The County’s own “sole source

checklist” omitted the “extraordinary” requirement and indicated that the contract should be

awarded because the County needed to take action because the first contact was rejected.

With respect to the temporary exception of Los Angeles County Code section

2.121.250, subdivision (B)(2), the court noted that neither party contested whether the contract

fit under this exception.

On June 5, 2013, the trial court issued a writ of mandate. The trial court entered

judgment on June 18, 2013.

DISCUSSION

The County contends the trial court employed the wrong standard of review because it

failed to accord the appropriate deference to the agency’s decision, and improperly reviewed

the basis for the County’s decision, not the County’s ultimate decision. The County further

argues that Ramsell II was exempt from competitive bidding because it was a personal

services contract that (1) could not be performed by County employees in the time available;

(2) involved services of an extraordinary professional or technical nature, and (3) remedied an

emergency situation that required quick action. Finally, the County asserts that voiding

Ramsell II on the very last day of its existence made a mockery of the equitable nature of the

mandate remedy.

AHF attacks the Ramsell II contract on many fronts. First, it contends the trial court

properly refused to apply the “arbitrary and capricious” standard to questions of statutory

construction. In any event, the trial court’s interpretation of Los Angeles County Code section

2.121.250, subdivision (B)(3) is consistent with the relevant provisions of the County Code,

which specifically refer to services, not information technology. Second, on the merits, the

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Gutierrez declaration did not provide an evidentiary basis for concluding that the Ramsell II

contract was for extraordinary professional or technical services. Further, there was no

evidence that County employees could not perform the services contemplated under the

Ramsell II contract or recruit employees to perform them; indeed, in Ramsell I the court

pointed out that it was “difficult to imagine why County employees” could not perform the

services called for because they were not “novel or cutting edge.” Lastly, Los Angeles

County Code section 2.121.250 provides no “quick action” situation, and in any event, there

was no emergency situation other than that of the County’s own creation because there was no

legal requirement to provide services to HIV/AIDS patients on a computer-based system, and

there was sufficient time to bid the contract.

I. Standard of Review and Principles of Statutory Construction

“A public entity’s ‘award of a contract, and all of the acts leading up to the award, are

legislative in character.’ (Santa Ana Tustin Community Hospital v. Board of Supervisors

(1982) 127 Cal.App.3d 644, 652.)” (Mike Moore’s 24-Hour Towing v. City of San Diego

(1996) 45 Cal.App.4th 1294, 1303 (Mike Moore’s 24-Hour Towing).) “Review of a local

entity’s legislative determination is through ordinary mandamus under [Code of Civil

Procedure] section 1085.” (Ibid.) “‘Such review is limited to an inquiry into whether the

action was arbitrary, capricious or entirely lacking in evidentiary support. [Citation.]’ This

test has also been formulated to add an inquiry whether the agency’s decision was ‘contrary to

established public policy or unlawful or procedurally unfair.’” (Ibid.) “Indeed, such

nonadjudicatory acts ‘are accorded the most deferential level of judicial scrutiny.’” (Khan v.

Los Angeles City Employees’ Retirement System (2010) 187 Cal.App.4th 98, 106.)

In County of Los Angeles v. City of Los Angeles (2013) 214 Cal.App.4th 643, the court

explained the function of a traditional writ of mandate. “A writ of mandate will lie to ‘compel

the performance of an act which the law specially enjoins, as a duty resulting from an office,

trust, or station’ [citations] ‘where there is not a plain, speedy, and adequate remedy, in the

ordinary course of law.’ (Code Civ. Proc., § 1086.) Code of Civil Procedure section 1085

permits judicial review of ministerial duties as well as quasi-legislative and legislative acts.

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[Citation.] A trial court must determine whether the agency had a ministerial duty capable of

direct enforcement or a quasi-legislative duty entitled to a considerable degree of deference.

This question is generally subject to de novo review because it is one of statutory

interpretation, a question of law for the trial court. [Citations.] [¶] A ministerial duty is one

which is required by statute. ‘A ministerial act is an act that a public officer is required to

perform in a prescribed manner in obedience to the mandate of legal authority and without

regard to his own judgment or opinion concerning such act’s propriety or impropriety, when a

given state of facts exists. Discretion, on the other hand, is the power conferred on public

functionaries to act officially according to the dictates of their own judgment.’ [Citations.]

[¶] Normally, mandate will not lie to control a public agency’s discretion, that is to say, force

the exercise of discretion in a particular manner. However, it will lie to correct abuses of

discretion. [Citation.] In determining whether a public agency has abused its discretion, the

court may not substitute its judgment for that of the agency, and if reasonable minds may

disagree as to the wisdom of the agency’s action, its determination must be upheld. [Citation.]

A court must ask whether the public agency’s action was arbitrary, capricious, or entirely

lacking in evidentiary support, or whether the agency failed to follow the procedure and give

the notices the law requires. [Citation.] [¶] In applying this extremely deferential test, a court

‘“must ensure that an agency has adequately considered all relevant factors, and has

demonstrated a rational connection between those factors, the choice made, and the purposes

of the enabling statute.”’ [Citation.] Deferential review of quasi-legislative activity

minimizes judicial interference in the interests of the separation of powers doctrine.

[Citation.]” (Id. at pp. 653–654.)

Whether the statutory provisions “impose a ministerial duty, for which mandamus will

lie, or a mere obligation to perform a discretionary function is a question of statutory

interpretation.” (AIDS Healthcare Foundation v. Los Angeles County Department of Public

Health (2011) 197 Cal.App.4th 693, 701.) To that end, “‘We examine the “language,

function and apparent purpose”’ of the statute. [Citation.] . . . ‘Even if mandatory language

appears in [a] statute creating a duty, the duty is discretionary if the [public entity] must

22

exercise significant discretion to perform the duty.’ [Citation.] Thus, in addition to

examining the statutory language, we must examine the entire statutory scheme to determine

whether the [entity] has discretion to perform a mandatory duty.” (Ibid.)

Our “inquiry is whether the record shows a reasonable basis for the action of the

legislative body, and if the reasonableness of the decision is fairly debatable, the legislative

determination will not be disturbed.” (Mike Moore’s 24-Hour Towing, supra, 45 Cal.App.4th

at pp. 1305–1306.) We will “look beyond the findings and conclusions of the trial court,

where the record shows that the question is debatable and there may be a difference of opinion

on the subject. [Citation.] In essence, the question is whether substantial evidence supports

the agency’s decision [citation], although it has also been stated that ‘what constitutes

reasonable evidentiary support may vary depending upon the nature of the action.’ [Citation.]

In a challenge to a legislative decision, the petitioner has the burden of proof to show that the

decision is unreasonable or invalid as a matter of law[, [citation] and] ‘“[t]here is a

presumption that the [agency] ascertained the existence of necessary facts to support its action,

and that the ‘necessary facts’ are those required by the applicable standards which guided the

[agency]. [Citations.]” [Citation.]’” (Id. at p. 1306.) We “‘will tend to defer to the presumed

expertise of the agency acting within its scope of authority.’ [Citation.] Thus, the agency is

required to consider all relevant factors, and on appeal a rational connection must be

demonstrated between those factors, the choice made, and the purposes of the statute under

which the agency was acting. [Citation.]” (Ibid.)

“In statutory construction cases, our fundamental task is to ascertain the intent of the

legislature in order to effectuate the purpose of the statute. [Citation.] [To that end,] ‘[w]e

begin by examining the statutory language, giving the words their usual and ordinary

meaning.’ [Citations.] If the terms of the statute are unambiguous, we presume the legislature

meant what it said, and the plain meaning of the language governs. [Citations.] If [the

statute] is ambig[uous], however, we may then look to extrinsic sources, including the

ostensible objects to be achieved and the legislative history. [Citation.] . . . [W]e ‘“‘select the

construction that comports most closely with the apparent intent of the Legislature, with a

23

view to promoting rather than defeating the general purpose of the statute, and avoid an

interpretation that would lead to absurd consequences.’”’” (Estate of Griswold (2001) 25

Cal.4th 904, 910–911.)

II. The Ramsell II Contract Was Exempt from Competitive Bidding Under Los

Angeles County Code Section 2.121.250, Subdivisions (B)(2) and (B)(3)

Here, our analysis turns on the application of the correct standard of review to the

County and DHS’s actions in approving and letting the Ramsell II contract. We apply

principles of statutory construction, which are legal questions, to the threshold question of

what is meant by the statute’s use of the words “extraordinary” and “professional” or

“technical” services. To the secondary question of whether the County’s evidence met the

statutory definitions, we apply a more deferential standard and determine whether substantial

evidence supported the County’s findings and whether it abused its discretion in bypassing the

competitive bidding requirements of its own charter. We are concerned only with whether,

after determining the meaning of the relevant statutory terms and in complying with such

meanings, the County acted in an arbitrary and capricious manner and without any evidentiary

support in entering into the no-bid contract. In conclusion we find that after giving the words

“extraordinary” and “professional” or “technical” meanings which are consistent with the

intent of the County’s Charter provisions to promote competitive bidding (see Domar Electric

v. City of Los Angeles, supra, 9 Cal.4th at p. 175), the County did not act in an arbitrary and

capricious fashion or without any evidentiary support by entering into the Ramsell II contract.

On the contrary, because the County determined that no other entity could provide the

necessary services due to their extraordinary and technical nature, it acted within its statutory

mandate.

A. The Contract Was for Personal Services

A personal service is “‘[a]n act done personally by an individual. In this sense, a

personal service is an economic service involving either the intellectual or manual personal

effort of an individual, as opposed to the salable product of the person’s skill.’ (Black’s Law

Dict. (9th ed.2009) p. 1260, col. 1.)” (City of Monterey v. Carrnshimba, supra, 215

24

Cal.App.4th 1091–1092.) In Cobb v. Pasadena City Board of Education (1955) 134

Cal.App.2d 93, the court considered whether a school board was required to seek competitive

bids to employ an architect to prepare plans for the school’s expansion. (Id. at p. 94.) Cobb

reiterated the principle that it was well settled that “because an architect is an artist, that his

work requires taste, skill and technical learning and ability of a rare kind, it would be bad

judgment to advertise and get many bids when the lowest bidder might be also the least

capable and most inexperienced and his bid absolutely unacceptable.” Thus, “‘the

employment of a person who is highly and technically skilled in his science or profession is

one which may properly be made without competitive bidding.’ [Citation.]” (Id. at p. 95.)

Notably, Cobb rejected the contention that the competitive bidding requirement for

construction contractors automatically meant that an architect’s services could only be

employed by competitive bidding. “Where competitive proposals do not produce an

advantage, a statute requiring competitive bidding does not apply.” (Ibid.)

Similar considerations apply here. The attractiveness of Ramsell was two-fold: (1) the

provision of proprietary software designed to manage a large platform of computer-related

pharmacy database services, and (2) support and training for those persons actually in the

pharmacies using the Ramsell software. Thus, merely because the Ramsell contract

envisioned the use of a product, namely, software or hardware, that did not take the contract

out of the realm of “personal services.” Rather, the contract contained a hybrid of product and

service that could not be separated. Thus, the contract was not a contract for a product.

Further, although the contract provided a mechanism for the processing and ordering

of a commodity, namely, pharmaceuticals, it did not have as its object the manufacture of such

pharmaceuticals and there is no evidence that Ramsell obtained any profit from the sale of

such pharmaceuticals. Instead, Ramsell was an intermediary through which pharmaceutical

orders could be tracked and placed in an efficient fashion and prescriptions could be filled in a

manner that would cause minimal disruption to the patients. Ramsell received approximately

$60,000 per month for its services and the cost of the pharmaceuticals—in which it had no

25

stake—comprising the bulk of the contract’s cost, namely, an estimated $5.9 million per

month.

B. Ramsell’s Services Were of an Extraordinary Professional or Technical

Nature

We find no case construing the language of Los Angeles County Code section

2.121.250, subdivision (B)(3) that the services be “of an extraordinary professional or

technical nature.” However, we must read this requirement to incorporate the underlying

principle that the purpose of competitively bidding jobs that County employees could do is

that those jobs should go to County employees; thus, if third parties are to be used, the

services they provide must be “extraordinary”—namely, County employees cannot currently

perform such services because the County does not currently perform such tasks or cannot do

so given the kind and scope of services at issue. Although the record is unclear how many

persons are actually employed by Ramsell to perform pharmacy administrator services under

the Ramsell II contract, it is highly likely that many of the persons using the Ramsell propriety

software are not Ramsell employees at all, but contract pharmacy employees and employees

of wholesale drug manufacturers. As such, those persons are by definition not County

employees. On the other hand, those persons actually employed by Ramsell (such as support

staff and installers) by definition would have specialized knowledge about the program not

possessed by any County employee. (Domar Electric, Inc. v. City of Los Angeles, supra, 9

Cal.4th at p. 173 [“‘Competitive bidding provisions must read in the light of the reason for

their enactment, or they will be applied where they were not intended to operate and thus deny

municipalities authority to deal with problems in a sensible, practical way.’”].)

The legislative history offers no insight on the intended scope of the defined

exceptions to the competitive bidding requirements; however, the legislative history

discloses the main impetus behind Proposition A was the decline in County revenues

following the passage of Proposition 13.6 Since then, County revenues continue to

6

The current version of Los Angeles County Code section 2.121 had its genesis in the

wake of the enactment of tax-cutting Proposition 13. “Proposition 13 was a reaction against

26

fluctuate, but given the increased use of private contractors, the current version of Los

Angeles County Code section 2.121.250, enacted in 1990, provides that the decision to

contract out is guided by considerations additional to pure monetary concerns. Thus, the

language regarding “extraordinary technical or professional services,” reflects an

awareness that the County is not always equipped to perform the required services.

Indeed, section 44.7 permits independent contractors where the work would not only be more

economically performed, but also where the work would be “more feasibly performed.” Such

is the case here: The Ramsell II contract was a superior method of implementing the Bridge

to Reform. The Ramsell II contract provides for a unique data collection function that is

intrinsic to its value. Ramsell provided services that ensured program drugs were timely

ordered and remained in stock, as well as services that ensured the section 340B price was

obtained. Inasmuch as we have concluded that the services provided by Ramsell employees

cannot be severed from the Ramsell proprietary software, this data collection function would

be an ongoing part of the prescription-filling process for patients transisitioning to the LIPH

program. Such a function is a highly specialized feature of the Ramsell software specifically

designed to ensure timely ordering and filling of prescriptions for those patients receiving

governmental financial assistance.

Finally, the County submitted evidence that in its search for an appropriate entity to use

for the transition from Ryan White to Healthy Way LA, it found only Ramsell met its

specifications for efficiency, accuracy, and data collection, and only Ramsell had the right

business model to provide the services. Given the County’s expertise in the area of providing

pharmaceuticals to low income patients, this decision was entitled to greater deference. On

the increasingly costly and unsatisfactory services of California’s local governments.

Now Proposition A, which will appear on the November ballot, is proposing the most

effective way to meet the stringent demands of Proposition 13: Use the energies and

methods of the private sector—businesses and individual citizens—to do more of the

tasks that local governments now perform so inefficiently.” (Popper, A Private Solution

to a Public Problem, L.A. Times (July 26, 1978) p. F5.) The voters in Los Angeles County

passed Proposition A. The most recent version of the enabling legislation was adopted by the

supervisors on March 13, 1990. (L.A. County Ord. § 90-0030, § 3.)

27

this record, there is no evidence the County’s actions were arbitrary and capricious or lacking

in evidentiary support in selecting a vendor that it deemed was the only entity properly

equipped to provide needed IT services for pharmacy administration. (Mike Moore’s 24-Hour

Towing, supra, 45 Cal.App.4th at p. 1303.)

For these reasons, we reject AHF’s arguments. First, AHF appears to argue that

because AHF operates a paper-based system, the County is obligated to do so as well in

implementing the Bridge to Reform. We disagree. “[M]andate will not lie to control a public

agency’s discretion, that is to say, force the exercise of discretion in a particular manner.

However, it will lie to correct abuses of discretion.” (County of Los Angeles v. City of Los

Angeles, supra, 214 Cal.App.4th at p. 654.) One of the considerations facing the County was

efficiency and cost-cutting and seamlessness in the provision of medications, and its evidence

supported its conclusion that the Ramsell contract would ease the transition of HIV/AIDS

patients to the Healthy Way LA program. Further, restraining the County in its choice of

platforms in which to secure the best-priced medications and timely service does not serve the

interests of such patients.

We conclude that in construing the exception of Los Angeles County Code section

2.121.250, subdivision (B)(3) very narrowly and with an improper focus on the exact nature

of the tasks performed, rather than a consideration whether such tasks could or would actually

be performed by County employees, and ignoring the County’s own assessment of the

situation which it faced and the need for the kind of specialized proprietary software and

services that Ramsell offered, the trial court erred. We reverse and direct the trial court to

enter judgment for the County.7 (Code Civ. Proc., § 43.)

7 Lastly, because we conclude the trial court erred on the merits, we need not consider

Ramsell’s equitable argument that the Court’s ruling was contrary to equitable mandamus

principles.

28

DISPOSITION

The judgment is reversed. The trial court is directed to enter judgment for the

Appellants. Appellants are to recover their costs on appeal.

CERTIFIED FOR PUBLICATION.

JOHNSON, J.

We concur:

ROTHSCHILD, P. J.

BENDIX, J.*

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant

to article VI, section 6 of the California Constitution.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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