K. & W. Pharmacy, Inc. v. State Department of Social Welfare

KINGSLEY, J.

This is an action for declaratory relief, brought by two pharmacies, seeking a declaration that a certain regulation issued by defendant State Social Welfare Board was invalid. After a hearing in the trial court, judg

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ment was entered adverse to plaintiffs and they have appealed. We reverse the judgment with directions to dismiss the action.

On. December 16, 1960, defendant board amended its Regulation MC-046, which deals with the basis for computation of the amounts payable to pharmacies for furnishing drugs to persons covered by the state medical care program, in such a manner as to reduce that basis. Plaintiffs contend that that amendment was invalid because it was not adopted in accordance with the procedure set forth in sections 11423 and 11424 of the Government Code, and, therefore, that an earlier regulation, prescribing a basis of charges more favorable to suppliers, remained in force. The trial court rejected that contention, on the theory that the so-called “regulation” was not the kind of administrative action to which the cited code sections apply but that it was, in fact and in law, merely an offer by the board to purchase drugs on the basis therein set forth

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offer which any pharmacist was free to accept or reject.

We do not reach the merits of that controversy. It is admitted that the “regulation” was adopted as part of a program established by laws that were repealed by the Legislature effective March 1, 1966, and that it is no longer in force. All sales that could have been affected by the challenged regulation have long since been made and no sale hereafter will or could be affected by it. The record shows that the defendants have, heretofore, made “audits” of the records of the plaintiffs and have made claims against them for refund of payments which, if the regulation was valid, were in excess of the amounts lawfully payable to plaintiffs.

The action was brought under the provisions of section 11440 of the Government Code, which reads as follows: ‘‘ Any interested person may obtain a judicial declaration as to the validity of any regulation by bringing an action for declaratory relief in the superior court in accordance with the provisions of the Code of Civil Procedure and in addition to any other ground which may exist, such regulation may be declared to be invalid for a substantial failure to comply with the provisions of this chapter or, in the case of an emergency regulation or order of repeal, upon the ground that the facts recited in the statement do not constitute an emergency within the provisions of Section 11421 (b). ’ ’