California State Employees' Ass'n v. Williams

The issue here is whether statutes and a contract calling for the conduct of administrative tasks of the state’s Medi-Cal program by private carriers violate article XXIV, the civil service amendment of the state Constitution.

Several California decisions hold that this provision inhibits “contracting out” state activities or tasks to private firms or persons. (Burum v. State Comp. Ins. Funds (1947) 30 Cal.2d 575 [ 184 P.2d 505 ]; State Comp. Ins. Fund v. Riley (1937) 9 Cal.2d 126 [ 69 P.2d 985 , 111 A.L.R. 1503 ]; Stockburger v. Riley (1937) 21 Cal.App.2d 165 [ 68 P.2d 741 ].)‘Plaintiffs, the California State Employees’ Association and two taxpayers, contend that the contract in question is thus illegal and entails illegal expenditures from the state treasury. They seek to enjoin these expenditures. They appeal from an adverse judgment after the trial court sustained defense demurrers.

Defendants are the administrator of the Medi-Cal agency, the State Controller and the three contracting carriers (California Physicians’ Service, Hospital Service of California and Hospital Service of Southern California). At the inception of this lawsuit defendant Spencer Williams was…