Capen

Plaintiff, Dr. Daniel A. Capen, a licensed physician, is building a surgical clinic that he will wholly own and operate, in which nonowner, nonlessee physicians will practice. He was informed by the former state Department of Health Services (Department) that a license for the clinic was required because it would be used by physicians who do not share in its ownership and operation, in violation of Health and Safety Code section 1204, subdivision (b)(1).

Section 1204, subdivision (b)(1), defines the surgical clinics subject to licensing by the Department. It includes any “clinic that is not part of a hospital and that provides ambulatory surgical care for patients who remain less than 24 hours,” regardless who owns or operates the clinic. It excludes from the definition doctor-owned-and-operated clinics that are “owned or leased and operated as a clinic or office by one or more physicians ... in individual or group practice . . . .” {Ibid.) The interpretation of the exclusion is the subject of this action.

Dr. Capen brought this declaratory relief action claiming that the exclusion is ambiguous in that it could be read either to exempt or not to exempt his clinic from…