Medical group goes after doctor for $1.4 million in legal fees

Dr. Diana Blum
Dr. Diana Blum

Daily Post Staff Writer

Attorneys for a Sutter Health affiliate sued by a former employee are seeking more than $1.4 million in legal fees from her following the outcome of the trial, said an attorney for the Palo Alto Foundation Medical Group, whose doctors work at the Sutter-affiliated Palo Alto Medical Foundation.

Diana Blum, a neurologist who now practices in Menlo Park, sued the medical group, PAMF and Sutter Health in 2015 over a contractual dispute that led to her leaving in 2013.

Santa Clara County Superior Court Judge Drew Takaichi took four of Blum’s six claims of action away from the jury, including wrongful construction termination, negligent interference, retaliation for physicians who advocate for medically appropriate healthcare and unfair competition.

The jury didn’t see the claims against Sutter Health or Palo Alto Medical Foundation, where the medical group operates.



Last month, the jury ruled to award Blum $28,415 in damages for one of the three remaining claims against the medical group.

Blum originally sought $10 million in her 2015 complaint, an amount that was updated to between $444,000 and $957,000 by the time of trial.

A story in the Post that ran on Feb. 14 incorrectly reported that the jury had unanimously found for Blum on all of her claims.

“Dr. Blum prevailed. Jury came back 12-0 in Dr. Blum’s favor,” Blum’s Newport Beach-based lawyer, Theresa Barta, told the Post in an email on Feb. 13. “Judge took many claims away from the jury, but they found in favor of Dr. Blum.”

Court documents showed that the jury found for Blum on one breach of contract claim, and in favor of the medical group on a second breach of contract claim and on a claim of intentional interference with prospective advantage.
Presiding juror Catherine Naghdi, of San Jose, told the Post that three of the jury’s 12 members had voted to not award Blum any damages.

Blum was hired as a shareholder-track doctor in the neurology department in 2009. In 2012, she was elected to be a shareholder, but a dispute soon unfolded that would lead to her leave the company.

Blum claimed in the suit that the medical group prioritized productivity and profits over patient care, including by promoting the prescription of generic drugs to maximize profits for the practice, discouraging the referral of patients to doctors outside of Sutter Health and ending the distribution of sample medication.



She claimed she was forced out of the practice and threatened with retaliation if she sued or spoke to the media about her situation.

The medical group characterized Blum as a doctor who “joined a medical group, but then discovered that she did not want to work in a group practice with other doctors as part of a team.”

They claimed Blum left of her own accord because she was unhappy about her schedule and the medical group’s salary system, in which newer shareholder doctors’ salaries are scaled up to their full amount over three years.


  1. PAMF is a horrible organization that puts profits over patient care. I am a physician at PAMF and I go to Kaiser for the care of myself and my family.
    I am sorry to hear that the organization is going after Dr Blum for legal fees. That is an intimidation tactic to prevent others from speaking up for patients’ interests.

    • Everything changed as Sutter became more involved. Good for Dr. Blum for speaking out. Shame on them for asking for legal fees.

  2. I work at the clinic and the bosses, coordinators, supervisors, H.R., Patient Relations, Billing have big egos and don’t abide to their ads “PAMF Cares” and “Sutter Plus You.” It should be “PAMF Cares About Patients’ Money” or “PAMF Plus Patients’ Money.” It is not good to hear doctors are shareholders; that is conflict of interest. Many people I know stopped going to Sutter all together, and I don’t blame them.

  3. I am a former PAMF physician. I also was forced to leave as well because I relentlessly questioned the administrative policies that put profits before people and treated the doctors like cogs in their medical machinery. The working conditions became absurd. I worked with then for 25 years but eventually they wore me down. My patients are the ones who suffer in this scenario.

  4. I was in that courtroom watching the proceedings and it was painful to see how much relevant information was being suppressed by Sutter and PAMF’s attorneys. The jury should’ve had an opportunity to weigh in on more of the consequential claims. Nevertheless, Dr. Blum won the case and yet she owe’s Sutter and PAMF 1.4 million in legal fees? Not only is that morally despicable but it only furthers their persona is a massive corporate bully.

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