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D entered into an agreement with P, an obstetrician and gynecologist, to include him as one of 16,000 participants on two of its preferred provider lists. P had practiced medicine for more than 35 years; he was a past president of the Orange County Medical Association; and he held full staff privileges at Mission Regional Hospital, where he had served as Chairman of the Obstetrics and Gynecology Department for nine years. P was to provide medical services to D's insureds in return for agreed-upon payment by D. The agreement created no employment or agency relationship, and it allowed P to also 'contract with other preferred provider organizations, health maintenance organizations or other participating provider arrangements.' It provided for termination by either party 'at any time, with or without cause, by giving thirty (30) days prior written notice to the other party.' On July 22, 1992, D notified P in writing that effective August 31, 1992, it was terminating his preferred provider status. P asked for clarification and D replied as per the contract it was without cause. P never gave a reason but The 'delistment was related to the fact that [he] did not meet D's current selection and retention standard for malpractice history.' D would not include or retain on its preferred provider lists any physician who had more than two malpractice lawsuits, or who had paid an aggregate sum of $50,000 in judgment or settlement of such actions. P's patients had sued him for malpractice on four separate occasions, all predating his 1990 agreement with D. In three of these actions, the plaintiffs had abandoned their claims, while the fourth case had settled for $713,000. D failed to respond to a request for a hearing. P sued D for Violation of Fair Procedure. P alleged that delisting devastated his practice, reducing it to 'a small fraction' of his former patients. He asserted that he was required to reveal his termination to other insurers and managed care entities, which then removed him from their preferred provider lists, and that he suffered rejection by 'physician groups . . . dependent upon credentialing by D' and by current D preferred provider physicians, who ceased referring patients to him. The court granted D summary judgment for P’s failure to state a claim. It held that D could delist P as per the contract. The Court of Appeal reversed. It held that before removing P from its preferred provider lists, D should have given him notice of the grounds for its action and a reasonable opportunity to be heard. D appealed.

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