Statutes and Administrative Regulations May Be a Source of Public Policy
In Green v. Ralee Engineering Co. (1998) 19 Cal. 4th 66 78 Cal. Rptr. 2d 16, 960 P.2d 1046, our Supreme Court recognized that "fundamental public policy may be enunciated in administrative regulations that serve the statutory objective." (Id. at p. 80 agency regulations provide public policy limitation on legislative at-will provision regarding employment contracts.)
The court recognized that although the Legislature is primarily vested with the power to declare public policy, regulations enacted under the authority of a statute are valid sources of public policy.
In addition to statutes and administrative regulations, the common law may be a source of public policy in this context.
In Potvin v. Metropolitan Life Ins. Co. (2000) 22 Cal. 4th 1060 95 Cal. Rptr. 2d 496, 997 P.2d 1153, our Supreme Court found that a health insurer's contract provision allowing removal of a physician from its list of preferred providers without cause violated public policy supporting the common law right to fair procedure.
The court stated: "California courts, too, are loathe to enforce contract provisions offensive to public policy. (Kreamer v. Earl (1891) 91 Cal. 112, 117 27 P. 735 ' "No court will lend its aid to give effect to a contract which is illegal, whether it violate the common or statute law, either expressly or by implication." '; . . .)" (Id. at p. 1073.)