Judge: Mark A. Young, Case: 22SMCV00022, Date: 2023-04-26 Tentative Ruling
Case Number: 22SMCV00022 Hearing Date: August 21, 2023 Dept: M
CASE NAME: Ecure LLC, v.
Blue Cross of California, et al.
CASE NO.: 22SMCV00022
MOTION: Demurrer
to the Complaint
HEARING DATE: 8/21/2023
Legal
Standard
A
demurrer for sufficiency tests whether the complaint states a cause of action.
(Hahn v. Mirda (2007)
147 Cal.App.4th 740, 747.) When considering demurrers, courts read the
allegations liberally and in context. In a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters. Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (CCP §§
430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate
facts sufficient to apprise the defendant of the factual basis for the claim
against him. (Semole v. Sansoucie
(1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions,
deductions or conclusions of fact or law alleged in the pleading, or the
construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen
(1964) 226 Cal.App.2d 725, 732, internal citations omitted.)
A
special demurrer for uncertainty is disfavored and will only be sustained where
the pleading is so bad that defendant cannot reasonably respond—i.e., cannot
reasonably determine what issues must be admitted or denied, or what counts or
claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s
of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if
the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Ibid.)
Any party, within the time allowed
to respond to a pleading may serve and file a notice of motion to strike the
whole or any part thereof. (CCP § 435(b)(1); Cal. Rules of Court, Rule
3.1322(b).) The court may, upon a motion or at any time in its discretion and
upon terms it deems proper: (1) strike out any irrelevant, false, or improper
matter inserted in any pleading; or (2) strike out all or any part of any
pleading not drawn or filed in conformity with the laws of California, a court
rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a
pleading which is not essential to the claim is surplusage; probative facts are
surplusage and may be stricken out or disregarded”].)
“Liberality in permitting amendment
is the rule, if a fair opportunity to correct any defect has not been given.” (Angie
M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of
discretion for the court to deny leave to amend where there is any reasonable
possibility that plaintiff can state a good cause of action. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to
show in what manner plaintiff can amend the complaint,
and how that amendment will change the legal effect of the
pleading. (Id.)
Analysis
Request for Judicial Notice
Plaintiff’s
request for judicial notice is GRANTED. (Evid. Code § 452(c).) The existence of
the documents are noticed.
Quantum Meruit
Defendants demur to the first cause of action for quantum meruit. A
claim for quantum meruit must allege: 1) performance of services, work or
labor; 2) at defendant’s request; and 3) circumstances inferring defendant’s
promise to pay a reasonable value. (Maglica
v. Maglica (1998) 66 Cal.App.4th 442, 449-450; Palmer v. Gregg
(1967) 65 Cal.2d 657, 660; see also MKB
Management, Inc. v. Melikian (2010) 184 Cal.App.4th 796, 805) “ ‘The measure of recovery in quantum
meruit is the reasonable value of the services rendered provided
they were of direct benefit to the defendant.’ ” (Chodos v. Borman
(2014) 227 Cal.App.4th 76, 96; quoting Palmer, supra, 65 Cal.2d
at 660.) “The idea that one must be benefited by the goods and services
bestowed is thus integral to recovery in quantum meruit.” (Maglica, supra,
66 Cal.App.4th at 450.) Therefore, a plaintiff
must generally establish both that he was acting pursuant to either an express
or implied request for such services from the defendant and that the services
rendered were intended to and did benefit the defendant; further, the defendant
must have retained the benefit with full appreciation of the facts. (Pacific Bay Recovery, Inc. v. California Physicians'
Services, Inc. (2017) 12 Cal.App.5th 200; Ochs v. PacifiCare
of California (2004) 115 Cal.App.4th 782.)
Defendants argue that the first
amended complaint (FAC) does not
show that Plaintiff’s assignors and Defendants agreed on any reimbursement
amount, or that Anthem benefitted from the services. Further, ABCLH contends
that it is governed by the California Department of Insurance, and therefore is
not subject to the Knox-Keene Act.
In the medical insurance context, Courts have found that if a
provider contends that it received below the UCR of the emergency services, a provider
“may assert a quantum meruit claim against the plan to recover the shortfall.”
(Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc.
(2021) 71 Cal.App.5th 323, 335; citing Bell v. Blue Cross of California
(2005) 131 Cal.App.4th 211, 221; see Pacific Bay,
supra, 12 Cal.App.5th at 200 [plaintiff
could not obtain reasonable and customary rates under a quantum meruit theory
where Knox Keene only required payment per the patient’s EOC for non-emergency
services].) The Knox-Keene Act
creates a reasonable expectation from medical providers that they will be
reimbursed. This is because medical providers have a statutory duty to provide
“emergency [medical] services and care” to persons who are in “danger of loss
of life, or serious injury or illness.” (Health & Safety Code, § 1317(a).) Within
certain statutory periods, the health care service plan must reimburse the
hospital or other medical providers for the “emergency services and care
provided to its enrollees” as to (1) all care necessary for stabilization of
the enrollee, and (2) for all post-stabilization care the plan authorizes. (Health
& Saf. Code, § 1371.4(b) & (c); 28 CCR § 1300.71(g).) When the medical
providers are out of network, Knox Keene requires reimbursement of “reasonable
and customary value” of the emergency health care services rendered, utilizing
specified factors to determine the UCR. (28 CCR § 1300.71(a)(3)(B).) Therefore,
if Knox Keene applies to Defendants’ plans, then there would be an implied-in-law
right to recover for the reasonable value consistent with the regulations.
Previously, the Court agreed that the complaint did not state a cause of
action for quantum meruit because there were insufficient facts showing a
promise to pay reasonable and customary rates. The complaint initially pled
that Defendants were regulated by the Department of Insurance. (Compl.,
¶ 6.) Knox-Keene only applies to “health care service plans” rather than
insurance plans operating pursuant to the Insurance Commissioner. (Health &
Safety Code § 1345(e); see Ins. Code § 740(g) [excluding health care service
plans from the Insurance Code].) Knox-Keene does “not apply to: A person
organized and operating pursuant to a certificate issued by the Insurance
Commissioner unless the entity is directly providing the health care service
through those entity-owned or contracting health facilities and providers....”
(Health & Safety Code § 1343(e)(1).)
Thus, the pled facts in the complaint would potentially exclude Defendants
from the Knox Keene Act. As such, the providers could not reasonably infer that
Defendants agreed to pay UCR for emergency services based on the Knox Keene
Act.
The FAC now alleges that there is
an implied in law right to recover UCR under Knox Keene. Critically, the FAC
pleads that Defendants operate health care service plans with the subject
patients. “Health Care Service Plan” are defined as follows: “Health care
service plan” or “specialized health care service plan” means either of the
following:
(1) Any person
who undertakes to arrange for the provision of health care services to
subscribers or enrollees, or to pay for or to reimburse any part of the cost
for those services, in return for a prepaid or periodic charge paid by or on
behalf of the subscribers or enrollees.
(2) Any person,
whether located within or outside of this state, who solicits or contracts with
a subscriber or enrollee in this state to pay for or reimburse any part of the
cost of, or who undertakes to arrange or arranges for, the provision of health
care services that are to be provided wholly or in part in a foreign country in
return for a prepaid or periodic charge paid by or on behalf of the subscriber
or enrollee.”
(Health & Safety Code §1345(f).) Here, the FAC alleges that Blue Cross of California licensed by
the DMHC and is therefore subject to the Knox-Keene Act, and that Anthem Blue
Cross Life & Health Insurance is licensed by the Department of Insurance
“only” for their Disability and Life Insurance policies. (FAC ¶ 6.) The FAC
pleads that the health insurance plans “in this instant case are strictly
health care insurance policies governed by the DMHC… ABCL&H takes premiums
exclusively under these plans for health insurance. ABCL&H manages
exclusively the health care of those patients for those premiums and assumes a
shared responsibility for those claims by healthcare providers. It is not an
indemnity plan by any nature.” (FAC ¶ 6.) Thus, the FAC establishes as a matter of fact that Defendants were
operating certain health care service plans for the subject patients, even if ABCL&H
also provides other types of insurance.
Plaintiff is entitled to quantum meruit recovery consistent with the
Knox-Keene, which includes UCR for emergency services and authorized
post-stabilization services. It is undisputed that Plaintiff’s assignors
provided both emergency and related
post-stabilization services. (FAC ¶ 18.) Defendants failed to pay the
full UCR sums and paid far less than the Physicians' billed charges as required
for the alleged emergency services. (FAC ¶¶ 19-27.)
Accordingly, the demurrer is OVERRULED as to this cause of action.
Breach of “Implied-in-Law”
Contract
Defendants demur to the implied-in-law contract claim on the grounds that
the FAC fails to state facts showing an intent to form a contract, specific
provisions Defendants breached, and that ABCLH is governed by the DMHC or Knox
Keene. Defendants argue that the instant claim fails under an implied-by-fact
contract.
Notably, Plaintiff styles the contract claim as an “implied-in-law”
contract, largely relying on the same reasoning as the quantum meruit claim. A quasi-contract,
or contract implied in law, is an obligation created by law, without regard to
the intention of the parties, designed to restore the aggrieved party to their former
position through restitution. (Maglica v. Maglica (1998) 66 Cal.App.4th
442, 449.) Where one person renders services to another from which the latter
derives benefit, an obligation arises to pay their reasonable value on an implied
contract or quantum meruit for services rendered. (See 1 Witkin (2023) Summary
11th Contracts § 1072.) Whenever there is an invalid or unenforceable express
contract, recovery is nevertheless allowed on a quasi-contractual basis. (Id.)
Therefore, the instant quasi-contract claim substantially differs from a
traditional implied in fact contract, which is a contract manifested by
conduct. (Yari¿v. Producers Guild of America, Inc.¿(2008) 161 Cal.App.4th
172, 182.) Reviewing the elements of quasi contract claims and quantum meruit
claims, there is no
functional or technical difference between the two theories. Indeed, the instant
implied in law contract follows the same facts, law and analysis. (See FAC ¶¶
50-57.) The Court would thus find that the quasi-contract claim is equally
well-stated, even if repetitive.
Defendants recognize the distinction between implied-in-fact and
implied-in-law contracts, but still only analyze this cause of action as if it
were an implied-by-fact contract. To support a quasi-contract claim, Plaintiff
does not need to allege Defendants’ intent to form a contract, a meeting of the
minds, or a breach of specific provisions of the quasi-contract. As the Knox
Keene Act implies an agreement between the providers and Defendants in instant
action, the quasi-contract claim reiterating this theory is valid.
Accordingly, the demurrer is OVERRULED.
Defendants to file an answer within 10 days.