Judge: Alison Mackenzie, Case: 22STCV40838, Date: 2023-11-06 Tentative Ruling
Case Number: 22STCV40838 Hearing Date: November 6, 2023 Dept: 55
The
demurrer is overruled.
The
motion to strike is denied.
Twenty
days to answer.
I.
BACKGROUND
On 5/22/23, Plaintiff PMH Laboratory, Inc. (“Plaintiff”) filed a First
Amended Complaint alleging Causes of Action for:
1. UNFAIR COMPETITION LAW – CAL. BUS. &
PROF. CODE § 17200
2. NEGLIGENCE
3. UNJUST ENRICHMENT
4. QUANTUM MERUIT
5. GOODS AND SERVICES RENDERED
6. MONEY HAD AND RECEIVED
7. OPEN BOOK ACCOUNT
8. ACCOUNT STATED
9. VIOLATION OF CAL. HEALTH & SAF.
CODE § 1342.2
10. DECLARATORY AND INJUNCTIVE RELIEF.
According to the allegations, Plaintiff performed COVID-19 antibody and
PCR testing patient specimens at its laboratory, and Defendants California Physicians’
Service dba Blue Shield of California and Blue Shield of California Promise
Health Plan (collectively, “Defendants”) are a group health plan and/or a
health insurance issuer. Plaintiff alleges that Defendants failed to pay
Plaintiff $38,400,727.78 for all claims at reasonable rates submitted for
testing and services performed for Defendants’ insured patients, in violation
of California’s Unfair Competition Law (UCL); the Families First Coronavirus
Response Act (FFCRA) § 6001(a); the Coronavirus Aid, Relief, and Economic
Security Act (CARES) § 3202(a); and Cal. Health & Safety Code § 1342.2(a).
Defendants request the Court to sustain their demurrers to each Cause of
Action of Plaintiff’s First Amended Complaint (“FAC”), and to grant their
motion to strike parts of claims that are based on references to the FFCRA and
CARES acts.
II.
DISCUSSION
As
to the UCL claim, Defendants contend that an injunction requiring Defendants to
comply with the law as a general matter, “would be … invalid,” and it
would be impermissibly vague in the context of the statutorily regulated
healthcare industry, as to issues of paying reasonable amounts and the “cash
price” posted online, citing for example, Long Beach Mem’l Med. Ctr. v.
Kaiser Found. Health Plan, Inc., (2021) 71 Cal. App. 5th 323, 343, and 45
C.F.R. § 182.20 (defining “cash price”).
In response, Plaintiff advances the argument that, pursuant to CARES Act
§3202(a) and H&S §1342.2(a), Plaintiff seeks specific relief
requiring that Defendants: (1) reimburse Plaintiff at its listed cash price,
(2) turnover amounts earned that are being withheld, and (3) implement
procedures to cease improperly denying claims (referencing FAC, ¶¶ 164-67.) Plaintiff cites People ex rel. Gascon v.
HomeAdvisor, Inc. (2020) 49 Cal. App. 5th 1073, 1082 (“An injunction must
be sufficiently definite to provide a standard of conduct for those whose
activities are to be proscribed, as well as a standard for the court to use in
ascertaining an alleged violation of the injunction.”).
The
Court agrees with Plaintiff that its injunction relief is not based upon just
general compliance with law, but instead reimbursement of specified amounts,
based on website posting and reasonableness in sum (e.g., FAC, ¶¶ 30 (“PMH’s
website confirms that PMH charges a reasonable cash price for COVID-19 IgG
Antibody Testing of $125.00 and a reasonable cash price for SARS-CoV-2
(COVID-19) qPCR Testing of $195.00. As such, Defendants are required to pay
PMH’s billed price for COVID Testing.”), 41, 45 (“Defendants are required to
reimburse PMH $125.00 for COVID-19 antibody tests and $195.00 for COVID-19 PCR
tests that it provided to patients insured through Defendants.”), 54 (table of
specified dollar amounts), 79 (“Defendants underpaid certain of PMH’s claims
for COVID Testing by unilaterally choosing to pay less than the $125 price for
antibody tests and less than the $195 price for PCR tests that PMH reasonably
charged and lists its website.”) and 83 (“underpaying on claims is not less
than approximately $38,400,727.78….”)). Defendants’ case cited is off point on
the injunction issue because that case involved summary adjudication and a jury
trial. See Long Beach, 71
Cal.App.5th at 343 (“It is impossible for Kaiser to definitively know the
‘reasonable and customary value’ of emergency medical services until a jury
fixes that value,…”). For purposes of
this demurrer, the allegations that Plaintiff’s claimed prices are reasonable must
be considered true. “No matter how unlikely or improbable, plaintiff's
allegations must be accepted as true for the purpose of ruling on the
demurrer.” Kerivan v. Title Ins.
& Trust Co. (1983) 147 Cal.App.3d 225, 229.
Next,
Defendants argue that Plaintiff’s restitution argument is a disguised damages
claim that, as a matter of law, cannot support a UCL cause of action. Plaintiff counters that courts recognize UCL
claims by providers for restitution based on reimbursement of earned amounts
based on Knox-Keene Act violations. “Although the Department of Managed Health
Care has jurisdiction over the subject matter of [the Knox-Keene Act], its
jurisdiction is not exclusive and there is nothing in [the Act] to preclude a
private action under the UCL or at common law on a quantum meruit theory.” Bell v. Blue Cross of Cal., (2005) 131
Cal. App. 4th 211, 216-17; Coast Plaza Drs. Hosp. v. UHP Healthcare, (2002)
105 Cal. App. 4th 693, 699-705, 706-07) (UCL claim based for Knox-Keene Act
violation). Plaintiff also cites to trial court rulings regarding the CARES Act
but such rulings do not govern here. Venegas v. County of L.A. (2007)
153 Cal.App.4th 1230, 1244. Nor are citations to federal case law binding on
California courts. Analogous case law decided under the Knox-Keene Act supports
seeking statute-based reimbursement, as distinguished from damages, in an
action, without plaintiffs having to rely on any enforcement mechanism derived
from a cause of action for unfair business practices. See Bell, 131 Cal.App.4th at
221.
Finally,
Defendant asserts that the UCL claims fails because it only applies to competitors
and consumers. But a UCL claim does not require a competitor or consumer. Alch
v. Supr. Ct., (2004) 122 Cal. App. 4th 339, 402-03; Herr v. Nestle USA,
Inc., (2003) 109 Cal. App. 4th 779, 789.
Therefore,
the Court concludes that Plaintiff adequately pled injunctive relief, the
alleged reimbursement is authorized by statute, and the UCL claim survives
demurrer.
Defendants
argue that the Court should not recognize negligence-based tort duties to
reimburse medical providers under the statutes sued upon, by analogizing to the
similar Knox-Keene Act, and cite Long Beach., 71 Cal. App. 5th at 337-38. Plaintiff contends that negligence actions
for tort damages are available under Health and Safety Code Section 1342.2, which
is based on legislative intent to incentivize the public to seek COVID-19
testing services. Plaintiff further argues
that the pleading well alleges that Defendants have been negligent and per-se
negligent, by breaching duties arising under the specified statutes, and that
that plans owe a duty of care to providers under the Knox-Keene Act,
notwithstanding the economic loss rule.
“Violation
of a statutory duty to another may therefore be a tort and violation of a
statute embodying a public policy is generally actionable even though no
specific civil remedy is provided in the statute itself.” South Bay Building Ent., Inc. v. Riviera
Lend-Lease, Inc. (1999) 72 Cal. App. 4th 1111, 1123. Alternatively, a violation of a statute
embodying a public policy can be evidence offered to show negligence per se. Michael R. v. Jeffrey B. (1984) 158
Cal. App. 3d 1059, 1066-67. Such theories are viable here as matters of law.
The
economic loss rule is not a defense
but relates to whether to include tort damages as an element of damages. Greystone Homes, Inc. v. Midtec, Inc.
(2008) 168 Cal. App. 4th 1194, 1215. Economic
loss damages are available for negligent performance of an agreement for
services where criteria for special relationship are met, and the economic-loss
rule’s bar of damages for tort claims does not apply to non-contracting
parties. North American Chemical Co.
v. Sup. Ct. (1997) 59 Cal.App.4th 764, 785, 787. Here, Plaintiff factually alleges implied
agreements such as by conduct of Defendants paying on some of the claims, while
Defendants contend that no agreements were involved. Thus, the economic loss rule is not revealed
to have negated any cause of action here, while such allegations and disputes
remain for determinations by the fact-finder.
Moreover,
the Knox-Keene Act specifically enables negligence claims against plans. See, e.g.,
Bell, supra, 131 Cal.App.4th at 217 n. 7 (California Health and Safety Code “Section
1371.25 makes health care service plans and providers each responsible for
their own acts and omissions, and confirms the rule that both can be liable ‘on
the doctrines of equitable indemnity, comparative negligence, contribution, or
other statutory or common law bases for liability.’ ”). Further, the cite relied upon by demurring
party is legally distinguishable as not involving consideration of Section
1371.25, and factually distinguishable, as involving a trial and evidence and
different policy considerations based upon reimbursing providers of emergency
medical services. See Long Beach, supra, 71
Cal.App.5th at 337 (“The hospitals have
provided no evidence or argument suggesting that inadequate reimbursement for
emergency medical services under the Knox-Keene Act is a widespread
problem….”).
So,
here, the pleading legitimately alleges negligent acts based on statutory
duties, in a special relationship (e.g.,
FAC, ¶ 120 (“A special relationship was
created under the circumstances as PMH was the intended beneficiary of the
transactions with Defendants (which benefited Defendants and their insureds),
the harm to PMH was foreseeable, Defendants had a duty and a statutory duty to
PMH to pay for COVID Testing and Service, and PMH was harmed by Defendants’
negligence in carrying out the transactions.” )).
C. Issue: Whether
the Cause Of Action for Unjust Enrichment Fails.
Defendants
assert that unjust enrichment is not a cognizable cause of action, the related
doctrine of quasi-contract is not alleged, and the claim duplicates quantum
meruit. Plaintiff rebuts by stating that
cases have held that it is a cause of action, and demurrers do not lie based on
asserting duplicating claims.
There
is a split of authority as to whether unjust enrichment is a stand-alone cause
of action. E.g., Peterson v. Cellco Partnership (2008)
164 Cal.App.4th 1583, 1593. But see
Jogani v. Sup. Ct. (2008) 165 Cal.App.4th 901, 911 (“[U]njust
enrichment is not a cause of action.”). Similarly, there is a split of authority
as to whether a demurrer may be sustained as to a claim that duplicates
another. Holcomb v. Wells Fargo Bank,
NA (2007) 155 Cal.App.4th 490, 501 (negligence allegations duplicative of
negligent misrepresentation and thus “insufficient” to support a separate cause
of action). But see Blickman
Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890 (holding
that a demurrer may not be sustained on grounds that a claim is duplicative).
The
Court exercises its discretion to follow the line of authorities recognizing
unjust enrichment as a cause of action. The
Court also determines that unjust enrichment and quantum meruit have differing
elements and are not duplicative.
The
elements of a claim for unjust enrichment are:
1.
Receipt of a benefit;
2.
unjust or wrongful retention of the
benefit; and
3.
at the expense of another.
Lectrodryer v. SeoulBank (2000) 77 Cal. App.
4th 723, 726.
In
contrast, the different elements of a claim for quantum meruit are:
1.
Plaintiff’s 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, 449-50. The Court therefore allows Plaintiff’s claim of unjust enrichment
to proceed.
D.
Issue:
Whether Claims for Quantum Meruit and Goods and Services Rendered Fail to
State Facts Sufficient to Constitute Causes of Action.
First, Defendants argue that patient-initiated requests are not express
or implied requests by the plan member for an out-of-network provider to
provide the services (citing, e.g., Ochs v. PacifiCare of Cal., (2004)
115 Cal. App. 4th 782, 794 (2004)). Plaintiff contends that implied requests
for the services are alleged (referring to FAC, ¶¶ 46, 60, 74,78 and 127-130).
The Court agrees that the Complaint adequately alleges facts supporting a
conclusion that defendants impliedly agreed to reimburse Plaintiff (e.g., FAC, ¶
74 (“74. Defendants knew and understood that PMH was providing COVID Testing
and Services to Defendants insureds. Defendants communicated with PMH regarding
submitted claims, paid certain claims for COVID Testing and Services submitted
by PMH and were aware of the amounts that PMH charged for COVID Testing and
Services.”) and 76 (“Defendants did pay
certain claims for COVID Testing and Services submitted by PMH in full, thereby
acknowledging and establishing their obligations and duty to fully reimburse
PMH for COVID Testing and Services, and establishing a relationship,
understanding, implied promise and implied contract that Defendants would fully
reimburse/pay PMH’s claims for COVID Testing and Services, which PMH relied
upon.”)).
Second, Defendants contend that quantum meruit and goods and services
rendered are the same. But quantum meruit and
goods and services differ as to elements and pled facts regarding Defendants
being unjustly enriched, versus Defendants’ failing to pay for goods and
services (e.g., FAC, ¶¶ 129 and 134). The
elements of a claim for quantum meruit are already set forth above, and the
different elements of a claim for goods and services are:
1.
Defendant indebted to Plaintiff.
2.
in a certain amount; and
3.
goods or services provided to
defendant.
Farmers Ins.
Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.
Third, Defendants maintain that Plaintiff fails to plead facts sufficient
to show that the services conferred any direct benefit to them as distinguished
from benefits to the patients. The pleading alleges that Defendants benefitted
from Plaintiff’s services (e.g., FAC, ¶ 75 (“75. Defendants received monies to
pay for claims, including claims for COVID Testing and Services provided to its
insureds, and Defendants benefitted from the COVID Testing and Services that
were provided by PMH.”)). Moreover, case
law decided in the context of the Knox-Keene Act, as to plan reimbursement for
providing emergency services, is supportive of such allegations. Cf., e.g., Bell, supra, 131 Cal.App.4th at
221 (“‘He who takes the benefit must bear the burden” (Civ. Code, § 3521), and
he who has ‘performed the duty of another by supplying a third person with
necessaries, although acting without the
other’s knowledge or consent, is entitled to restitution from the other … Dr.
Bell's quantum meruit claim is sufficient for pleading purposes and thus is not
subject to demurrer. ”). An opinion,
relied upon in the reply, is factually distinguishable, in that it opined about
plaintiffs (doctors) performing express contracts in order to benefit
themselves. See California
Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94
Cal.App.4th 151, 174 (“any benefit conferred upon defendants by Physicians was
simply an incident to Physicians’ performance of their own obligations to
Intermediaries under the Intermediary-Physician Agreements.”). By contrast, in this case Plaintiff is
alleged to have taken on statutorily encouraged tasks, to assist with
government-sponsored public policy to counter a public health emergency, in
exchange for the statutory rights of reimbursement.
Thus, the Court determines that Defendants’ issues do not negate the
claims of Quantum Meruit and Goods and Services Rendered.
E.
Issue:
Whether the Claim for Money Had and Received is Sufficiently Alleged.
Defendants
argue that the general elements of a common count are not alleged. Also, Defendants state that Plaintiff has not
alleged any money received by Defendants was for the use of Plaintiff or that Defendants
are “indebted” to Plaintiff based on any contract.
As
to common counts, there is no obligation to allege the general elements of a
common count, where another claim is alleged—Money Had and Received. Courts have repeatedly rejected arguments
regarding failures to state a claim, where the pleadings did not really include
the cause of action being attacked. See
Hahn v. Mirda (2007) 147 Cal.App.4th 740, 749 (“Appellant pleaded a
cause of action for fraud, not a cause of action for damages based on lack of
informed consent. It is irrelevant that Ms. Hahn may not have been able to
state a cause of action based on a theory of liability she did not allege.”). The
allegations suffice for a claim for Money Had and Received. Farmers Ins.
Exchange v. Zerin (1997) 53 Cal. App. 4th 445, 460 (elements
are Defendant is indebted to plaintiff and for money had and received by
defendant for the use of plaintiff) (see, e.g., FAC, ¶ 137 (“Defendants,
through payments made by their insureds, received money that was intended, in
part, to be used for the benefit of PMH, an out-of-network health care provider
that provided COVID Testing and Services to the insureds.”)).
Furthermore, the pleading adequately alleges that
money received by defendants was payments by their insureds, and was intended
to be used for Plaintiff’s benefit because the law requires payment for COVID
Testing and Services provided to the insureds
(e.g., First Amended Complaint, ¶ 137 (“Defendants, through payments
made by their insureds, received money that was intended, in part, to be used
for the benefit of PMH, an out-of-network health care provider that provided
COVID Testing and Services to the insureds.”)).
For those reasons, the Court rejects the defense
attacks on the Claim for Money Had and Received.
F. Issue: Whether the Cause of Action for Open Book
Account is Adequately Alleged.
Defendants contend that no detailed statement of transactions is alleged
based upon any contract between the parties or fiduciary relationship. Plaintiff contends that it sufficiently
alleged that the conduct of the Parties constituted “financial transactions
with each other involving payment for health care services,” that “PMH, in the
regular course of business, kept an electronic account of the debits and
credits involved in the financial transactions between PMH and Defendants,” and
that “Defendants owe PMH money on the account in an amount of not less than
approximately $38,400,727.78” (quoting
from FAC, ¶¶ 140-43).
The elements of a claim for Open
Book Account are:
1.
Detailed statement which constitutes
the principal record of one or more transactions between a debtor and a
creditor arising out of a contract or some fiduciary relation;
2.
shows the debits and credits in
connection therewith, and against whom and in favor of whom entries are made;
3.
entered in the regular course of
business as conducted by such creditor or fiduciary;
4.
kept in a reasonably permanent form
and manner; and
5.
in a bound book, on a sheet or sheets
fastened in a book or to backing but detachable therefrom, on a card or cards
of a permanent character, or is kept in any other reasonably permanent form and
manner.
CCP §337a; Tsemetzin v. Coast
Federal Savings & Loan Assn. (1997) 57 Cal. App. 4th 1334, 1343.
In ruling upon demurrers, courts treat as being true “not only the
complaint’s material factual allegations, but also facts that may be implied or
inferred from those expressly alleged.” Poseidon
Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th
1106, 1111-12. Accord Schauer v.
Mandarin Gems of Cal., Inc. (2005) 125 Cal. App. 4th 949, 953.
Here, the pleading sufficiently alleges and infers detailed statements of
transactions, contractual intent and a contractual relationship, as follows:
140. PMH restates and incorporates by reference, as though fully set
forth herein, the allegations contained in each of the paragraphs above.
141. PMH and Defendants had financial transactions with each other
involving the payment for health care services performed by PMH for the benefit
of Defendants and their insureds.
142. PMH, in the regular course of business, kept an electronic account
of the debits and credits involved in the financial transactions between PMH
and Defendants.
143. Defendants owe PMH money on the account in an amount of not less
than approximately $38,400,727.78.
(First Amended
Complaint, ¶¶ 140-143.)
Given such allegations, and reasonable inferences therefrom, the Court
overrules the demurrer as to the Cause of Action for Open Book Account.
G.
Issue:
Whether the Cause of Action for Account Stated Fails.
Defendants’ position, as to Account Stated, is that no agreement was
alleged as to the final balance due. Plaintiffs
contend that the pleading sufficiently alleges that, “by beginning to pay PMH
for its COVID Testing and Services claims” and “other words and conduct,”
Defendants “agreed that the amount PMH claimed to be due from Defendants herein
is the correct amount owed for each claim for Testing and Services” and “promised
to pay PMH the stated amount owed for each claim” (quoting from First Amended
Complaint, ¶¶ 146-158).
The elements of a cause of action
for Account Stated are:
1.
An account statement of indebtedness
between the parties;
2.
the balance or sum due;
3.
the time of the statement;
4.
the place of the statement;
5.
the debt was found, or the debtor
expressly or impliedly promised to pay the amount.
Truestone, Inc. v. Simi West Industrial Park II (1984) 163 Cal.App.3d 715, 725 (“‘it must appear that at the time of the
statement an indebtedness from one party to the other existed, that a balance
was then struck and agreed to be the correct sum owing from the debtor to the
creditor, and that the debtor expressly or impliedly promised to pay to the
creditor the amount thus determined to be owing.’”); Block v. D. W.
Nicholson Corp. (1947) 77 Cal. App. 2d 739, 746 (“‘An account stated
requires that there be an acknowledgment of a previous indebtedness, since such
indebtedness constitutes the consideration upon which the new contract is
based. It is also required that there be an agreement that the balance is
correct, and a promise for the payment of such balance. This promise may be either express or
implied.’").
Applying those claim elements, the Court agrees with Plaintiff that the
pleading adequately alleges that defendants impliedly agreed to pay the amounts
claimed by Plaintiff as being correct (e.g., FAC, ¶¶ 146, 147).
H.
Issue:
Whether the Cause of Action for Violation of Health and Safety Code
Section 1342.2 Fails.
Defendants argue that no private right of action exists under Health and
Safety Code Section 1342.2, including because the statute specifically vests
the California Department of Managed Health Care (DMHC), with enforcement
authority for COVID-19 testing services coverage (citing, e.g., Mayron v. Google LLC, (2020) 54 Cal. App. 5th 566, 571, and the UCL
claim alone cannot cause an enforcement mechanism (citing Rose v. Bank of
Am., N.A., (2013) 57 Cal. 4th 390, 397 (“by borrowing requirements from
other statutes, the UCL does not serve as a[n] … enforcement mechanism”)). Plaintiff responds that controlling
authorities regarding other portions of the Knox-Keene Act, and guidance from
the DMHC, are to the contrary, and support an implied private right of action.
California cases have
implied a private right of action when a defendant has a statutory obligation,
and it would be unenforceable, even when a regulatory agency has some
jurisdiction over the obligation. See Goehring v. Chapman University (2004) 121
Cal.App.4th 353, 379 (holding that the legislature intended to confer a private
right of action for statute regarding unaccredited law schools despite no
express provision providing for such a right of action).
The legislative history of Health
and Safety Code Section 1342.2 shows the targeting of a “public purpose of
ensuring that as many individuals as possible receive necessary testing and
vaccination in response to a pandemic.” CA LEGIS 729 (2021), 2021 Cal. Legis.
Serv. Ch. 729 (S.B. 510) (WEST). “The
Governor approved SB 510 [Pan, D-Sacramento] (Chapter 729, Statutes 2021) on
October 8, 2021, to require a health care service plan contract or a disability
insurance policy to cover the costs for COVID-19 diagnostic and screening
testing and health care services related to testing for COVID-19, or a future
disease when declared a public health emergency by the Governor of the State of
California.” 33 No. 8 Cal. Ins. L. &
Reg. Rep NL 8, available on Westlaw (citing Health and Safety Code
Sections 1342.2 and 1342.3 and Insurance Code Sections 10110.7 and
10110.75.) (The insurance code sections
essentially repeat provisions of Section 1342.2.) See also generally 2
Witkin, Summary 11th Insurance § 190C (2023).
As a matter of legislative
intent, without enablement of adjudication and enforcement of reasonable
reimbursements to providers, the plans’ obligation could be largely illusory,
and providers could be deterred and not encouraged to assist with legislative
policy to increase Covid testing and vaccination services against Covid during
an emergency pandemic.
Turning to statutory
interpretation, the Court notes that Section 1342.2 states that plans “shall” reimburse
providers for all testing or services in amounts that are reasonable. “Absent any indicia of a contrary legislative
intent, the word ‘shall’ is ordinarily construed as mandatory, whereas ‘may’ is
ordinarily construed as permissive.” In
re J.N. (2006) 138 Cal. App. 4th 450, 457 n.4.
There is no governing
California opinion addressing a private right of action under the California
statute. The Ninth Circuit Court of
Appeal recently held that there is no private right of action for a provider to
sue an insurer under the federal CARES and FFCRA Acts, addressing similar
topics of Covid services reimbursement, but involving some different statutory
language as compared to the California statute. Saloojas, Inc. v. Aetna
Health Of California, Inc. (2023) 80 F.4th 1011, 1013, 1015-16. State
courts are not bound by decisions of lower federal courts as to federal
statutory law. Brown v. Ralphs
Grocery Co. (2011) 197 Cal.App.4th 489, 498. California courts seem to be
more inclined to imply private rights of action even where enforcement is
expressly given to an administrative agency.
E.g., Goehring,
supra, 121 Cal.App.4th at 379.
Like the federal statutory
counterparts, California’s statutory Section 1342.2 gives limited authority to
the California Department of Managed Health Care, without expressly providing
for exclusive determination or enforcement of reasonable reimbursements to the
providers by the California Department of Managed Health Care and the
California Attorney General: “The director may issue guidance to health care
service plans regarding compliance with this section.” “The department shall
hold health care service plans accountable for timely access to services
required under this section and coverage requirements established under federal
law, regulations, or guidelines.” H
& S C. § 1342.2(c), (g).
Unlike federal law,
differences in California law support a conclusion of a private right of
action. Specifically, the California
version of statutory Covid reimbursements differs from federal versions,
including by adding a “reasonable” factor to the amount determination, which
relates to a traditional court function— i.e., ascertaining disputed monetary
amounts. Cf., e.g., Bell,
supra, 131 Cal.App.4th 211, 222
(“the obligation to ‘reimburse’ imposed by [California Health and Safety
Code] section 1371.4. is to reimburse a reasonable sum, the definition of which
will be adjudicated by Dr. Bell's prosecution of this lawsuit against Blue
Cross.”). In contrast, federal statutory
law can avoid amount disputes, because it specifies the reimbursement amount as
equaling the cash price of a COVID-19 test made available to the public under
Section 3202(b) of the CARES Act. Where
the provider has not complied with the requirement, and the plan and provider
did not arrive at a negotiated rate for the test, Section 3202(a) is silent,
but as discussed in Saloojas, 80 F.4th at 1015-16, the prescribed enforcement
mechanism is section 3202(b) of the CARES Act, granting the Secretary of Health
and Human Services (HHS) authority to impose civil monetary penalties on
providers to compel them to comply with the requirement to publicly post on the provider’s website the cash price for
the COVID-19 diagnostic test. That whole
statutory scheme makes in possible for the HHS to almost insure that providers
qualify for reimbursement in a set amount, subject to the less likely
possibility that providers do not respond to the HHS penalties for encouraging
them to publicly post on the provider’s website the cash price for reimbursement,
in the provider’s own interests.
While the
Covid-reimbursement part of the Knox-Knee Act did not specify whether providers
have a private right to sue, the Legislature presumably passed that with
existing law in mind, which expressly recognizes that right in relation to the
Knox-Keene Act. See, e.g., Bell, supra, 131 Cal.App.4th
at 221 (“We likewise reject Blue Cross's
contention that Dr. Bell has failed to state a cause of action under the
UCL,…”); Blue Cross of California,
Inc. v. Superior Court (2009) 180 Cal.App.4th 1237, 1257 (“private plaintiffs can pursue UCL actions
based on violations of the Knox-Keene Act.”).
"The legislature is … presumed to have enacted legislation with
existing law in mind.” Harris v.
Verizon Communications (2006) 141 Cal.App.4th 573, 585, disapproved on other grounds by Azure Ltd. v. I-Flow Corp. (2009)
46 Cal.4th 1323, 1336.
The
Court therefore reasons that Plaintiff has a private right of action under one
or more of the statutes alleged in the Complaint, and almost certainly as to
the California statutory version, considering such analogous California case
law preexisting the legislation.
I.
Issue: Whether the Causes of Action for
Declaratory and Injunctive Relief Fail.
Defendants
assert that the declaratory and injunctive relief cause of action is entirely
derivative of Plaintiff’s UCL claim and fail for the same reasons. In the
reply, they add that only past wrongs are alleged, since the obligations were
in effect only during the federal public health emergency ending May 11, 2023,
citing People v. Zemek, (2023) 93 Cal. App. 5th 313, 327. As to the issues raised in the opposition, Plaintiff
counters that the statutory claims are viable, and declaratory relief is
appropriate for determining issues of statutory interpretations, such as the
dispute as to rights of reimbursement under CARES Act §3202 and H&S
§1342.2. Plaintiff cites Von Durjais
v. Bd. of Trustees, (1978) 83 Cal. App. 687.
The
Court already determined that the UCL claim does not fail, as already addressed
above, under issue “B.”
As
to the mootness issue, the Court concludes that allegedly unpaid obligations do
not moot past wrongs. “[I]njunctive relief lies only to prevent threatened
injury and has no application to wrongs that have been completed.” Huntingdon Life Sciences, Inc. v. Stop
Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal. App. 4th 1228,
1266. See also Madrid v. Perot Systems Corp. (2005)
130 Cal. App. 4th 440, 465 (“UCL has not altered … injunctive relief, which
requires a threat that the misconduct to be enjoined is likely to be
repeated….”). Cf. also Gafcon, Inc. v. Ponsor & Assocs.
(2002) 98 Cal. App. 4th 1388, 1404 (“declaratory relief operates prospectively
only, rather than to redress past wrongs….”).
In the instant matter, the claims allegedly still remain unpaid, after
effectively accruing during the federal public health emergency.
In
sum, the Court decides that the UCL claim does not fail and issues remain
ongoing in support of injunctive relief.
J. Issue: Whether Pleading Paragraphs 96, 99, 100,
101, 103, 104, 105, 108 and 110 Should
Be Stricken.
As
to the First Cause of Action—UCL—Defendants reason that Plaintiff’s allegations
are defective insofar as they relate to the FRCRA, and CARES. Specifically, they state that Plaintiff did
not allege it charged its cash prices to any patients seeking
to pay in cash for COVID-19 testing as distinguished from charging defendants,
and Plaintiff failed to adequately allege it posted cash prices online in
accordance with 45 C.F.R. 182.10 and 182.40. Plaintiff points out that it alleged that it
listed the cash price for its COVID tests on its website pursuant to
§3202(a)(2), and there is no statutory requirement to allege that it charged
its cash price to non-parties.
The
elements of a claim to allege for Unfair Business Practices are minimal, as
follows:
1.
A business practice;
2.
that is unfair, unlawful or
fraudulent; and
3.
authorized remedy.
Bus. & Prof.
Code § 17200; Paulus v. Bob Lynch
Ford, Inc. (2006) 139 Cal.App.4th 659, 676.
Further,
the elements to allege of a claim for injunctive relief minimal, as follows:
1.
Wrongful act stating a cause of
action; and
2.
basis for equitable relief (e.g.,
ordinarily irreparable harm must be threatened, or a remedy at law is
inadequate).
Brownfield v. Daniel Freeman Marina Hosp. (2d Dist. 1989) 208 Cal. App. 3d 405, 410.
Additionally,
the elements of a cause of action for declaratory relief are:
1.
Person interested under a written
instrument or a contract; or
2.
a declaration of his or her rights or
duties;
a.
with respect to another; or
b.
in respect to, in, over or upon
property; and,
3.
an actual controversy.
CCP §1060; Ludgate
Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal. App. 4th 592, 605-06.
As
to statutory claims, parties must plead facts demonstrating a right to recover
under the particular statute. G.H.I.I.
v. MTS, Inc. (1983) 147 Cal.App.3d 256, 273. Complainants need only allege a prima facie
violation of a statute, and need not address the statutory exceptions. See Ribas v. Clark (1985) 38 Cal. 3d
355, 362 (“because the complaint alleges a prima facie violation of section
631, subdivision (a), it is defendant's burden on this demurrer to show on the
face of the pleadings that she comes within the exception of subdivision (b) of
the statute.”).
Those
elements are sufficiently alleged here, and not negated by the defense
contentions raised. The alleged state
and federal statutes do not require charging cash prices to patients as a
prerequisite for reimbursement, as there is no statutory mention of that. Cf.
Prospect, supra, 45 Cal.4th at 506 (“These provisions strongly suggest that
doctors may not bill patients directly when a dispute arises between doctors
and the HMO's.”). Judges should not add
statutory language that is not there. Yao
v. Sup. Ct. (2002) 104 Cal. App. 4th 327, 333.
While
sections of the Code of Federal Regulations impose detailed requirements for
posting cash prices on a provider’s website (45 C.F.R. §§ 182.40 and 182.10),
the great detail added to the statutes appears to go against expressed
legislative intent to require simply posting cash prices publicly on the
website. Judges will state the true
meaning of a statute ... “‘even though this requires the overthrow of an
earlier administrative construction.’” Board
of Trustees of Cal. State Univ. v. Public Employment Relations Bd. (2007) 155 Cal.App.4th 866, 876-77 (“the plain meaning of sections …
does not support PERB's interpretation.”).
Accord Plumbers And
Steamfitters, Local 290 v. Duncan
(2007) 157 Cal.App.4th 1083, 1089 (“Nothing in the language of the
statute or the legislative history supports the interpretation….”). “The administrative construction of a statute
is entitled to weight unless a contrary legislative purpose is apparent.” Goehring v. Chapman University (2004)
121 Cal.App.4th 353, 383. The Court
concludes that the pleading satisfies the statutory requirements notwithstanding
added ones in the Code of Federal Regulations. Also, as to the Knox-Keene Act,
case law supports such remedies for analogous violations of the Knox-Keene
Act. Cf., e.g., Bell, supra, 131 Cal.App.4th at
221 (addressing allegations of provided
medical emergency services and concluding, “[f]or pleading purposes, Dr. Bell's
complaint (including his declaratory relief cause of action) is more than
adequate.”).
In
sum, the Court determines that one or more statutory violations have been
sufficiently pled in support of Unfair Business Practices, as further addressed
above, and thus denies the motion to strike.
III.
CONCLUSION
The
Court overrules the demurrer and denies the motion to strike, allowing twenty
days to answer.