Judge: Armen Tamzarian, Case: 24STCV15242, Date: 2024-10-03 Tentative Ruling
Case Number: 24STCV15242 Hearing Date: October 3, 2024 Dept: 52
Tentative Ruling
Defendants Blue Shield of California Life & Health
Insurance Company and California Physicians’ Service dba Blue Shield of
California’s Demurrer
Defendants Blue Shield of
California Life & Health Insurance Company and California Physicians’
Service dba Blue Shield of California demur to all 14 causes of action alleged
by plaintiff DoctorNow, Inc.
Request
for Judicial Notice
Plaintiff requests judicial
notice of an order by the superior court in another case. The order is not
relevant or necessary to the court’s analysis.
(See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998)
18 Cal.4th 739, 748, fn. 6; Appel v.
Superior Court (2013) 214 Cal.App.4th 329, 342, fn. 6.)
Plaintiff’s request for
judicial notice is denied.
1st
Cause of Action: Unfair Competition Law
Defendants’ papers do not clearly demur
to the first cause of action. They refer
to plaintiffs’ cause of action for violation of Health and Safety Code section 1342.2
as the “first cause of action.” (Memo,
pp. 3-4.) It is not the first cause of
action. It is the 11th cause of
action. (The body of the complaint erroneously
has two seventh causes of action and therefore incorrectly labels violation of
Health and Safety Code section 1342.2 the 10th cause of action.) The first cause of action alleges violation
of the unfair competition law.
Assuming defendants meant to
demur to the first cause of action, plaintiff alleges sufficient facts for
unfair competition. Defendants argue
only that Health and Safety Code section 1342.2 does not provide a private
right of action. Even if correct, that is
irrelevant to the first cause of action.
The unfair competition law “
‘borrows’ violations from other laws by making them independently actionable as
unfair competitive practices.” (Korea
Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134,
1143.) “[A] private plaintiff may bring
a UCL action even when ‘the conduct alleged to constitute unfair competition
violates a statute for the direct enforcement of which there is no private
right of action.’ ” (Kasky v. Nike,
Inc. (2002) 27 Cal.4th 939, 950.)
2nd
Cause of Action: Negligence
Plaintiff does not allege sufficient
facts for the element of duty. “[T]here
is no legal duty” in tort “not to negligently or intentionally underreimburse a
hospital or other medical provider.” (Long
Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc. (2021)
71 Cal.App.5th 323, 341 (Long Beach Memorial).) Imposing a tort duty “not to underreimburse”
a medical provider “runs afoul of the longstanding principle that tort
‘liability … for purely economic losses is “the exception, not the rule.” ’ ” (Id. at pp. 337-338.)
Plaintiff’s second cause of
action alleges defendants violated statutory duties requiring them “to
reimburse DoctorNow … the cash prices for COVID Testing listed on DoctorNow’s
public internet website.” (Comp., ¶
102.) That is equivalent to the legal
duty the Court of Appeal rejected in Long Beach Memorial.
Plaintiff’s reliance on Centinela
Freeman Emergency Medical Associates v. Health Net of California, Inc.
(2016) 1 Cal.5th 994 (Centinela) is misplaced. In Centinela, the California Supreme
Court recognized a duty “to fill a gap in the provisions of the Knox-Keene Act
that would have otherwise allowed health plans to make reckless—and hence ‘morally
blameworthy’—delegations of the duty to pay and thereby to leave hospitals and
other medical providers ‘without any reasonable prospect of payment’ despite
their statutory entitlement to such remuneration.” (Long Beach Memorial, supra, 71
Cal.App.5th at pp. 340-341.) “Centinela
did not purport to create a free-floating tort duty attaching to every
provision of the Knox-Keene Act, including those where there is no gap, such as
in the context of this case, where the hospitals and other medical providers
already have the right to sue for quantum meruit to recover any underpayment.” (Id. at p. 341.)
Centinela is
distinguishable from the present case. There,
the court held “a health care service plan may be liable to noncontracting
emergency service providers for negligently delegating its financial responsibility
to an IPA or other contracting medical provider group that it knew or should
have known would not be able to pay for emergency service and care provided to
the health plan's enrollees.” (Centinela,
supra, 1 Cal.5th at pp. 1001-1002.) Under the Knox-Keene Act, the plaintiff
providers in Centinela were obligated to provide emergency services regardless
of whether there was a reasonable prospect of being paid for their
services. By contrast, plaintiff DoctorNow,
Inc. had no obligation to provide its services. DoctorNow, Inc. was free to refuse services to
defendant’s insureds unless and until defendant negotiated a contract. Further, if plaintiff persuades the trier of
fact that defendant violated Health and Safety Code section 1342.2, it has a
remedy under the Unfair Competition Law.
Likewise, as explained below, if plaintiff persuades the trier of fact
that defendant made certain false promises, plaintiff may seek damages pursuant
to its fraud and promissory estoppel causes of action. Accordingly, there is no gap that needs to be
filled by recognizing a tort duty.
3rd
Cause of Action: Fraud
Plaintiff alleges sufficient facts
for this cause of action. Fraud by intentional
misrepresentation requires: (1) a misrepresentation of fact; (2) knowledge of
falsity; (3) an intent to defraud; (4) justifiable reliance; and (5)
damages. (Ryder v. Lightstorm
Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1079.) “[F]raud must be pled specifically.” (Lazar v. Superior Court (1996)
12 Cal.4th 631, 645.) “ ‘This
particularity requirement necessitates pleading facts which
show how, when, where, to whom, and by what means the representations were
tendered.’ ” (Ibid.) “A plaintiff’s burden in asserting a fraud
claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the
names of the persons who made the allegedly fraudulent representations, their
authority to speak, to whom they spoke, what they said or wrote, and when it
was said or written.’ ” (Ibid.)
Plaintiff specifically alleges each element. Plaintiff alleges the misrepresentation
occurred in an email from “Joan Russo, Senior Manager of Regulatory Filing.” (Comp., ¶ 118.) Plaintiff alleges that on August 16, 2021, Russo
sent plaintiff an email stating: “[T]he
Plan does not dispute that we are mandated to cover an out-of-network claim for
eligible COVID diagnostic testing services based on the provider’s posted cash
price. We have requested that our Claims
department complete an audit of all claims submitted by DoctorNow for the above
referenced testing procedures and to reprocess any claims that have been
incorrectly denied or paid based on an allowance other than the posted cash
price.” (Id., Ex. B, p. 2.) The email further included a table of various
CPT codes and columns labeled “Posted Price” and “Payment Required @ Posted
Price.” (Id., p. 3.) In the row for the relevant CPT code for
COVID testing, the table provides the “Posted Price” was “$295” and “YES”,
payment at the posted price was required.
(Id. at p. 4.)
Plaintiff alleges, “Relying on these statements
DoctorNow continued to provide services to Defendants’ Insureds. From August 17, 2021, the day after the
representation, to May 11, 2023, the end of the Federal Public Health
Emergency, DoctorNow performed approximately 85,000 tests for Defendant’s
Insureds, relying on these representations.”
(Comp., ¶ 121.) Plaintiff alleges
it suffered damages because “Defendants abandoned the published cash price
policy and began denying claims as well as underpaying thousands of claims”
totaling a balance of “$22,995,866.83.”
(Ibid.)
Defendants
argue, “The complaint does not plausibly allege knowingly false statements made
with the intent to defraud Plaintiff.”
(Memo, p. 6.) Unlike federal
court proceedings, California civil procedure has no plausibility requirement
for pleading. The
court must accept factual allegations as true regardless of whether the court
finds them plausible. (Hacker v.
Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [on
demurrer, “the facts alleged in the pleading are deemed to be true, however
improbable they may be”].) Allegations of
knowledge and intent are ultimate facts sufficient to withstand challenge by
demurrer. (See, e.g., Perkins v.
Superior Court (1981) 117 Cal.App.3d 1, 6 [allegations that defendants
acted “wrongfully and intentionally” and “in retaliation” sufficient to support
prayer for punitive damages]; Johnson v. Casetta (1961) 197 Cal.App.2d
272, 276 [“an allegation of knowledge of incompetency is an allegation of
ultimate fact”]; Rosin v. Superior Court (1960) 181 Cal.App.2d 486, 490
[“It has been suggested that the allegation of petitioner’s intent in removing
the children from the jurisdiction is only a conclusion. . . . This is an allegation of fact, not a mere
conclusion.”].)
Defendants further argue plaintiff did not adequately
allege Russo’s authority to speak on behalf of the entity defendants. Plaintiff alleges sufficient facts to
withstand demurrer. It alleges Russo was
“Senior Manager of Regulatory Filing.” (Comp., ¶ 118.) In her email to plaintiff, she wrote that her
“earlier response was premature as we had not yet finished our audit and
consideration of your claims. [¶] Please accept the attached version as our
final response.” (Comp., Ex. B, p. 1.) Giving a “final response” to supersede a
“premature” response made before “finish[ing] our audit” indicates she had sufficient
authority to speak for her employer. A
reasonable trier of fact could find Russo had the authority necessary to speak
for and bind defendants.
Defendants rely on Mannion v. Campbell Soup Co.
(1966) 243 Cal.App.2d 317, 320-321. That
case is distinguishable because the Court of Appeal reviewed a judgment based
on evidence, not the pleadings. (Id.
at pp. 318-319.) The court held there
was no “substantia[l] evidence” of a person’s “actual or ostensible authority
to bind the company to the contract found by the [trial] court.” (Id. at p. 321.) On demurrer, the court cannot make such a
finding based solely on the complaint.
4th
Cause of Action: Negligent Misrepresentation
Plaintiff does not allege
sufficient facts for negligent misrepresentation. “To be actionable, a negligent
misrepresentation must ordinarily be as to past or existing material
facts. ‘[P]redictions as to future
events, or statements as to future action by some third party, are deemed
opinions, and not actionable fraud.’ ” (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158.) There is no cause of action for a “negligent
false promise.” (Id. at p. 159.)
Plaintiff alleges defendants
negligently misrepresented “that they would cover and pay in full the costs for
COVID-19 Testing and Services” and that plaintiff’s “cash rate would be
honored.” (Comp., ¶ 131.) That is a promise, not an actionable statement
of past or existing material fact. It is
actionable only under the theory of intentional misrepresentation or
“promissory fraud.” (Lazar v. Superior Court,
supra, 12
Cal.4th at p. 638.)
5th
Cause of Action: Unjust Enrichment
Plaintiff does not allege
sufficient facts for the fifth cause of action because “California does
not recognize a cause of action for unjust enrichment.” (Hooked Media Group, Inc. v. Apple Inc.
(2020) 55 Cal.App.5th 323, 336; accord Everett v. Mountains Recreation &
Conservation Authority (2015) 239 Cal.App.4th 541, 553.)
6th Cause of
Action: Quantum Meruit
Plaintiff does not allege
sufficient facts for this cause of action.
“To recover on a claim for the reasonable value
of services under a quantum meruit theory, a plaintiff must establish both that
he or she was acting pursuant to either an express or implied request for
services from the defendant and that the services rendered were intended to and
did benefit the defendant.” (Ochs v. PacifiCare of
California (2004) 115 Cal.App.4th 782, 794.) Here, plaintiff does not allege sufficient
facts to show an express or implied request for services.
Plaintiff alleges, “Defendants knew
and understood that DoctorNow was providing COVID-19 Testing and Services to
Defendants’ insureds. Defendants
communicated with DoctorNow regarding submitted claims, paid certain claims for
COVID-19 Testing and Services submitted by DoctorNow and were aware of the
amounts that DoctorNow charged for COVID-19 Testing and Services.” (Comp., ¶ 61.) It further alleges, “Defendants, through their conduct,
including through the payment of certain claims for COVID-19 Testing and
Services submitted by DoctorNow, requested that DoctorNow perform and continue
to perform COVID-19 Testing and Services for Defendants’ benefit.” (¶ 143.) These conclusory allegations are
insufficient. Paying for services after
they are rendered is not the same thing as requesting services.
Common Counts: 7th,
8th, 9th, and 10th Causes of Action
Plaintiff asserts common count
claims for goods and services rendered, money had and received, open book
account, and account stated. “ ‘ “A common count is proper whenever the
plaintiff claims a sum of money due, either as an indebtedness in a sum
certain, or for the reasonable value of services, goods, etc., furnished. It
makes no difference in such a case that the proof shows the original
transaction to be an express contract, a contract implied in fact, or a
quasi-contract.” [Citation.]’ ” (Utility
Audit Co., Inc. v. City of Los Angeles (2003) 112 Cal.App.4th 950, 958.) Plaintiff fails to state facts sufficient to
support a common count because it does not allege facts indicating the parties
had an express, implied in fact, or quasi-contract. (See 1 Witkin, Summary of Cal. Law (11th ed.
2017), Contracts, §§ 102, 103, pp. 145-148 [discussing differences between
express contracts, implied in fact contracts, and quasi-contracts].)
11th Cause of Action:
Violation of Health & Safety Code § 1342.2
Plaintiff does not allege sufficient facts
for this cause of action. Health &
Safety Code section 1342.2 does not permit a private right of action. “A private party can sue for violation of a statute
only where the statute in question allows it.”
(Mayron v. Google LLC (2020) 54 Cal.App.5th 566, 571.) “[T]here must be a ‘clear, understandable,
unmistakable’ indication of intent to allow a private right of action. It is not enough that the statutory text
suggests such a right.” (Id. at
pp. 571-572.)
Health and Safety Code section 1342.2,
subdivision (a)(4) requires “a health service plan” to reimburse health care
providers for COVID-19 tests. Subdivision
(g) provides, “The [D]epartment” of Managed Health Care “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.” (Id., subd.
(g).) The statute does not expressly
provide that health care providers may sue to enforce it. No provision in section 1342.2 constitutes a
clear, understandable, and unmistakable indication of intent to allow a private
right of action.
Plaintiff relies on authority permitting
private actions for other provisions of the Knox-Keene Act. Those cases, however, do not support the
proposition that private plaintiffs can sue directly for violations of
the Health and Safety Code. They instead
permit claims for quantum meruit for emergency services or unfair competition
arising from the Health and Safety Code.
(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”]; Bell v. Blue Cross of California, supra,
131 Cal.App.4th at p. 216 [“Although the Department of Managed Health Care has
jurisdiction over the subject matter of section 1371.4 …, its jurisdiction is
not exclusive and there is nothing in section 1371.4 or in the Act generally to
preclude a private action under the UCL or at common law on a quantum meruit
theory”]; Coast Plaza Doctors Hospital v. UHP Healthcare (2002) 105
Cal.App.4th 693, 706 [“conduct in violation of the Knox–Keene Act may be the
basis for a cause of action under Business and Professions Code section 17200”].)
12th Cause of
Action: Promissory Estoppel
Plaintiff alleges sufficient facts
for promissory estoppel. “The elements
of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its
terms; (2) reliance by the party to whom the promise is made; (3) [the]
reliance must be both reasonable and foreseeable; and (4) the party asserting
the estoppel must be injured by his reliance.’ ” (US Ecology, Inc. v. State of California (2005)
129 Cal.App.4th 887, 901.)
Plaintiff alleges sufficient facts
at this stage. It alleges, “Defendants
promised insureds and DoctorNow that they would cover and pay in full the costs
for COVID-19 Testing and Services.”
(Comp., ¶ 174.) Plaintiff “relied
on Defendants’ promises.” (Ibid.) Plaintiff further alleges, “Defendants knew
that by their actions and omissions, their payments, and communications, they
merely intended for insureds and DoctorNow to rely on those promises, knowing
full well that they would later refuse to pay a substantial number of claims
that would grow over time.” (¶ 175.) Plaintiff alleges it was injured because it provided
COVID tests for which it has not been fully paid. (¶¶ 178, 180.) Whether plaintiff’s reliance was reasonable
or foreseeable is a question of fact that cannot be resolved on demurrer.
13th Cause of
Action: Equitable Estoppel
Equitable estoppel is not a cause of
action. “[E]quitable estoppel ‘acts
defensively only. It operates to prevent
one from taking an unfair advantage of another but not to give an unfair
advantage of one seeking to invoke the doctrine.’ ” (Ryder v. Lightstorm Entertainment, Inc.
(2016) 246 Cal.App.4th 1064, 1075.) “[A]
stand-alone cause of action for equitable estoppel will not lie as a matter of
law.” (Behnke v. State Farm General
Ins. Co. (2011) 196 Cal.App.4th 1443, 1463.)
14th
Cause of Action: Declaratory and Injunctive Relief
Plaintiff does not allege sufficient facts
for declaratory relief. Declaratory
relief “operates prospectively” and is not proper “where there is an accrued
cause of action for an actual breach of contract or other wrongful act.” (Baldwin
v. Marina City Properties, Inc. (1978) 79 Cal.App.3d 393, 407.) A claim for declaratory relief does not lie
when “ ‘the
rights of the complaining party have crystallized into a cause of action for
past wrongs’ ” and “a money judgment will fully resolve the dispute.” (Cardellini v. Casey (1986) 181
Cal.App.3d 389, 396.)
Plaintiff alleges defendant
owes a specific amount of money—down to the penny—for underpaying past
claims. (Comp., ¶ 72.) Plaintiff further asserts defendants violated
a statute that no longer applies because it is now more than “six months after
the federal public health emergency expire[d].”
(Health & Saf. Code, § 1342.2, subd. (a)(5).) The controversy is not prospective.
As for injunctive relief, plaintiff does
not allege sufficient facts to constitute a cause of action because “[i]njunctive
relief is a remedy, not a cause of action.”
(Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65.)
Disposition
Defendants Blue
Shield of California Life & Health Insurance Company and California
Physicians’ Service dba Blue Shield of California’s demurrer to plaintiff’s
second, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth,
and fourteenth causes of action is sustained
with 20 days’ leave to amend. The demurrer to all other causes of action is
overruled.