Judge: David S. Cunningham, Case: 19STCV09558, Date: 2024-01-11 Tentative Ruling

Case Number: 19STCV09558    Hearing Date: March 12, 2024    Dept: 11

19STCV09558 (Braun)

Tentative Ruling Re: Demurrer

Date:                           3/12/24

Time:                          1:45 pm

Moving Party:           West Hills Surgical Center (“WHSC”) and West Hills Hospital (“WHH”) (collectively “Defendants”) 

Opposing Party:        Sandra Braun (“Plaintiff”)

Department:              11

Judge:                        David S. Cunningham III

________________________________________________________________________

TENTATIVE RULING

Request for Judicial Notice (“RJN”)

Defendants’ RJN is granted on the Court’s own motion.

Demurrer

Confidentiality of Medical Information Act (“CMIA”)

Defendants’ demurrer is overruled as to WHSC.

Defendants’ demurrer is sustained as to WHH.

The issue of leave to amend will be decided at the hearing.

Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”)

Defendants’ demurrer is overruled as to WHSC.

Defendants’ demurrer is sustained as to WHH.

The issue of leave to amend will be decided at the hearing.

BACKGROUND

This is a putative class action.  The operative complaint is the fourth amended complaint (“4AC”).  Plaintiff alleges that she and the putative class members underwent outpatient surgeries at WHSC and that Defendants disclosed their personal medical health information (“PMHI”) to nonparty insurers and billing agencies without permission.  Plaintiff claims the alleged conduct violated:

* Civil Code section 56, the CMIA;

* Business and Professions Code section 17200, the UCL; and

* Civil Code section 1750, the CLRA.

On January 11, 2024, the Court heard Plaintiff’s motion for class certification.  In reply to the motion, Plaintiff proposed two new CMIA classes.  The Court denied the motion without prejudice and granted Plaintiff leave to amend to add the new classes to the complaint.

On January 26, 2024, Plaintiff filed the 4AC.

Here, Defendants demur to the 4AC.

LAW

When considering demurrers, courts read the allegations liberally and in context, and “treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)  “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.”  (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)  It is error “to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.”  (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

DISCUSSION

RJN

Defendants ask the Court to judicially notice the Informed Consent form that Plaintiff signed at the time of her surgery.  (See Demurrer, pp. 3, 8-9; see also Reply, pp. 5-6; Fuller Decl., ¶ 3.)

Plaintiff contends judicial notice should be denied because the Court denied a similar request during an earlier demurrer round, and the parties disagree about the interpretation and legal effect of the Informed Consent.  (See Opposition, pp. 9-11.)  Plaintiff contends the Court should sanction Defendant for requesting judicial notice a second time.  (See id. at p. 12.)

Defendants claim the prior denial is distinguishable.  Judge Ann Jones (Ret.) made the prior denial in connection with the demurrer to the first amended complaint. Plaintiff then attached the Informed Consent as an exhibit to the second amended complaint. Here, Defendants request judicial notice of the second amended complaint, which they claim has not been ruled on previously.  (See, e.g., Reply, pp. 5-6 [asserting that the 4AC constitutes a sham pleading since the Informed Consent is not attached to it].)

Under Code of Civil Procedure section 430.70, “[t]he demurring party must specify in the demurrer or attached points and authorities the particular matters which the court is requested to judicially notice.”  (Edmon & Karnow, Cal. Practice Guide: Civ. Procedure Before Trial (The Rutter Group June 2023 Update) ¶ 7:18; see also Code Civ. Proc. § 430.70.)

However, “[c]ompliance with [section] 430.70 alone is insufficient.”  (Edmon & Karnow, supra, at ¶ 7:19.)  Rule 3.1113(l) requires the demurring party to file a request for judicial notice “as a separate document listing the specific items for which notice is requested.”  (Ibid., emphasis in original; see also Rules of Court, rule 3.1113, subd. (l).)

The RJN is defective.  Defendants’ notice of demurrer references an “accompanying Request for Judicial Notice and exhibits attached thereto” (Notice of Demurrer, p. 1), but they failed to file it.  The Court searched eCourt and Case Anywhere; there is no separate RJN document posted on either website. 

Nevertheless, the Court has discretion to “take judicial notice on its own motion.”  (Edmon & Karnow, supra, at ¶ 7:12.) The Court agrees with Defendants that the prior denial is distinguishable.  Plaintiff attached the Informed Consent to the second amended complaint after the prior denial took place.  The prior denial is nonbinding and inapplicable to the second amended complaint, which means the Court is free to judicially notice the second amended complaint, including the Informed Consent, sua sponte.  (See id. at ¶ 7:9 [allowing judicial notice of exhibits attached to superseded complaints].)

On balance, the Court finds that the Informed Consent should be judicially noticed since it is material to Plaintiff’s allegations and causes of action.  The Court is granting Defendants’ RJN on its own motion with several rules in mind.  One, for exhibits attached to complaints, courts “accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”  (Ibid.)  Two, “the truth of statements contained” in a document in the court file “and their proper interpretation are not subject to judicial notice if those matters are reasonably disputable.” (Id. at ¶ 7:15.10, emphasis in original.) Three, the plaintiff’s interpretation of a contract must be accepted at the pleading stage unless there is only one reasonable construction.  (Id. at ¶¶ 7:47.4, 7:48.25-7:48.27)[1]

Plaintiff’s sanctions request is denied. To repeat, the Court agrees that the prior denial is distinguishable.

Demurrer

CMIA

The CMIA provides:

(a) A provider of health care, health care service plan, or contractor shall not disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan without first obtaining an authorization, except as provided in subdivision (b) or (c).

(Cal. Civ. Code § 56.10, subd. (a), emphasis added.) 

Defendants rely on the exception in subdivision (c)(2).  (See Demurrer, p. 7.)  It states:

(c) A provider of health care or a health care service plan may disclose medical information as follows:

* * *

(2) The information may be disclosed to an insurer, employer, health care service plan, hospital service plan, employee benefit plan, governmental authority, contractor, or other person or entity responsible for paying for health care services rendered to the patient, to the extent necessary to allow responsibility for payment to be determined and payment to be made. If (A) the patient is, by reason of a comatose or other disabling medical condition, unable to consent to the disclosure of medical information and (B) no other arrangements have been made to pay for the health care services being rendered to the patient, the information may be disclosed to a governmental authority to the extent necessary to determine the patient's eligibility for, and to obtain, payment under a governmental program for health care services provided to the patient. The information may also be disclosed to another provider of health care or health care service plan as necessary to assist the other provider or health care service plan in obtaining payment for health care services rendered by that provider of health care or health care service plan to the patient.

(Id. at § 56.10, subd. (c)(2).)

Turning to the 4AC, the allegations for the CMIA cause of action state:

24. In early March 2018, Plaintiff was informed that she required outpatient surgical treatment. Plaintiff chose to have the procedure performed at WHSC.

25. On the morning of March 27, 2018, and just before undergoing surgery, Plaintiff was presented with several documents to complete, initial, and sign. Among the documents Plaintiff completed was a “HIPPA Release” in favor of her spouse, Mauricio Braun. A consent to “Telephone Calls for Financial Communications.” A Consent to Resustative Measures. And a “Consent to Anesthesia.” Most importantly, Plaintiff (like all Class members completed an Informed Consent in which she promised to pay “the [her] account at the rates stated in the Surgery Center’s price list.”

26. Thus, Plaintiff was the responsible party once she signed the Informed Consent.

27. During the March 27, 2018, surgical procedure at WHSC, a tissue sample was taken to be analyzed in a laboratory at WHH.

28. WHSC sent the sample to WHH along with the Plaintiff’s PMHI and insurance information following the procedure. WHH analyzed the Plaintiff’s tissue sample and then submitted a claim to the Plaintiff’s insurer utilizing the information sent to it by WHSC. WHH’s submission to Blue Shield disclosed PMHI and violated Plaintiff’s rights under the CMIA.

29. In addition, on April 6, 2018, over ten days after the procedure, WHSC submitted a claim to Plaintiff’s insurance company, Blue Shield, which further disclosed Plaintiff’s PMHI. Again, Blue Shield is not a healthcare provider, and the disclosure was not required to determine a responsible party because Plaintiff was already contractually accountable for all charges.

30. WHSC performs outpatient services for dozens of persons each day. Over the past nine years, thousands of outpatient procedures have been conducted at the WHSC facility. Before performing these procedures, WHSC, as a matter of course, has each patient sign an Informed Consent document.

31. The Informed Consent identifies who will be financially responsible for WHSC’s services.

32. In almost all cases, the responsible party will be the patient themselves.

33. Although each patient contractually binds themselves to pay for all charges in the Informed Consent, the West Hills Defendants will submit the Class member’s PMHI, in conjunction with a claim, to an insurance carrier, revealing the PMHI. This disclosure violates the CMIA.

* * *

54. Plaintiff now incorporates by reference the allegations contained in each of the preceding allegations as fully set forth herein.

55. Defendants are providers of healthcare services and are subject to the requirements and mandates of the CMIA.

56. Plaintiff and all Class members are Defendants' " patients “within the meaning of Civil Code § 56.05(g).

57. WHSC acquired the PMHI of Plaintiffs and Class members and was duty-bound to preserve its confidentiality.

58. WHSC was entrusted with the PMHI of Plaintiff and Class members as a provider of medical services and, therefore, owed a duty of reasonable care to preserve the confidentiality of their PMHI.

59. Under California Civil Code § 56.10, Defendants were required to obtain the Plaintiff’s and Class member’s authorization before disclosing their PMHI to an insurance company unless there was a question of responsibility of payment.

60. Under California Civil Code § 56.11, An authorization for the release of medical information by a provider of health care, health care service plan, pharmaceutical company, or contractor shall be valid if it: (a) Is handwritten by the person who signs it or is in a typeface no smaller than 14-point type. (b) Is clearly separate from any other language present on the same page and is executed by a signature which serves no other purpose than to execute the authorization.

61. Plaintiff and Class members never signed such an authorization.

62. In conscious disregard to the above requirements, Defendant WHSC, in its regular course of business, negligently and unlawfully disclosed Plaintiff’s and Class members’ PMHI without first obtaining Plaintiff’s and Class members’ authorization.

63. Likewise, Defendant WHH, in its regular course of business, negligently and unlawfully disclosed Plaintiff’s and Class members’ PMHI without first obtaining their authorization.

64. As a direct and proximate result of Defendants’ violation of California Civil Code § 56.10 and § 56.11. Plaintiff and the Class seek relief under Civil Code §§ 56.35 and 56.36(b).

65. Plaintiff and the Class seek nominal damages of one thousand dollars ($1,000) per violation under Civil Code § 56.36(b)(1), punitive damages up to three thousand dollars ($3,000) per violation under Civil Code § 56.35.

66. Plaintiff and the Class seek recovery of attorney’s fees of up to one thousand dollars ($1,000) per violation under Civil Code § 56.35 and litigation costs under Civil Code § 56.35.

(4AC, ¶¶ 24-33, 54-66, emphasis in original.)

WHSC

Defendants contend the demurrer should be sustained as to WHSC because the 4AC fails to allege the Informed Consent’s terms verbatim.  (See Demurrer, p. 9; see also Reply, pp. 4-5.)

The Court disagrees.  “A written contract may be pleaded by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect.”  (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4^th 972, 993; see also Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4^th 189, 198-199 [stating that, “[i]n an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language”].)  Defendants do not claim Plaintiff fails to allege the legal effect of the Informed Consent.[2]

Next, Defendants contend the demurrer should be sustained because:

* the CMIA permits “[a] provider of health care or a healthcare service plan” to disclose medical information, without consent, to an insurer “to the extent necessary to allow responsibility for payment to be determined and payment to be made” (Demurrer, p. 7);

* the Informed Consent states that WHSC may disclose Plaintiff’s information to her insurer “to bill or receive payment for medical treatment or services provide to [her]” (id. at p. 8); and

* “nothing in the Informed Consent ‘identifies who will be financially responsible’ such that [WHSC] would be precluded from submitting a claim to Plaintiff’s insurer to determine responsibility for payment on the account[.]”  (Ibid.; see also id. at pp. 9-10; Reply, pp. 5-6.)

This argument necessitates consideration of the Informed Consent. The key question is whether the Informed Consent is clear and unambiguous and only susceptible to Defendants’ interpretation.

Plaintiff answers no.  Her position is that Defendants had no need to seek payment from her insurer.  She claims the subdivision (c)(2) exception is inapplicable because the Informed Consent “obligates her to pay for all services rendered by . . . WHSC[.]”  (Opposition, p. 13; see also id. at p. 7.) 

In addition, Plaintiff contends the Informed Consent is generic and vague; it notes that “information” may be disclosed to third parties yet fails to specifically mention confidential medical information.  (See id. at p. 13.)[3]

The payment provision states: 

In consideration of the services to be rendered to the patient, the undersigned (as parent, guardian, spouse, guarantor, agent or as the patient) individually promises to pay the patient’s account at the rates stated in the Surgery Center's price list (known as the “Charge Master”) effective on the date of service, which rates are hereby expressly incorporated by reference as the price term of this Agreement to pay the patient’s account. Some special items will be priced separately if there is no price listed on the Charge Master, or the charge is listed as zero. In the event that the Surgery Center has to engage an attorney or collection agency to collect any unpaid balances that arise from the treatment consented to herein, the undersigned agrees to the attorney’s fees and collection expenses incurred by the Surgery Center.

(Fuller Decl., Ex. 1, Informed Consent, p. 2.)

The disclosure provision states:

We may use or disclose information about you to bill or receive payment for medical treatment or services provided to you. These disclosures include releasing information;

(1) to your health plan to obtain prior approval or to determine whether your plan will cover the treatment or services; or

(2) to individuals or entities involved in collecting amounts owed to us.

(Ibid.)

The Court believes the demurrer should be overruled.  The payment provision does not expressly bar use of insurance proceeds to pay the patient’s account.  The disclosure provision fails to define “information” and does not reference confidential medical information or PMHI.  At this point, both provisions appear ambiguous such that Plaintiff’s allegations and interpretation must be accepted.  For now, Plaintiff states a claim.[4]

WHH

Defendants claim the demurrer should be sustained as to WHH because the Informed Consent is a contract between Plaintiff and WHSC, not Plaintiff and WHH, and it does not identify who has responsibility to pay for WHH’s services.  (See Demurrer, p. 11; see also Reply, p. 7.)

Plaintiff contends the demurrer should be overruled because:

* “Plaintiff has sued each Defendant in this matter as an agent, conspirator, aider, and abettor, and as a control person for every other Defendant, and the liability of each Defendant arises from the fact that it has engaged in all or part of the unlawful acts, plans, schemes or transactions complained of herein” (Opposition, p. 14);

* “Plaintiff alleges that WHSC is adjacent to WHH and WHSC and WHH improperly and unlawfully shared her PMHI” (ibid.); and

* the 4AC “seeks injunctive relief against WHSC and WHH[.]”  (Ibid.)

The Court agrees with Defendant.  The “agent, conspirator, aider, abettor, control person” allegation is conclusive.  (See 4AC, ¶ 15.)  Without more, the fact that WHH’s building is adjacent to WHSC’s building is innocuous.  (See id. at ¶ 18.)  Indeed, Plaintiff fails to cite any authority that recognizes liability under the CMIA for being physically adjacent to an alleged violator.  Nor does the request for injunctive relief help her.  Plaintiff’s allegations fail to show that the Informed Consent applies to WHH, and she fails to demonstrate that WHH did something wrong absent application of the Informed Consent, so there is no current alleged basis for injunctive relief.  The demurrer is sustained.

Whether leave to amend should be granted will be addressed at the hearing.  Is “agent, conspirator, aider, abettor, control person” liability available under the CMIA?  Can Plaintiff allege conduct by WHH that would show a violation of the CMIA even if the Informed Consent is inapplicable?  Plaintiff’s counsel should be prepared to answer these questions. 

UCL and CLRA

The UCL and CLRA causes of action are derivative of the CMIA cause of action.  The same analysis applies; thus, the Court overrules the demurrer as to WHSC and sustains the demurrer as to WHH.  The Court will decide the issue of leave to amend at the hearing.