Judge: Edward B. Moreton, Jr., Case: 21SMCV00381, Date: 2022-10-14 Tentative Ruling

Case Number: 21SMCV00381    Hearing Date: October 14, 2022    Dept: 200

Superior Court of California

County of Los Angeles

Beverly Hills Courthouse | Department 200

Background

On February 25, 2021, Plaintiff, The Regents of the University of California, filed this action against Defendants Cigna Health Corporation and Cigna Health & Life Insurance Company (collectively, “CIGNA”).

The Complaint alleges the following. Plaintiff is authorized to administer various medical facilities within the University of California system, including the various components of UCLA Health System (collectively, “UCLA Health”). (Compl., ¶ 1.)

On or about October 29, 2018, through December 7, 2018, UCLA Health provided emergent, inpatient, continuous, and medically necessary treatment to a patient with the initials “M.H.” (Compl., ¶ 8.) M.H. was a beneficiary of a health plan sponsored, administered, and/or funded by CIGNA. (Compl., ¶ 9.) At all relevant times, CIGNA and/or its agents, authorized the medical services to M.H. by UCLA Health. (Compl., ¶ 10.) UCLA Health timely and properly submitted the billed charges to CIGNA for payment by CIGNA. (Compl., ¶ 11.)

UCLA Health’s usual and customary charges for the medically necessary services to M.H. amounted to $1,109,498.57. (Compl., ¶ 12.) However, CIGNA only paid $408,531.06, contending that the amount is “calculated based on a percentage of a fee schedule developed by CIGNA that is based upon a methodology similar to a methodology utilized by Medicare ….” (Compl., ¶ 12.) CIGNA refused to pay the balance of $700,967.51. (Compl., ¶ 13.)

The Complaint asserts two causes of action for (1) breach of implied-in-fact contract and (2) quantum meruit.

CIGNA now moves for summary judgment or, in the alternative, summary adjudication of those two causes of action, contending that each claim is barred by the statute of limitations under Code of Civil Procedure section 339, subdivision (1). Plaintiff opposes.

Evidentiary Objections

No evidentiary objections filed.

Requests for Judicial Notice

No requests for judicial notice filed.

Legal Standard

The purpose of a motion for summary judgment “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)

A defendant moving for summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established.” (Code Civ. Proc., § 437c(p)(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Id.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c, subd. (c).)

Analysis

Code of Civil Procedure section 339, subdivision (1) (“Section 339(1)”) provides: “Within two years: … An action upon a contract, obligation or liability not founded upon an instrument of writing, except as provided in Section 2725 of the Commercial Code or subdivision 2 of Section 337 of this code; … shall not be deemed to have accrued until the discovery of the loss or damage suffered by the aggrieved party thereunder.”

“The statute of limitations for quantum meruit claims is two years. (Code Civ. Proc., § 339.) Generally, the statute of limitations commences when a party knows or should know the facts essential to the claim.” (Vishva Dev, M.D., Inc. v. Blue Shield of California Life & Health Ins. Co. (2016) 2 Cal.App.5th 1218, 1223 (“Vishva”).)

In Vishva, a physician “provided emergency medical services to two individuals who had health care coverage through Blue Shield of California Life & Health Insurance Company (Blue Shield Life) and one individual who had health care coverage through California Physicians Services, also known as Blue Shield of California (Blue Shield California).” (Vishva, supra, 2 Cal.App.5th p. 1220.) The physician “submitted bills for its services for each of the individuals to their respective insurers.” (Ibid.) “Blue Shield Life and Blue Shield California refused to pay or agreed to pay only a fraction of the amount billed, informing [the physician] of their decisions regarding each bill in written Explanation of Benefits (EOB) letters.” (Ibid.)

The sole issue in Vishva was when the physician knew or should have known that the defendants had denied paying the medical bills. (Vishva, supra, 2 Cal.App.5th p. 1223.)

The California Court of Appeal held that the physician “had knowledge of the facts giving rise to its claim of quantum meruit when it received the EOBs, with their unequivocal denial of its bills, more than two years prior to filing this lawsuit.” (Vishva, supra, 2 Cal.App.5th p. 1226 [emphasis added].) In addition, although the physician “engaged in a voluntary appeals process with Blue Shield Life and Blue Shield California, [that] did not change or undercut the EOBs’ denials of [the physician’s] claims.” (Ibid.)

A.              First Cause of Action for Breach of Implied-In-Fact Contract

Relying on Vishva, CIGNA argues the following.

The two-year statute of limitations in Section 339(1) bars Plaintiff’s breach of implied-in-fact contract claim. It is undisputed that on January 10, 2019, CIGNA transmitted to Plaintiff an Explanation of Payment (“EOP”). (Plaintiff’s Response to CIGNA’s Separate Statement (“UMF”), ¶ 8.) Therefore, by January 10, 2019, Plaintiff was on notice that CIGNA refused to pay the full-billed charges for M.H.’s services. However, Plaintiff did not file this lawsuit until February 25, 2021, more than two years after January 10, 2019. (UMF, ¶ 9.) Therefore, Plaintiff’s claim is barred.

The Court finds that CIGNA has met its burden of establishing a complete defense to the first cause of action for breach of implied-in-fact contract. Therefore, the burden shifts to Plaintiff to raise triable issues of material fact as to that issue.

In opposition, Plaintiff acknowledges that in Vishva, the Court of Appeal held that the statute of limitations begins to run once the insurer has issued an “unequivocal denial” of payment in writing.

However, it argues that the EOP Plaintiff issued on January 10, 2019, concerning patient M.H was not an unequivocal denial for the following reasons. Plaintiff’s Assistant Director, Sureya Villalobos, testifies that while Plaintiff received an EOP on January 10, 2019, it also received a second EOP dated February 25, 2019. (Declaration of Sureya Villalobos, filed September 30, 2022 (“Villalobos Decl.”), ¶ 6.) Along with that second EOP, CIGNA retracted its initial payment of $408,531.06 and then repaid that amount again on February 25, 2019. (Villalobos Decl., ¶ 6.) Therefore, it is the date of this second EOP, February 25, 2019, that represents the appropriate accrual date for the purposes of statute of limitations. Since Plaintiff filed this action on February 25, 2021, exactly two years after that date, its action is not barred by the statute of limitations.

In any event, Plaintiff continues, the limitations period was tolled by emergency Covid-19 orders by 178 days. Plaintiff’s counsel submits a copy of Emergency rule 9 which the California Judicial Council adopted on April 6, 2020, and amended on May 29, 2020. (Declaration of Christopher Hapak, filed September 30, 2022 (“Hapak Decl.”), ¶ 2, p. 14 – Emergency rule 9.) According to Emergency rule 9: “Notwithstanding any other law, the statute of limitations and repose for civil cause of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.” (Hapak Decl.; Exhibit 2, p. 14, first paragraph.) Therefore, even if the Court were to consider that the first EOP to be unequivocal denial, this action was filed on February 25, 2021, within the 178-day tolling period. Therefore, it is timely.

Lastly, Plaintiff concludes, California case law disfavors the statute of limitations due its harsh nature.

In reply, CIGNA argues (without citing any authority) that Plaintiff cannot avail itself of Emergency rule 9 “[w]ith respect to rules of tolling based on disabilities such as the Covid-19 pandemic, [because] Code of Civil Procedure section 357 clarifies that tolling only applies when the ‘disability’ giving rise to tolling exists as of the time the cause of action accrues.” (Reply, p. 6:14-20.) “Here, the causes of action upon which UCLA relies accrued on January 10, 2019, which was well in advance of the onset of the COVID pandemic.” (Reply, p. 6:20-23.)

The Court finds CIGNA’s Emergency rule 9 argument unpersuasive.

First, the Judicial Council Advisory Committee clearly stated: “Emergency rule 9 is intended to apply broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil action. The term ‘civil causes of action’ includes special proceedings.” (Hapak Decl., p. 14, “Advisory Committee Comment” section.)

Nowhere does Emergency rule 9 define the pandemic as a “disability,” for the purposes of Code of Civil Procedure section 357 or even mention that statute.

Neither do the only (four) published California appellate court cases that discuss Emergency rule 9 support CIGNA’s argument. (Committee for Sound Water & Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 403-405, review denied (Sept. 14, 2022) (“Committee for Sound Water”); People v. Financial Casualty & Surety, Inc. (2021) 73 Cal.App.5th 33, 38-40; People v. Philadelphia Reinsurance Corporation (2021) 70 Cal.App.5th Supp. 10, 15-22; People v. Financial Casualty & Surety, Inc. (2022) 78 Cal.App.5th 879, 883-888.)

Second, in support of its argument, CIGNA cites two cases: McLeran v. Benton (1887) 73 Cal. 329, 344 (discussing the impact of the disability of an heir or devisee on statute of limitations) and a 1987 federal district case Cooper v. Franchise Tax Bd. (N.D. Cal. 1987) 661 F. Supp. 60, 61 (discussing the impact of the disability of imprisonment on statute of limitations).

However, Plaintiff is an entity and not alleging any disability. Therefore, those cases are inapplicable here.

“‘A tolling provision suspends the running of a limitations period.’ [Citation.]” (Committee for Sound Water, supra, 79 Cal.App.5th at p. 403.) “In other words, ‘the limitations period stops running during the tolling event, and begins to run again only when the tolling event has concluded. As a consequence, the tolled interval, no matter when it took place, is tacked onto the end of the limitations period, thus extending the deadline for suit by the entire length of time during which the tolling event previously occurred.’ [Citation.]” (Ibid.)

Here, the Emergency rule 9 tolled Plaintiff’s statute of limitations from April 6, 2020, through October 1, 2020 (178 days). therefore, even if the Court were to agree with CIGNA that the EOP it transmitted on January 10, 2019, controls, Plaintiff’s lawsuit is well within the statute of limitations period.

For those reasons, the Court finds that Plaintiff has met its burden of showing a triable issue of material fact concerning CIGNA’s statute of limitations defense.

Accordingly, the Court DENIES CIGNA’s request for summary adjudication as to the first cause of action for breach of implied-in-fact contract.

B.              Second Cause of Action for Quantum Meruit

Relying on Vishva, CIGNA raises the same statute of limitations arguments concerning the second cause of action for quantum meruit.

However, even if the Court finds that CIGNA has met its initial burden for summary adjudication concerning that claim, Plaintiff has raised triable issue of material fact concerning CIGNA’s statute of limitations defense.

Accordingly, the Court DENIES CIGNA’s request for summary adjudication as to the second cause of action for quantum meruit.

Conclusion

Defendants Cigna Health Corporation and Cigna Health & Life Insurance Company’s Motion for Summary Judgment or, in the Alternative, Summary Adjudication is DENIED.

Defendants to give notice.

Dated: October 14, 2022

__________________________________________

Edward B. Moreton, Jr.

Judge of the Superior Court