Judge: Gail Killefer, Case: 22STCV40882, Date: 2023-08-03 Tentative Ruling

Case Number: 22STCV40882    Hearing Date: August 3, 2023    Dept: 37

HEARING DATE:                 Thursday, August 03, 2023

CASE NUMBER:                   22STCV40882

CASE NAME:                        PMH Laboratory, Inc. v. Health Net, et al.

MOVING PARTY:                 Defendants Health Net of California, Inc (“HNCA”); Heath Net, LLC (“HNLLC”); and Centene Management Company LLC (“Centene”).

OPPOSING PARTY:             Plaintiff PMH Laboratory, Inc.

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrers with a Motion to Strike

OPPOSITION:                        21 July 2023

REPLY:                                  27 July 2023

TENTATIVE:                         The demurrer to the second, fifth, and ninth causes of action is sustained without leave to amend.

                                                The demurrer to the sixth, seventh, and tenth causes of action is sustained with leave to amend.

                                                The demurrer to the third, fourth, and eighth causes of action is overruled.

The Motion to strike is granted in part as to Paragraph 15 of the FAC as to the phrase “and attorneys’ fees.” The request to strike paragraphs 2, 3,7, and 8 of the Prayer for Relief is granted with leave to amend. The request to strike paragraphs 1, 4, 5, and 6 of the Prayer for Relief is denied. The court also denies the Defendants’ request to strike Paragraphs 7, 16, 18, 19, 26-29, 32-36, 38, 41, 44, 47, 48, 61, 63, 66, 67, 69-76, 82, 83, 90-93, 95, 99, 100, 102-104, 106-108, 111, 113, 115, 117, 121, 122, 161-165 of the FAC.

Background

On December 29, 2022, Plaintiff PMH Laboratory, Inc. filed a Complaint against Health Net of California, Inc (“HNCA”); Health Net, LLC (“HNLLC”); Centene Management Company LLC (“Centene”); and Does 1 to 100.

The operative First Amended Complaint (“FAC”) alleges ten causes of action:

1)     Unfair Competition Law;

2)     Negligence;

3)     Unjust Enrichment;

4)     Quantum Meriut;

5)     Goods and Services Rendered;

6)     Money Had and Received;

7)     Open Book Account;

8)     Account Stated;

9)     Violation of Health & Saf. Code § 1342.2; and

10) Declaratory and Injunctive Relief.

On May 23, 2023, Defendants HNCA, HNLLC, and Centene each filed a Demurrer with a Motion to Strike to Plaintiff’s FAC.  Plaintiff filed opposing papers on July 21, 2023. 

Defendants HNCA, HNLLC, and Centene (collectively “Defendants”) filed one reply on July 27, 2023.

request for JUDICIAL notice

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

Defendants request judicial notice of the following:

1)     Exhibit A, a true and correct copy of a PDF printout of the California Department of Managed Health Care’s (“DMHC”) public website showing the portion of DMHC’s Plan Directory alphabetically listing all DMHC-licensed health care services plans with names beginning “FirstSight Vision Services, Inc. (America’s Best Vision Plan)” through “Humana Health Plan of California, Inc.,” available on the DMHC’s website at https://wpso.dmhc.ca.gov/Dashboard/SearchHealthPlan.aspx, and which lists “Health Net of California, Inc.” as a “Full Service” health care service plan, but does not list “Health Net, LLC” as a health care service plan.

2)     Exhibit B, a true and correct copy of a PDF printout of the DMHC’s public website showing the portion of DMHC’s Plan Directory alphabetically listing all DMHC-licensed health care services plans with names beginning “Aspire Health Plan” through “Central Health Plan of California, Inc.,” available on the DMHC’s website at https://wpso.dmhc.ca.gov/Dashboard/SearchHealthPlan.aspx, and which does not list “Centene Management Company LLC” as a health care service plan.

3)     That portion of the DMHC’s website shown in Exhibits A and B and publicly available on the DMHC’s website at https://wpso.dmhc.ca.gov/Dashboard/SearchHealthPlan.aspx includes a link titled “Why isn’t my plan listed?”, which, when accessed, displays the following popup message: “The website only includes information on health plans licensed by the California Department of Managed Health Care.”

4)     Exhibit C, a true and correct copy the DMHC’s All Plan Letter regarding APL 22-032 – Compliance with Senate Bill 1473 (2022), dated December 27, 2022, available on the DMHC’s website at: https://www.dmhc.ca.gov/Portals/0/Docs/OPL/APL%2022-032%2020Compliance%20with%20Senate%20Bill%201473%20(2022).pdf?ver=WAcZbzkx6GeX14D 3DAVffA%3D%3D.

5)     Exhibit D, a true and correct copy of the “FAQs About Families First Coronavirus Response Act and Coronavirus Aid, Relief, And Economic Security Act Implementation Part 43” jointly prepared by the Department of Labor, the Department of Health and Human Services, and the Department of the Treasury, dated June 23, 2020, available on the U.S. Department of Labor’s website at: https://www.dol.gov/sites/dolgov/files/ebsa/aboutebsa/our-activities/resource-center/faqs/aca-part-43.pdf, and which is incorporated by reference in Plaintiff PMH Laboratory Inc.’s (“PMH”) First Amended Complaint. See FAC ¶¶ 33, 35 & n.7 (quoting Exhibit D and providing a hyperlink to the foregoing website from which Exhibit D was retrieved).

6)     Exhibit E, a true and correct copy of a screen capture printout of PMH’s website, captured on March 17, 2023, available at: https://pmhlaboratory.com/covid19, and which is incorporated by reference in PMH’s First Amended Complaint. See FAC ¶ 45 & n.15 (referencing Exhibit E and providing a hyperlink to the foregoing website from which Exhibit E was retrieved).

Defendants request judicial notice of the fact that HNLLC and Centene are not listed in the California Department of Managed Health Care (“DMHC”) Directory listing all licensed Knox-Keene health care service plan, including HNCA. Defendants rely on Namdy Consulting, Inc. v. UnitedHealthcare Insurance Company (C.D. Cal., July 11, 2018, No. CV 18-01283-RSWL-KS) 2018 WL 6430119, at *3 for the proposition that the court may take judicial notice of the contents of the DMHC’s website. Under California law, however, the court may not accept the truth of the DMHC’s contents or accept the interpretation that Defendants HNLLC and Centene are not subject to the provisions of the Knox-Keene Act. (See Wood v. Superior Ct. of San Diego County (2020) 46 Cal.App.5th 562, 580, fn. 2 [court may take judicial notice of the fact statements made to the public on a government website but not their truth].)

Plaintiff opposes Defendants’ request for judicial notice because it asserts that the matters stated in the documents establish that HNLLC and Centene are not health care service plans subject to the Knox-Keene Act because their names do not appear on the DMHC’s website listing of health plans. “[A]lthough it might be appropriate to take judicial notice of the existence of the websites, the same is not true of their factual content.” (Searles Valley Minerals Operations, Inc. v. State Bd. of Equalization (2008) 160 Cal.App.4th 514, 519 [italics original].) Plaintiff asserts that whether HNLLC and Centene are subject to the provisions of the Knox-Keene Act is a triable issue of fact because according to Defendants’ own website states: 

We offer these health plans and services through Health Net, LLC and its subsidiaries: Health Net of California, Inc., Health Net Life Insurance Company and Health Net Community Solutions, Inc. These entities are wholly owned subsidiaries of Centene Corporation (NYSE: CNC), a Fortune 50 company providing health coverage to more than 20 million Americans.

(Opp. to RJN Ex. A.) “Thus, Defendants admit on their own website that they ‘provide health plans’ and offer ‘health plans and services’ through Defendant HNLLC and its subsidiary, Defendant HNCA, which are both wholly owned subsidiaries of Defendant Centene.” (Opp. to RJN at 5:14-16.)

The court agrees that whether Defendants HNLLC and Centene are subject to the provisions of the Knox-Keene Act is a triable issue of fact not properly resolved on demurrer. (Fuhrman v. California Satellite Systems (1986) 179 Cal.App.3d 408, 422.) The court finds that Plaintiff has sufficiently pled that Defendants “constitute a group health plan and/or a health insurance issuer offering group or individual health insurance coverage as referenced in Section 6001(a) of the Families First Coronavirus Response Act1 (“FFCRA”) and Section 3202(a) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).” (FAC ¶ 7.)

Nevertheless, the court will take judicial notice of the DMHC website and its content, but not its truthfulness. Defendants’ request for judicial notice is granted.

Discussion

I.         Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable.¿ (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿ “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿ (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿ For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿ A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿ (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿ 

¿ 

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. (Code of Civ. Proc., § 435(b)(1); Cal. Rules of Court (CRC), 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. (Code of Civ. Proc., § 436, subds. (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”].)¿¿¿ 

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿

II.        Allegations in FAC

The FAC alleges that Plaintiff is a high-volume COVID-19 diagnostic testing laboratory that provides COVID-19 diagnostic testing and related services. (FAC ¶ 2.) Plaintiff performed COVID-19 testing and COVID-19 related services related to collecting patient specimens, blood samples, supplies, material and staff for which it submitted claims to Defendants for payment and reimbursement. (FAC ¶¶ 13, 14, 15.) Defendants are alleged to be a group health plan/and or a health insurance issuer offering group or individual health insurance coverage. (FAC ¶ 7.)

The FAC asserts that pursuant to § 6001(a) of the Families First Coronavirus Response Act (“FFCRA”), § 3202(a) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and § 1342.2(a) of the California Health and Safety Code, Defendants must provide coverage and full reimbursement to Plaintiff and other network health care providers for COVID Testing and Services. (FAC ¶¶ 7, 9, 16.) Plaintiff was damaged when Defendants denied payment or paid less than the amounts owed, in violation of federal and California law. (FAC ¶ 17.) Defendants denied payments on certain claims on the basis that they were untimely, improper, illegal, or underpaid claims. (FAC ¶¶ 62, 70.)

The FAC admits that Plaintiff did not negotiate a rate for its COVID Tests with Defendants and operates as an out-of-network provider (FAC ¶ 46.) But pursuant to the FFCRA, CARES, and the California Health and Safety Code, health insurers like Defendants must provide coverage and full reimbursement to Plaintiff and other out of network health care provider for COVID Testing and Services. (FAC ¶ 16.)

III.      Demurrer[1]

Defendants Health Net of California, Inc (“HNCA”); Heath Net, LLC (“HNLLC”); Centene Management Company LLC (“Centene”) (collectively “Defendants”) demur to Plaintiff’s First Amended Complaint (“FAC”) as to all causes of actions alleged therein except for the first cause of action for Violation of the Unfair Competition Law.

            A.        Ninth Cause of Action-Violation of Health & Saf. Code § 1342.2

Health & Safety Code § 1342.2(a) (of the Knox-Keene Health Care Service Plan Act of 1975 states in relevant part:

Notwithstanding any other law, a health care service plan contract that covers medical, surgical, and hospital benefits, excluding a specialized health care service plan contract, shall cover the costs for COVID-19 diagnostic and screening testing and health care services related to diagnostic and screening testing approved or granted emergency use authorization by the federal Food and Drug Administration for COVID-19, regardless of whether the services are provided by an in-network or out-of-network provider.

Defendants demur to the ninth cause of action on the basis that § 1342.2 authorized the DMHC  to enforce the statute and does not simultaneously allow suits by private individuals. (See Blue Cross of California, Inc. v. Superior Court (2009) 180 Cal.App.4th 1237, 1250 [“[A]lthough the Knox–Keene Act expressly authorizes the DMHC to enforce the statute and does not include a parallel authorization for suits by private individuals, private individuals can bring suit under the UCL for violations of the Knox–Keene Act.”].) “Although the Department of Managed Health Care has jurisdiction over the subject matter of section 1371.4 (as well as the rest of the Knox–Keene Act), 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.” (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 216.)

Although Plaintiff argues that section 1342.2 should be construed as permitting a private right of action, Plaintiff fails to cite to any case that has expressly construed provisions of the Knox-Kenne Act as creating a private right of action.

The demurrer to the ninth cause of action is sustained without leave to amend.

B.        Second Cause of Action – Negligence

“The elements of a cause of action for negligence are well established. They are (a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917 [internal quotations omitted].) “A duty may arise through statute, contract, or the relationship of the parties.” (Lichtman v. Siemens Industry Inc. (2017) 16 Cal.App.5th 914, 920 [internal quotations and citations omitted].) The existence of a legal duty is a question of law for the Court to decide. (Adams v. City of Fremont (1998) 68 Cal.App.4th 243, 265.)

Defendants demur to the second cause of action on the basis that Defendants owe no duty in tort to pay Plaintiff’s unilaterally set cash price or billed charges. As established above, violations of section 1342.2 do not create a private right of action and thus impose no duty on Defendants to reimburse Plaintiff. As to Plaintiff’s asserting a duty to pay under the FFCRA and the CARES Act, Plaintiff again fails to show these statutes create a statutory duty. (See Saloojas, Inc. v. Aetna Health of California, Inc. (N.D. Cal., Sept. 30, 2022, No. 22-CV-02887-JSC) 2022 WL 4775877, at *2 [“Plaintiff's first claim fails as a matter of law. There is no private right of action to enforce Section 3202(a)(2) of the CARES Act or Section 6001 of the FFCRA by requiring Defendant to pay Plaintiff's posted cash price.”].)

Moreover, Plaintiff fails to show that California permits tort recovery for purely economic losses related to the failure to pay for medical services. “The relevant policy considerations counsel against recognizing a legal duty by health plans—compensable via a tort—not to reimburse hospitals and other medical providers of emergency medical services at an amount less than the ‘reasonable and customary value’ of those services.” (Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc. (2021) 71 Cal.App.5th 323, 337.) Absent a legal duty to provide reimbursement for services rendered under tort law, Plaintiff’s negligence cause of action against Defendants fails. Moreover, the doctrine of negligence per se is an evidentiary presumption and “does not provide a right of action for violation of a statute.” (Johnson v. Honeywell Internat. Inc. (2009) 179 Cal.App.4th 549, 556.)

The court also finds the Plaintiff’s reliance on Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994 (“Centinela”) misplaced.  Plaintiff cites Centinela to support its argument that a duty of care under tort law exists for violations of the Knox-Keene Act.  Centinela, however, described that duty as follows:

Centinela held that a health plan has a legal duty, enforceable in a tort claim, (1) not to negligently ‘delegate its financial responsibility’ to reimburse hospitals and other medical providers under the Knox-Keene Act to other entities known as risk-bearing organizations if the plan knows or should know that its delegate ‘would not be able to pay’ the reimbursements, and (2) not to negligently ‘continu[e] or renew[ ] a delegation contract’ with its delegate ‘when it knows or should know that there can be no reasonable expectation that its delegate will be able to’ pay reimbursements.

(Long Beach Memorial Medical Center, 71 Cal.App.5th at 340.)

Here, Plaintiff fails to allege that she brings a claim for negligent initial delegation by Defendants in this action. Therefore, absent a showing that § 6001(a) of the FFCRA, § 3202(a) of the CARES Act; or section 1342.2(a) provide a statutory duty for Defendants to pay the full price requested by Plaintiff for services, Plaintiff’s second cause of action fails.  (FAC ¶¶ 28, 29, 31, 117, 119.)

The demurrer to the second cause of action is sustained without leave to amend.

C.        Fourth Cause of Action – Quantum Meruit

“The requisite elements of quantum meruit are (1) the plaintiff acted pursuant to ‘an explicit or implicit request for the services’ by the defendant, and (2) the services conferred a benefit on the defendant. [Citation.]” (Port Medical Wellness, Inc. v. Connecticut General Life Insurance Company (2018) 24 Cal.App.5th 153, 180.) “To recover in quantum meruit, a party need not prove the existence of a contract [Citations], but it must show the circumstances were such that ‘the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made’ [Citations.]’”  (Chodos v. Borman (2014) 227 Cal.App.4th 76, 96.) “For pleading and other procedural purposes, such as the right to a jury trial, a claim for quantum meruit is considered an action at law, not in equity.” (Id. at 97.)

Defendants demur to the fourth cause of action on the basis that Plaintiff failed to state that Defendants specifically requested Plaintiff’s services or that Defendants benefitted from the testing services Plaintiff allegedly provided to third-party patients.   

Plaintiff is not required to allege that Defendants specifically requested COVID-19 testing services, only that there was an implicit request for services. (See Port Medical Wellness, Inc., 24 Cal.App.5th at 180.) The FAC alleges that Defendants understood and accepted that Plaintiff would perform beneficial COVID Testing and Servies for individuals insured by Defendants and that such services “were not free.” (FAC ¶¶ 127, 130.). Plaintiff also understood that Defendants would provide payment as required by the FFCRA, the CARES Act, and Section 1342.2(a). (FAC ¶¶ 7, 8.) These services were performed upon “Defendants’ implied request.” (FAC ¶ 136.) Defendants’ conduct attests it requested Plaintiff perform and continue to perform COVID Testing and Services by paying certain claims. (FAC ¶ 135.) Defendants continued to benefit from the services provided by Plaintiff and failed to request that Plaintiff stop performing such services for its insured. (FAC ¶ 81.)

The court also finds that it is immaterial that the services provided were for the benefit of the Defendants’ insured rather than the Defendants themselves.  The FAC alleges that Defendants themselves benefitted from the services by underpaying for the services. (FAC ¶ 17.) Moreover, Defendants fail to cite case law holding that services provided in relation to medical services are not recoverable unless an express agreement exists between the parties given that legislation exists imposing on Defendants an obligation to pay such services.

Based on the above, the court finds that Plaintiff has sufficiently pled a claim for quantum meruit. The demurrer to the fourth cause of action is overruled.

D.        Fifth Cause of Action – Goods and Services Rendered

“‘The measure of recovery in quantum meruit is the reasonable value of the services rendered, provided they were of direct benefit to the defendant.’” (Advanced Choices, Inc. v. State Dept. of Health Services (2010) 182 Cal.App.4th 1661, 1673 [internal quotations omitted].) “Accordingly, where services have been rendered under a contract which is unenforceable because not in writing, an action generally will lie upon a common count for quantum meruit.” (Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995.)

Defendants demur to the fifth cause of action on the basis that the claim is duplicative of the fourth cause of action for quantum meruit. (See CACI No. 371.) As the fifth cause of action is duplicative of the fourth cause of action, the demurrer is sustained without leave to amend.

E.        Third Cause of Action – Unjust Enrichment

“The elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.’” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593 citing Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.)“[T]he ‘mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefor.’[Citation.]” (Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 134.)

“[T]here is no cause of action in California for unjust enrichment. The phrase ‘Unjust Enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so. [Citation] Unjust enrichment is ‘a general principle, underlying various legal doctrines and remedies, rather than a remedy itself.’ [Citation.] It is synonymous with restitution. (Melchior v. New Line Cinema (2003) 106 Cal.App.4th 779, 793 [internal quotations omitted].)

Defendants demur to the third cause on the basis that it is not a separate cause of action in California. As shown above, California courts have recognized a claim for unjust enrichment when a party is unjustly enriched at the expense of another. (See Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238 [“The elements of a cause of action for unjust enrichment are simply stated as ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’”].)

Accordingly, the demurrer to the third cause of action is overruled.

F.        Sixth Cause of Action – Money Had and Received

“A cause of action for money had and received is stated if it is alleged the defendant ‘is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff.’” (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) “An action for money had and received will lie to recover money paid by mistake, under duress, oppression or where an undue advantage was taken of plaintiffs' situation whereby money was exacted to which the defendant had no legal right.” (Ezmirlian v. Otto (1934) 139 Cal.App. 486, 496.)

Defendants demur to the sixth cause of action on the basis that the FAC does not allege that Defendants received money that “belongs” to Plaintiff. Defendants cite cases in which healthcare providers were found to not be third-party beneficiaries of a health insurance policy or contract. (Cal. Emergency Physicians Med. Grp. v. PacifiCare of Cal. (2003) 111 Cal.App.4th 1127, 1138; Allied Anesthesia Med. Grp., Inc. v. Inland Empire Health Plan (2022) 80 Cal.App.5th 794, 807.) The cases cited do not dispel Plaintiff’s allegation that “Defendants, through payments made by their insureds, received money that was intended, in part, to be used for the benefit of [Plaintiff], an out-of-network health care provider that provided COVID Testing and Services to the insureds.” (FAC ¶ 140.)

The court finds that Plaintiff has not pled that a sum certain is owed or capable of being made certain. Thus, the demur to the sixth cause of action is sustained with leave to amend.

G.        Seventh Cause of Action – Open Book Account

A “book account” is defined as a “‘detailed statement, kept in a book, in the nature of debit and credit, arising out of contract or some fiduciary relation.' It is, of course, necessary for the book to show against whom the charges are made. ... It must also be made to appear in whose favor the charges run.” (Joslin v. Gertz (1957) 155 Cal.App.2d 62, 65 quoting Wright v. Loaiza (1918) 177 Cal. 605, 606-607.) A book account may furnish the basis for an action on a common count ‘... when it contains a statement of the debits and credits of the transactions involved completely enough to supply evidence from which it can be reasonably determined what amount is due to the claimant.’ [Citations].” (Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 708.) “A book account is described as  ‘open’ when the debtor has made some payment on the account, leaving a balance due.” (Id. at 708.)

Defendants demur to the seventh cause of action on the basis that Plaintiff fails to allege a fiduciary relationship or any agreement between Plaintiff and Defendants to treat the payable amounts as an Open Book Account.

The FAC states that Plaintiff and Defendant “had financial transactions with each other involving the payment for health care services performed by [Plaintiff] for the benefit of Defendants and their insureds.” (FAC ¶ 144.) Plaintiff “in the regular course of business, kept an electronic account of the debts and credits involved in the financial transactions between [Plaintiff] and Defendants.” (FAC ¶ 145.) Defendants owe “not less than approximately $9,827,475.65.” (FAC ¶ 146.)

“As Witkin states in his text, ‘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.’” (Kawasho Internat., U.S.A. Inc. v. Lakewood Pipe Service, Inc. (1983) 152 Cal.App.3d 785, 793.) Here, Plaintiff has sufficiently pled that an implied in fact or quasi-contract existed between Plaintiff and Defendants wherein Defendants agreed to pay for certain services and either underpay or denied payment for COVID Testing and Services. (FAC ¶¶ 19, 48, 62, 64, 65, 106, 117.) However, Plaintiff has not pled that the sum owed is a sum certain or capable of being made certain.

Therefore, the demurrer to the seventh cause of action is sustained with leave to amend.

H.        Eighth Cause of Action – Account Stated

“The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.)

Defendants argue the eighth cause of action fails because it does not allege any agreement between the parties as to the correct amount due and owing.  “To constitute an account stated, 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. In addition, the amount agreed upon must be either specifically stated or readily calculable.” (H. Russell Taylor's Fire Prevention Service, Inc. v. Coca Cola Bottling Corp. (1979) 99 Cal.App.3d 711, 726–727.)

The FAC states that by paying Plaintiff for its COVID Testing and Services around May 2020, by words and conduct, Defendants agreed to the amount Plaintiff claimed to be due for each claim was the correct amount owed. (FAC ¶ 149.) Defendants owe an amount “not less than approximately $9,827,475.65.” (FAC ¶ 151.) The FAC also states that pursuant to § 3202(a)(2) of the CARES Act when there is no negotiated rate for COVID-19 testing, health insurers “shall reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website.” (FAC ¶ 47.) “Therefore, 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.” (FAC ¶ 47.) Pursuant to § 3202(a)(2) of the CARES Act, Defendants agreed to pay for services at the price listed on Plaintiff’s public internet website.

Based on the above, the court finds that the eighth cause of action is properly pled, and the demurrer to the eighth cause of action is overruled.

I. Tenth Cause of Action - Declaratory and Injunctive Relief

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations.  (See CCP § 1060; Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) “[W]hen the parties maintain a contractual relationship which will continue after resolution of the immediate dispute, and may give rise to additional claims, declaratory relief can help guide their future conduct and avoid multiple lawsuits.” (Cardellini v. Casey (1986) 181 Cal.App.3d 389, 396.)

“An injunction is a writ or order requiring a person to refrain from a particular act.” (CCP § 525.) “Injunctive relief is a remedy, not a cause of action.” (City of South Pasadena v. Department of Transportation (1994) 29 Cal.App.4th 1280, 1293.) “‘A permanent injunction is merely a remedy for a proven cause of action. It may not be issued if the underlying cause of action is not established.’” (Id. at 1293.)

Defendants do not demurrer to Plaintiff’s request for declaratory relief but to Plaintiff’s request for injunctive relief. Defendants argue the tenth cause of action fails because Plaintiff requests that Defendants obey various statutes and is impermissibly broad and vague under California Law. 

The FAC requests that Defendants “fully cover and provide reimbursement on claims submitted to them for COVID Testing and Services” “[u]nder the FFCRA, the CARES Act, California Health and Safety Code, and other relevant law[.]” (FAC ¶ 161.) “[Plaintiff] seeks a declaration that Defendants cease violating the FFCRA, CARES Act, and California Health and Safety Code by correctly reimbursing [Plaintiff] for COVID Testing and Services at the reasonable rates charged to Defendants.” (FAC ¶ 164.) “[Plaintiff] also seeks injunctive relief to order Defendants to cease violating the FFCRA, CARES Act, and California Health and Safety Code by turning over the amounts that PMH earned for the COVID Testing and Services provided during the pandemic based on the reasonable rates charged to Defendants.” (FAC ¶ 165.) Plaintiff also “seeks injunctive relief to order Defendants to reimburse PMH and other out of network providers the amount listed on the provider’s website for claims submitted for COVID Testing and Services during the COVID Pandemic.” (FAC ¶ 167.)

An injunction must comport with the due process principle of fair notice. (People v. Uber Technologies, Inc. (2020) 56 Cal.App.5th 266, 316.) An injunction must provide “reasonable specificity.” (Id. at 316.) The court finds that Plaintiff’s request for injunctive relief is overbroad because it mandates that Defendants “obey” the FFCRA, the CARES Act, and the Health and Safety Code instead of specifically stating what provision it seeks to enforce.  (See N.L.R.B. v. Express Pub. Co. (1941) 312 U.S. 426, 433 [The fact that an employer had violated provisions of the National Labor Relations Act did not mean the National Labor Relations Board could issue a broad injunction prohibiting the employer from committing other unfair labor practices in the future.].) The court may not issue such a broad injunction that requires Defendants to obey the FFCRA, the CARES Act, and the Health and Safety Code. (See Long Beach Memorial Medical Center, 71 Cal.App.5th at 343; City of Redlands v. County of San Bernardino (2002) 96 Cal.App.4th 398, 416; Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 739, 752.)

Plaintiff is not seeking an injunction that specifically states that pursuant to § 3202(a)(2) of the CARES Act, Defendants pay $125.00 for the COVID-19 IgG Antibody Testing and “a reasonable cash price for SARS-CoV-2 (COVID-19) qPCR Testing of $195.00” as posted on Plaintiff’s public interest website. (See FAC ¶ 31.) Plaintiff’s request for injunctive relief also does not specifically state that under § 6001(a)(2) of the FFRCA it seeks to require that Defendants pay for “items and services,” nor does Plaintiff specify what those “items and services” are with sufficient specificity as put Defendants on notice as what conduct is prohibited.

Therefore, the demurrer to the tenth cause of action is sustained with leave to amend.

IV.       Motion to Strike

Defendants request that the following be stricken from Plaintiff’s FAC:

1)     The portion of Paragraph 113 of the FAC that reads “as well as disgorgement and restitution for the amounts not paid to PMH in violation of the FFCRA Section 6001, CARES Act Section 3202, and California Health and Safety Code Section 1342.2, plus interest and attorneys’ fees”;

2)     Paragraphs 1, 2, 3, 4, and 8 of the Prayer for Relief;

3)     The portion of Paragraph 5 of the Prayer for Relief that reads “including restitution and disgorgement for amounts unlawfully withheld by Defendants and owed to Plaintiff”; and

4)     The portions of Paragraphs 7, 16, 18, 19, 26-29, 32-36, 38, 41, 44, 47, 48, 61, 63, 66, 67, 69-76, 82, 83, 90-93, 95, 99, 100, 102-104, 106-108, 111, 113, 115, 117, 121, 122, 161-165 of the FAC, and Paragraphs 6 and 7 of the Prayer for Relief, which reference to the FFCRA and the CARES Act.

First, Plaintiff is correct that Defendants cannot seek to strike such broad portions of the FAC that reference the FFCRA and CARES Act via a Motion to Strike “Where a motion to strike is so broad as to include relevant matters, the motion should be denied in its entirety.” (Triodyne, Inc. v. Superior Court for Los Angeles County (1966) 240 Cal.App.2d 536, 542.)

Whether Plaintiff was required to comply with 45 C.F.R. § 182.40 in listing its “cash price” for its services and whether Plaintiff did in fact comply with 45 C.F.R. § 182.40 is a question of fact and not a determination the court can make by way of a motion to strike. “[A] motion to strike is generally used to reach defects in a pleading which are not subject to demurrer. A motion to strike does not lie to attack a complaint for insufficiency of allegations to justify relief; that is a ground for general demurrer.” (Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340, 342.) Moreover, Plaintiff has sufficiently alleged an “ownership interest” in the fund Defendants have withheld from Plaintiff in connection with the COVID-19 benefits provided by Plaintiff to sustain a cause of action under the UCL. (FAC ¶¶ 95, 108, 111, 165.) Lastly, Plaintiff can proceed on a cause of action for violation of the UCL remised on violations of the Knox-Keene Act. (See Bell, 131 Cal.App.4th at 216.)

As Plaintiff’s third, fourth, and eighth causes of action survived Defendants’ demurrer, Plaintiff may seek prejudgment interest pursuant under Civ. Code § 3288 and post-judgment interest after judgment is entered under CCP § 685.100. Any request to strike references to prejudgment and post-judgment interest is denied.

However, the court agrees that Plaintiff has failed to show that it is entitled to attorney’s fees or punitive damages.  Attorney’s fees may be recovered as costs when authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5(a)(10).) Plaintiff fails to identify what statute or law authorized the court to award Plaintiff attorney’s fees.

To state a claim for punitive damages under Civil Code § 3294, a plaintiff must allege specific facts showing that the defendant has been guilty of malice, oppression, or fraud. (Smith v. Superior Court (1992) 10 Cal. App. 4th 1033, 1042.)  The basis for punitive damages must be pled with specificity; conclusory allegations devoid of any factual assertions are insufficient. (Id.)  

Plaintiff fails to show the FAC pleads punitive damages with the requisite specificity. Moreover, since punitive damages are sought against a corporation, Plaintiff must show that a managing agent, officer, or director of the corporation authorized or ratified the wrongful conduct. Civ. Code § 3294, subd. (b); White v. Ultamar (1999) 21 Cal.4th 563, 572.) Therefore, the court grants Defendants request to strike punitive damages.

Based on the above, Defendants’ request to strike Paragraph 113 of the complaint is granted in part as to the phrase “and attorneys’ fees.” (FAC ¶ 115.) The request to strike paragraphs 2, 3,7 and 8 of the Prayer for Relief is granted with leave to amend. The request to strike paragraphs 1, 4, 5, and 6 of the Prayer for Relief is denied. The court also denies Defendants’ request to strike Paragraphs 7, 16, 18, 19, 26-29, 32-36, 38, 41, 44, 47, 48, 61, 63, 66, 67, 69-76, 82, 83, 90-93, 95, 99, 100, 102-104, 106-108, 111, 113, 115, 117, 121, 122, 161-165 of the FAC.

Conclusion

The demurrer to the second, fifth, and ninth causes of action is sustained without leave to amend.

The demurrer to the sixth, tenth and seventh causes of action is sustained with leave to amend.

The demurrer to the third, fourth, and eighth causes of action is overruled.

The Motion to strike is granted in part as to Paragraph 15 of the FAC as to the phrase “and attorneys’ fees.” The request to strike paragraphs 2, 3,7, and 8 of the Prayer for Relief is granted with leave to amend. The request to strike paragraphs 1, 4, 5, and 6 of the Prayer for Relief is denied. The court also denies the Defendants’ request to strike Paragraphs 7, 16, 18, 19, 26-29, 32-36, 38, 41, 44, 47, 48, 61, 63, 66, 67, 69-76, 82, 83, 90-93, 95, 99, 100, 102-104, 106-108, 111, 113, 115, 117, 121, 122, 161-165 of the FAC.