Judge: Gary Y. Tanaka, Case: 22TRCV00277, Date: 2023-02-16 Tentative Ruling
Case Number: 22TRCV00277 Hearing Date: February 16, 2023 Dept: B
LOS ANGELES SUPERIOR COURT –
SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka Thursday, February 16, 2023
Department B Calendar No. 8
PROCEEDINGS
R&R Surgical Institute v. Blue Cross
Blue Shield of Arizona, et al.
22TRCV00277
1. Teamsters Western Region & Local 177 Health Care
Plan and Blue Cross and Blue Shield of Arizona, Inc.’s Demurrer to Complaint
2. Blue Cross and Blue Shield of Arizona, Inc.’s Motion
to Quash Service of Summons and Complaint
TENTATIVE RULING
Teamsters
Western Region & Local 177 Health Care Plan’s Demurrer to Complaint is
overruled.
Blue
Cross and Blue Shield of Arizona, Inc.’s Demurrer to Complaint is moot.
Blue
Cross and Blue Shield of Arizona, Inc.’s Motion to Quash Service of Summons and
Complaint is granted.
Background
Plaintiff filed its Complaint on April 11,
2022. Plaintiff alleges the following
facts. Plaintiff is an out-of-network medical provider with a history of
treating participants of the health plan of Defendants. Plaintiff alleges that it provided medically
necessary services to insured member patients (Patients A-C). Plaintiff alleges that Defendants made oral
promises and representations that they would pay certain percentages of the
allowable rate and that no pre-authorization was required. However, ultimately, the benefits paid were
inadequate. Plaintiff asserts causes of
action for (1) Breach of Oral Contract; (2) Promissory Estoppel; (3) Breach of
Oral Contract; (4) Promissory Estoppel. The
first and second causes of action are only asserted against Blue Cross and Blue
Shield of Arizona, Inc. The third and
fourth causes of action are asserted against all Defendants.
Meet
and Confer
Defendants set forth a meet and confer declaration in
sufficient compliance with CCP § 430.41. (Decl., Michael Zorkin, ¶ 2.)
Request for Judicial Notice
Plaintiff’s request for judicial notice is granted, in
part. The Court takes judicial notice of its own file, but, makes no order,
comment, or finding that this order has or does not have any precedential value
in this action.
Objections
Defendant’s objection to the request
for judicial notice is sustained, in part. The Court takes judicial notice of its own
file but does not make a finding that this order has any precedential value in
this action.
Demurrer
A
demurrer tests the sufficiency of a complaint as a matter of law and raises
only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th
1702, 1706.) In testing the sufficiency
of the complaint, the court must assume the truth of (1) the properly pleaded
factual allegations; (2) facts that can be reasonably inferred from those
expressly pleaded; and (3) judicially noticed matters. (Blank v. Kirwan (1985)
39 Cal.3d 311, 318.) The Court may not
consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7
Cal.App.4th 634, 638.) Because a
demurrer tests the legal sufficiency of a complaint, the plaintiff must show
that the complaint alleges facts sufficient to establish every element of each
cause of action. (Rakestraw v.
California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts
sufficient to constitute a cause of action, courts should sustain the
demurrer. (C.C.P., § 430.10(e); Zelig
v. County of Los Angeles (2002) 27 Cal.App.4th 1112, 1126.)
Sufficient facts are the essential facts
of the case "with reasonable precision and with particularity sufficiently
specific to acquaint the defendant with the nature, source, and extent of his
cause of action.” (Gressley v.
Williams (1961) 193 Cal.App.2d 636, 643-644.) "Whether the plaintiff will be able to
prove the pleaded facts is irrelevant to ruling upon the demurrer." (Stevens v. Superior Court (1986) 180
Cal.App.3d 605, 609–610.) Under Code
Civil Procedure § 430.10(f), a demurrer may also be sustained if a complaint is
“uncertain.” Uncertainty exists where a
complaint’s factual allegations are so confusing they do not sufficiently
apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp.
(1986) 185 Cal.App.3d 135, 139, fn. 2.)
Defendants demur to the
Complaint and each cause of action on the ground that the Employee Retirement Income Security Act
(“ERISA”) Section 514(a) preempts all state law causes of action. 29 USC § 1144(a); Blue Cross of Cal. v. Anesthesia Care Assocs. Medical Grp., Inc.,
187 F.3d 1045, 1051 (9th Cir. 1999). “Section 514(a) of ERISA
preempts state law claims that relate to employee benefit plans. 29 U.S.C. §
1144(a). We have held that ERISA preempts common law theories of breach of
contract implied in fact, promissory estoppel, estoppel by conduct, fraud and
deceit and breach of contract.” Aetna Life Ins. Co. v. Bayona, 223 F.3d
1030, 1034 (9th Cir. 2000). The demurrer also makes reference to
preemption pursuant to the civil enforcement provision - 29 U.S.C. § 1132(a) (§
502(a)). The Reply appears to clarify
that the demurrer is solely based on “conflict” preemption under Section
514(a).
Here, the causes of action are
not preempted because ERISA does not preempt claims by a third-party suing an
ERISA Plan, not as the assignee of a Plan member, but as an independent entity.
The causes of action are not dependent
on the right to recover Plan benefits. Plaintiff’s
allegations refer to Defendants’ conduct outside the Plan. For
example, Plaintiffs allege that Defendants made promises and representations
that they would provide benefits independent of the Plan. In Morris
B. Silver M.D. v. ILWU-PMA Welfare Plan (2016) 2 Cal.App.5th 793 (“Silver”),
the Court held that the state law claims for breach of oral contract, quantum
meruit, and promissory estoppel were not subject to preemption under ERISA
because the claims were based on the Plan’s alleged oral agreement to pay the
medical provider for health care services. Similarly, here, in the instant action,
Plaintiff’s claims are based on oral representations and promises to pay for
the represented rate of services.
Defendants’ attempt to distinguish Silver is unavailing. Defendants argue that the Plaintiff in Silver
did not invoke the Plan terms, whereas here, Plaintiff reiterated Plan payment
terms in detail with respect to the amount it believes it should have been paid.
Defendants also argue that the facts in Silver involved a denial of all
payments, whereas, in the instant action, there is no dispute regarding
coverage, but instead regarding insufficient payments.
The Court finds the following passage in Morris B. Silver M.D., Inc.
v. International Longshore & Warehouse etc. (2016) 2 Cal.App.5th
793, 806–807 instructive:
“The gravamen of Silver's causes of action for breach of oral contract,
quantum meruit and promissory estoppel is that the Plan orally agreed to pay
Silver for health care services in the specified amounts, authorized the
provision of those services and then failed to pay as agreed. Although Silver
has not asserted a cause of action for negligent misrepresentation, its claims
are indistinguishable from those found not to be preempted by Memorial
Hospital and those courts that have applied the two-part Memorial
Hospital test. Like those
cases, Silver's three contract/quasi-contract causes of action do not address
an area of exclusive federal concern. Silver
is not, as the Plan argues, seeking compensation for the Plan's decisions
to deny coverage under the terms of an ERISA plan; its alleged right to
reimbursement does not depend on the Plan's terms. Rather, the claims are predicated on a garden-variety
failure to make payment as promised for services rendered. To be sure, the claims would not exist but for
an ERISA plan and are predicated on somebody's interpretation of the plan. But the fact an ERISA plan is an initial step
in the causation chain, without more, is too remote of a relationship with the
covered plan to support a finding of preemption.” Id.
Thus, the fact that the claim was not paid rather than underpaid was not
essential to the Silver Court’s analysis. Likewise, the details of the type of payment
terms that were set forth in the Plan as opposed to allegations of
representations of the type of payments that were promised to be made to
Plaintiff (which apparently resemble payment terms under the Plan) was also not
dispositive to the analysis. The instant
action closely mirrors the facts of Silver in that the Plan itself is
simply an initial step in the causation chain. The claims asserted by Plaintiff is not
dependent on the Plan, but instead are “garden variety” claims for failure to
make promised payments for services rendered.
Third
Cause of Action for Breach of Oral Contract
Defendant’s demurrer to the third cause of action is
overruled. Plaintiff states facts
sufficient to constitute a cause of action.
“The elements of a cause of action for breach of contract
are: (1) the contract, (2) plaintiff's performance or excuse for
nonperformance, (3) defendant's breach, and (4) the resulting damages to
plaintiff.” Coles v. Glaser (2016) 2
Cal.App.5th 384, 391(internal quotations omitted). Plaintiff has alleged facts setting forth the
existence of the contract, plaintiff’s performance, defendant’s breach, and
resulting damages. (Complaint, ¶¶ 69-76.)
Defendant’s
demurrer to the third cause of action is overruled.
Fourth
Cause of Action for Promissory Estoppel
Defendant’s
demurrer to the fourth cause of action is overruled. Plaintiff states sufficient facts to state a
cause of action.
“[T]he
doctrine of promissory estoppel is used to provide a substitute for the
consideration which ordinarily is required to create an enforceable promise....
The purpose of this doctrine is to make a promise binding, under certain
circumstances, without consideration in the usual sense of something bargained
for and given in exchange....” Aceves v. U.S. Bank, N.A. (2011) 192
Cal.App.4th 218, 230–231 (internal citations and quotations omitted). “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.” Flintco
Pacific, Inc. v. TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727,
734.
Plaintiff
pleads sufficient facts to meet the elements of promissory estoppel. Plaintiff
pleads a clear and unambiguous promise – to pay the out-of-network provider,
Plaintiff, 80 percent of the allowable rate for the patients, after the
deductible is met, and that there were no pre-authorization or
pre-certification requirements that were needed to be satisfied. (Complaint, ¶¶ 77-79.) Plaintiff alleges that it reasonably and
foreseeably relied upon these promises and then provided medical services to
the patients. (Complaint, ¶¶ 80-81.) Plaintiff alleges that it was damaged by the
reliance by not obtaining full payment for services rendered. (Complaint, ¶¶ 82-83.)
Defendant’s demurrer to the fourth cause of
action is overruled.
Thus,
for the foregoing reasons, Defendant Teamsters Western Region & Local 177
Health Care Plan (“Teamsters”) demurrer to the Complaint is overruled. The Court notes that Defendant Teamsters was
not named as a Defendant to the first and second causes of action.
Defendant
Teamsters Western Region & Local 177 Health Care Plan is ordered to file
and serve an Answer within 10 days of this date.
Defendant Blue Cross and Blue Shield of Arizona,
Inc.’s Demurrer to the Complaint and each of the four causes of action to which
it was named is moot. The Court refers
the parties to the ruling on the Motion to Quash set forth below.
Motion
to Quash Service of Summons and Complaint
Defendant
Blue Cross and Blue Shield of Arizona, Inc. moves for an order quashing service
of the summons and complaint pursuant to Code of Civil Procedures section
418.10(a)(1). Defendant asserts that it
is an Arizona corporation and lacks minimum contacts with California for this
Court to exercise personal jurisdiction.
Objections
Defendant’s
objections 1 to 9 are sustained.
Motion
to Quash
Plaintiff
has the burden to show that sufficient minimum contacts exist between Defendant
and California to establish personal jurisdiction. See, Mihlon v. Superior Court (1985)
169 Cal.App.3d 703, 710; See, also, Edmunds v. Superior Court (1994) 24
Cal.App.4th 221, 230-31. Plaintiff must
meet this burden by a preponderance of the evidence. See, Ziller Elec. Lab GmbH v. Superior
Court (1988) 206 Cal.App.3d 1222, 1232.
General
Jurisdiction
A
non-resident defendant may be subject to the forum state’s general jurisdiction
if the defendant’s contacts are substantial, continuous, and systematic. See Vons Companies, Inc. v. Seabest Foods,
Inc. (1996) 14 Cal.4th 434, 445. Plaintiff must provide competent evidence
to establish that Defendant’s connections with California are sufficiently
continuous and systematic to impose general jurisdiction. See Int’l Shoe Co. v. Wash., 326 U.S.
310, 317 (1945). Plaintiff has failed to submit competent evidence to establish
that Defendant has substantial, systematic, and continuous contacts to impose
general jurisdiction upon Defendant. The only evidence submitted was the
declaration of Dr. Ramin Roohipour who lacks competency to testify as to the
business practices of Defendant.
Specific
Jurisdiction
“When
determining whether specific jurisdiction exists, courts consider the
relationship among the defendant, the forum, and the litigation. A court may
exercise specific jurisdiction over a nonresident defendant only if: (1) the
defendant has purposefully availed himself or herself of forum benefits; (2)
the controversy is related to or arises out of the defendant's contacts with
the forum; and (3) the assertion of personal jurisdiction would comport with
fair play and substantial justice.” Snowney
v. Harrah’s Ent., Inc. (2005) 35 Cal.4th 1054, 1062 (internal citations and
quotations omitted).
Ownership and control by a nonresident
parent corporation of a subsidiary that does business in California does not,
without more, subject the parent to jurisdiction. DVI, Inc. v Superior Court
(2002) 104 Cal.App.4th 1080, 1092-97. However, a parent corporation may be
subject to specific jurisdiction if it causes its subsidiary to engage in forum
contacts despite the fact that the separateness of the corporations is
maintained. Anglo Irish Bank Corp., PLC v Superior Court (2008) 165 Cal.App.4th 969, 982.
So long as the parent entity purposefully directed its activities toward
California, either directly or through its subsidiary, specific jurisdiction
may be found. Healthmarkets, Inc. v Superior Court (2009) 171
Cal.App.4th 1160, 1169.
Here,
Plaintiff has not provided competent evidence that Defendant purposefully
availed itself of the forum benefits, and that the controversy is related to
the Defendant’s contacts within the forum. Plaintiff’s primary argument is that specific
jurisdiction can be imposed because Defendant’s members can receive care in all
other states through the BlueCard program. However, imposition of jurisdiction merely based
on nationwide coverage has been rejected. Elkman v. Nat’l States Ins. Co. (2009) 173
Cal.App.4th 1305, 1318 (2009). “[W]e conclude a nonresident insurer does not
subject itself to personal jurisdiction in a forum state merely by accepting
premium payments sent from the forum state and by processing and paying claims
submitted by its insureds for treatment rendered in the forum state.” Id.
Plaintiff
submits no authority to show that specific jurisdiction can be imposed based on
the BlueCard program. The Court finds
persuasive non-binding but relevant authority which has analyzed this issue and
rejected the jurisdiction argument. Stanford Health Care v. Hawaii Medical
Service Association (N.D. Cal., Sept. 2, 2022, No. 21-CV-06720-HSG) 2022 WL
4021759, at *3. “[C]ourts regularly find a provider's participation in the
BlueCard program insufficient to establish specific personal jurisdiction. See
Craig Hosp. v. Empire Healthchoice, Inc., No. 18-CV-00794-WYD-STV, 2019 WL
10258608, at *4-5 (D. Colo. Apr. 1, 2019) (collecting cases); see also
Healthcare Ally Mgmt. of California, LLC v. Blue Cross Blue Shield of Minnesota,
787 F. App'x 417, 418 (9th Cir. 2019) (finding patient insurance contracts to
be insufficient evidence of defendant Minnesota provider's purposeful availment
in California where “six of the nine patients here were covered under plans
administered – but not insured – by [provider], and the other three patients
were insured through [provider] plans issued in Minnesota to Minnesota
residents”). Id.
In
addition, merely having a website that can be accessed by California residents does
not, in and of itself, create jurisdiction. Jacqueline B. v. Rawls Law Group,
P.C. (2021) 68 Cal.App.5th 243, 254. The website must target California
residents. Here, Defendant submitted evidence that coverage cannot be obtained
on the website with a California zip code. (Supplemental Declaration, Robin Smith, ¶ 4.)
In
addition, as noted above, Plaintiff submitted no competent evidence in support
of the opposition. The declaration of Dr.
Ramin Roohipour lacks competency to testify as to the business practices of
Defendant and Roohipour failed to provide foundation and authentication to
testify as to the contents and meaning of Defendant’s website.
Finally, the Court finds that, considering
the lack of evidence submitted by Plaintiff, as outlined above, the interests
of fair play and substantial justice do not support the imposition of personal
jurisdiction.
Therefore,
Defendant’s Motion to Quash Service of Summons and Complaint is granted.
Defendants
are ordered to given notice of this ruling.