Judge: Joseph Lipner, Case: 24STCV08196, Date: 2024-10-10 Tentative Ruling

Case Number: 24STCV08196    Hearing Date: October 10, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant UnitedHealthcare Insurance Company (“Defendant”) demurs to the Complaint filed by Plaintiffs Emsurgcare and Emergency Surgical Assistance (“ESA”) (collectively, “Plaintiffs”).

The Court OVERRULES the demurrer.

Background

            This is a health insurance dispute. The following facts are taken from the allegations of the Complaint, which the Court accepts as true for the purposes of the demurrer.

            Plaintiffs are medical companies that provide medical services to patients. Defendant is a health insurance provider.

            Plaintiffs allege that a patient to whom they provided emergency medical services (the “Patient”) received health insurance through Defendant pursuant to an insurance agreement (the “Plan”). Emsurgcare billed $65,000.00 to Defendant for services rendered to the Patient. Defendant determined that $3,082.22 would be paid. ESA billed $63,000.00, of which Defendant paid nothing.

            Plaintiffs allege that Defendant satisfies the definition of a Health Care Service Plan under Health & Safety Code, section 1345, subd. (f), which includes “[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees.” (Health & Saf. Code, § 1345, subd. (f).) Plaintiff alleges that Defendant meets this definition because all issuances of payment for the medical services at issue in this case come from Defendant.

            Plaintiffs allege that they are entitled to the lesser of the actually billed charges or the then-current usual, customary, and reasonable rate for the medical services provided.

            Plaintiffs filed this action on April 2, 2024, raising one claim for quantum meruit.

            Defendant demurred to the Complaint on September 16, 2024. Plaintiffs filed an opposition and Defendants filed a reply.

Request for Judicial Notice

The Court grants the parties’ requests for judicial notice and takes notice of the submitted public records. The Court solely takes judicial notice of the existence of the records, and not the truth of any facts contained therein.

Legal Standard

“The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds:

(a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading.

(b) The person who filed the pleading does not have the legal capacity to sue.

(c) There is another action pending between the same parties on the same cause of action.

(d) There is a defect or misjoinder of parties.

(e) The pleading does not state facts sufficient to constitute a cause of action.

(f) The pleading is uncertain. As used in this subdivision, “uncertain” includes ambiguous and unintelligible.

(g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.

(h) No certificate was filed as required by Section 411.35.”

(Code Civ. Proc., § 430.10.)

As a general matter, in a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) The court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Ibid.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

Discussion

            Under the Knox Keene Act, Health & Safety Code, sections 1340 et seq., “[a] health care service plan, or its contracting medical providers, shall reimburse providers for emergency services and care provided to its enrollees, until the care results in stabilization of the enrollee[.]” (Health & Saf. Code, § 1371.4, subd. (b).) Where an insurance provider violates section 1371.4, the medical service provider in question has an implied-in-law right to recover for the reasonable value of its services. (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 221.)

Whether Defendant is a Health Care Service Plan

            Plaintiffs allege that Defendant satisfies the definition of a Health Care Service Plan under Health & Safety Code, section 1345, subd. (f), which includes “[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees.” (Health & Saf. Code, § 1345, subd. (f) [emphasis added].) Plaintiff alleges that Defendant meets this definition because all issuances of payment for the medical services at issue in this case come from Defendant.

Defendant argues that this definition is inapplicable due to provisions of the Plan, provided in the Declaration of Jane Stalinski, stating that Defendant does not provide medical services or make treatment decisions. (See Defendant’s Request for Judicial Notice, Stalinski Decl., A Ex. at p. 58.) Notwithstanding the Court’s judicial notice of the fact that the plan was an exhibit in a separate case, the Court is not able to rely on those filings to establish the truth of the contents of the exhibit. Nor is external evidence otherwise permitted in order to resolve a demurrer. Furthermore, even if the Court were to take Defendant’s factual assertions as true, they do not disprove Plaintiff’s allegation that Defendant undertook to reimburse the cost of the Patient’s medical services.

Defendant argues that the Chief Counsel of the Department of Managed Health Care (“DMHC”) confirmed in a letter that Defendant is not a Health Care Service Plan, is not regulated by the DMHC, and is not subject to the Knox-Keene Act. (See Slaught Decl. ¶ 3; Defendant’s Request for Judicial Notice, Ex. 2.) These assertions rely on facts and nonbinding legal opinions contained in the materials submitted for judicial notice – which the Court cannot rely on as evidence.

“This chapter shall not apply to:

“(1) A person organized and operating pursuant to a certificate issued by the Insurance Commissioner unless the entity is directly providing the health care service through those entity-owned or contracting health facilities and providers, in which case this chapter shall apply to the insurer's plan and to the insurer.”

(Health & Saf. Code, § 1343, subd. (e).)

Defendant argues that it is undisputed that Defendant is organized and operating pursuant to a certificate issued by the Insurance Commissioner. Again, however, Defendant relies on judicially noticed materials to prove the truth of this matter.

Finally, Defendant cites a large number of unpublished federal cases the courts indicated that Defendant or related entities were not subject to the Knox-Keenes Act. (Demurrer at pp. 8:19-10:28; see Namdy Consulting Inc. v. UnitedHealthcare Ins. Co. 2018 WL 6507890, at *3 (C.D. Ca. Dec. 7, 2018); Ata Mazaheri, M.D., Inc. v. UnitedHealthcare Ins. Co. Inc., 2023 WL 5167362, at *7-9 (C.D. Cal. July 10, 2023); Emsurgcare v. UnitedHealthcare Ins. Co., 2024 WL 3742707, *6 (C.D. Cal. Aug. 8, 2024); Torres v. United Healthcare Ins. Co., 2024 WL 3498861, *11 (C.D. Cal. June 28, 2024); Talbot v. Pyure Brands LLC (Talbot I), 2023 WL 8191127, * 3 (C.D. Cal. Oct. 27, 2023); Talbot v. Pyure Brands Welfare Benefit Plan (Talbot II), 2024 WL 242468 (C.D. Cal. Jan. 4. 2024); Sanjiv Goel, M.D., Inc. v. United Healthcare Servs., Inc. (Goel v. UHS), 2024 WL 1361800 (C.D. Cal. Mar 29, 2024); Emsurgcare v. UnitedHealthcare Ins. Co., 2024 WL 2892319, *6 (C.D. Cal. June 7, 2024).)

While those cases may be considered as persuasive authority, they do not conclusively resolve the factual issues in this case. The Court therefore finds that Plaintiffs have adequately alleged that Defendant is a Health Care Service Plan.

While the Court concludes that it cannot decide this issue at the demurrer stage, if Defendant believes this issue is clear, the Court will entertain an early and focused summary judgment motion on the issue.

Failure to State a Claim

“Quantum meruit refers to the well-established principle that the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered. To recover in quantum meruit, a party need not prove the existence of a contract, 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.” (Chodos v. Borman (2014) 227 Cal.App.4th 76, 96, citations and quotation marks omitted.) Generally, “in order to recover under a quantum meruit theory, a plaintiff must establish both [1] that he or she was acting pursuant to either an express or implied request for such services from the defendant and [2] that the services rendered were intended to and did benefit the defendant.” (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248.)

Defendant argues that Plaintiff failed to allege that Defendant requested that Plaintiffs perform the medical services at issue. The Court disagrees that this is a requirement. “[T]he health care plans’ duty to reimburse arises out of the providers’ duty to render services without regard to a patient’s insurance status or ability to pay. … [T]he protection the Legislature granted to the providers [requires that] the duty to reimburse must be read as a duty to pay a reasonable and customary amount for the services rendered.” (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 220.) Thus, where the Knox Keene Act applies, the duty to reimburse arises out of the emergency treatment of the insured patient – not out of the insurance company’s request that the services be performed.

            Thus, the failure to allege that Defendant requested the Patient’s treatment does not defeat the quantum meruit claim.

ERISA Preemption

Defendant argues that the Employment Retirement Income Security Act (“ERISA”) preempts Plaintiffs’ quantum meruit claim.

Under ERISA, “a state-law cause of action is completely preempted if (1) ‘an individual, at some point in time, could have brought [the] claim under ERISA § 502(a)(1)(B),’ and (2) ‘where there is no other independent legal duty that is implicated by a defendant's actions.’ [Citation.]” (Marin General Hosp. v. Modesto & Empire Traction Co. (9th Cir. 2009) 581 F.3d 941, 946.) State law legal duties are not independent of ERISA where “interpretation of the terms of respondents' benefit plans forms an essential part of … [the] claim”, and “liability would exist … only because of [the] administration of ERISA-regulated benefit plans.” (Aetna Health Inc. v. Davila (2004) 542 U.S. 200, 213.)

Second, ERISA expressly preempts all state laws “insofar as they may now or hereafter relate to any employee benefit plan” under ERISA. (29 U.S.C. § 1144.) “A law ‘relates to’ an employee benefit plan, … if it has a connection with or reference to such a plan.” (Shaw v. Delta Air Lines, Inc. (1983) 463 U.S. 85, 96–97.) “A state-law claim has a ‘ “reference to” an ERISA plan’ if it ‘is premised on the existence of an ERISA plan’ or if ‘the existence of the plan is essential to the claim's survival.’ [Citation.]” (Depot, Inc. v. Caring for Montanans, Inc. (9th Cir. 2019) 915 F.3d 643, 665.)

To argue preemption, Defendant again rely on facts external to the pleadings, arguing that “Plaintiffs strategically omit that the Patient’s Plan is governed by ERISA.” (Demurrer at p. 14:7-8.) Defendants rely on judicially noticed materials to prove this fact. Specifically, Defendant asks the Court to rule in line with a court order sustaining Defendant’s demurrer in Ventura County Superior Court Case No. 2023CUB010724, which found that judicially noticed materials in that case showed that Defendant was an ERISA plan. This string of judicial notice is too attenuated to justify bringing in new facts for consideration on demurrer. The Court does not find that Defendant has established, at the pleading stage, that the Plan at issue was governed by ERISA.

The Court therefore overrules the demurrer.