Judge: Mark C. Kim, Case: 21LBCV00582, Date: 2022-09-01 Tentative Ruling
Case Number: 21LBCV00582 Hearing Date: September 1, 2022 Dept: S27
1.
Background Facts
Plaintiffs, Prime Healthcare Paradise Valley, LLC, et al. filed this
action against Defendant, Molina Healthcare, Inc. for damages arising out of
alleged underpayment for emergency health services provided to Molina’s members
enrolled in Medi-Cal. There are eleven plaintiffs
in the action, and they collectively assert claims for breach of implied in fact
contract and quantum meruit. Plaintiffs filed
their original complaint on 11/02/21, but filed their operative FAC on
11/23/21, prior to Defendant making an appearance in the action. On 5/13/22, the Court overruled Defendant’s
demurrer, which was made on the ground that Plaintiffs improperly joined one
another in the action.
On 6/10/22, Defendant filed a cross-complaint against all eleven plaintiffs. The cross-complaint includes causes of action
for restitution/unjust enrichment (commercial claims), restitution/unjust
enrichment (Medi-Cal claims), violation of BPC §17200, et seq., and money had
and received. In connection with all
claims, Molina alleges it overpaid the various plaintiffs (which it
collectively refers to as “Prime”) because of the plaintiffs’ billing and
claims submissions practices, including, but not limited to, failure to meet
sepsis billing requirements. At ¶20, it
alleges it made overpayments to Prime as a result of at least one of the following:
(i) issues related to the application of deductible and/or co-insurance
payments; (ii) issues related to coordination of benefits; (iii) issues related
to the application of payment rates; and/or (iv) issues related to the billing
codes used for certain services. In
connection with its commercial claims, Molina alleges Prime billed in excess of
the reasonable rate, and Molina is entitled to restitution in the form of any
over-payment it made as a result of the excessive billing. In connection with its Medi-Cal claims,
Molina alleges it believes it paid the correct amounts per the Medi-Cal rates,
which are set by Medi-Cal, to the extent it overpaid those amounts, it is
entitled to restitution.
2.
Demurrer to Cross-Complaint
a. Legal
Standard on Demurrer
A demurrer is a pleading used to test
the legal sufficiency of other pleadings. It raises issues of law, not fact,
regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to
challenge the truthfulness of the complaint; and for purpose of the ruling on
the demurrer, all facts pleaded in the complaint are assumed to be true,
however improbable they may be.
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 39 Cal.3d
311 (1985). No other extrinsic evidence can be considered (i.e., no “speaking
demurrers”). A demurrer is brought under CCP § 430.10 [grounds], § 430.30 [as
to any matter on its face or from which judicial notice may be taken], and §
430.50(a) [can be taken to the entire complaint or any cause of action
within]. Specifically, a demurrer may be
brought per CCP § 430.10(e) if insufficient facts are stated to support the
cause of action asserted. Per CCP
§430.10(a) a demurrer may be brought where the court has no jurisdiction of the
subject of the cause of action alleged in the pleading. Furthermore, demurrer for uncertainty will be
sustained only where the complaint is so bad that the defendant cannot
reasonably respond. CCP §
430.10(f).
However, in construing the
allegations, the court is to give effect to specific factual allegations that may
modify or limit inconsistent general or conclusory allegations. Financial
Corporation of America v. Wilburn, 189 Cal.App.3rd 764, 769 (1987). And, if the
facts pled in the complaint are inconsistent with facts which are incorporated
by reference from exhibits attached to the complaint, the facts in the incorporated
exhibits control. Further, irrespective of the name or label given to a cause
of action by the plaintiff, a general demurrer must be overruled if the facts
as pled in the body of the complaint state some valid claim for relief. Special
demurrers are not allowed in limited jurisdiction courts. (CCP § 92(c).)
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment. Goodman v.
Kennedy, 18 Cal.3d 335, 348 (1976). The burden is on the complainant to show
the Court that a pleading can be amended successfully. (Id.)
Finally, CCP section 430.41
requires that “[b]efore filing a demurrer pursuant to this chapter, the
demurring party shall meet and confer in person or by telephone with the party
who filed the pleading that is subject to demurrer for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the demurrer.” (CCP § 430.41(a).) The parties are to meet and confer
at least five days before the date the responsive pleading is due. (CCP §
430.41(a)(2).) Thereafter, the demurring party shall file and serve a declaration
detailing their meet and confer efforts. (CCP § 430.41(a)(3).)
b. Meet
and Confer
Molina provided the declaration of
its attorney, Sarah L. Harty, with the demurrer. Her declaration details her efforts to meet
and confer prior to filling the demurrer.
The Court finds the meet and confer efforts sufficient, and will rule on
the demurrer on its merits.
c. First
and Second Causes of Action, Unjust Enrichment/Restitution
Prime demurs to the first and second
causes of action on two grounds. First,
it contends unjust enrichment and restitution are not freestanding causes of
action. Second, it argues Molina has
failed to state sufficient facts to support any cause of action for unjust
enrichment.
Prime cites various cases that stand for the position that unjust enrichment
and restitution are not freestanding causes of action under CA law. Molina, in opposition to the demurrer, cites
Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th
1105, 1132 and Hirsch v. Bank of America (2003) 107 Cal.App.4th 708,
722 to support its position that a claim for unjust enrichment can be stated
under CA law. In Prakashpalan, the Court
stated (citations omitted):
The elements for a claim of unjust enrichment are “receipt of a benefit
and unjust retention of the benefit at the expense of another.” (citation.)
“The theory of unjust enrichment requires one who acquires a benefit which may
not justly be retained, to return either the thing or its equivalent to the
aggrieved party so as not to be unjustly enriched.” (citation.) It is not,
strictly speaking, 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.] ... It is synonymous with restitution.” (citation.) Ordinarily,
restitution is required only if “‘the benefits were conferred by mistake,
fraud, coercion or request.’” (citation.)
In Hirsch, the Court of Appeals was considering the trial court’s
ruling on a demurrer. It held (citations
omitted):
Unlike a claim for damages based on breach of a legal duty, appellants'
unjust enrichment claim is grounded in equitable principles of restitution. An
individual is required to make restitution when he or she has been unjustly
enriched at the expense of another. (citations.) A person is enriched if he or
she receives a benefit at another's expense. (citations.) The term “benefit”
connotes any type of advantage. (citations)
Appellants have stated a valid cause of action for unjust enrichment
based on Banks' unjustified charging and retention of excessive fees which the
title companies passed through to them. Banks received a financial
advantage—excessive fees charged to the title companies—which they unjustly
retained at the expense of appellants, who absorbed the overage.
While it appears clear there is a split of authority concerning whether
a claim for unjust enrichment can be stated as an independent claim (both
parties’ cited case law demonstrates this conflict), the Court is inclined to
overrule the demurrer, since the Hirsch Court expressly allowed the cause of action
to stand, and the Prakashpalan Court called it a “claim” instead of a “cause of
action,” but still allowed it to proceed.
The demurrer on the ground that unjust enrichment/restitution cannot be
stated as an independent cause of action is overruled.
Prime also demurs to these causes of action on the ground that Molina failed
to allege Prime is unjustly retaining a benefit. Prime then goes on to argue that various
specific details about overpayments have not been pled. Prime fails to show that doing so is required
at the pleading stage; these arguments appear to be the proper subject of
discovery. Molina has alleged that it
made overpayments to Prime, and if it did, it would be up to a jury to
determine the amount of those overpayments and whether Prime’s retention of
those payments is unjust. The demurrer is
overruled.
d.
Third
Cause of Action, Violation of BPC §17200, et seq.
Prime demurs to the third cause of action for unfair competition on the
grounds that (a) Molina lacks standing to advance the cause of action, (b)
Molina fails to allege any unlawful, unfair, or fraudulent conduct with particularity,
and (c) Molina is not “the general public,” as required to state this claim,
and instead is a sophisticated business entity.
Prime first argues Molina has not state a claim for unfair competition
because Molina lacks standing; specifically, Prime argues Molina has not
alleged an economic injury that is concrete and particularized, as well as
actual and imminent, as opposed to conjectural or hypothetical. Prime cites Bower v. AT&T Mobility, LLC
(2011) 196 Cal.App.4th 1545 to support its contention. In Bower, the plaintiff sued AT&T for making
representations that it was required to have consumers pay sales tax based on
the full price of a cell phone, even if they bought the phone at a discount. Plaintiff alleged that AT&T was required,
by law, to pay such taxes, but it was not legally obligated to pass those taxes
along to the purchasers of the phones. The
trial court sustained a demurrer, and the COA affirmed. It held that the plaintiff, even if she
alleged false statements, failed to allege she sustained any injury that was
more than conjectural or hypothetical as a result of the false statement; in other
words, even if AT&T had correctly phrased the requirement that IT pay the
taxes, it still could (and likely would) have chosen to pass that on to the consumer,
so there was no harm.
Bower is distinguishable from the instant case. In this case, Molina alleges it actually overpaid
Prime on various claims. Whether this
ends up ultimately being true is a topic for discovery and/or the trier of
fact. At the pleading stage, it is sufficient
to allege actual, as opposed to hypothetical or conjectural, damages.
Prime also argues Molina has failed to state facts showing unfair,
unlawful, or fraudulent conduct with particularity. Prime argues an unfair competition claim is
statutory in nature, and cites case law holding that statutory causes of action
must be pled with specificity. Molina
argues such particularity is not required, citing Alborzi v. Univ. of S.Cal.
(2020) 55 Cal.App.5th 155, 184.
Indeed, the Alborzi Court stated, “Particularized fact pleading is not
required for a UCL claim.” The demurrer on
this ground is therefore also overruled.
Prime’s final argument is that Molina is not a consumer, and its claims,
as a sophisticated business, do not fall into the §17200 statutory scheme. Prime cites Rosenbluth Internat., Inc. v.
Superior Court (2002) 101 Cal.App.4th 1073, 1075 in support of this position. Rosenbluth held that a non-injured person
cannot sue under the UCL on behalf of members of the general public when those
members did not suffer injury.
Rosenbluth has no bearing on the instant case, wherein Molina alleges it
was personally harmed, and is not suing on behalf of the general public.
The demurrer to the third cause of action is overruled.
e.
Fourth
Cause of Action, Money Had and Received
Prime argues, first, that the cause of action for money had and received
rises and falls with the other causes of action. Because the demurrer to the other causes of
action is overruled, the demurrer to the money had and received cause of action
on this ground is also overruled.
Prime’s second argument is that Molina has not alleged a specific sum
of money that is owed. Prime does not cite
a case, decided at the pleading as opposed to fact-finding stage, holding that
a specific amount of money must be pled in the complaint. The demurrer is overruled.
f.
Conclusion
Prime’s demurrer is overruled in its entirety. It is ordered to file an answer to the cross-complaint
within ten days.
Molina is ordered to give notice.
Parties who intend to submit
on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as
directed by the instructions provided on the court website at www.lacourt.org. If the department
does not receive an email indicating the parties are submitting on the tentative
and there are no appearances at the hearing, the motion may be placed off calendar. If a party submits on the tentative, the
party’s email must include the case number and must identify the party
submitting on the tentative. If any party does not submit on the tentative, the
party should make arrangements to appear remotely at the hearing on this
matter.