Judge Martha K. Gooding, Case 2021-01233821 2022-08-29 Tentative Ruling

Judge: Martha K. Gooding, Case: 2021-01233821, Date: 2022-08-29 Tentative Ruling

1) Demurrer to the Amended Complaint

2) Case Management Conference

The Demurrer by Defendant California Physicians’ Service dba Blue Shield of California (“Defendant”) to the First Amended Complaint of Plaintiff Sovereign Asset Management, Inc. (“Plaintiff”) is SUSTAINED with 15 days leave to amend.

Defendant contends the second cause of action for breach of implied covenant and the third cause of action for intentional interference with prospective economic relations are vulnerable to demurrer because they are time-barred.

Plaintiff does not dispute that these causes of action are subject to the two-year statute of limitations in CCP section 339(1). (See Archdale v. American Internat. Specialty Lines Ins. Co. (2007) 154 Cal.App.4th 449, 472 [breach of implied covenant claim sounding in tort is governed by two-year statute of limitations]; Knoell v. Petrovich (1999) 76 Cal.App.4th 164, 168 [trial court did not err in finding that that plaintiff’s interference with prospective business advantage claim was barred by two-year statute of limitations].) Defendant points out that “[t]he statute of limitations on a claim alleging the wrongful denial of insurance benefits begins to run when the insurer unequivocally denies the claim.” (Dem. at 3, citing Prudential-LMI Com. Ins. v. Superior Court (1990) 51 Cal.3d 674, 692-93 [plaintiffs should be given leave to amend their complaint to allege facts showing their action was filed within the one year statute of limitation for actions on a fire policy where the claim was equitably tolled until it was “denied unequivocally”]; Vishva Dev, M.D., Inc. v. Blue Shield of Cal. Life & Health Ins. Co. (2016) 2 Cal.App.5th 1218, 1223-24 [rejecting plaintiff’s argument that the statute of limitations on his quantum meruit claims was tolled until “the end of the insurers’ optional appeals process” and finding that it “began to run when [insurer] formally denied [plaintiff’s] claims in writing in the original EOBs].)

Here, the FAC is replete with allegations that Defendant denied and improperly refused to pay the claims at issue. (See, e.g., FAC at ¶¶ 59 [“Instead of adjudicating and paying the Exhibit A claims, Blue Shield denied the claims for payment of services …”], 70, [“Defendant is in breach of the relevant insurance policies and has damaged Plaintiff by refusing to pay the claims for insurance benefits …”], 73 [“Blue Shield has breach the implied covenant … by unreasonably failing and refusing to pay Plaintiff’s claims for mental illness services …”], 82 [“Plaintiffs entire relationship with its Blue Shield Patients was cut off by Blue Shield's flat and unjustified refusal to pay Plaintiffs claims, and the failure by Blue Shield to pay these millions of dollars in benefits ultimately became the proximate cause of the Cordoba facility going out of the business of servicing Blue Shield patients in 2018”].)

The Court rejects Plaintiff’s argument that the statute has “not begun to run” because its breach of contract claim has not been “resolved” yet. (Dem. at 5.) Because Plaintiff did not file this action until November 2021, these claims expired, at the latest, in December 2020, and are time-barred under the two-year statute of limitations unless Plaintiff can show the claims were tolled.

Plaintiff argues the doctrines of equitable tolling and equitable estoppel apply to bar the application of the statute of limitations. However, Plaintiff has not alleged facts that would support either doctrine.

Following Vishva Dev, M.D., Inc., if engaging in a voluntary appeal process does not “toll” the statute of limitations, then neither would the opportunity to “resubmit” a claim, (as opposed to “reopening” the decision to deny the claim).

Although it is unclear how Plaintiff could amend its complaint to save these claims, the Court will provide Plaintiff with an opportunity to amend. (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747.)

Plaintiff shall file and serve its amended pleading within 15 days.

Defendant is ordered to give notice.