Judge: Maurice A. Leiter, Case: 23STCV14984, Date: 2023-12-01 Tentative Ruling

Case Number: 23STCV14984    Hearing Date: December 1, 2023    Dept: 54

Hearing Date: December 1, 2023

Department 54, Judge Maurice A. Leiter

Demurrer to Complaint

Moving Party: Defendant Local Initiative Health Authority for Los Angeles County dba L.A. Care Health Plan

Responding Party: Plaintiffs Doctors Medical Center of Modesto, Inc., Lakewood Regional Medical Center, Inc. and Los Alamitos Medical Center, Inc.

T/R:     DEFENDANT’S DEMURRER IS OVERRULED.

DEFENDANT TO FILE AND SERVE AN ANSWER TO THE COMPLAINT WITHIN 30 DAYS OF NOTICE OF RULING.

DEFENDANT TO NOTICE. 

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.

BACKGROUND

On June 27, 2023, Plaintiffs Doctors Medical Center of Modesto, Inc., Lakewood Regional Medical Center, Inc. and Los Alamitos Medical Center, Inc. sued Defendant Local Initiative Health Authority for Los Angeles County dba L.A. Care Health Plan, asserting causes of action for breach of implied in law contract, quantum meruit, negligence and breach of written contract.

Plaintiff alleges Defendant failed to pay Plaintiff the reasonable value of medical services provided to Defendant’s health plan enrollees.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

A. First, Second, and Third Causes of Action

Defendant demurs to the first through third causes of action for breach of implied-in-law contract and breach of implied-in-fact contract on the ground that Plaintiffs may only allege a claim for quantum meruit against Defendants under County of Santa Clara v. Superior Court (2023) 14 Cal.5th 1034.

In County of Santa Clara, hospitals sued the County for failure to pay the reasonable value of medical services provided to the County’s health plan enrollees, asserting causes of action for quantum meruit and breach of implied contract.

The California Supreme Court held that the Government Claims Act does not immunize a public entity from a plaintiff’s quantum meruit and breach of implied contract claims to enforce a statutory duty of reimbursement. (Id. at 1045-56.)

Defendant argues that the holding in County of Santa Clara implies that quantum meruit is the only allowable cause of action against a public entity for failure to comply with the Knox-Keene Act, and the other claims for breach of implied contract are duplicative of the quantum meruit claim. Defendant also asserts the holding “did not revive” the hospital’s claims for breach of implied-in-fact contract, distinguishing this claim from breach of implied-in-law contract. There is no language in the opinion that supports either of these assertions. The Court did not limit permissible claims to quantum meruit, and the Court drew no meaningful distinction between implied-in-law and implied-in-fact contract claims.

Plaintiffs allege Defendant breached its statutory and contractual duties to Plaintiffs by failing to pay for services rendered by Plaintiffs. This is sufficient to state causes of action for breach of implied contract. Plaintiffs may allege alternative theories of liability.

The demurrer to the first through third causes of action is OVERRULED.

B. Fifth and Sixth Causes of Action

Defendant demurs to the fifth and sixth causes of action for failure to discharge a mandatory duty per Gov. Code § 815.6 on the grounds that it is contradictory to the cause of action for quantum meruit and Defendant does not have a mandatory duty under the Knox-Keene Act.

As stated, Plaintiffs may allege alternative theories of liability, even if they “conflict” in some ways.

The California Supreme Court did not address the applicability of Gov. Code § 815.6 in County of Santa Clara. Defendant cites no cases, other than the reversed Court of Appeal opinion preceding County of Santa Clara, that show Defendant does not have a mandatory duty under the Knox-Keene Act.

The demurrer to the fifth and sixth causes of action is OVERRULED.