Judge: Michael E. Whitaker, Case: 23SMCV04062, Date: 2024-05-01 Tentative Ruling

Case Number: 23SMCV04062    Hearing Date: May 1, 2024    Dept: 207

TENTATIVE RULING

MOTION

Defendants Heritage Provider Network, Inc; Regal Medical Group, Inc; Lakeside Medical Organization, a Medical Group, Inc.; Oasis Independent Medical Associates, Inc.; Desert Medical Group, Inc.; High Desert Medical Corporation, a Medical Group; Affiliated Doctors of Orange County Medical Group, Inc.; Sierra Medical Group, Inc.; and Coastal Communities Medical Group, Inc. (“Defendants”) move to strike the following passages from the First Amended Complaint regarding Plaintiff’s request for injunctive relief:

Paragraph 46(a): “Failing to comply with its mandatory duty to consider the criteria set forth in California at 28 C.C.R. Section 1300.71(b), which are the minimum criteria that a licensed health plan is legally required to consider when paying out-of-network providers, when paying claims pursuant to Section 1371.4 for emergency care.  Vituity is informed and believes that Heritage does not consider any, let alone all, of the six statutorily-created minimum criteria, and instead pays Vituity an arbitrarily chosen percentage of what it believes Medicare would pay.”

Paragraph 47(b): “An order enjoining Heritage from implementing its current out-of-network reimbursement methodology for out-of-network emergency services provided by Vituity; and”

Paragraph 50(c): “(c) Failed to use statistically credible data, updated at least annually, to take into consideration the factors defendants are required by DMHC to consider when paying for services absent a written contract setting an alternative rate, including the following:

(i)              the provider’s training, qualifications, and length of time in practice;

(ii)            the nature of the services provided;

(iii)          the fees usually charged by the provider;

(iv)          prevailing provider rates charged in the general geographic area in which the services were rendered; or

(v)            the economics of the medical provider’s practice that are relevant.”

Page 13, Prayer for Relief, item “2”: “For injunctive relief as set forth above in the unfair business practices cause of action”

            Plaintiff opposes the motion and Defendants reply.

ANALYSIS

1.     MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof.  (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).)  On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court.  (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.) 

Here, Defendants move to strike allegations relating to Plaintiff’s request for injunctive relief on the grounds that courts may not grant injunctive relief restraining or altering an insurance company’s payment methodology, which is instead governed and managed by the Department of Managed Health Care (DMHC).  In support, Defendants primarily rely upon Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc. (2021) 71 Cal.App.5th 323 (hereafter Long Beach).[1]

Plaintiff opposes, arguing Long Beach is distinguishable because (1) unlike the injunction in Long Beach, the injunction Plaintiff seeks is not too vague to enforce; and (2) Plaintiff already has a jury verdict from another case demonstrating that Defendants underpay the reasonable and customary value for services.

“Under federal and state law, a hospital is required to provide necessary stabilizing treatment for any person in an emergency medical condition.” (Long Beach, supra, 71 Cal.App.5th at p. 329 (citing 42 U.S.C. § 1395dd, subd. (b); Health & Saf. Code, § 1317, subd. (a)).)  “If that person is covered by a health care service plan, California's Knox-Keene Health Care Service Plan Act of 1975 (the Knox-Keene Act) (§ 1340 et seq.) requires the plan to reimburse the hospital for providing such emergency services and care.”  (Ibid.)  “Under the Knox-Keene Act, the health care service plan (or its contracting medical providers) must, within 30 or 45 days, reimburse the hospital or other medical providers for the emergency services and care provided to its enrollees as to (1) all care necessary for stabilization of the enrollee, and (2) for all poststabilization care the plan authorizes the hospital to provide.”  (Id. at p. 334.)

“The amount of reimbursement depends upon whether the hospital and plan already have a contract in place: If they do, the plan must pay the agreed upon contractual rate; if they do not, the plan must pay the reasonable and customary value for the emergency health care services rendered” (Id. at p. 329 (citing Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(A)).)  “If a plan without a contract pays reimbursement that the hospital believes is below the reasonable and customary value, the hospital may sue the plan in quantum meruit for the shortfall.”  (Ibid.)

Long Beach held that while a provider may sue for quantum meruit, it may not also sue for injunctive relief under California’s unfair competition law “to enjoin the plan from paying too little reimbursement for possible future claims not covered by a contract[.]”  (Long Beach, supra, 71 Cal.App.5th at pp. 329-330.)  Long Beach also clarified that while “a plaintiff may as a general matter state a claim under the unfair competition law for a violation of the Knox-Keene Act” (id. at p. 342), as a way of pursuing restitution for underpayments as an alternative to a quantum meruit claim (id. at p. 343-344), an injunction to restrain an insurer from underpaying for emergency medical services in the future or to “obey the law” is “legally unavailable.”  (Id. at p. 343.)   Specifically, Long Beach explains:

What is more, the injunctive relief the hospitals seek—that is, an order enjoining Kaiser from violating the Knox-Keene Act by underpaying for emergency medical services in the future—is legally unavailable. To the extent it requires Kaiser more specifically not to underpay reimbursement when its enrollees receive emergency medical services in every future instance, it is difficult to see how Kaiser could comply: It is impossible for Kaiser to definitively know the “reasonable and customary value” of emergency medical services until a jury fixes that value, but Kaiser is statutorily obligated to pay some reimbursement amount within 30 or 45 days of rendering those services. If Kaiser incorrectly estimates the “reasonable and customary” value and underpays, it will have violated the injunction and will ostensibly be subject to contempt penalties. To us, such an injunction would be so vague that persons of common intelligence must necessarily guess at its meaning and differ as to its application; as such, it would be invalid and could not form the basis for the potent weapon of contempt. To the extent it requires Kaiser more generally to obey the law, such an injunction would be equally invalid.

(Long Beach, supra, 71 Cal.App.5th at p. 343 [cleaned up].)

In opposition, Plaintiff primarily cites case law standing for the proposition that parties may sue to recover the quantum meruit reasonable value for emergency services rendered in instances where they believe they have been underpaid, but Plaintiff’s cited case law does not directly address Long Beach’s holding. 

Long Beach is clear that a plaintiff may not sue “to enjoin the plan from paying too little reimbursement for possible future claims not covered by a contract[.]”  (Long Beach, supra, 71 Cal.App.5th. at pp. 329-330.)  Here, Plaintiff seeks “Restitution for all underpayments for emergency services resulting from Heritage’s unfair payment patterns” and “An order enjoining Heritage from implementing its current out-of-network reimbursement methodology for out-of-network emergency services provided by Vituity[.]”  (FAC ¶ 47.)

Thus, Plaintiff’s request for injunctive relief regarding Defendants’ payment methodology is legally unavailable pursuant to Long Beach.  As such, the Court agrees that it is proper to strike from the Complaint any such request.

However, the Court declines to strike paragraph 46(a) or 50(c), as those are simply factual allegations that could also be relevant to Plaintiff’s other causes of action.  Similarly, the Court declines to strike the prayer for injunctive relief, as Plaintiff also seeks injunctive relief regarding Defendants’ alleged failure to timely or accurately pay bills, timely specifying the reasons for any contest, and complying with the applicable written contracts.  (See FAC ¶ 47(c).)

2.     LEAVE TO AMEND

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiff has failed to meet this burden as Plaintiff only indicates is “A court should not sustain a motion to strike without leave to amend if there is a reasonable possibility that the defect can be cured by amendment.”  (Opp. at p. 6.)  Here, because the requested injunctive relief is “legally unavailable” (in part) pursuant to Long Beach, there is no reasonable possibility that the defect could be cured by amendment.    

CONCLUSION AND ORDER

For the reasons stated, the Court grants, in part, Defendants’ Motion to Strike and strikes from the First Amended Complaint the entirety of paragraph 47(b) without leave to amend.  The Court denies the balance of Defendants’ motion to strike.  

Defendants shall provide notice of the Court’s ruling and file a proof of service regarding the same. 

DATED:  May 1, 2024                                                           ___________________________

                                                                                    Michael E. Whitaker

                                                                                    Judge of the Superior Court