Judge: Michael Shultz, Case: 23STCV01331, Date: 2025-03-03 Tentative Ruling

DEPARTMENT 40 - MICHAEL J. SHULTZ  - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 



Case Number: 23STCV01331    Hearing Date: March 3, 2025    Dept: 40

Heeshik Ganocy, DDS, et al. v. Kaiser Foundation Health Plan, et al.

Monday, March 3, 2025

 

[TENTATIVE] ORDER SUSTAINING DEMURRER TO THE SECOND AMENDED COMPLAINT IN PART AND OVERRULING IN PART

 

                                                  I.          BACKGROUND

       The second amended complaint (“SAC”), filed April 4, 2024, alleges that Plaintiffs are the heirs of Kent Ganocy, DDS, (“Dr. Ganocy”) who was employed by Defendants, Southern California Permanente Medical Group (“Group”), The Permanente Federation, LLC (the “Federation”), and Kaiser Foundation Health Plan (the “Plan”). Plaintiffs allege Defendants created a toxic work environment for its physicians and staff, including Dr. Ganocy, and caused Dr. Ganocy to commit suicide. Plaintiffs allege a claim for wrongful death and assert survivorship claims for violations of the Fair Employment and Housing Act (“FEHA”), the Labor Code, and for wrongful termination in violation of public policy.

 

                                                   II.         ARGUMENTS

A.      Demurrer filed May 7, 2024.

       The Plan and Federation (“Defendants”) demur to the first cause of action for wrongful death because Defendants cannot be vicariously liable for the Group’s acts under the Knox-Keene Act (“Knox-Keene”). Additionally, Defendants cannot be vicariously liable where the underlying alleged tortfeasor (the Group) is not liable for the alleged negligence.

       Plaintiffs do not allege facts to support a duty owed by Defendants, breach of that duty, or that Defendants caused damages. Dr. Ganocy’s suicide is an intervening act that breaks the chain of causation.

       Defendants argue that the court twice sustained demurrer to prior versions of the pleading because Plaintiffs did not allege facts supporting an employment relationship between Defendants and Dr. Ganocy, and the SAC does not cure the defects. The new allegations contradict facts asserted in other pleadings. The court should not permit further leave to amend.

 

B.      Opposition filed August 6, 2024.

       Plaintiffs argue that the SAC alleges plausible claims for wrongful death. The SAC alleges facts to support that Defendants are joint employers of Dr. Ganocy under the “integrated enterprise test.” A special relationship exists between Defendants and Dr. Ganocy requiring Defendants to protect Dr. Ganocy from harm by the Group. The facts support all elements of the claim. Dr. Ganocy’s suicide does not break the chain of causation.

 

C.      Reply filed February 24, 2025.

       Defendants argue that Plaintiffs concede the core defects raised in the demurrer by failing to address them. Plaintiffs repeat the same arguments and ignore controlling authority cited by Defendants. Plaintiffs’ new theory of direct liability based on the claim that Defendants are joint employers of Dr. Ganocy is not supported by any facts. The new alleged facts conflict with facts previously alleged.

 

                                              III.        LEGAL STANDARDS

       A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing the complaint’s sufficiency, the court must assume the truth of the properly pleaded factual allegations as well as facts that can be reasonably inferred from those expressly pleaded facts. The court may also consider matters properly subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

       The court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) Plaintiff is required to allege facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. (Code Civ. Proc., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)

       Sufficient facts are the essential facts of the case “with reasonable precision and with particularity that is sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.)  Whether the Plaintiff will be able to prove the pleaded facts is irrelevant. (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.)

       A demurrer may also be sustained if a complaint is “uncertain.” Uncertainty exists where a complaint’s factual allegations are so confusing, they do not sufficiently apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2; Code Civ. Proc., § 430.10(f).)

       A pleading is required to assert general allegations of ultimate fact. Evidentiary facts are not required. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47; Lim v. The.TV Corp. Internat. (2002) 99 Cal. App. 4th 684, 690.)

 

                                                         IV.        DISCUSSION

A.      The court’s prior orders.

       On August 21, 2023, the Hon. Anne Richardson sustained demurrer to the complaint with leave to amend. The court determined that Plaintiffs could not allege vicariously liability against the Plan and Federation for the alleged negligence of the Group because vicarious liability is precluded by Knox-Keene, and that liability falls on the Group alone. (M.O. 8/21/23.) The court determined that Plaintiffs failed to allege a duty owed by the Plan and Group to Dr. Ganocy. The court permitted Plaintiffs to allege facts to plead around the defect that the suicide was an intervening cause.

       On March 25, 2024, the court sustained demurrer to the first amended complaint with leave to amend finding that Knox-Keene precluded a theory of vicarious liability against Defendants for the conduct of the Group. Knox-Keene also precludes vicarious liability on agency principles. Plaintiffs failed to allege a basis for direct liability based on a duty owed by the Plan and the Group as it was “unclear” how the Plan and Group exposed Plaintiff to reasonably foreseeable negligent conduct of a third party. (M.O. 3/25/24, p. 13.) The court declined to find that Defendants did not cause Dr. Ganocy’s suicide as a matter of law at the pleading stage. Foreseeability is a question for the jury. The court determined that the federal court opinion cited by Defendants was unpublished and not binding.

 

B.      Analysis

1)      Defendants have shown that vicarious liability is precluded by the Knox-Keene Act.

       The SAC alleges that the Plan and the Federation are vicariously liable for any and all actions of Group’s management because the Permanente Medical groups formed the Federation to represent the interests of the various groups. (SAC ¶ 108-109.) Plaintiffs allege that the Federation controlled Dr. Ganocy’s workplace by making operational decisions to share better care practices and protocols to improve health. (SAC ¶ 113.) Federation’s control included the creation of workplace committees on equity, inclusion, and diversity in the Groups’ workplace. (SAC ¶ 114.) The Federation was involved in the selection and approval of the Group’s leadership which affected who supervised Dr. Ganocy and controlled his working environment. (SAC ¶ 33.)

       Knox-Keene, codified at Health & Safety Code § 1340, et seq., "provides the legal framework for the regulation of California's individual and group health care [service] plan.” (People ex rel. Elliott v. Kaiser Foundation Health Plan, Inc. (2024) 105 Cal.App.5th 1114, 1123.) The purpose and intent of Knox-Keene is to "promote the delivery and the quality of health and medical care to the people of the State of California who enroll in, or subscribe for the services rendered by, a health care service plan or specialized health care service plan as described in the statute.” (Health & Saf. Code, § 1342 subd. (a) – (h).) Defendants rely on the following express provision:

"A plan, any entity contracting with a plan, and providers are each responsible for their own acts or omissions, and are not liable for the acts or omissions of, or the costs of defending, others. Any provision to the contrary in a contract with providers is void and unenforceable. Nothing in this section shall preclude a finding of liability on the part of a plan, any entity contracting with a plan, or a provider, based on the doctrines of equitable indemnity, comparative negligence, contribution, or other statutory or common law bases for liability." (Health & Saf. Code, § 1371.25.)

       Defendants’ interpretation of the statute as precluding vicarious liability against a plan, a contracting entity, and providers is supported by case authority. (Kaiser Foundation Health Plan, Inc. v. Superior Court (2012) 203 Cal.App.4th 696, 714 ["This statute has been interpreted as ‘prevent[ing] a health care service plan from being held vicariously liable for a medical provider's acts or omissions.’”]; PacifiCare of California v. Bright Medical Associates, Inc. (2011) 198 Cal.App.4th 1451, 1462 ["Our opinion in Martin concludes section 1371.25 bars an action holding PacifiCare vicariously liable for Bright's [medical group’s] acts or omissions. PacifiCare would be liable to the [plaintiffs] only if it directly committed some act or omission contributing to the delays in [decedent’s] health care."].)

       Plaintiffs do not address Defendants’ argument on this issue, with which Justice Richardson also agreed. (M.O 3/25/24, p. 4.) Accordingly, demurrer on this ground is SUSTAINED. Plaintiffs are precluded from asserting vicarious liability against Defendants.

 

2)      Plaintiffs have alleged facts to support Defendants’ direct liability based on existing duties and their own misconduct.

       Wrongful death is a negligence claim requiring facts showing the existence of a duty, breach of that duty, that the wrongful conduct caused the injury, and resulting damages. (Melton v. Boustred (2010) 183 Cal.App.4th 521, 529.) Plaintiffs allege that because Dr. Ganocy’s daily activities were “in part controlled by FEDERATION’S mission, operational decisions, and workplace influence, FEDERATION was obligated to ensure that its control over Ganocy did not cause him direct or indirect harm, and to ensure that the workplace it was involved in creating was safe and professional.” (SAC ¶ 116.)

       Plaintiffs allege that Dr. Ganocy was employed by Group, and that the Plan, the Federation and the Group “compelled, coerced, aided, and abetted the discrimination.” (SAC ¶ 14-15.) Plaintiffs argue that Defendants are directly liable for the harm to Dr. Ganocy and Plaintiffs based on Defendants’ relationship to Dr. Ganocy as joint employers. A special relationship existed between Defendants and Dr. Ganocy from which an affirmative duty arose based on an “integrated enterprise” theory.

       Plaintiffs rely on Strother v. Southern California Permanente Medical Group (9th Cir. 1996) 79 F.3d 859 which addressed the question of whether a physician partner in a medical group can be characterized as an “employee” of the medical group and two physician partners. (Strother at 863.) Plaintiffs argue that based on the integrated enterprise theory, Dr. Ganocy was an employee of Federation and Group.

       The integrated enterprise test applies where four factors are established: (1) interrelation of operations, (2) common management, (3) centralized control of labor relations, (4) and common ownership or financial control." (Laird v. Capital Cities/ABC, Inc. (1998) 68 Cal.App.4th 727 (Laird at 737-738 ["This test is designed to further Congress's intent that title VII be construed liberally, including its definition of the term “employer.’”].

       The SAC implicates this theory of liability as it alleges throughout that the Federation created policies that controlled Group’s working environment and how physicians were made, and how much they are paid; the policies controlled the terms of a physician’s employment and the manner in which workplace complaints or concerns are handled by Group; those policies also controlled the selection and approval of the Group’s leadership, who supervised Plaintiff and/or who had the authority to control Plaintiff’s working environment, (among other things). (SAC ¶ 32-33.)

        Defendants argue that these allegations conflict with other allegations that the Federation is a limited liability company formed and operated by the Group (SAC ¶ 29), not the other way around. Defendants argue that the Federation cannot operate the Group at the same time that the Group operates the Federation.  This allegation alone, however, does not negate Plaintiffs’ theory.  Plaintiffs allege that the Federation and Plan create a national strategy to guide the Permanente groups, these policies impact the work environment of each group, and the Federation had the authority and ability to make decisions and recommendations regarding the Group’s operations. (SAC ¶ 30.)

       The Federation allegedly exists to ensure that the Permanente Groups share common principles, practices, services, costs, fees, messaging, and communication and to ensure that the Permanente groups would operate in accordance with the Plan’s mission. (SAC ¶ 29.) The SAC goes on at length to allege Federation’s role in evaluating business relationships and executing contracts with third parties, suppliers, vendors, and other organizations. (SAC ¶ 31.) The Federation creates and/or modifies many of the rules, guidelines, and/or policies that the Groups use on a daily basis. (SAC ¶ 32.)

       Plaintiffs allege that although Federation was formed and is operated “to some extent” by the Permanent Groups, it is also directly and indirectly controlled by the Plan. (SAC ¶ 46.) Plaintiffs allege the specific ways that the Plan controlled Group’s selection of healthcare providers, services paid for by the Plan, and the manner in which those services are provided. The Plan controlled Dr. Ganocy’s professional decisions and recommendations, including whether Dr. Ganocy’s patients could receive services under the Plan. (SAC ¶ 46-47.)

       The salient issue is not to identify what entity controls the Group or the Plan (or vice versa), but rather to demonstrate the interrelation of operations between the entities, common management, centralized control of labor relations, and financial control (among other things) to support a finding of an integrative enterprise. Plaintiffs adequately allege facts to support this theory of liability.

       Defendants argue that Plaintiffs removed allegations that are not included in the SAC, and therefore, Plaintiffs “changed the facts.” (Dem. 16:19.) However, the Plaintiffs were required to assert critical facts to support a viable theory of liability, which were necessarily “different” facts from those previously alleged. Plaintiffs were given leave to amend to assert a viable claim against Defendants, which they have.

       Moreover, employers have a special relationship with their employees because of an employers’ ability to control their employees’ conduct, and because, as a matter of public policy, employers who benefit from their employees’ conduct should "concomitantly bear ‘the risks incident to [their] enterprise’ as a ‘cost of doing business.’” (Musgrove at 707.) This duty obligates the employer to protect or assist another or to control the conduct of a third person causing another harm. (Musgrove at 706.)

       Plaintiffs need only allege facts to support a basis for liability “under any legal theory.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.)  Accordingly, demurrer on this ground is OVERRULED. 

 

3)      The alleged facts support breach of duty.

       Negligence claims can be alleged in general terms by stating the acts or omissions that were negligently performed. (Greninger v. Fischer (1947) 81 Cal.App.2d 549, 552; Guilliams v. Hollywood Hospital (1941) 18 Cal.2d 97, 101.) Defendants contend that Plaintiffs do not identify what actions the Federation should have taken. (Dem. 17:14.)This is not the standard. Plaintiffs are required to identify acts and omissions constituting a breach.

       Plaintiffs allege that the Federation’s leadership, that included Ramon Davidoff, M.D., also served as the Group’s leadership (common management). Because of this common management and  control, Dr. Davidoff allegedly had the ability and authority to control Group leadership as well as those who supervised Dr. Ganocy and controlled his immediate working environment. (SAC ¶ 35-36.) The Federation allegedly received information that the Group’s leadership was creating a highly toxic work environment for its physicians and staff and therefore, knew or should have known that Dr. Ganocy’s work environment was toxic, intolerable, and reasonably likely to cause individuals working in that environment to experience high levels of emotional distress leading to suicide. (SAC ¶ 37.) 

       Plaintiffs adequately allege Defendants’ acts and omissions that caused injury despite their knowledge of the Group’s toxic work environment: Defendants permitted the Group’s leadership to remain in place, took no corrective action; supported Group’s leadership efforts; and ignored reports, complaints, and information revealing that Group’s leadership was causing extreme distress in the workplace. (SAC ¶ 43.) Demurrer is OVERRULED on this ground.

 

4)      The alleged facts support the element of causation.

Whether a defendant's conduct is an actual cause of a plaintiff's harm is a question of fact; the existence and extent of a defendant's liability is a question of law and social policy." (Maupin v. Widling (1987) 192 Cal.App.3d 568, 573.)

       Defendants argue that Dr. Ganocy’s suicide constitutes an intervening act that breaks the causal chain and precludes liability against Defendants. (Dem. 7:3-6.) According to the case cited by Defendants, intervening or superseding cause is not a matter of causation but rather “arises only after it has been established that the defendant’s conduct has been in fact a cause of the injury.” (Tate v. Canonica (1960) 180 Cal.App.2d 898, 908, ["Essentially, it is a question of whether the defendant shall be relieved of responsibility for the result of his fault for the reason that another cause which has contributed to that result is regarded as playing a more important, significant and responsible part.”].)

       As Plaintiffs observe, this argument is an affirmative defense. The question of “whether an intervening cause will cut off a defendants’ liability (supervening cause) is another consideration in determining whether proximate cause exists. Supervening  cause is a question of policy to be considered only after defendant is found to be the cause in fact of the injury." (Maupin at 574.)

       Justice Richardson declined to find that Plaintiff could not prevail as a matter of law on the issue of causation because he ultimately committed suicide as “Tate itself recognized that there could be ‘cases where it would be proper to treat the act of suicide as an independent intervening act because it was truly voluntary’ where the defense of an independent intervening act would not bar the action if the intervening act was a reasonably foreseeable result of the original actor’s wrongdoing.” (M.O. 3/25/04, p. 7.) As foreseeability is a question for the trier of fact, this issue cannot be resolved at the demurrer stage. Demurrer is OVERRULED on this ground.

 

                                            V.         CONCLUSION

       Based on the foregoing, demurrer is SUSTAINED in part as to the first cause of action for wrongful death only to the extent Plaintiffs allege Defendants are vicariously liable. Leave to amend is denied as Plaintiffs have repeatedly attempted to establish vicarious liability without success. Demurrer is OVERRULED on all other grounds. Defendants are ordered to answer within 30 days.