Judge: Michael Small, Case: 22STCV38687, Date: 2023-05-23 Tentative Ruling

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Case Number: 22STCV38687    Hearing Date: May 23, 2023    Dept: 57

Plaintiff Lakewood Regional Medical Center, Inc. (“Lakewood”) sued The Chefs’ Warehouse, Inc (“TCW”) under California law for breach of an implied contract, quantum meruit, accounts stated, unjust enrichment, and unfair competition.   According to Lakewood’s complaint, TCW operates an employee benefit plan that provides health care benefits for plan members. All of Lakewood’s causes of action arise out TCW’s alleged failure to reimburse Lakewood in full for medical care and services the Hospital provided to a TCW member.  TCW demurred on two grounds.  First, TCW argues that all of Lakewood’s claims conflict with the federal Employee Retirement Income Security Act ("ERISA") and thus are preempted by that statute.  (29 U.S.C. Section 1144(a).)   Second, TCW argues that even if Lakewood’s claims are not preempted by ERISA, Lakewood’s complaint fails to allege sufficient facts to support the claims.

Taking the preemption argument first, the Court has determined that Lakewood’s claims are not preempted by ERISA.   It is salient for the ERISA preemption inquiry that Lakewood is a third-party provider of services to TCW members, outside of the plan's network of providers.  Put another way, Lakewood is not a plan participant, an assignee of a participant, or a plan beneficiary.  Drawing on a body of ERISA precedent, the Court in Morris Silver M.D., Inc. v. International Longshore & Warehouse Union -- Pacific Maritime Association Welfare Plan (2016)  2 Cal.App.5^th 793, 802-807, held that a third-party doctor's claims against a plan sponsor for breach of contract, promissory estoppel, and unjust enrichment were not preempted by ERISA.  The distinction for ERISA preemption purposes between the state law claims of a third party provider of services, on the one hand (which generally are not preempted), and the state law claims of a plan participant, assignee, or beneficiary, on the other hand  (which are preempted) also was recognized in Port Medical Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5t 153.  In that case, the Court held that ERISA preempted claims, inter alia, for breach of an implied contract and quantum meruit brought against a plan by medical providers who were participants in the plan through an express, in-network provider agreement with the plan and had provided services to plan beneficiaries pursuant to the plan.  (Id. at pp. 175-181).

Applying Silver and Port Medical Wellness, the Court has concluded that Lakewood’s state law claims against TCW are not preempted.  The demurrer is thus overruled to the extent that it rests on ERISA preemption.

The demurrer also is overruled to the extent it is based on asserted pleading defects as to all of Lakewood’s claims, except as to the claim for unjust enrichment.  In the Court’s view, the allegations in the complaint are sufficient to state those claims.   It is a close call with respect to the cause of action for breach of an implied contract.  But even here, the cause of action survives the demurrer.

The demurrer is sustained without leave to amend as to the cause of action for unjust enrichment.  That is because unjust enrichment is not a stand-alone claim in California law.  Rather, the concept of unjust enrichment embodies principles that underpin other claims and remedies recognized in California law.  (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 233 Cal. App.4^th 221, 231; Levine v. Blue Shield of California (2010) 189 Cal.App.4^th 1117, 1138.).