3/7/2025: Defendant files this Demurrer to the FAC, followed by the Opposition (4/23/2025) and Reply (4/29/2025).  

TENTATIVE RULING: DEMURRER TO THIRD AND FOURTH CAUSES OF 

ACTION by DEFENDANT LOCAL INITIATIVE HEALTH AUTHORITY FOR LOS ANGELES COUNTY is SUSTAINED without leave to amend. 

DEMURRER 

Defendant LA Care demurs to the 3rd and 4th causes of action in the FAC on the grounds that Plaintiff fails to plead facts sufficient to constitute the claims for quantum meruit and open account/account stated.1 Specifically, LA Care argues that as a public entity, it is immune to liability on non-statutory, common-law theories of recovery under Gov’t Code § 815.2  

Indeed, “a private party cannot sue a public entity on an implied-in-law or quasi-contract theory, because such a theory is based on quantum meruit or restitution considerations which are outweighed by the need to protect and limit a public entity's contractual obligations.” (Katsura v. City of San Buenaventura (2007) 155 Cal.App.4th 104, 109–110.) This principle arises from the Government Claims Act. “Government Code section 815 states: ‘Except as otherwise provided by statute: [¶] (a) A public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person.’ The Legislative Committee Comment to section 815 states: ‘This section abolishes all common law or judicially declared forms of liability for public entities, except for such liability as may be required by the state or federal constitution....’ [Citations.]” (Sheppard v. North Orange County Regional Occupational Program (2010) 191 Cal.App.4th 289, 314.) While this general rule is subject to exceptions to ensure compliance with statutory or constitutional obligations, TMMC has not sufficiently identified any relevant statutory or constitutional basis for recovery for the 3rd and 4th causes of action and appears to seek purely monetary damages for these claims. (County of San Bernardino v. Superior Court (2022) 77 Cal.App.5th 1100, 1107–1108 (“in the absence of some constitutional requirement, public entities may be liable only if a statute declares them to be liable.”))  

County of Santa Clara v. Superior Court¿(2023) 14 Cal.5th 1034, 1049 is instructive to this analysis. In Santa Clara, several Hospitals provided medical services to individuals enrolled in a health care service plan operated by the County. (Santa Clara, supra, 14 Cal.5th at 1038.) The Hospitals submitted reimbursement claims to the County, which only paid a portion of those claims. (Ibid.) The Hospitals sued to recover the remaining amounts under the Knox-Keene Act’s reimbursement provision. (Ibid.) The Supreme Court of California held that “the Government Claims Act does not immunize” public entities from liability in quantum meruit actions for reimbursement as mandated under the Knox-Keene Act. (Id., at 1056.) The Court reasoned that “the Government Claims Act is concerned with shielding public entities from tort claims seeking money damages, and not with every conceivable claim that might be pressed against a public entity.” (Id., at 1049.) The Court further explained, “the Hospitals do not seek money damages. They seek to compel the County to comply with its mandatory duty under the Knox-Keene Act and its implementing regulations to reimburse the Hospitals for the reasonable and customary value of their emergency services and care.” (Id., at 1051.) By contrast, “liability based on contract or the right to obtain relief other than money damages is unaffected by the Act.” (Ibid., quoting City of Dinuba¿v.¿County¿of Tulare¿(2007) 41 Cal.4th 859, 867.) 

Unlike the Hospitals in Santa Clara, here, TMMC’s 3rd and 4th causes of action do not expressly seek recovery based on LA Care’s statutory duty of reimbursement. Rather, these claims are based generally on LA Care’s alleged underpayment and indebtedness to TMMC despite its promise to pay for TMMC’s services. (FAC, ¶¶ 22-24, 26-28.) The 3rd and 4th causes of action seek not only money damages but also interest and costs associated with those damages. (Ibid.) By comparison, TMMC’s 2nd cause of action for implied-in-law contract does expressly allege LA Care owes a duty to reimburse TMMC for no less than “reasonable and customary amounts” as required by the Knox-Keene Act and 28 C.C.R. § 1300.71. (Id., ¶¶ 16-18.) In fact, LA Care does not demur to the 2nd cause of action, conceding that this type of implied contract claim is expressly permitted under the Santa Clara reasoning. Further, although TMMC’s Opposition contends that it 3rd and 4th causes of action merely “seek[] to compel Defendant to comply with its mandatory statutory duty to reimburse,” the Court cannot rely on this extrinsic assertion to interpret the allegations as pled on the face of the FAC. In the Court’s view, it is not clear how TMMC’s 3rd and 4th causes of action differ from its 2nd cause of action beyond the nature/type of the recovery sought. In other words, TMMC is either seeking statutory reimbursement for its 3rd and 4th causes of action (making these common law restitution claims merely duplicative of the 2nd cause of action), or TMMC is seeking additional monetary damages beyond the reimbursement already sought within its 2nd cause of action (such that these additional claims should be barred by the Santa Clara precedent). Even if TMMC intended to plead the former, TMMC has not demonstrated how additional facts could cure the duplicative nature of these actions if given the opportunity to amend the FAC.  

In sum, the Court cannot extend the narrow exception for the statutory duty of reimbursement carved out by Santa Clara, and must look to the specific recovery sought rather than the label of the claim. Accordingly, the Court finds that the 3rd and 4th causes of action in the FAC, as pled, are barred under Gov’t Code § 815 as common-law claims seeking monetary damages rather than mere reimbursement for services rendered. Therefore, LA Care’s Demurrer to the 3rd and 4th causes of action is SUSTAINED without leave to amend. 

Defendant Local Initiative Health Authority for Los Angeles County to serve notice of ruling.  This tentative ruling (“TR”) shall be the order of the Court unless changed at the hearing and shall by this reference be incorporated into the Minute Order. 

TR emailed to counsel on 5/5/25 at 4:40 a.m.