Judge: Ronald F. Frank, Case: 21TRCV00589, Date: 2023-01-24 Tentative Ruling
Case Number: 21TRCV00589 Hearing Date: January 24, 2023 Dept: 8
Tentative Ruling¿ #1
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HEARING DATE: January 24, 2023¿
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CASE NUMBER: 21TRCV00589
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CASE NAME: R&R
Surgical Institute v. Anthem Blue Cross Life and Health Insurance Company, et
al
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MOVING PARTY: (1)
Defendant, Anthem Blue Cross Life and
Health Insurance Company’s Demurrer
(2)
Defendants, Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. and
Premera Blue Cross’s Demurrer
RESPONDING PARTY: (1) Plaintiff, R&R Surgical Institute
(2)
Plaintiff, R&R Surgical Institute
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TRIAL DATE: Not Set
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MOTION:¿ (1) Demurrer
(2)
Demurrer
Tentative Rulings: (1) Defendant Anthem’s Demurrer is SUSTAINED with
20 days leave to amend
(2) Defendant Premera’s Demurrer is SUSTAINED with 20 days leave to amend
I. BACKGROUND¿¿
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A. Factual¿¿
¿¿
This action arises out of breach of contract cases.
Plaintiff, R&R Surgical Institute filed a complaint against Defendants,
Anthem Blue Cross Life and Health Insurance Company, Premera Blue Cross,
Providence Health & Services, and Blue Cross Blue Shield of Massachusetts
HMO Blue, Inc., and DOES 1 through 20. The First Amended Complaint alleges
causes of action for: (1) Breach of Oral Contract; (2) Promissory Estoppel; (3)
Breach of Oral Contract; and (4) Promissory Estoppel.
Defendant, Anthem
Blue Cross Life and Health Insurance Company (“Anthem”) and Defendant,
Blue Cross and Blue Shield of
Massachusetts HMO Blue, Inc. and Premera Blue Cross (“Premera”) both filed
demurrers to Plaintiff’s FAC.
B. Procedural¿¿
¿
On March 1,
2022, Defendant, Anthem Blue Cross Life and Health Insurance Company (“Anthem”)
filed a demurrer to Plaintiff’s complaint. On April 22, 2022, Defendant,
Premera filed a joinder in Anthem’s demurrer. On January 10, 2023, Plaintiff
filed an opposition to Defendant, Anthem’s demurrer. On January 10, 2023,
Plaintiff filed an opposition to Defendant, Anthem’s demurrer. On January 17,
2023, Anthem filed a reply brief. On January 17, 2023, Premera filed a joinder
in Anthem’s reply brief.
On April 22,
2022, Defendants, Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc.
and Premera Blue Cross (“Premera”) filed a demurrer. On January 10, 2023,
Plaintiff filed an opposition to Defendant, Premera’s demurrer. Additionally, on
January 10, 2023, Plaintiff filed an opposition to Defendant, Anthem’s joinder
in Premera’s demurrer. On January 17, Premera filed a reply brief.
II. REQUEST FOR JUDICIAL
NOTICE
In
its opposition to Anthem’s demurrer, Plaintiff requested for this Court to take
judicial notice of the Minute Order dated June 13, 2022 in R&R Surgical
Institute v. Anthem Blue Cross Life and Health Insurance Company, Case No. 21TRCV00596
(erroneously referenced as Case No. 21TRCV00569), from the Superior Court of
California, County of Los Angeles, Civil Division, Southwest District, Torrance
Courthouse, Department B. The Request is
denied as the Court does not consider unpublished appellate court
decision, much less trial court decisions, unless they fit within the
exceptions of Rule of Court 8.1115(b). Defendants
also rely on unpublished trial court rulings and the Court will not consider
the defense’s cited cases either.
III. DEMURRER ANALYSIS
A. Legal Standard
“The
primary function of a pleading is to give the other party notice so that it may
prepare its case [citation], and a defect in a pleading that otherwise properly
notifies a party cannot be said to affect substantial rights.” (Harris v.
City of Santa Monica (2013) 56 Cal.4th 203, 240.) “A¿demurrer¿tests the
legal sufficiency of the factual allegations in a complaint.” (Ivanoff v.
Bank of America, N.A.¿(2017) 9 Cal.App.5th 719, 725.) The Court
looks to whether “the complaint alleges facts sufficient to state a cause of
action or discloses a complete defense.” (Id.) The Court does not “read
passages from a complaint in isolation; in reviewing a ruling on a demurrer, we
read the complaint ‘as a whole and its parts in their context.’
[Citation.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214
Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly
pleaded factual allegations, facts that reasonably can be inferred from
those expressly pleaded and matters of which judicial notice has been
taken.” (Harris, supra, 56 Cal.4th p. 240.) “The court does
not, however, assume the truth of contentions, deductions or conclusions
of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183
Cal.App.4th 1350, 1358.)
A
general demurrer may be brought under Code of Civil Procedure section 430.10,
subdivision (e) if insufficient facts are stated to support the cause of action
asserted or under section 430.10, subdivision (a), where the court has no
jurisdiction of the subject of the cause of action alleged in the pleading. All
other grounds listed in Section 430.10, including uncertainty under subdivision
(f), are special demurrers. Special demurrers are not allowed in limited
jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).)
Leave
to amend must be allowed where there is a reasonable possibility of successful
amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The
burden is on the complainant to show the Court that a pleading can be amended
successfully. (Id.)
B.
Anthem’s
Demurrer
Breach of Oral
Contract
Defendant,
Anthem contends that the FAC’s first and third cause of action for breach of
oral contract should be dismissed because Plaintiff failed to allege facts
supporting a contractual obligation or breach. “To establish a cause of action
for breach of contract, the plaintiff must plead and prove (1) the existence of
the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3)
the defendant’s breach, and (4) resulting damages to the plaintiff.
[Citation.]” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93,
97-98.) “The elements of a breach of oral contract are the same as those for
breach of a written contract. [Citations.]” (Stockton Mortgage, Inc. v. Tope
(2014) 223 Cal.App.4th 437, 453.)
Defendant refers this
Court to Case No 20STCV12525, Deanco Healthcare, LLC v. Blue
Cross of California, et al, where Anthem was involved in another matter
involving an issue it claims is nearly identical to the case at bar. As noted
above, this Court does not consider unpublished trial court decisions, unless
they fit within the exceptions of Rule of Court 8.1115(b).
Here,
Plaintiff’s FAC alleges that “an oral contract existed between the parties,
whereby Anthem, Premera, and Providence promised and agreed to pay R&R for
services rendered to Patient A at 50% of the UCR rate.” (FAC, ¶ 35.) Plaintiff
further alleges that “Anthem, Premera, and Providence further promised that the
specific proposed procedures to be performed on Patient A (CPT 49650/49650-50
did not require predetermination or preauthorization.) (FAC, ¶ 35.) Next,
Plaintiff alleges that “in reliance on these promises regarding the
out-of-network benefit rate and no pre-service authorization or certification
requirements, R&R accepted Patient A for treatment and rendered medically
necessary surgeries.” (FAC, ¶ 36.)
Plaintiff’s
FAC alleges that “Anthem, Premera, and Providence breached the agreement by
failing to pay the claim at the pre-service represented rate. (FAC, ¶ 37.)
Plaintiff also argues that “the fact that [defendants] did issue some payment
for each claim establishes acknowledgment of the agreement and mutual assent.”
(FAC, ¶ 39.) Lastly, Plaintiff alleges that it was harmed by defendants’ breach
of contract, and that said breaches were a substantial factor in causing its
harm. (FAC, ¶ 39.) Plaintiff asserts
that Courts are split on whether insurance verifications and preauthorization
calls can constitute a promise to pay for purposes of contract creation.
Anthem argues
that verification calls do not amount to consent to enter a contract. In support
of its argument, Anthem cites to unpublished cases to establish that “it is
well-established that routine verification calls do not equate to consent to
enter into a contract.” (citing Stanford Hosp. and Clinics v. Multinat’l
Underwriters, Inc., No. C-07-05497 JF (RS), 2008 WL 5221071, at *6-7 (N.D.
Cal. Dec. 12, 2008) (rejecting the argument that a “verification of coverage
amounted to a promise to pay for the patient’s treatment”).) Anthem
also relies on Pacific Bay Recovery, Inc. v. California Physicians'
Services, Inc. (2017) 12 Cal.App.5th 200, 214-217.) Pacific Bay held
that the plaintiff provider failed to allege sufficient facts to show that the
provider and insurer had a meeting of the minds regarding the amount to be paid
for certain services. (Id. at 216.) The Court explained that the
provider’s general allegations that the insurer would pay an undermined
“percentage or portion” of the UCR lacked specificity. (Id.)
The Court
finds the allegations to be insufficient but will grant Plaintiff leave to
amend. The Court accepts plaintiff’s
invitation to discuss the “practical realities” of out of network treatment for
medical services, and if Plaintiff believes those realities are germane to a
demurrer then an amended pleading should provide the relevant details of those
realities for the Court to consider. The Court is concerned with the allegation of
a phone call or two to “confirm” coverage to one of the multiple defendants, and
to confirm the amount of Plaintiff’s deductible, without considerable detail
being alleged as to what that means for the substance of this case:
Does it mean confirming that the Plaintiff
is a member of Anthem’s plan?
Does it mean confirming that the type of
treatment Plaintiff planned to provide is specifically listed in the plan or
policy as a covered benefit?
Does it mean that Anthem confirmed that it agreed
to pay the usual, customary and reasonable rate for in-network providers for
that type of treatment for these two patients?
Does it mean that Anthem promised to pay a specific
percentage of the in-network rate? Does
it mean that Anthem would or would not apply its maximum allowable amount for
that type of treatment, or was that issue not confirmed?
Does it mean that Anthem concurred that it
considered the proposed treatment was medically necessary?
Does it mean that Anthem would pay for whatever
facility charge Plaintiff submitted or that there were dollar limits to the
facility charge it would approve before applying the out-of-network percentage?
Does the oral contract incorporate the Plan
terms of the Anthem Plan or the BCBS of MA Plan, the Premera Plan, or was there
no agreement as to whether the terms of any of the defendant’s Plans would or
would not apply?
What is the factual basis for Plaintiff’s
threadbare allegation that Anthem, BCBS of MA, Premera and Providence were
agents of each other and acted with authority to process patient A’s or patient
B’s claim?
Because Plaintiff alleged an oral contract,
and alleges that separately named distinct companies were agents of each other,
what is the scope of the alleged agency, i.e., just to process a claim or to
agree to another insurer’s coverage or another insurer’s Plan terms or another
insurer’s amount or a percentage of benefit payment, etc.?
These type of details in the pleading are
important for the Court to fulfill its gatekeeper role in screening complaints involving
multi-defendant causes of action, and to ensure that cases that proceed do so
against the proper defendants.
Promissory Estoppel
Defendant Anthem
also asserts that Plaintiff’s promissory estoppel claims in the second and
fourth causes of action fail because Plaintiff fails to allege a clear and
unambiguous promise by Anthem.
A promissory
estoppel claim requires: (1) a clear and unambiguous promise clear; (2)
reliance; (3) the reliance must be reasonable and foreseeable; and (4) injury
due to reliance. (Advanced Choices, Inc. v. State Dept. of Health Svcs.
(2010) 182 Cal.App.4th 1661, 1672.) The promise “must be definite enough
that a court can determine the scope of the duty and the limits of performance
must be sufficiently defined to provide a rational basis for the assessment of
damages.” (Ladas v. Cal. State Auto. Ass’n (1993) 19 Cal.App.4th 761, 770.) Reliance must be
specific and plaintiff must substantially change position. (Youngman v. Nev.
Irrigation Dist. (1969) 70 Cal.2d 240, 249.) Finally, promissory
estoppel is a legal fiction designed to substitute for contractual
consideration where a party relied on another’s promise without having entered
into an enforceable contract. (Philips Med. Capital, LLC v. Med. Insights
Diagnostics Ctr., Inc. (N.D. Cal. 2007) 471 F. Supp. 2d 1035, 1043.)
Defendant demurs to the
second and fourth causes of action on the grounds that it claims (1) Plaintiff
obtained information it needed to determine what it might be paid, not that
Anthem clearly and unambiguously promised to pay an amount certain; and (2) to
the extent that Plaintiff’s causes of action rely on purported promises
contained within Anthem’s policies, or terms used by Anthem in its policies,
those promises are between Anthem and the patient rather than with Plaintiff,
thus, Defendant claims Plaintiff fails to plead a clear and unambiguous promise
relied upon by the party to whom the promise is made. As noted above, the Court finds insufficient
detail concerning the underlying purported oral contracts upon which the claimed
estoppel arises, but the Court will grant leave to amend all the causes of
action.
Misjoinder
Defendant argues that the fourth cause of action is subject
to demurrer because there is a misjoinder or defect of parties. The Court disagrees.
Code of Civil Procedure section 430.10(d) provides that a
demurrer may be brought on the grounds of misjoinder of parties. (Code Civ. Proc., § 430.10(d).) “Demurrers on
the ground of misjoinder lie only when the defect
appears on the face of the complaint or matters judicially noticed.” (Royal
Surplus Lines Ins. Co., Inc. v. Ranger Ins. Co. (2002) 100 Cal.App.4th 193,
198.) Furthermore, Defendant must show that it will be prejudiced by the
alleged misjoinder. (5 Witkin, Cal. Procedure (4th
ed. 1997) Pleading, § 926, pp. 385–386.) Defect of parties occurs where
Plaintiffs fails to include all necessary parties.
Defendant
asserts that there is a defect or misjoinder because Anthem is not a proper
defendant to this lawsuit with respect to Patients A and B, despite Plaintiff’s
allegation that Anthem is the insurance company and local plan for those
Patients. Anthem claims that with respect to Patient A, Anthem is neither the
claim nor the plan administrator responsible for determining how claims are
processed and paid. (Declaration of Kathi Loppnow (“Loppnow Decl.”), ¶
4.) Instead, Defendant Anthem argues that Defendant Premera was responsible for
determining how Patient A’s claims were paid. (Loppnow Decl., ¶ 4.) Anthem claims that it
served as a local “host plan” pursuant to the BlueCard network of benefits
plans and referred Plaintiff’s claim for Patient A to Premera. (Loppnow Decl., ¶
4.) Anthem further claims it did not make decisions regarding the final claim
reimbursement determination for Patient A’s benefits nor did it fund any
reimbursement. (Loppnow
Decl., ¶ 4.)
With
respect to Patient B, Anthem asserts that BCBS of MA was responsible for
determining how Patient B’s claims were paid. (Loppnow Decl., ¶ 5.) It also notes that it
served as a local “host plan” pursuant to the BlueCard network of benefits
plans and referred Plaintiff’s claim to BCBS of MA. (Loppnow Decl., ¶ 5.) Anthem further notes
that it did not make decisions regarding the final claim reimbursement
determination for Patient B’s benefits nor did it fund any reimbursements. (Loppnow Decl., ¶
5.)
In opposition, Plaintiff asserts that Defendant Anthem’s
demurrer for misjoinder of must be
overruled because it is based on facts outside the operative FAC that are not
subject to judicial notice. Anthem asserts it “is not a proper defendant to
this lawsuit with respect to Patients A and B, despite Plaintiff’s allegations
that Anthem is the insurance company and local plan for those patients.”
(Demurrer, p. 9-10.) The Court concurs
and does not sustain the Demurrer on the misjoinder ground. The Court can consider such extrinsic
evidence at the summary judgment stage, not the demurrer stage.
C. Premera’s Demurrer
Premera makes several of the same arguments as to pleading
deficiencies that Anthem raised and which the Court discussed above. Premera’s demurrer concerning the sufficiency
of allegations is sustained with leave to amend for the same reasons discussed
as to Anthem. Premera also argues that
the FAC is time barred and does not relate back to the original filing date of
August 6, 2021. Because the Court
anticipates there will be a Demurrer to the second amended complaint, it will
address the statute of limitations defense here. The Court overrules the demurrer to the
extent it is based on the statute of limitations.
Timeliness of Plaintiff’s
Claims
Pursuant to Code of Civil Procedure section 339, the statute of
limitations for oral contracts or for promissory estoppel predicated on an oral
representation is two years. California
Code of Civil Procedure section 312 notes that the statute of limitations begins
to run when a cause of action accrues. Defendant Premera relies on Vishva
Dev, M.D., Inc. v. Blue Shield Cal. Life & Health Ins. Co., 2
Cal.App.5th 1218 (2016), rev. den., Nov. 9, 2016 (“Vishva Dev”), noting
that in the healthcare context, California law notes that a legal claim arising
out of a payment dispute between a healthcare provider and a health plan
accrues no later than the issuance of an EOB by a health plan explaining its
payment determination on the claim.
In Vishva, a physician “provided emergency medical
services to two individuals who had health care coverage through Blue Shield of
California Life & Health Insurance Company (Blue Shield Life) and one
individual who had health care coverage through California Physicians Services,
also known as Blue Shield of California (Blue Shield California).” (Vishva,
supra, 2 Cal.App.5th p. 1220.) The physician “submitted bills for its
services for each of the individuals to their respective insurers.” (Ibid.)
“Blue Shield Life and Blue Shield California refused to pay or agreed to pay
only a fraction of the amount billed, informing [the physician] of their
decisions regarding each bill in written Explanation of Benefits (EOB)
letters.” (Ibid.) The sole issue in Vishva was when the
physician knew or should have known that the defendants had denied paying the
medical bills. (Vishva, supra, 2 Cal.App.5th p. 1223.)
The Court of Appeal held that the physician “had knowledge
of the facts giving rise to its claim of quantum meruit when it received the
EOBs, with their unequivocal denial of its bills, more than two years
prior to filing this lawsuit.” (Vishva, supra, 2 Cal.App.5th p.
1226 [emphasis added].) In addition, although the physician “engaged in a voluntary appeals process with Blue Shield Life and Blue Shield California,
[that] did not change or undercut the EOBs’ denials of [the physician’s]
claims.” (Ibid.)
Relying on Vishva Dev, Premera argues that with regard to
Patient A, Plaintiff was unambiguously informed of the adverse benefits
determination by July 5, 2019, at the latest, when the check and corresponding
EOB reflected the alleged underpayment of benefits were sent. (FAC,
¶21.) Premera further asserts that with respect to health services provided to
Patient B, Plaintiff knew of the adverse benefits determination by July 29,
2019, at the latest, when the EOB reflecting the alleged underpayment of
benefits was sent. (FAC, ¶¶ 30, 31.) However, Plaintiff’s original complaint
was filed on August 6, 2021.
In
opposition, Plaintiff argues that the action is not time-barred because the
two-year statute of limitations did not accrue until defendants issued a final
denial of the claim, essentially arguing that the internal appeal process
should toll the running of the statute of limitations. . Plaintiff asserts that the FAC establishes
that the two-year statute of limitations for Patient’s A claim did not start
running until at least August 15, 2019, which is the date Defendants sent a
response letter to R&R’s appeal (FAC ¶ 22.) Plaintiff claims August 15,
2019 letter was the first time Defendants explained that they used their own
maximum allowable amounts to price the claim, rather than the claimed pre-service
quote of 50% UCR, and that no additional payments would be made. (FAC ¶ 22.) Additionally,
with reference to Patient B, Plaintiff asserts that the EOB Defendants sent
Plaintiff on July 5, 2019, did not constitute a clear repudiation of the claim.
Plaintiff further contends it did not know the facts essential to the claim
until after appealing. The Vishva
decision undermines plaintiff’s tolling argument during the pendency of the
claims-handling appeal process. (Vishva,
supra, 2 Cal.App.5th p. 1226
However,
Plaintiff has a more successful tolling argument predicated on the COVID rules
issued by the California Supreme Court.
The Court finds that Plaintiff’s limitations period for the filing of
the original Complaint was tolled by California Rules of Court Emergency Rule
9(a).
Emergency rule 9 was adopted by the California Judicial Council on April 6,
2020, and amended on May 29, 2020. According to Emergency rule 9:
“Notwithstanding any other law, the statute of limitations and repose for civil
cause of action that exceed 180 days are tolled from April 6, 2020, until
October 1, 2020.” Therefore, even if the
Court considers the initial EOBs to be unequivocal denials, this action was
filed on August 6, 2021, well within the 178-day tolling period. The allegations
of breach of oral contract and promissory estoppel alleged in the FAC relate
back to the original Complaint. Although
the original Complaint violated the pleading requirement to state which parties
are being included as to which cause of action, ¶ 3 of the original Complaint
contains broad Doe allegations that assert each Doe Defendant including the
later-named Premera was “responsible in some manner for the occurrences alleged
. . . .”
¿¿¿
Tentative Ruling¿ #2
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HEARING DATE: January 24, 2023¿
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CASE NUMBER: 21TRCV00589
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CASE NAME: R&R
Surgical Institute v. Anthem Blue Cross Life and Health Insurance Company, et
al
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MOVING PARTY: (1)
Defendant,
Providence Health & Services-WA’s Motion for Judgment on the Pleadings
RESPONDING PARTY: (1) Plaintiff, R&R Surgical Institute
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TRIAL DATE: Not Set
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MOTION:¿ (1) Motion for Judgment on the
Pleadings
Tentative Rulings: (1) Motion for Judgment on the Pleadings is
DENIED.
The Court outlined the majority
of its reasoning on the statute of limitation issue raised again by the MJP when it issued its tentative ruling on the
pending demurrers being heard the same day.
In addition, Premera asserts that
the FAC should not relate back because Plaintiff was not ignorant of Providence
at the time Plaintiff filed its original complaint. Defendant argues, “There
are not many instances in the law where absolute ignorance is vital and my
serve to advance a litigant’s case, but [California’s Code of Civil Procedure]
section 474 contains one. The decided cases have made it clear that a
plaintiff’s ignorance, to satisfy the statute, must be genuine, that is, real
and not feigned. (citing Stephens v. Berry (1967) 249 Cal.App.2d 474,
477 (citing Lipman v. Rice (1963) 213 Cal.App.2d 474, 477; Herschfelt
v. Knowles-Raymond Co. (1955) 130 Cal.App.2d 347; Mercantile Trust Co.
v. Stockton Co. (1919) 44 Cal.App. 558).) Based on this, Defendant notes
that the FAC states “With regard to Patient A, Plaintiff interacted with…
Defendant Providence during the processing of this claim.” (FAC ¶15.) Defendant
argues that this shows that Plaintiff failed to meet the conditions of
California Code of Civil Procedure section 474, because Plaintiff alleges it knew
of the identify of Providence before filing the original complaint.
In opposition, Plaintiff argues that after filing suit
and during a meet and conger conference with Anthem on September 9, 2021,
Anthem’s counsel advised Plaintiff’s counsel that Patient A was allegedly not a
member of an Anthem Plan and was instead insured through Premera (allegedly a
claims administrator contracted by Providence). Plaintiff further contends that
on November 15, 2021, Anthem demurred to the original complaint on the grounds
that, among other things, Anthem was a mis-joined party defendant. Plaintiff
asserts that concurrently with the demurrer, Anthem filed the Declaration of
Kathi Loppnow, a legal specialist employed by Anthem. Ms. Loppnow declared
that:
For Patient A,
Anthem is neither the claim administrator nor the plan administrator
responsible for determining how claims are processed and paid. Premera was
responsible for determining how Patient A’s claims were paid. Anthem served as
a local “host plan” pursuant to the BlueCard network of health benefits plans
and referred Plaintiff’s claim for Patient A to Premera. Anthem did not make
decisions regarding the final claim reimbursement determination for Patient A’s
benefits.
(Escalante
Decl., ¶ 10.) As such, Plaintiff asserts that the FAC related back because
Plaintiff was ignorant to Providence’s allegedly culpable involvement in the
acts alleged at the time Plaintiff filed its original complaint on August 6,
2021, until Anthem and its counsel educated Plaintiff’s counsel. A Plaintiff may have knowledge of a person’s existence
involvement but lack detail as to its potential culpability until it conducts discovery
and investigation. Thus, mere knowledge of
Promera’s or Providence involvement before the original lawsuit was filed is
not a sufficient ground by itself to bar relation back under Section 474. Given
the liberal policy underlying California’s Doe pleading statute, the Court
accepts Plaintiff’s representations as the basis for the delayed naming of
Premera until discovery and investigation led Plaintiff to amend its original
allegations to what has become the FAC.