Judge: Ronald F. Frank, Case: 21TRCV00589, Date: 2023-04-13 Tentative Ruling
Case Number: 21TRCV00589 Hearing Date: April 13, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: April 13, 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) Anthem Blue Cross Life and Health Insurance Company
(2)
Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. and Premera Blue
Cross
(3)
Providence Health & Services-WA
RESPONDING PARTY: (1) Plaintiff,
R&R Surgical Institute
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TRIAL DATE: Not Set
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MOTION:¿ (1) Demurrer by Anthem to SAC
(2)
Demurrer by Premera to SAC
(3)
Demurrer by Providence to SAC
Tentative Rulings: (1) Defendant Anthem’s Demurrer is SUSTAINED
(2) Defendant Premera’s Demurrer is SUSTAINED.
(3) Defendant Providence’s Demurrer is SUSTAINED
The Court will take oral argument from Plaintiff as to
whether any further amendment can be made to address the unanswered question raised
in the Court’s prior Tentative Ruling as to the FAC, and as to the deficiencies
raised by the Defendants’ brief in the state court precedents which are binding
on this Court as opposed to federal trial-level decisions which are not.
I. BACKGROUND¿¿
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A. Factual¿¿
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This action arises out of a claimed breach of contract
case regarding payment for out-of-network treatment and a facility charge
incurred by Plaintiff on behalf of two non-party patients of Plaintiff. 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. On February
14, 2023, Plaintiff filed a Second Amended Complaint (“SAC”) alleging 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”), Defendant, Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc.
and Premera Blue Cross (“BCBSMA”), and Defendant, Providence Health &
Services – WA (“Providence”) filed demurrers to the SAC and filed joinders in each others’
demurrers.
B. Procedural¿¿
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On
March 14, 2023, Anthem Blue Cross Life and Health Insurance Company filed a
demurrer. On March 30, 2023, Plaintiff, R&R Surgical Institute filed an
opposition. On April 6, 2023, Anthem Blue Cross Life and Health Insurance
Company filed a reply brief.
On
March 15, 2023, Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. and
Premera Blue Cross filed a Demurrer. On March 30, 2023, Plaintiff filed an
opposition. On April 6, 2023, Blue Cross and Blue Shield of Massachusetts HMO
Blue, Inc. filed a reply brief.
On
March 16, 2023, Defendant, Providence Health & Services – WA filed a
Demurrer to the SAC. On March 30, 2023, Plaintiff filed an opposition. On April
6, 2023, Providence Health & Services – WA filed a reply brief.
II. ANALYSIS
A. Legal Standard
Because
this is not the first demurrer heard by the Court in this case, and not its
first tentative ruling on a demurrer, the Court will not repeat the standards
applied in evaluating demurrers.
B.
Anthem’s
Demurrer
Anthem demurs to Plaintiff’s SAC on the grounds that it
claims the SAC fails to state sufficient facts to constitute any cause of
action against Anthem.
Breach of Oral
Contract
Anthem contends
that the SAC’s first and third cause of action for breach of oral contract
should be dismissed because, despite being given leave to amend after the demurrer
was sustained as to the First Amended Complaint (“FAC”), Plaintiff has still 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.)
In this Court’s previous
ruling on the sustained demurrer to the FAC, the Court accepted Plaintiff’s
invitation to discuss the “practical realities” of out of network treatment for
medical services, the Court noting that if germane to a demurrer then an
amended pleading should provide the relevant details of those realities for the
Court to consider. The Court also noted that it was 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, and that
without considerable detail being alleged as to what that means for the
substance of the case, the Court was left with numerous potential questions. As a general rule, a phone call by a health
care provider to verify that a patient is covered by the insurer or the amount
of a remaining deductible is not sufficient to create a contract between the health
care provider and the insurer. In the
emergency service arena, state and federal statutes may provide a cause of
action for the health care provider against the patient’s insurance company,
but the statutes do not create a contract cause of action. The SAC does not plead a statute nor
emergency services.
Phone Call Regarding Patient A
Here, in reference to the
phone call, Plaintiff alleges that on April 24, 2019, prior to
rendering services, R&R's billing manager called Anthem to verify whether
Patient A was eligible for coverage, to confirm whether Patient A's plan offers
out-of-network surgery benefits, and if so, to determine the rate at which the
plan pays out-of-network claims. R&R's billing manager is alleged to have spoken
with Sarah (Reference No. 191140003538), who assured R&R that Patient A was
eligible for coverage; that Patient A's plan offers out-of-network general
surgery and bariatric surgery benefits; that Patient A's plan pays
out-of-network claims at 50% of the usual, customary, and reasonable rate
("UCR"), which is the amount paid for a medical service in a
geographic area based on what out-of-network providers in the area usually
charge for the same or similar medical service; and that Patient A's remaining
deductible and out-of-pocket amounts were $2,208.51 and $6,508.51,
respectively. This information was memorialized contemporaneously by R&R's
billing manager on a form entitled "Insurance Verification" during
the regular course of business. (SAC, ¶ 20.)
While these allegations are more specific than those in some of the precedents
cited the parties in briefing, confirmation that a plan generally covered out
of network claims at a specific percentage is not a promise to pay plaintiff a
specific amount or a specific percentage as to either the two specific patients
here. The SAC does not allege that Sarah
promised that any of the defendants would pay 50% of a $100,000 facility fee,
for example.
Additionally,
Plaintiff contends that R&R's billing manager called Anthem again on May 2,
2019 to determine whether the specific procedures (CPT 49650/49650-50) to be
performed on Patient A required pre-authorization. R&R's billing manager
also provided Patient A's diagnosis code (K40.90) and advised that the
outpatient care would be performed at R&R. R&R's billing manager spoke
with Tatum B. who assured R&R that no prior authorization was needed as
long as the services were deemed medically necessary. This information was
alleged to be memorialized contemporaneously by R&R's billing manager on a
form entitled "Pre-Authorization" during the regular course of
business. (SAC, ¶ 21.) Plaintiff asserts that on May 6, 2019, in reliance on
Anthem's promises regarding the out-of-network coverage rate and that obtaining
pre-authorization was not necessary, the medically necessary services were
rendered to Patient A at R&R. (SAC, ¶ 22.)
Next,
Plaintiff asserts that on May 8, 2019, R&R submitted the $101,200 facility
fee claim to Anthem, a facility fee that the SAC does not allege was ever raised
or mentioned or approved or promised by Anthem’s telephone agent, and on or
about July 5, 2019, Premera, the alleged claims administrator contracted by
Providence, sent R&R an Explanation of Benefits ("EOB") and
corresponding check in the amount of $2,954.12. (SAC, ¶¶ 23, 24.) Plaintiff
noted Anthem's logo is affixed to the front of the check and the EOB indicates
the amount allowed for the same or similar services in the geographic area is $101,200.
(SAC, ¶ 24.) Plaintiff distinguished that based on its experience, $2,954.12 is
not the UCR rate, or in the range of the UCR rate, for the same or similar
services rendered within the geographical area. (SAC, ¶ 25.) Moreover,
Plaintiff noted the EOB itself indicates the amount allowed for the same or
similar services in the geographic area is $101,200, thus, R&R is entitled
to at least $47,645.88 (50% of amount allowed less amount paid.) (SAC, ¶ 25.)
Lastly,
Plaintiff noted that upon receipt of underpayment for this claim, R&R's
billing manager sent a letter to Anthem appealing the adverse benefit
determination. Anthem sent a response letter on August 15, 2019, stating,
"We have contacted the Member's plan [i.e., Providence] and have received
the following response: We utilize our own maximum allowed amount due to
specific account requirements. No additional money will be paid." (SAC,
¶ 26.) This statement is not consistent with Anthem's pre-service promise that
Patient A's plan paid general surgery benefits at 50% of the UCR rate. (SAC, ¶
27.) Anthem is alleged to have been acting
under the authority of Providence when it made the pre-service representations,
and Premera was alleged to have been acting under the authority of Providence
when it processed the claim. (SAC, ¶ 27.) The SAC thus contends that either Anthem is
responsible for making a misrepresentation on Providence's behalf, or Premera
is responsible for underpaying the claim, with the ratification of Providence. (SAC,
¶ 27.)
Phone Call Regarding Patient B
Plaintiff
contends that on May 2, 2019, prior to rendering services, R&R's billing
manager called BCBS of MA to verify whether Patient B was eligible for
coverage, to confirm whether Patient B's plan offers out-of-network surgery
benefits, and if so, to determine the rate at which the plan pays
out-of-network claims. (SAC, ¶ 32.) R&R's billing manager spoke with James
(Reference No. 23761), who represented that Patient B was eligible for
coverage; that Patient B's plan offers out-of-network general surgery benefits; that Patient B's
plan reimburses out-of-network benefits at 80% of the Local Allowable rate for
the same or similar out-of-network medical services within the geographic area;
and that Patient B's remaining deductible and out-of-pocket amounts were $
1,000 and $ 5,000, respectively. This information was memorialized
contemporaneously by R&R's billing manager on a form entitled
"Insurance Verification" during the regular course of business. (SAC,
¶ 32.) While these allegations are also more
specific than those in some of the precedents cited the parties in briefing,
confirmation that a plan generally covered out of network claims at a specific percentage
is not a promise to pay plaintiff a specific amount or a specific percentage as
to either the two specific patients here.
The SAC does not allege that James promised that any of the defendants would
pay 50% of a $90,000 facility fee, for example.
Additionally,
Plaintiff informs the Court that R&R's billing manager called BCBS of MA
again on May 15, 2019, to inquire whether the specific procedure (CPT 49652) to
be performed on Patient B required pre-authorization. R&R's billing manager
also provided Patient B's diagnosis code (k43.9) and advised that the
outpatient care would be performed at R&R. R&R's billing manager spoke
with Beverly S. who assured R&R that no authorization was needed. This
information was memorialized contemporaneously by R&R's billing manager on
a form entitled "Pre11 Authorization" during the regular course of
business. (SAC, ¶ 33.) Plaintiff states that on
May 16, 2019, in reliance on BCBS of MA's promises regarding the
out-of-network coverage rate and that obtaining pre-authorization was not
necessary, the medically necessary services were rendered to Patient B at
R&R, and that on May 16, 2019, R&R submitted the $91,398.00 facility
fee claim to local Anthem plan, as instructed by BCBS of MA. (SAC, ¶¶ 34, 35.)
Plaintiff
notes that following submission of the claim, BCBS of MA issued a check for
services rendered dated July 25, 2019, in the amount of $ 5,195.40. R&R
disputes that this amount is commensurate with 80% of the local allowable rate
for the same or similar out-of-network medical services within the geographic area. (SAC, ¶ 36.) In fact,
Plaintiff claims that on or about July 29, 2019, Anthem sent R&R an EOB for
this claim stating the "Allowed” amount was $91,398. Accordingly, the SAC
alleges that R&R is entitled to $67,923 ($91,398 x 80% less amount paid),
plus interest in the highest amount and earliest date allowed by law. (SAC, ¶
37.) However, Plaintiff contends that the amount paid by BCBS of MA is not
consistent with Anthem's pre-service “promise” that Patient B's plan paid
general surgery benefits at 80% of Local Allowable rate. (SAC, ¶ 38.) Plaintiff
argues that Anthem was acting under the authority of BCBS of MA when it made
the pre-service representations, and so either Anthem is responsible for making
a misrepresentation on BCBS of MA's behalf, or BCBS of MA is responsible for underpaying the claim.
(SAC, ¶ 38.)
Anthem’s Demurrer Arguments
Here, Anthem
claims that with regard to both Patient A and Patient B, Plaintiff failed to
address any of the Court’s concerns. The
Court disagrees. Plaintiff has answered some of the Court’s
concerns in the minute order to the previous demurrer. But not enough of those concerns. Anthem
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 Pacific Bay Court explained
that the provider’s general allegations that the insurer would pay an undetermined
“percentage or portion” of the UCR lacked specificity. (Id.) Anthem also relies on Bay Area Surgical
Mgmt., LLC v. Principal Life Ins. Co., 2012 WL 4058373 at *1 (N.D. Cal.
2012), where prior to the scheduled surgery, an employee of the Plaintiff spoke
with an employee of the defendant via telephone, and the employee allegedly
confirmed that the patient was covered under Defendant’s insurance and that no
preauthorization was necessary. There, the Plaintiff performed the surgery and
billed the defendant, which the defendant did not pay in its entirety. However,
the Bay Area Surgical Court held that the Plaintiff did not state
sufficient facts that the telephone conversation formed an agreement. The same
is true here. The SAC fails to allege
sufficient facts to show that a contract was formed between Plaintiff and any
of the defendants.
Anthem notes
that Plaintiff’s only additional allegations include references to: (1) the
alleged check indicating that an amount allowed for the same or similar
services is $101,200; and (2) Plaintiff’s personal experience that $2,954.12 is
not the usual and customary rate. (SAC ¶¶ 24, 25.) Anthem asserts the alleged
check at issue arrived after the phone call between Anthem and Plaintiff and
after the treatment at issue was provided, and therefore, cannot establish that
a clear and unambiguous promise was made during the phone call and before
Plaintiff provided the treatment at issue.
Agency
One question presented by this Court’s minute order was
what the scope of the alleged agency between each company was. Here, Anthem’s
demurrer argues that Plaintiff’s amendments do not cure the Court’s concerns.
Defendant notes that between the FAC and SAC, the only additional language
Plaintiff presents (as related to Anthem’s purported agency) is the following:
· Paragraphs 15-18, 27 and 49 of the SAC contain minor
amendments which center on the allegation that “Plaintiff is informed and
believes and thereon alleges that at all times relevant, Anthem and Premera
were acting as agents of Providence in dealings with R&R, and Providence
exercised control over the representations and actions of Anthem and Premera.”
Specifically, Plaintiff alleges that Anthem served as a local host plan; and
referred the claim to Premera, the claim administrator, on behalf of
Providence, the health plan. Plaintiff also alleges Providence was responsible
for providing Anthem and Premera with “accurate information regarding Patient
A’s coverage” and ultimately made a final determination on the claim.
· Similarly, Paragraphs 28-30, 38, 58, and 64 of the SAC
contain minor amendments which center on the allegation that “Plaintiff is
informed and believes and thereon alleges that at all times relevant, Anthem
was acting as the agent of BCBS of MA, and BCBS of MA exercised control over
the actions of Anthem.” Specifically, Plaintiff alleges that Anthem served as a
local host plan; and referred the claim to BCBS of MA, the claim administrator.
Plaintiff also alleges BCBS of MA was responsible for providing Anthem with
“accurate information regarding Patient B’s coverage.”
The Court finds that the amended allegations
of agency do address some of the Court’s prior-stated concerns. But that still does not create a breach of
contract cause of action.
Promissory Estoppel
Defendant Anthem
also asserts that Plaintiff’s promissory estoppel claims fail because Plaintiff
fails to allege a clear and unambiguous promise by Anthem either on its own
behalf or on behalf of its alleged principal.
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.)
Anthem demurs to the second and fourth
causes of action, again, on the grounds, that it asserts that in response to
this Court’s prior ruling, Plaintiff has failed to plead additional allegations
which address this Court’s concerns. Defendant notes that Plaintiff’s only
additional allegations include references to: (1) the alleged check indicating
that an amount allowed for the same or similar services is $101,200; and (2)
Plaintiff’s personal experience that $2,954.12 is not the usual and customary
rate. (SAC ¶¶ 24, 25.) Defendant asserts the alleged check at issue arrived
after the phone call between Anthem and Plaintiff and after the treatment at
issue was provided, and therefore, cannot establish that a clear and
unambiguous promise was made during the phone call and before Plaintiff
provided the treatment at issue.
Conclusion
The Court finds that Plaintiff’s allegations
that an oral contract was formed are not sufficient to overcome Anthem’s or the
other of the Defendants’ Demurrers.
Further, the Court finds that there are not sufficient allegations as to
the promissory estoppel cause of action’s unambiguous promise element. A statement on the telephone that, in general,
a patient’s plan pays for 50% of UCR rates for general surgery or 80% of
Allowable Amounts out of network is not a promise to pay 50% of a $100,000
facility fee or 80% of a $90,000 facility fee, for purposes of pleading a promissory estoppel claim.
C. Premera’s Demurrer
Premera demurs to the SAC because it argues that Plaintiff’s first
and Second causes of action do not state sufficient facts to constitute a cause
of action against Premera. Additionally, Premera demurs to the SAC because it
argues that Plaintiff’s third and fourth causes of action do not state
sufficient facts to constitute a cause of action against BCBSMA.
For the same reasons above, the Court does not believe
Plaintiff has provided sufficient allegations of facts to show that there was a
“meeting of minds” to survive a demurrer to the breach of contract causes of
action, nor sufficient allegations to establish a promissory estoppel cause of
action and specifically as to the unambiguous promise element of such a claim.
As such, the Court sustains Premera’s demurrer.
D.
Providence’s Demurrere
Providence
demurs to Plaintiff’s SAC on the grounds that it alleges Plaintiff’s first
cause of action for breach of oral contract fails to state facts sufficient to
constitute a cause of action. Additionally, Providence demurs because it argues that Plaintiff’s second
cause of action for promissory estoppel fails to state facts sufficient to
state a cause of action.
For
the same reasons listed above for causes of action one and two, the Court
sustains demurrer as to Providence. The Court will hear oral argument as to
whether Plaintiff believes any future amendments could cure these pleading
defects.