Judge: Salvatore Sirna, Case: 23PSCV00051, Date: 2023-08-08 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on the tentative rulings by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 23PSCV00051    Hearing Date: August 29, 2023    Dept: G

Defendant California Physicians’ Service’s Demurrer to Third Cause of Action of Plaintiff’s First Amended Complaint

Respondent: Plaintiff Felipe Alexandre

TENTATIVE RULING

Defendant California Physicians’ Service’s Demurrer to Third Cause of Action of Plaintiff’s First Amended Complaint is OVERRULED.

Defendant to answer the First Amended Complaint in ten (10) days.

BACKGROUND

This is a breach of contract action arising from a health insurance policy. In April 2022, Plaintiff Felipe Alexandre was visiting Sao Paulo, Brazil when Alexandre became ill with a strep infection that spread to Alexandre’s lungs. As a result of this infection, Alexandre underwent surgery at a Brazilian hospital in Sao Paulo. After returning to California, Alexandre submitted a claim to Alexandre’s insurer, Defendant California Physicians’ Service (Blue Shield). Alexandre alleges Blue Shield denied Alexandre’s two claims and appeal on the grounds that Alexandre’s surgery was not emergency treatment.

On January 6, 2023, Alexandre and Glenia Alexandre filed a complaint against Blue Shield and Does 1-100, alleging the following causes of action: (1) breach of the implied covenant of good faith and fair dealing, (2) breach of contract, and (3) violation of Business and Professions Code section 17200. On May 31, the court sustained Blue Shield’s demurrer to the Complaint with leave to amend.

On June 13, 2023, Alexandre filed a First Amended Complaint (FAC) against the same defendants alleging the same causes of action.

On July 13, 2023, Blue Shield filed the present demurrer. On August 8, the court continued a hearing on the demurrer so parties could adequately meet and confer. On August 7 and August 8, Blue Shield’s counsel met and conferred telephonically with Alexandre’s counsel but was unable to reach a resolution. (Shvarts Supp. Decl., ¶ 3.)

A hearing on the demurrer and a case management conference are set for August 29, 2023.

ANALYSIS

Blue Shield demurs to Alexandre’s third cause of action for violation of Business and Professions Code section 17200. For the following reasons, the court OVERRULES Blue Shield’s demurrer to Alexandre’s third cause of action.

Legal Standard

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747.)

To state a cause of action for unfair business practices, a plaintiff must establish defendant engaged in “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” (Bus. & Prof. Code, § 17200.) This section establishes three types of unfair competition, prohibiting “practices that are either ‘unfair,’ or ‘unlawful,’ or ‘fraudulent.’” (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1496.) Thus, “An act or practice may be actionable as “unfair” under the unfair competition law even if it is not ‘unlawful.’” (Chavez v. Whirlpool Corp. (2001) 93 Cal.App.4th 363, 374.)¿However, despite the broad scope of Business and Professions Code section 17200, its remedies are limited to equitable relief and damages are not recoverable. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.)

Discussion

Blue Shield argues Alexandre’s unfair business practices claim fails because Alexandre is not entitled to the limited remedies of injunctive relief or restitution. Because California’s unfair competition law allows courts to enjoin ongoing business practices that are unlawful, unfair, or fraudulent, “[i]njunctive relief will be denied if, at the time of the order of judgment, there is no reasonable probability that the past acts complained of will recur, i.e., where the defendant voluntarily discontinues the wrongful conduct.” (California Service Station ect. Assn. v. Union Oil Co. (1991) 232 Cal.App.3d 44, 57.)

In this case, Alexandre alleges Blue Shield’s denial of coverage for emergency medical services without conducting a full, fair, and thorough investigation constitutes unfair, unlawful, misleading, and fraudulent business practices. (FAC, ¶ 43.) Alexandre further alleges that these practices are ongoing and that there is a reasonable probability these practices will continue. (FAC, ¶ 43.) Blue Shield argues these allegations are insufficient because they do not allege how Blue Shield’s practices will further impact Alexandre. (Demurrer, p. 4:16-23.) But Alexandre specifically pleads that Blue Shield “provides health insurance coverage” to Alexandre in the present tense which establishes these allegedly unfair, unlawful, or fraudulent business will continue to impact Alexandre if Alexandre makes another claim. (FAC, ¶ 1.)

Blue Shield also argues injunctive relief would be legally impermissible on the grounds that Alexandre’s proposed injunction is vague and invalid by requiring Blue Shield’s mere compliance with the law. (Demurrer, p. 6:5-18.) “An injunction must be sufficiently definite to provide a standard of conduct for those whose activities are to be proscribed, as well as a standard for the court to use in ascertaining an alleged violation of the injunction.” (People ex rel. Dept. of Transp. v. Maldonado (2001) 86 Cal.App.4th 1225, 1234.) “An injunction which forbids an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application exceeds the power of the court.” (Pitchess v. Superior Court (1969) 2 Cal.App.3d 644, 651.) And “[w]hile a court may not issue a broad injunction to simply obey the law, . . .  the court is entitled to restrain the person from committing similar or related unlawful activity.” (City of Redlands v. County of San Bernardino (2002) 96 Cal.App.4th 398, 416.)

In Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc. (2021) 71 Cal.App.5th 323 (LBMMC), the court held an injunction to prevent underpayment for emergency medical services was impermissibly vague as it was impossible for the defendant to know the reasonable and customary value of medical services. (Id., at p. 343.) But unlike LBMMC, Alexandre is not seeking an injunction to require Blue Shield to pay a certain amount. Instead, Alexandre is seeking to enjoin Blue Shield from denying claims without conducting an adequate investigation. (FAC, ¶ 43-44.) Furthermore, the actual language, scope, and availability of injunctive relief in this case will turn on the facts uncovered in discovery. Thus, at this stage, a challenge to the vagueness or permissibility of Alexandre’s requested injunctive relief is premature.

Because Alexandre has alleged sufficient facts to establish the availability of injunctive relief, Alexandre has adequately stated a claim for unfair business practices pursuant to Business and Professions Code section 17200. Accordingly, Blue Shield’s demurrer to Alexandre’s third cause of action is OVERRULED.

CONCLUSION

Based on the foregoing, Blue Shield’s demurrer is OVERRULED as to Alexandre’s third cause of action.

Defendant to answer the First Amended Complaint in ten (10) days.