Judge Stephen I. Goorvitch, Case Number: 23STCV23470, Date: 2025-02-11 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 23STCV23470, Date: 2025-02-11 Tentative Ruling

Plaintiff R&B Medical Group, Inc. (“Plaintiff”) moves for a writ of attachment against Defendant Health Access for All Inc. (“Defendant”) in the amount of $126,581.80. The court grants the application but orders attachment of only $60,191.

On or about July 1, 2020, Plaintiff entered into a Laboratory Service Agreement (the “Agreement”) with Defendant whereby Plaintiff agreed to perform certain laboratory testing and other services for specimens furnished by Defendant. (Busheri Decl. ¶¶ 5-7, Exh. 1.) Pursuant to the Agreement, Petitioner picked up specimens and the corresponding requisition forms from Defendant; tested the specimens for the tests requested in the requisitions; and transmitted the results to Defendant. (Id. ¶¶ 7-13.) As relevant to this case, all the specimens that Plaintiff tested for Defendant were for Covid-19. (Id. ¶ 7.)

Section 5 of the Agreement, titled “Fees,” states that Defendant “agrees to pay, upon receipt of billing information and required reports from [Plaintiff], the amounts set forth in Exhibit ‘A’, less any applicable deductibles, copayments, or dollars recovered through coordination of benefits (COB) activities. Such payment shall be considered payment in full.” (Id. Exh. 1.)[1]

Section 6 of the Agreement, titled “Billing,” states that Defendant (referred to as “CLIENT”) “shall indicate the entity responsible for payment of Services rendered on the requisition submitted to LABORATORY [i.e., Plaintiff].” As relevant to this case, section 6 also includes the following terms:

A. If CLIENT indicates that CLIENT is responsible for payment, LABORATORY will submit to CLIENT a monthly itemized statement of Services rendered to CLIENT. Payment for Services is due fifteen (15) days from the date of invoice….

B. If CLIENT indicates that a third party is responsible for payment, LABORATORY, in accordance with legal and regulatory requirements, agrees to bill the patient or other responsible party, including Medicare, Medicaid (Medi-Cal in CA) and insurance companies for Services performed under this Agreement.

C. CLIENT agrees to provide LABORATORY with all necessary billing information and copies of the front and back of the proof of Primary and Secondary insurance(s) information along with submission of the LABORATORY requisition form at the time of request for service.

D. CLIENT agrees to attach a copy of the patients’ demographic sheet to ease and accommodate accurate and proper billing by LABORATORY.

F. If LABORATORY is unable to obtain payment from any third party due to CLIENT's failure to provide all the necessary information and documentation required by this Agreement, or as a result of CLIENT’s failure to follow applicable rules or regulations, CLIENT agrees to pay LABORATORY for all such services at the agreed upon fee schedule.

a. Is denied payment by the carriers and insurers for any deniable reason, or if

b. The patient is uninsured, or his/her insurance coverage was expired at the time of service

c. For each denied PCR COVID-19 SARS-CoV-2 CORONAVIRUS test, LABORATORY will bill the CLIENT one hundred ($100.00) dollars and CLIENT agrees to make a payment upon receipt of the invoice/client billing statement from the LABORATORY.

In its application for writ of attachment, Plaintiff contends that Defendant breached section 6 of the Agreement by failing to provide the information necessary for Plaintiff to bill third parties and by failing to reimburse Plaintiff for the services rendered. Plaintiff contends that it suffered principal damages of $41,900 because of this breach. (See Busheri Decl. ¶¶ 7, 11-13, 14-435, Exh. 440 [summary] and Exh. 2-439 [invoices and requisition forms].) As discussed below, Defendant disputes Plaintiff’s contentions and also asserts that Plaintiff failed to mitigate its damages.

“Except as otherwise provided by statute, an attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500) exclusive of costs, interest, and attorney’s fees.” (Code Civ. Proc. § 483.010.) The court shall issue a right to attach order if the court finds all of the following:

(1) The claim upon which the attachment is based is one upon which an attachment may be issued.

(2) The plaintiff has established the probable validity of the claim upon which the attachment is based.

(3) The attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based.

A claim has “probable validity” where it is more likely than not that the plaintiff will prevail. (See Code Civ. Proc. § 481.190.) “The application shall be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based.”¿ (Code Civ. Proc. § 484.030.)¿ “In contested applications, the court must consider the relative merits of the positions of the respective parties and make a determination of¿the probable outcome of the litigation.”¿ (Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 80.) “The Attachment Law statutes are subject to strict construction.” (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1168.)

Defendant’s request for judicial notice of Exhibits A through D is granted. The court rules as follows on Defendant’s evidentiary objections to the declaration of Michael K. Murray:

The court rules as follows on Defendant’s evidentiary objections to the declaration of Sheila Busheri:

The court overrules Plaintiff’s evidentiary objections to the declarations of Mariana Canela and Jailene Covarrubias.

The application is based on Plaintiffs’ cause of action for breach of contract. To establish a claim for breach of contract, a plaintiff must prove: (1) There was a valid contract; (2) Plaintiff performed under the contract or had a valid excuse for non-performance; (3) Defendant breached the contract; and (4) Plaintiff incurred damages as a result of Defendant’s breach. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.)

Plaintiff contends that Defendant breached section 6 of the Agreement and that Plaintiff suffered principal damages of $41,900. Specifically, Plaintiff submits evidence that Defendant provided samples and requisitions for Covid-19 testing for patients from Defendant’s Gardena, Los Angeles, and Huntington Beach locations. Plaintiff performed the Covid-19 tests requested on the requisitions and reported the results to Defendant. Nearly all the requisition forms for these tests either have no third-party billing information, indicate “pending eligibility” or similar language, or otherwise lack sufficient information to allow Plaintiff to bill a third party. For the few patients for which a billing number was provided (such as patient “P.A.”), Defendant failed to provide the “front and back of the proof of Primary and Secondary insurance(s) information,” as required by section 6.C of the Agreement. Pursuant to sections 6.C, 6.F, and 6.G of the Agreement, Plaintiff billed Defendant for these Covid-19 tests for which Defendant did not provide the necessary information to bill third parties. The total balance owed on all the invoices is $41,900. (See Busheri Decl. ¶¶ 7, 11-13, 14-435, Exh. 440 [summary] and Exh. 2-439 [invoices and requisition forms].) The Busheri declaration shows that Plaintiff charged $75 for some of the tests and $100 for some of the tests. (See e.g. Id. ¶¶ 159-167, 170-184.)

This evidence satisfies Plaintiff’s burden. Plaintiff submits calculations showing that Defendant owes pre-judgment interest of $17,856 on the balance of $41,900, through January 3, 2025. (Murray Decl. ¶ 21, Exh. J.) Plaintiff also requests attachment of costs in the amount of $435, which is permissible under Code of Civil Procedure section 482.110(b). (See Murray Decl. ¶¶ 19-20, 22 and Exh. I.) This totals $60,191. The court will address attorneys’ fees separately.

The court (Richardson, J.) denied Plaintiff’s motion for summary judgment on December 5, 2024. This is not dispositive. In order to prevail on summary judgment, Plaintiff must demonstrate that no reasonable jury could find in Defendant’s favor. This motion is subject to a lower standard, viz., probably validity. Moreover, this court is not bound by Judge Richardson’s ruling.

Defendant contends that “the Agreement does not provide a ‘clear and definite formula’ for the computation of damages” because it does not clearly define: (1) what information is “necessary” for Plaintiff to bill a third party; (2) when Defendant “is responsible for paying for a test”; and (3) when a patient is “uninsured.” Section 6.B of the Agreement states:

If CLIENT indicates that a third party is responsible for payment, LABORATORY, in accordance with legal and regulatory requirements, agrees to bill the patient or other responsible party, including Medicare, Medicaid (Medi-Cal in CA) and insurance companies for Services performed under this Agreement.

CLIENT agrees to provide LABORATORY with all necessary billing information and copies of the front and back of the proof of Primary and Secondary insurance(s) information along with submission of the LABORATORY requisition form at the time of request for service.

If LABORATORY is unable to obtain payment from any third party due to CLIENT’s failure to provide all the necessary information and documentation required by this Agreement, or as a result of CLIENT’s failure to follow applicable rules or regulations, CLIENT agrees to pay LABORATORY for all such services at the agreed upon fee schedule.

· If Defendant contends that a third party is responsible for payment, Defendant must so indicate in the requisition forms provided to Plaintiff.

· Defendant must provide “billing information” for the responsible third parties and “copies of the front and back of the proof of Primary and Secondary insurance(s) information” for those patients that are insured. This information and documentation must be provided “at the time of request for service.”

· If Plaintiff is unable to obtain payment from any third party due to Defendant’s failure to provide the information or documentation required by the Agreement, then Defendant agrees to pay Plaintiff for such services at the agreed upon fee schedule.

(See ibid.) These terms of the Agreement are not ambiguous. Assuming, without deciding, that there is some ambiguity in the term “necessary,” as Defendant argues, the court concludes that such ambiguity either is not material or does not detract from Plaintiff’s probably valid claim.

Defendant argues that it provided Plaintiff sufficient billing and insurance information for the Covid-19 tests at issue. (See Oppo. 6-12; Canela Decl. ¶¶ 4-21; Covarrubias Decl. ¶ 2.) The court disagrees. As discussed, Defendant must provide the required information “at the time of request for service.” The requisition forms that Defendant provided to Plaintiff include a “Bill To:” section in which Defendant could check a box indicating whether the Covid-19 test should be billed to a doctor, patient, Medicare, Medi-Cal, insurance, or IPA. The requisition forms also include a section for “Billing Information.” In many of the requisition forms at issue, Defendant failed to check one of the “Bill To:” boxes and failed to indicate whether a third party is responsible for payment. In the section titled “Billing Information,” these requisition forms also lack sufficient information to allow Plaintiff to determine which third party, if any, Defendant indicated should be billed. (See e.g. Busheri Decl. Exh. 5, 6, 8, 9, 12, 64, 79, 131, 210, 226, 276, 333, 397.) Plaintiff had no contractual duty to bill a third party for these tests because Defendant failed to fulfill its contractual duty in section 6.B to “indicate[] that a third party is responsible for payment.”

On nearly all the requisition forms at issue, including those for which Defendant checked a box in the “Bill To:” section, Defendant either provided no third-party billing information or wrote “pending eligibility,” “uninsured,” “medical pending,” or similar language in the “Billing Information” section. (See Busheri Decl. ¶¶ 7, 11-13, 14-435, Exh. 440 [summary] and Exh. 2-439 [invoices and requisition forms].) Plaintiff had no contractual obligation to bill Medicare, Medi-Cal, an insurance carrier, or an “IPA” for these tests because Defendant failed to provide “copies of the front and back of the proof of Primary and Secondary insurance(s) information” or other necessary billing information, such as “Medi-Cal No.” or “Medicare No.” Further, for many of these tests, Defendant indicated on the requisition forms that insurance coverage was not presently available, including from Medicare or Medi-Cal.

Defendant argues that when it “wrote ‘pending eligibility,’ ‘pending medical,’ ‘Mcal pending’ or a similar phrase on a requisition form this indicated that a third party, not Defendant, was responsible for payment.” (Oppo. 8.) Defendant implicitly concedes that Plaintiff could not bill Medi-Cal or any insurer since the patients were “pending eligibility.” Rather, Defendant argues that Plaintiff should have billed the patient because of “all the requisition forms that say ‘pending eligibility’ or something similar all but one (over 300) contain the patient’s full name and address, such that Plaintiff had enough information to bill these patients directly.” (Oppo. 8:22-24, citing Simonovich Decl. ¶ 2.) However, Defendant has not cited any requisition forms in which Defendant checked the box “patient” in the “Bill To:” section. As noted, Defendant had a contractual obligation to indicate if a third party was responsible for payment. Since the “Bill To:” section of the form specifically included a box for “patient,” Defendant does not show that providing the patient’s information in other parts of the form, without checking the “Bill To:” box for “patient” or writing the patient’s name (or the word “patient”) in the “Billing Information” section, was sufficient to indicate that the patient was responsible for payment. Although Defendant wrote “cash” or “cash pt” on certain requisition forms, it did not indicate on those forms that Plaintiff should bill the patient. Further, the notations “cash” or “cash pt” would not reasonably indicate to Plaintiff that it needed to bill the patient. (See e.g. Busheri Decl. Exh. 265, 389, 402.)

Defendant contends that it would write “uninsured” on the requisition forms to indicate that Plaintiff should seek reimbursement from the Health Resources and Services Administration Covid-19 Coverage Assistance Fund (“HRSA”). (Oppo. 10:27-28; Canela Decl. ¶ 8.) The Agreement did not require Plaintiff to bill HRSA and, in any event, Defendant did not indicate on any of the forms that HRSA was the third party responsible for payment. Thus, Defendant does not show that Plaintiff had a contractual obligation to bill or seek reimbursement from HRSA.

Defendant points out that it “actually did provide insurance information on 17 requisition forms.” (Oppo. 7:13-14; Canela Decl. ¶ 22.) However, the evidence shows that Defendant did not provide “copies of the front and back of the proof of Primary and Secondary insurance(s) information” for these patients, as required by section 6.C of the Agreement. (Busheri Decl. ¶¶ 14, 153, 155, 159-169, 204, 240, 311; see e.g. Exh. 3, 152-163, 204, 240, 311.) Defendant also did not provide all necessary information in the “Billing Information” section of the requisition forms. (Ibid.) Defendant also sometimes did not complete the “Billing Information” section accurately. (Ibid.)[2] On this briefing and record, Plaintiff has sufficiently shown that Defendant did not comply with section 6.C for these 17 Covid-19 tests such that Plaintiff did not have a contractual obligation to pursue payment from an insurer.

Defendant argues that, in 2022, it transmitted hundreds of Medi-Cal Eligibility Verification Numbers (“EVNs”) to Plaintiff for multiple invoices that Plaintiff claims are unpaid. Defendant argues that section 6.B of the Agreement “required Plaintiff to bill Medi-Cal once it had the patients’ EVNs.” (Oppo. 11-12.) Section 6.C of the Agreement states:

(Busheri Decl. Exh. 1 [emphasis added].) The requests for service at issue were primarily made in 2020 and 2021. Defendant argues that in 2022 in transmitted Medi-Cal approvals for patients listed on Invoices 480, 503, 647, 481, 482, 504, 648, 702, and 1132. (Canela Decl. ¶¶ 11-21.) Nearly all these invoices were billed between August 2020 and December 2020, and one was billed in June 2021. (Reply 6:10-14; Busheri Decl. Exhs. 2, 113, 147, 164, 345, 432, 436, 192.) The Agreement did not authorize Defendant to provide Medi-Cal information months or years after the request for service was made and after Plaintiff had invoiced Defendant for services rendered. Furthermore, on this record, Defendant has not persuasively shown that Plaintiff could have billed Medi-Cal for patients who were not eligible at the time services were rendered, or that Defendant properly emailed the EVNs to Plaintiff. (Reply 5-6.) For purposes of this application, the court finds Plaintiff is more likely to prevail on these issues.

Defendant argues that Plaintiff failed to mitigate its damages. Defendant also argues that “Plaintiff failed to mitigate its damages by 1) not billing patients directly when Defendant provided the patient’s full name and address on over 300 requisition forms; 2) not submitting claims for reimbursement to Medi-Cal when it received patient EVNs for nearly 300 patients, and 3) not submitting claims for reimbursement to insurance companies when it received insurance information on requisition forms.” (Oppo. 13:23-27.)

A generally recognized principle of the law of damages is that a party must make reasonable efforts to mitigate damages, and recovery will not be allowed for damages that a party should have foreseen and could have avoided by reasonable effort without undue risks, expense, or humiliation. This principle applies broadly to many different sorts of legal claims.

(State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, 1049, citations and internal quotations omitted.)

The frequent statement of the principle in the terms of a ‘duty’ imposed on the injured party has been criticized on the theory that a breach of the ‘duty’ does not give rise to a correlative right of action. It is perhaps more accurate to say that the wrongdoer is not required to compensate the injured party for damages which are avoidable by reasonable effort on the latter’s part.

The doctrine does not require the injured party to take measures which are unreasonable or impractical or which would involve expenditures disproportionate to the loss sought to be avoided or which may be beyond his financial means. The reasonableness of the efforts of the injured party must be judged in the light of the situation confronting him at the time the loss was threatened and not by the judgment of hindsight.

Having considered the relative merits of the parties’ position, the court concludes, on this record, that Plaintiff is more likely to prevail on the defense for failure to mitigate as to the Covid-19 tests at issue on this application. Plaintiff did not have personal relationships with the patients and, instead, relied on requisition forms completed by Defendant for billing information. To request HRSA reimbursement, Plaintiff would have needed to certify to the best of its knowledge that each of the patients was uninsured “at the time the services were provided.” (RJN Exh. D.) Defendant wrote “pending eligibility” or something similar on most of the requisition forms, and such notations would not necessarily have informed Plaintiff that the patients were uninsured at the time of service. Although Defendant wrote “uninsured” on a small percentage of the requisition forms (see Busheri Decl. Exh. 440), Plaintiff would still lack sufficient information, without contacting the patient, to certify that those patients were uninsured at the time of services. Thus, on this record, it does not appear that Plaintiff could pursue HRSA reimbursement with reasonable efforts. Moreover, even if it had pursued HRSA reimbursement, it is unclear on this record whether Plaintiff would have been reimbursed for any of the Covid-19 tests at issue. Stated differently, Defendant does not demonstrate that Plaintiff failed to mitigate its damages in any specific dollar amount.

Contrary to Defendant’s assertion, pr-judgment interest may be included in a pre-judgment writ of attachment since it is part of the “defendant’s indebtedness claimed by the plaintiff.” (See Code Civ. Proc. § 483.015(a)(1) and Civ. Coe § 3287(a); see also Rutter, Cal. Prac. Guide: Enforcing Judgments and Debts, ¶ 4:65.) Plaintiff’s calculations of prejudgment interest, at the 10 percent rate authorized by statute, appear reasonable and have not been rebutted in opposition. (Murray Decl. ¶ 21, Exh. J; Civ. Code § 3289(b).)

The Agreement states that “in order to recover attorneys’ fees, the parties must mediate any dispute prior to the initiation of litigation.” (Busheri Decl. Exh. 1.) The parties did not mediate, or attempt to mediate, the dispute prior to the initiation of litigation. (See Simonovich Decl. ¶ 4; Reply Murray Decl. ¶¶ 1-13, Exh. 1-7.) Rather, counsel engaged in settlement discussions, which did not result in a settlement. (Ibid.)

In reply, Plaintiff argues, for the first time, that the term “mediate” should be interpreted to mean only that the parties and their attorneys attempted to settle the dispute. (Reply 8-10.) “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) Regardless, Plaintiff does not demonstrate that this argument is likely to prevail, as the term “mediate” has a specific meaning under the law. For example:

Communications between the parties or their counsel regarding settlement are not the same as mediation. In mediation, a neutral third party analyzes the strengths and weaknesses of each party's case, works through the economics of litigation with the parties, and otherwise assists in attempting to reach a compromise resolution of the dispute.

(Frei v. Davey (2004) 124 Cal.App.4th 1506, 1514.) Although the attorney’s fees provision in Frei was more detailed, Plaintiff has not shown that the provision can be materially distinguished from the one at issue in this case. (Reply 9.) In other words, Plaintiff has not demonstrated that its interpretation of the contract is probably valid. Therefore, the court declines to order attachment of attorneys’ fees.

Plaintiff satisfies the statutory requirements of attachment, which are found in Code of Civil Procedure section 483.010:

[A]n attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500) exclusive of costs, interest, and attorney’s fees.

(Code Civ. Proc. § 483.010(a).) “[A]n attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite.” (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App. 4th 537, 541.)

In this case, Plaintiffs’ application for writ of attachment is based on a contract claim for which the total amount allegedly due exceeds $500. The claim is not secured by real property. The damages are readily ascertainable based upon the contract.

Defendant argues that “the Agreement does not provide a ‘clear and definite formula’ for the computation of damages” because it does not clearly define: (1) what information is “necessary” for Plaintiff to bill a third party; (2) when Defendant “is responsible for paying for a test”; and (3) when a patient is “uninsured.” (Oppo. 6-9.) While these arguments relate primarily to the probable validity of Plaintiff’s claim, Defendant also contends that they show Plaintiff’s damages are not fixed and readily ascertainable by reference to the contract. (Ibid.) For the reasons discussed, the court finds Defendant’s interpretation of the Agreement to be less persuasive than the one asserted by Plaintiff. Moreover, any ambiguities with respect to the word “necessary” are not material or, alternatively, do not detract from Plaintiff’s claim. Significantly, Defendant has not argued that the fees charged for the Covid-19 tests (generally $75 or $100) cannot be determined by reference to the Agreement or a fee schedule that was part of the parties’ Agreement. Accordingly, the court finds that Plaintiff’s damages are fixed and readily ascertainable from the terms of the Agreement, the invoices and requisition forms, and Plaintiffs’ declarations.

Code of Civil Procedure section 484.090 states that the Court shall issue a right to attach order if “the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based . . . [and] the amount to be secured by the attachment is greater than zero.” The court finds that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachments is based and the amount to be secured by the attachment is greater than zero.

Defendant has not shown that the amount of attachment should be reduced pursuant to CCP section 483.015(b), including based on its defense for failure to mitigate damages.

Plaintiff requests attachment of any property of Defendant, a corporation. (Application ¶ 9c.) That request is proper. “[A]ll corporate property for which a method of levy is provided by Article 2 (commencing with Section 488.300) of Chapter 8” may be attached. (Code Civ. Proc. § 487.010(a).)

Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment. Section 489.220 provides, with exceptions, for an undertaking in the amount of $10,000. Neither party has argued for a different amount of undertaking.

The application is GRANTED in the reduced amount of $60,191. Plaintiff shall post an undertaking of $10,000.

[1] Plaintiff did not submit Exhibit A to the Agreement, but Defendant does not dispute the amounts of the fees.

[2] For example, Defendant wrote a number that might be a policy number as the “address” or “city/state/zip.” (Busheri Decl. Exh. 204, 240, 311.)