Judge Steven J. Kleifield, Case 22STCV34461 2023-03-03 Tentative Ruling

Judge: Steven J. Kleifield, Case: 22STCV34461, Date: 2023-03-03 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Plaintiff University of Southern California on behalf of its USC Kenneth Norris, Jr. Cancer Hospital ("the Hospital") sued Defendant Cartamundi Dallas, Inc ("CDI"), which, according to the Hospital's complaint, operates an employee benefit plan that provides health care benefits for plan members. The Hospital's complaint asserts causes of action under California law for breach of an implied contract, quantum meruit, promissory estoppel, and unjust enrichment. All of the Hospital's causes of action arise out CDI's alleged failure to reimburse the Hospital in full for medical care and services the Hospital provided to a CDI member. CDI demurred on two grounds. First, CDI argues that all of the Hospital's claims conflict with the federal Employee Retirement Income Security Act ("ERISA") and thus are preempted by that statute. (29 U.S.C. Section 1144(a).) Second, CDI argues that even if the Hospital's claims are not preempted by ERISA, the complaint fails to allege sufficient facts to support the claims and is fatally uncertain.

Taking the preemption argument first, the Court's tentative ruling is that the Hospital's claims are not preempted by ERISA. It is salient for the ERISA preemption inquiry that the Hospital is a third-party provider of services to CDI members, outside of the plan's network of providers. Put another way, the Hospital is not a plan participant, an assignee of a participant, or a plan beneficiary. Drawing on a body of ERISA precedent, the Court in Morris Silver M.D., Inc. v. International Longshore & Warehouse Union -- Pacific Maritime Association Welfare Plan (2016) 2 Cal.App.5^th 793, 802-807, held that a third-party doctor's claims against a plan sponsor for breach of contract, promissory estoppel, and unjust enrichment were not preempted by ERISA. The distinction for ERISA preemption purposes between the state law claims of a third party provider of services, on the one hand (which generally are not preempted) and the state law claims of a plan participant, assignee, or beneficiary (the claims of which are preempted) also was recognized in Port Medical Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5t 153. In that case, the Court held that ERISA preempted claims, inter alia, for breach of an implied contract and quantum meruit brought against a plan by medical providers who were participants in the plan through an express, in-network provider agreement with the plan and had provided services to plan beneficiaries pursuant to the plan. (Id. at pp. 175-181.)
Applying Silver and Port Medical Wellness, the Court has concluded that the Hospital's state law claims against CDI are not preempted. The demurrer is thus overruled to the extent that it rests on ERISA preemption.

Turning to CDI's second argument in support of its demurrer, the Court has tentatively concluded that the Hospital has alleged sufficient facts to support its claims for breach of an implied contract, promissory estoppel, and quantum meruit. Nor are the allegations supporting these claims too uncertain. Accordingly, the demurrer is overruled to the extent it is based on asserted pleading defects as to the claims for breach of an implied contract, promissory estoppel, and quantum meruit. The demurrer is sustained, however, without leave to amend as to the cause of action for unjust enrichment. That is because unjust enrichment is not a stand-alone claim in California law. Rather, the concept of unjust enrichment embodies principles that underpin other claims and remedies recognized in California law. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 233 Cal. App.4^th 221, 231; Levine v. Blue Shield of California (2010) 189 Cal.App.4^th 1117, 1138.).