Judge Upinder S. Kalra, Case Number: 23STCV10653, Date: 2025-03-17 Tentative Ruling

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CASE NAME: Arcelia H. Villalobos, et al. v. Blue Cross of California dba Anthem Blue

RESPONDING PARTY(S): Plaintiff Arcelia H. Villabos, individually and as executory of the Estate of Salvador A. Villalobos

2. Summary Adjudication as to the first and second causes of action in Defendant’s favor.[1]

On May 8, 2023, Plaintiffs Arcelia H. Villalobos, individually and as Executor of the Estate of Salvador A. Villalobos, (Plaintiff) filed a Complaint against Defendant Blue Cross of California dba Anthem Blue Cross (Defendant). The Complaint has three causes of action for: (1) Declaratory Judgment; (2) Breach of Contract; and (3) Breach of the Covenant of Good Faith and Fair Dealing.

According to the Complaint, Plaintiff and her husband, decedent, were insured through Medicare and through a Medicare supplemental plan provided by Defendant via decedent’s employer. Plaintiff alleges that Defendant refused to reimburse approximately $50,000 in medical bills that Plaintiff paid for out of pocket. These services occurred at a Mexican hospital to decedent due to a brain bleed while on vacation in Mexico. Plaintiff alleges she also paid $36,000 to the Mexican treating physician and Defendant did not reimburse those costs either. Plaintiff alleges decedent’s son-in-law submitted claims for reimbursement to Defendant, of which Defendant only reimbursed ambulance fees, and a medical billing company located in Florida apparently submitted bills to Defendant for the same services Plaintiff paid for to the Mexican providers. Plaintiff alleges Defendant did not pay Plaintiff but paid this medical billing company. The medical billing company in turn sent a new bill to Plaintiff at four times the amounts set forth in the Mexican hospital’s original billing statement, noted an insurance payment of $47,762.24, and demanded an additional $100,626.95. Plaintiff contends she paid the hospital bill in full and owes nothing further.

On August 7, 2023, Defendant filed a demurrer with motion to strike portions of the Complaint, which the court SUSTAINED with leave to amend on October 25, 2023.

On November 22, 2023, Plaintiff filed a First Amended Complaint (FAC) with the same three causes of action.

On December 28, 2023, the parties stipulated to extend time for Defendant to respond to the FAC.

On January 24, 2024, Defendant filed the instant demurrer with motion to strike portions of the FAC which the court SUSTAINED without leave to amend as to the first cause of action and OVERRULED as to the second and third causes of action and GRANTED in part.

On December 20, 2024, Defendant filed the instant motion for summary judgment, or alternatively summary adjudication (MSJ). On February 24, 2025, Plaintiff filed an opposition. On March 6, 2025, Defendant filed a reply.[2]

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.¿(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) In analyzing such motions, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿(Hinesley¿v.¿Oakshade¿Town Center¿(2005) 135 Cal.App.4th 289, 294).¿Thus, summary judgment or summary adjudication is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist, and the moving party is entitled to judgment as a matter of law.¿(CCP § 437c(c);¿Villa v.¿McFarren¿(1995) 35 Cal.App.4th 733, 741.)¿

A triable issue of material fact exists where “the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, at p. 850.)¿

As to each claim as framed by the complaint, the party¿moving for summary judgment or summary adjudication must satisfy the initial burden of proof by presenting facts to negate an essential element.¿(Scalf¿v. D. B. Log Homes, Inc.¿(2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”¿(Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.) A motion for summary judgment or summary adjudication must be denied where the moving party's evidence does not prove all material facts, even in the absence of any opposition or where the opposition is weak.¿(See¿Leyva v. Superior Court (1985) 164 Cal.App.3d 462, 475;¿Salesguevara¿v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387.)¿¿¿¿

Once the¿moving¿party has met the burden, the burden shifts to the opposing party¿to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto.¿(CCP § 437c(o)(2).)¿ When¿a¿party¿cannot¿establish an essential element or defense, a court must grant a motion for summary judgment or summary adjudication.¿(CCP § 437c(o)(1)-(2).)¿¿

1. Objections to Declaration of Arcelia Villalobos (Objection Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12): OVERRULED. The documents were sufficiently authenticated. The court receives them under § 1250 of the Evidence Code to explain subsequent conduct of the declarant and knowledge of Defendant.

2. Objections to Declaration of Francis Nickels (Objection Nos. 13, 14, 15, 16, 17, 18, 19): OVERRULED. The documents were sufficiently authenticated. The court receives them under § 1250 of the Evidence Code to explain subsequent conduct of the declarant and knowledge of Defendant.

Defendant contends that summary judgment is proper because Plaintiff cannot show breach or damages. Specifically, Defendant contends that Plaintiff indisputably assigned payment rights to HLC and that Defendant indisputably paid the $50,000.00 lifetime benefit to Hospital Los Cabos Estado de Cuenta Netado (HLC).[3] Plaintiff argues that there is a triable fact as to Defendant being on notice that Plaintiff rescinded instructions to pay HLC since Plaintiff paid for those services already and instead instructed Defendant to reimburse Plaintiff.[4] Defendant replies that Plaintiff failed to provide admissible evidence showing a factual dispute.[5]

To state a claim for breach of contract, a plaintiff must allege sufficient facts to establish (1) a contract between the parties, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damages to the plaintiff from the breach. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)¿“As damages are an element of a breach of contract cause of action [citation], a plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later.” (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241 (Paramount Petroleum).)

Here, Defendant met its initial burden that there are no disputed facts concerning breach. Notably, it is undisputed that there is a $50,000 lifetime benefit that Defendant paid to Plaintiff and to HLC after receiving claims. (Separate Statement of Undisputed Material Facts (SSUMF) Nos. 2, 4, 7, 8, 12, 15, 16, 17, and 18.) The burden shifts.

However, Plaintiff also met their burden demonstrating a triable material fact. Critically, there is a material factual dispute as to whether Plaintiff rescinded the assignment to HLC and whether Defendant had notice of that. To start, Plaintiff provides evidence that they submitted claims to Defendant as early as September 25, 2021.[6] (Nickels Decl. ¶ 8.) This submission included an invoice from HLC. (Ibid.; see also Exhibit 6.) Next, Plaintiff provides evidence that Defendant instructed Plaintiff to resubmit the claims using a different claims form – which Plaintiff did. (Id. at ¶ 9.) Defendant rejected this submission again due to lack of signature and Plaintiff resubmitted the claims. (Id. at ¶ 10-11; see also Exhibit 7.) Two observations cut against Defendant’s position that these declarations and exhibits fail to raise triable facts concerning notice. First, it is undisputed that Defendant rejected Plaintiff’s claim forms for lack of signature – a defect that occurs underneath Item 5, Option A instructing Defendant to “[m]ake a payment to subscriber; provider has been paid.” (Nickels Decl., Exhibit 7.) Second, it is undisputed that Defendant paid two of Plaintiff’s claims submitted with the claim concerning HLC. (SSUMF Nos. 15, 16; Nickels Decl., Exhibits 6, 7.) This is circumstantial evidence of knowledge. As such, there is a material dispute that Defendant breached the plan by failing to remit payment to Plaintiff.

Accordingly, the court DENIES Defendant’s motion for summary judgment as to the Second Cause of Action.

ii. Third Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

Defendant contends that summary judgment is proper because it is undisputed that it did not withhold plan benefits and that Plaintiff cannot demonstrate damages it proximately caused. Plaintiff argues that there are triable facts as to Defendant’s interference with contract performance by failing to compare the different claim forms before remitting payment to HLC. Defendant replies there is no admissible evidence of wrongful conduct.

“ ‘The [implied] covenant of good faith and fair dealing [is] implied by law in every contract.’ [Citation.] The covenant is read into contracts and functions ‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’ [Citation.] The covenant also requires each party to do everything the contract presupposes the party will do to accomplish the agreement’s purposes. [Citation.] A breach of the implied covenant of good faith is a breach of the contract [citation], and ‘breach of a specific provision of the contract is not…necessary’ to a claim for breach of the implied covenant of good faith and fair dealing [citation].” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) (Emphasis in original.) Plaintiff’s allegations must show “that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement. Just what conduct will meet this criteria will depend on the contractual purposes and reasonably justified expectations of the parties.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)¿

“The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Smith v. City and County of San Francisco (2002) 225 Cal.App.3d 48-49.)¿¿

As above, Defendant met its initial burden. Notably, Defendant provided undisputed evidence that it paid the $50,000 lifetime benefit Plaintiff’s husband was entitled to. (SSUMF No. 18.) But there is more.

Plaintiff met their burden that a material factual dispute exists as to how Anthem paid this benefit. Specifically, there is a disputed fact whether Defendant’s payment to HLC was an “honest mistake” or a “conscious or deliberate act” because Defendant instructed Plaintiff to resubmit their claims multiple times, those claims included bills from HLC, those claims requested direct repayment since providers had been paid, and Defendant did pay two of those claims to Plaintiff. (Nickels Decl. ¶¶ 8-12.)

Accordingly, the court DENIES Defendant’s motion for summary judgment as to the Third Cause of Action.

[1] Defendant mistakenly states the first cause of action when it means the second and third causes of action. The first cause of action for declaratory judgment was disposed of via demurrer.

[2] The court disregards Defendant’s reply to separate statement. (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252 [noting that “[t]here is no provision in the statute” for a reply separate statement.”])

[3] Defendant further contends that Plaintiff was never guaranteed to have zero out of pocket expenses for foreign emergency care and that it is not liable for HLC’s alleged overstated charges.

[4] Plaintiff proposes additional arguments that the court declines to address.

[5] The court rejects Defendant’s argument that Plaintiff cannot prove damages because Plaintiff clearly seeks “the rest of the $50,000 medical coverage for foreign medical expenses.” (Villalobos Decl. ¶ 15.)

[6] It is undisputed that HLC submitted its claim to Defendant on October 15, 2021. (SSUMF No. 4.)