Case Number: BC613732 Hearing Date: July 20, 2016 Dept: 34

SUBJECT: Demurrer to first amended complaint; motion to strike

Moving Party: Defendants Blue Cross of California dba Anthem Blue Cross and American Imaging Management Inc. dba AIM Specialty Health (“defendant”)

Resp. Party: Plaintiff Jonathan Greenburg (“plaintiff”)

Defendants’ demurrer is SUSTAINED with leave to amend. Because the demurrer is sustained, the motion to strike is MOOT.

Defendants Objections to Plaintiff’s Exh. 1 is SUSTAINED.

PRELIMINARY COMMENTS:

A complaint must contain a “statement of facts constituting the cause of action, in ordinary and concise language.” (Code Civ. Proc., § 425.10(a)(1).) Plaintiff’s 81-page first amended complaint is not alleged in ordinary or concise language. Plaintiff presents unnecessary background facts, explanations as to medical conditions and treatments, and recitation of statutes and guidelines which appear to serve no purpose other than to make consideration of his complaint more difficult. (See, e.g., ¶¶ 6-15, 22-38.) Further, speculation about the possible cause of Justice Scalia’s death (see, e.g., FAC, ¶ 110 and Plaintiff’s Opposition to Demurrer, p. 1:3-15) are not relevant to the first amended complaint or to this demurrer. The Court considered striking the FAC on its own motion, and ordering plaintiff to submit an amended complaint with more concise allegations. However, in the interest of judicial economy, the Court has decided not to issue such an order.

Nonetheless, the Court expects any Second Amended Complaint filed by plaintiff to be in “ordinary and concise language” and to be devoid of extraneous and irrelevant material.

BACKGROUND:

Plaintiff appears to have commenced this action by filing a first amended complaint on 3/18/16 against defendants for: (1) prohibited business practices; (2) interference with contractual relations; (3) libel; (4) trade libel; (5) restraint of trade; (6) prohibited business practices; (7) interference with contractual relations; and (8) restraint of trade. (The Court says “appears to have commenced” because a summons was issued on 3/14/16, but there is no complaint on file to accompany that summons. The first pleading filed is a “First Amended Complaint” that was filed four days later, on 3/18/16.)

ANALYSIS:

Defendants demur to the first amended complaint on the ground that plaintiff fails to allege sufficient facts.

First and sixth causes of action

Plaintiff’s first and sixth causes of action seek relief for prohibited business practices under Business and Professions Code sections 17040 and 17043-17049. These sections prohibit “the production, manufacture, distribution or sale of any article or product of general use or consumption, with intent to destroy the competition of any regular established dealer in such article or product, or to prevent the competition of any person who in good faith, intends and attempts to become such dealer, to create locality discriminations;” the sale of “any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition;” the sale or use of “any article or product as a ‘loss leader’ as defined in Section 17030 of this chapter;” “[t]he secret payment or allowance of rebates, refunds, commissions, or unearned discounts, whether in the form of money or otherwise, or secretly extending to certain purchasers special services or privileges not extended to all purchasers purchasing upon like terms and conditions, to the injury of a competitor and where such payment or allowance tends to destroy competition;” the use of “any threat, intimidation, or boycott, to effectuate any violation of this chapter;” the solicitation of violations of Chapter 4 of the Business and Professions Code; joint participation or collusion in violations of that chapter; and entry “into a contract with any service or repair agency for the performance of warranty service and repair for products manufactured, distributed, or sold by such person, below the cost to such service or repair agency of performing the warranty service or repair.” (Bus. & Prof. Code, §§ 17040, 17043-17048.5.)

Plaintiff does not allege sufficient facts to establish that defendants violated any of these sections. Plaintiff appears to allege that from 2005 or 2006 to 2015, Anthem reimbursed plaintiff for the use of the Zyppah appliance using the HCPCS/CPT E0486. (FAC ¶ 16.) During this time, Medicare also reimbursed healthcare providers for use of the Zyppah appliance. (Id., ¶ 17.) In 2011, Medicare limited reimbursement under HCPCS/CPT E0486, which resulted in excluding the majority of existing appliances, despite plaintiff’s allegation that the appliances had been successfully used for years and there was no scientific or medical data suggesting that the appliances were inferior. (Ibid.) Plaintiff alleges that he nonetheless continued to bill Anthem for Zyppah and Anthem continued to reimburse him. (Id., ¶ 18.) On 1/15/16, plaintiff received from AIM a guideline setting forth Anthem’s criteria for the treatment of sleep apnea using oral appliances. (Id., ¶¶ 19-20.) Plaintiff admits that Zyppah does not meet all of the criteria. (Id., ¶ 20.) Plaintiff alleges that Anthem will no longer reimburse for appliances that do not comply with the guidelines and CMS Criteria. (Id., ¶ 21.) Plaintiff appears to disagree with the effectiveness and necessity of the CMS Criteria, and argues that there are advantages to Zyppah. (See id., ¶¶ 22-34.)

Plaintiff’s allegations appear to merely allege that defendant stated that it would no longer reimburse health care providers and patients for use of the Zyppah appliance. It is unclear how this constitutes a prohibited business practice under sections 17040 and 17043-17049. Plaintiff provides no authority suggesting that a healthcare provider’s refusal to reimburse for certain medical procedures constitutes a prohibited business practice.

Accordingly, defendants’ demurrer to the first and sixth causes of action is SUSTAINED.

Third and fourth causes of action

A claim for libel consists of a false, unprivileged written publication which exposes a person to hatred, contempt, ridicule, or obloquy, or which causes person to be shunned or avoided, or which has a tendency to injure person in his occupation. (Ruiz v. Harbor View Community Assn. (2005) 134 Cal.App.4th 1456, 1470-1471.) Trade libel consists of the following elements: (1) defendant’s false statement; (2) publication; (3) of matter disparaging the quality of another’s property or services; (4) which the publisher intended to cause harm to the owner, or should have recognized as being likely to cause it; and (5) causation of pecuniary harm or loss. (Computerxpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010; Leonardini v. Shell Oil Co. (1989) 216 Cal.App.3d 547, 572; Nichols v. Great Am. Ins. Cos. (1985) 169 Cal.App.3d 766, 773-74 [“The failure … to distinctly aver a disparaging publication in its complaint precludes any recovery on a defamation theory.”].)

It appears that this cause of action is based on the 1/15/16 guidelines. Plaintiff disputes the guideline’s statements as to CMS Criteria. (See id., ¶¶ 22-34.) However, the third cause of action appears to primarily take issue with the fact that reimbursement is contingent on compliance with the guidelines. (See FAC ¶¶ 20-21, 68-71.) There is no showing that the statement that reimbursement requires compliance with the guidelines is false. Instead, it appears that plaintiff is alleging that he will be harmed because his methods will no longer be reimbursed. (See id., ¶¶ 68-71.)

Accordingly, defendants’ demurrer to the third and fourth causes of action is SUSTAINED.

Second and seventh causes of action

The elements of a claim for intentional interference with contract are: (1) a valid contract between plaintiff and third party; (2) defendant’s knowledge of that; (3) defendant’s intentional acts designed to induce disruption of the relationship; (4) actual disruption; and (5) resulting damage. (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148; Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 929.) To show disruption, “[i]t is sufficient to show the defendant’s conduct made the plaintiff’s performance … under the contract more burdensome or costly.” (Golden W. Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 50.)

The elements of a claim for intentional interference with prospective economic advantage are: (1) and economic relationship existing between the plaintiff and third party; (2) probability of future economic benefit to the plaintiff; (3) defendant’s knowledge of the relationship; (4) defendant’s intentional acts designed to disrupt the relationship; (5) defendant engaged in an independently wrongful act in disrupting the relationship beyond just inducing disruption of economic advantage; (6) actual disruption of the relationship; and (7) economic harm to the plaintiff caused by the acts. (Salma v. Capon (2008) 161 Cal.App.4th 1275, 1290; Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 101 Cal.App.4th 688, 713.) Plaintiffs need not allege that defendants intended to disrupt, and may allege that defendants knew the interference would be substantially certain. (See San Jose Constr. v. S.B.C.C. (2007) 155 Cal.App.4th 1528, 1544.) “ ‘[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.’ ” (SC Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th 68, 92.)

Plaintiff’s allegations are insufficient to support these claims. To the extent that these claims are for interference with contracts, plaintiff does not allege facts which show the existence of valid contracts between plaintiff and third parties, or defendants’ knowledge of such. (See FAC ¶¶ 57-65, 99-107.) To the extent that these claims are for interference with economic advantage, plaintiff fails to allege an independently wrongful act, other than the conclusory assertion that defendants violated Business and Professions Code section 2400. (See id., ¶¶ 35-40.) The issuance of the guidelines does not appear to violate section 2400 because the guidelines seem to merely provide that Anthem will no longer provide reimbursement; there is no showing that the guidelines prohibit plaintiff from treating his patients in the manner he sees fit.

Accordingly, defendants’ demurrer to the second and seventh causes of action is SUSTAINED.

Fifth and eighth causes of action

Claims under the Cartwright Act require the following elements: (1) formation and operation of the conspiracy; (2) wrongful act or acts done pursuant thereto; and (3) damage resulting from such act or acts. (Asahi Kasei Pharma Corp. v. CoTherix, Inc. (2012) 204 Cal.App.4th 1, 7, 12 [Cartwright Act generally outlaws combinations or agreements restraining trade or competition or fixing or controlling prices, and, “ ‘[t]he appropriate use of federal cases interpreting the Sherman Act is as an aid in interpreting our own Cartwright Act, not as controlling precedent….’ ”]; Chavez v. Whirlpool Corp. (2001) 93 Cal.App.4th 363, 370-73 [illegal price fixing requires showing that the manufacturer and distributors were not acting independently (which is legal), but in an agreed scheme]; Kunert v. Mission Financial Services Corp. (2003) 110 Cal.App.4th 242, 262-63 [“A vertical price-fixing … agreement between supplier and distributor ‘destroys horizontal competition as effectively as would a horizontal agreement among distributors or retailers’… and is per se unlawful under the Cartwright Act.”]. See also Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 722 [complainants cannot merely restate the elements of a Cartwright Act violation, but must allege certain facts so that defendants can understand the nature of the alleged wrong]; Drum v. San Fernando Valley Bar Ass’n (2010) 182 Cal.App.4th 247, 255-56 [“ ‘A general demurrer [to an allegation of price fixing] will be sustained where the complaint makes conclusory allegations of a combination and does not allege with factual particularity that separate entities maintaining separate and independent interests combined for the purpose to restrain trade.’ ”]; UAS Management, Inc. v. Mater Misericordiae Hosp. (2008) 169 Cal.App.4th 357, 364 [Cartwright Act prohibits combinations in the unreasonable restraint of trade, and certain restraints are conclusively presumed illegal as defined by statutory sections]; Redwood Theatres, Inc. v. Festival Enterprises, Inc. (1988) 200 Cal.App.3d 687, 713 [“‘Whether a restraint of trade is reasonable is a question of fact to be determined at trial.’”].)

Plaintiff fails to allege facts to support his assertion that Anthem and AIM conspired to restrain trade. Once again, plaintiff merely alleges that defendants decided that they would no longer reimburse the use of Zyppah and similar appliances. (See FAC ¶¶ 87-90, 112-114.) It is unclear how this constitutes an unlawful or wrongful act.

Accordingly, defendants’ demurrer to the fifth and eighth causes of action is SUSTAINED.

Because the Court is sustaining the demurrer, defendants’ Motion to Strike is MOOT.