Case Name:   Aetna Life Insurance Company, Inc. v. Bay Area Surgical Management, LLC, et al.

Case No.:       1-12-CV-217943

According to the allegations of the Amended Complaint (“FAC”), plaintiff Aetna Life Insurance Company (“Aetna”) is a healthcare insurer and defendants are the owners and/or operators and/or managers of ancillary medical facilities at which physicians perform outpatient surgeries.  (FAC, ¶¶ 1-2.)  Many of these physicians are Aetna participating providers who own an interest in one or more defendant facilities.  (FAC. ¶ 2.)  This lawsuit involves instances where Aetna participating physician-investors have referred their Aetna member patients to a defendant facility, a non-participating provider in which these physicians have invested and which sets its own fee for services, and these physician-investors receive a substantial portion of the defendant’s profits.  (FAC, ¶ 2.)  To induce Aetna members to use a defendant facility’s out-of-network services, the defendant waives the patient member’s coinsurance and otherwise relieves the members’ obligation to pay their charges.  (FAC, ¶ 2.)  Each facility defendant then submits a health insurance claim to Aetna without disclosing that it waived the member’s portion of its charge or otherwise relieved the member from any obligation to pay its charge.  (FAC, ¶ 2.)

The FAC, filed on October 12, 2012, sets forth the following causes of action: [1] Unfair Competition in Violation of the California Business and Professions Code §§ 17200, et seq.; [2] Intentional Interference with Aetna’s Contractual Relations with its Members; [3] Intentional Interference with Aetna’s Contractual Relations with its In-Network Participating Providers; [4] Fraud; [5] Declaratory Judgment; and [6] Unjust Enrichment.  On October 1, 2012, the Court (Hon. Kleinberg) overruled BASM’s demurrer to the Complaint with regard to the first, fourth, fifth, and sixth causes of action, and sustained the demurrer with leave to amend with regard to the second and third causes of action.  On June 14, 2013, the Court (Hon. Kleinberg) overruled BASM’s demurrer to the second and third causes of action in the FAC.  BASM now moves for judgment on the pleadings with regard to the first, second, third, and fourth causes of action.

1. A.              BASM’s Request for Judicial Notice

BASM requests that the Court take judicial notice of the following:

(1)  Plaintiff’s Reply in Support of Motion to Compel Compliance with Physician Subpoenas Served on 09/06/2013;

(2)  Cross-Defendants’ Notice of Demurrer, Demurrer to First Amended Cross-Complaint, Memorandum of Points and Authorities in Support Thereof;

(3)  Cross-Defendants’ Reply to Cross-Complaints’ Opposition; and

(4)  Order re: Demurrer to First Amended Cross-Complaint, Motion for Leave to File Second Amended Cross-Complaint.

The Court can take judicial notice of these documents as court records pursuant to Evidence Code section 452, subdivision (d).  While the Court is free to take judicial notice of the existence of a document in a court file, however, the Court may not take judicial notice of the truth of hearsay statements in decisions and court files.  (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882; see also Stormedia, Inc. v. Superior Court (1999) 20 Cal.4th 449, 456, n. 9 [“When judicial notice is taken of a document … the truthfulness and proper interpretation of the document are disputable.”].)  Accordingly, the request for judicial notice is GRANTED as to the existence of these documents.

1. B.              Procedural Issue

As stated above, BASM previously demurred to each cause of action in the Complaint and FAC.  BASM’s demurrer to the Complaint was overruled as to four causes of action and the demurrer to the FAC was overruled as to the remaining two causes of action.  Therefore, at this point demurrers to each cause of action have been overruled.  Code of Civil Procedure section 438, subdivision (g) permits a party to move for judgment on the pleadings when a party has already demurred on the same grounds only when there has been a material change in applicable case law or statute since the ruling on the demurrer.  BASM argues that its motion for judgment on the pleadings is brought on a different “ground” than the prior demurrers because the motion for judgment on the pleadings refers to a case that was not previously cited and the arguments are somewhat different.  Raising a new argument, however, is insufficient; the question is whether a different “ground” is now being relied upon as the basis for the motion.  The possible grounds for a demurrer and for a motion for judgment on the pleadings by a defendant are enumerated in Code of Civil Procedure sections 430.10 and 438, subdivision (c)(1)(B).  Both the previous demurrers and the current motion for judgment on the pleadings were brought on the ground that the operative pleading fails to state facts sufficient to constitute a cause of action.  BASM has not demonstrated that there has been any material change in applicable case law or statute since the rulings on the demurrers.  Consequently, BASM cannot maintain the instant motion for judgment on the pleadings and the motion is DENIED.