Case Number: EC060549 Hearing Date: May 16, 2014 Dept: B

24. EC060549
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA v. LOCAL INITIATIVE
Demurrer
Case Management Conference

The Second Amended Complaint alleges that the Plaintiff provided emergency medical care to a patient who was the victim of a brutal beating. The patient was a member of the Defendant’s health plan. The Plaintiff submitted a claim to the Defendant for payment of the medical bills, but the Defendant refused to pay the bills. The Plaintiff brought this action to recover the amount of the bills.

This hearing concerns the demurrer filed by the Defendant, County of Los Angeles. Although the Defendant is identified as Community Health Plan Los Angeles, this is part of the Department of Health Services for the County of Los Angeles.

The Defendant argues that the Plaintiff did not comply with the Government Tort Claims Act. Under California law, the failure to timely present a claim for money or damages to a public entity bars a plaintiff from filing a lawsuit against that entity. State of California v. Superior Court (2004) 32 Cal. 4th 1234, 1239. The general rule under the Tort Claims Act is that any party with a claim for money or damages against a public entity must first file a claim directly with that entity; only if that claim is denied or rejected may the claimant file a lawsuit. City of Ontario v. Superior Court (1993) 12 Cal. App. 4th 894, 898. Further, compliance with the claims statute is mandatory and failure to file a claim is fatal to the cause of action. Pacific Tel. & Tel. Co. v. County of Riverside (1980) 106 Cal. App. 3d 183, 188.
Further, in order to state a cause of action for government tort liability, every fact essential to the existence of statutory liability must be pleaded with particularity, including the existence of a statutory duty. Zuniga v. Housing Authority (1995) 41 Cal. App. 4th 82, 96. Since the duty of a public entity can only be created by statute, the statute claimed to establish the duty must be identified. Id.

The Plaintiff alleges in paragraph 15 that it exhausted all administrative remedies and that it is exempt from compliance with otherwise applicable provisions of the Government Claims act under Government Code section 905.
First, this allegation is insufficient because it does not allege with particularity the facts essential to the existence of statutory liability, i.e., that the Plaintiff filed a claim and that the claim was denied. Accordingly, it does not plead the particular facts needed to demonstrate compliance with the claims statute.

Second, the Plaintiff is not exempt under Government Code section 905(i) from the requirement to present a claim. Section 905 creates a number of exceptions to the requirement that a claim must be presented and denied before a lawsuit may be brought against a public entity. Section 905 lists twelve categories of claims which are exempt from the filing requirement, including tax claims, claims by public employees for wages, pension claims, and claims for principal or interest upon bonds. Section 905(i) creates an exemption for “Claims by the State or by a state department or agency or by another public entity.” The Plaintiff claims that it is exempt because it is a public entity, i.e., a public trust, the Regents of the University of California.

However, Government Code section 935 specifically empowers local public entities to establish their own policies and procedures for the presentation of those claims against them which are excepted by section 905. City of Ontario v. Superior Court (1993) 12 Cal. App. 4th 894, 898. The statute then expressly permits the local public entity to establish a claim requirement, so long as the procedures are similar to, and not more restrictive than, those established by the Tort Claims Act with respect to claims not exempted by section 905. Id.

The County of Los Angeles has created a claim requirement in its Code of Ordinances. Copies of these ordinances are in exhibit A to the Defendant’s request for judicial notice. Section 4.01.010 states that all claims against the County of Los Angeles which are excepted by Government Code section 905 shall be governed by the procedures in the code of ordinances. Section 4.04.020 states that no suit for money may be brought against the County of Los Angeles until a written claim has been filed and acted upon.

This indicates that the Defendant, County of Los Angeles, has established a claim requirement, as permitted under Government Code section 935, and that this required the Plaintiff to present a written claim before bringing its suit for money. A review of the Plaintiff’s First Amended Complaint reveals no particular facts demonstrating that the Plaintiff has presented a claim to the Defendant.

In the opposition, the Plaintiff argues that its allegation that it exhausted all administrative regulations and statutes is sufficient. However, this is a general allegation of compliance because it does not include any particular facts regarding the presentment of a claim or the denial of the claim. As noted above, the Plaintiff must plead with particularity all facts essential to the existence of statutory liability. Since the Plaintiff did not plead particular facts, i.e., that it presented a claim and that the claim was denied, the Plaintiff has not pleaded sufficient facts to demonstrate that it complied with the Government Tort Claims Act.

Further, the Plaintiff argues that it pleaded substantial compliance with the requirements. California law holds that when there has been an attempt to comply but the compliance is defective, the test of substantial compliance controls. Pacific Tel. & Tel. Co. v. County of Riverside (1980) 106 Cal. App. 3d 183, 188. Under this test, the Court must ask whether sufficient information is disclosed on the face of the filed claim “to reasonably enable the public entity to make an adequate investigation of the merits of the claim and to settle it without the expense of a lawsuit.” Id. However, it has repeatedly been held that “‘[substantial] compliance cannot be predicated upon no compliance.'” Id. It is well-settled that claims statutes must be satisfied even in face of the public entity’s actual knowledge of the circumstances surrounding the claim. Id. at 191.

Most cases dealing with “substantial compliance” concerns disputes over whether the contents or form of the claim was adequate, not whether the filing was properly presented. DiCampli-Mintz v. County of Santa Clara (2012) 55 Cal. 4th 983, 994-995. A complete failure to serve any responsible officer of the entity will not constitute substantial compliance. Id. When the claims statute provides for the person upon whom the claim is to be served, service upon another is insufficient. Id.

For example, in DiCampli-Mintz, it was uncontested that the claim was never delivered or presented to the recipient designated in the claims statute. The Court of Appeal found that there was substantial compliance. The Supreme Court held that this was an error because when the claims statute identifies the person upon whom the claim is to be served, service upon another is insufficient to establish substantial compliance.

In the pending case, the Defendant has identified the person to whom the claim must be presented. Section 4.04.050 of the County of Los Angeles Code of Ordinances requires a signed, written claim to be presented to the County of Los Angeles by mailing or delivered it to

1) the clerk of the board of supervisors;
2) the county auditor-controller; or
3) the board of supervisors.

Under California law, service upon someone other than these identified individuals is insufficient to demonstrate substantial compliance.

The Plaintiff alleges in paragraphs 19 and 26 that it presented a letter for underpayment and that this letter was substantial compliance with the Government Claims Act. A copy of the letter is attached as exhibit C to the Second Amended Complaint.

A review of the letter reveals that it was addressed to the claims manager at the Offices of Managed Care Services. This is not a person identified in section 4.04.050, i.e., it is not the clerk of the board of supervisors, the county auditor-controller, or the board of supervisors. Since the letter was not served upon the individuals identified in Section 4.04.050, it cannot be substantial compliance under California law. See DiCampli-Mintz, 55 Cal. 4th at 994-995 (holding that when the claims statute provides for the person upon whom the claim is to be served, service upon another is insufficient to establish substantial compliance).

The Plaintiff also argues that its efforts to exhaust its administrative remedies demonstrate that it complied with the claims requirement. There is no legal authority holding that acts to exhaust administrative remedies can replace or substitute for the claims requirement. Instead, California law holds that the doctrine of exhaustion of administrative remedies has no relationship whatever to the requirements to present a claim before filing a lawsuit. Bozaich v. State of California (1973) 32 Cal. App. 3d 688, 698.

They serve completely different interests. The doctrine of exhaustion of administrative remedies evolved for the benefit of the courts, not for the benefit of litigants, the state or its political subdivisions. Id. It rests “on considerations of comity and convenience,” and its basic purpose is to secure a “preliminary administrative sifting process” to lighten the burden of overworked courts in cases where administrative remedies are available and are as likely as the judicial remedy to provide the wanted relief. Id.

The claim-filing requirements of the Government Code are directly related to the doctrine of governmental immunity and exist for the benefit of the state, not the judicial system. Id. They were adopted by the Legislature in the exercise of its legislative prerogative to impose conditions as a prerequisite to the commencement of any action against the public entity. Id.

Accordingly, the Plaintiff’s argument that its acts to exhaust its administrative remedies is a substitute for to present a claim is not supported by law and is not an excuse for the failure to present a timely claim to the correct persons.
Finally, the Plaintiff argues that the Defendant is equitably estopped from asserting that the claim was not properly presented. Under California, equitable estoppel may be pleaded as an excuse for the failure to comply with the claim presentation requirement. Ard v. County of Contra Costa (2001) 93 Cal. App. 4th 339, 347. In Ard, the plaintiff claimed that he was deceived by the defendant’s conduct into filing a late claim. In order to plead that equitable estoppel applies, the following must be alleged:

1) the party to be estopped must be apprised of the facts;
2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended;
3) the other party must be ignorant of the true state of facts; and
4) he must rely upon the conduct to his injury.’
Colony Ins. Co. v. Crusader Ins. Co. (2010) 188 Cal. App. 4th 743, 751.

However, ignorance of the law will not alone create an excuse or an estoppel. Tyus v. City of Los Angeles (1977) 74 Cal. App. 3d 667, 673. In order for estoppel to apply, there must be allegations that the defendant engaged in conduct to induce the plaintiff to act or not to act to the detriment of the plaintiff’s ability to present a timely claim under the Government Claims Act.

A review of the Second Amended Complaint reveals no allegations that the Defendant attempted to induce the Plaintiff to act or not to act with regards to the requirement to present a claim. Further, the Plaintiff offers no argument in its opposition that the Defendant made any communications or engaged in any conduct with regards to the requirement to present a claim under the Government Claims Act.

Instead, the Plaintiff makes arguments about communications regarding its attempt to resolve its bill. None of these arguments are relevant because they do not address the fundamental problem, which is that the Plaintiff appears to have been unaware of the requirements in the Government Code that it was required to present a claim to the public entity before it filed a lawsuit. The Plaintiff offers no basis to find that the Defendant engaged in any misleading conduct with regards to this requirement.

Therefore, there are grounds for a demurrer to the entire Second Amended Complaint because the Plaintiff did not plead sufficient, particular facts to demonstrate that it complied with the Torts Claim Act by presenting a claim before filing this lawsuit.

This is the Plaintiff’s third attempt to plead this claim. California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct this defect. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff does not meet this burden because the Plaintiff did not offer any basis by which it could correct the defect in its Second Amended Complaint.

Accordingly, the Court does not grant leave to amend because it is not reasonably possible for the Plaintiff to correct the defect that it failed to comply with the requirement under the Government Claims Act that it present a claim before filing this lawsuit.