Case Number: KC069796 Hearing Date: March 07, 2018 Dept: J

Re: Pomona Valley Hospital Medical Center v. Kaiser Foundation Health Plan, Inc., et al. (KC069796)

DEMURRER TO COMPLAINT; MOTION TO STRIKE PORTIONS OF COMPLAINT

Moving Parties: Defendants Kaiser Permanente Insurance Company, Kaiser Foundation Hospitals, The Permanente Medical Group and Southern California Permanente Medical Group

Respondent: Plaintiff Pomona Valley Hospital Medical Center

POS: Moving OK; Opposing OK; Reply OK

This is a dispute regarding the amount plaintiff should be paid for emergency medical services it provided to members of Kaiser Foundation Health Plan from 10/1/17-12/31/17. The complaint, filed 11/14/17, asserts causes of action against Defendants Kaiser Foundation Health Plan, Inc., Kaiser Permanente Insurance Company, Kaiser Foundation Hospitals, The Permanente Medical Group and Southern California Permanente Medical Group for:

Declaratory Relief

Unlawful Business Practices

A Case Management Conference is set for 4/9/18.

DEMURRER TO COMPLAINT:

Defendants Kaiser Permanente Insurance Company (“KPIC”), Kaiser Foundation Hospitals (“KFH”), The Permanente Medical Group (“TPMG”) and Southern California Permanente Medical Group (“SCPMG”) (collectively, “defendants”) demur, per CCP § 430.10(e)&(f), to the first and second causes of action in Plaintiff Pomona Valley Hospital Medical Center’s (“plaintiff”) complaint, on the basis that they both fail to state facts sufficient to constitute causes of action and are uncertain.

REQUEST FOR JUDICIAL NOTICE:

Defendants’ request for judicial notice (“RJN”) of online documents from the California Department of Insurance is granted. Plaintiff’s evidentiary objections to same are overruled.

“The Knox–Keene Act is a comprehensive system of licensing and regulation under the jurisdiction of the Department of Managed Health Care. (California Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 155, fn. 3). Among many other things, the Act compels for-profit health care service plans to reimburse emergency health care providers for emergency services to the plans’ enrollees.” Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 215. “Under the Department of Managed Health Care’s regulations, ‘reimbursement of a claim’ for non-contract providers means health care service plans must pay ‘the reasonable and customary value for the health care services rendered…’ (Cal.Code Regs., tit. 28, § 1300.71, subd. (a)(3)).” Id. at 216.

Plaintiff has alleged that non-demurring Defendant Kaiser Foundation Health Plan, Inc. (“KFHP”) “is, and at all relevant times to this action was, a nonprofit public benefit corporation…The Kaiser Foundation Health Plan, Inc. is licensed as a health care service plan and health maintenance organization under California law, regulated by the Department of Managed Health Care (‘DMHC’).” (Complaint, ¶ 34). Plaintiff has also alleged that KPIC “is, and at all relevant times to this action was, a corporation…PVHMC is informed and believes, and based thereon alleges, that Kaiser Permanente Insurance Company is licensed as a health care service plan and health maintenance organization under California law, regulated by the DMHC.” (Id., ¶ 35; see also, ¶ 7).

Plaintiff has alleged that KFH is a “nonprofit public benefit corporation…[that] owns and operates general acute care hospitals in Southern California.” (Id., ¶ 36). It has alleged that TPMG is “comprised of physician-owned, for-profit partnerships and professional corporations,” and that “[its] physicians provide professional and ancillary medical services to Kaiser Plan members in exchange for capitation payments per Kaiser Plan member assigned to it and a share of Kaiser Plan’s revenues and Kaiser Foundation Hospitals’ revenues.” (Id., ¶ 37). Plaintiff has alleged that SCPMG is “a for-profit professional medical group,” and that “[its] physicians provide professional and ancillary medical services to Kaiser Plan members in exchange for capitation payments per Kaiser Plan member assigned to it and a share of Kaiser Plan’s revenues and Kaiser Foundation Hospitals’ revenues.” (Id., ¶ 38).

Plaintiff seeks to impose liability against KPIC, KFH, TPMG and SCPMG on the basis of its allegation that they, along with KFHP, “form part of a network of operationally interrelated entities who engage in arranging for or providing health care services to Kaiser Plan members, including by contracting with out-of-network health care providers to provide emergency services to Kaiser Plan members or by assuming the financial responsibility as a risk-bearing organization for paying for emergency services provided to Kaiser Plan members by out-of-network health care providers.” (Id., ¶ 11). This allegation, however, does not allege that any of demurring defendants has an obligation to pay plaintiff for the services at issue in the complaint, nor does it allege that they have any obligations as a payor under the Knox-Keene Act.

As to KPIC, judicially noticeable documents reflect that it is an insurer regulated by the Department of Insurance, rather than a health plan subject to regulation by the DHMC. “Insurers are regulated by the Insurance Code and the Insurance Commissioner. Health care service plans fall under the jurisdiction of the Department of Managed Care and the Knox-Keene Act.” Smith v. PacifiCare Behavioral Health of California, Inc. (2001) 93 Cal.App.4th 139, 159. Plaintiff appears to concede that KPIC is an insurer but argues that “even if not regulated by the DMHC, [KPIC] is subject to the common law and under the doctrine of quantum meruit must reimburse the customary and reasonable value of [plaintiff’s] emergency services.” (Opposition, 5:16-18). Plaintiff, however, has not pled a cause of action for quantum meruit, nor has it made any allegations about services provided to KPIC’s insureds. Although the complaint defines “Kaiser Plan” to include both KFHP and KPIC (Complaint, ¶ 7), it consistently refers to members, rather than insureds, of the Kaiser Plan. (Id., ¶¶ 8, 11, 16, 18 and 19). Plaintiff has not alleged that KPIC specifically is obligated to pay anything for emergency services provided to KFHP’s members.

Plaintiff, moreover, cannot maintain claims against demurring defendants based on its conclusory secondary liability allegations. Plaintiff alleges that “[a]t all relevant times, each defendant was acting as an agent, representative, partner, joint-venturer, co-conspirator, or co-schemer of the other defendants, and, in committing the wrongful acts and omissions described in this complaint, was acting within the course and scope of that agency, representation, partnership, joint venture, conspiracy, or scheme. At all relevant times, each defendant acted in concert with each and every other defendant, and intended and did knowingly participate in the events, acts, transactions, practices, and courses of conduct described in this complaint. At all relevant times, in committing the acts and omissions described in this complaint, each defendant caused, aided, abetted, facilitated, encouraged, authorized, permitted, and/or ratified the wrongful acts and omissions of the other defendants.” (Complaint, ¶¶ 40-42).

The above language constitutes an “egregious example of generic boilerplate” of which the California Supreme Court in Moore v. Regents of University of California (1990) 51 Cal.3d 120, 134, fn. 12 has disapproved.

A complaint asserting a civil conspiracy theory must support the elements of the claim with factual allegations. See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1173. “’Conspiracy is not an independent cause of action, but rather a doctrine imposing liability for a tort upon those involved in its commission.’ (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 590).” Id. at 1172. “To allege a conspiracy, a plaintiff must plead: ‘(1) formation and operation of the conspiracy and (2) damage resulting to plaintiff (3) from a wrongful act done in furtherance of the common design’ (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1062).” Id. at 1173. “By its nature, tort liability arising from conspiracy presupposes that the coconspirator is legally capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by law and is potentially subject to liability for breach of that duty.” Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511. Conspiracy “cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles.” Id. at 514. Plaintiff does not make any factual allegations about any purported agreement at all, let alone factual allegations indicating that there was an agreement to commit a legal wrong. The complaint also says nothing about any duty the demurring defendants owe to plaintiff for the emergency services reimbursements at issue. There is no indication that any purported violation of the Knox-Keene Act and its implementing regulations constitutes a tort.

With respect to aiding and abetting, “”[l]iability may … be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person. [Citations.]’ (Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 846.)…To plead aiding and abetting by a defendant, the plaintiff must allege that the defendant had actual knowledge of the ‘specific primary wrong’ being committed, and gave substantial assistance to the wrongful conduct. (Id. at pp. 1145, 1146-1147; Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328,343-344.)” Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154, 188. Plaintiff has not alleged any alleged tortious wrong or facts showing demurring defendants’ “substantial assistance or encouragement.”

Defendants’ demurrer, then, is sustained.

MOTION TO STRIKE PORTIONS OF COMPLAINT:

Defendants Kaiser Foundation Health Plan, Inc. (“KFHP”), Kaiser Permanente Insurance Company (“KPIC”), Kaiser Foundation Hospitals (“KFH”), The Permanente Medical Group (“TPMG”) and Southern California Permanente Medical Group (“SCPMG”) move, per CCP §§ 435-437, for an order striking out the following portions of Plaintiff Pomona Valley Hospital Medical Center’s (“plaintiff”) complaint:

¶¶ 40-42 in their entirety (i.e., allegations regarding conspiracy and secondary liability);

¶ 107 in its entirety (i.e., pertaining to allegations under the unfair prong of B&P Code § 17200); and

¶ 113 in its entirety (i.e., “[f]or reasonable attorney’s fees” as to the second cause of action for Unlawful Business Practices).

The motion to strike is moot as to KPIC, KFH, TPMG and SCPMG, based upon the foregoing ruling on the demurrer. It is otherwise granted as to KFHP. Paragraphs 40-42 are ordered stricken, on the basis that they are conclusory (see above).

The court strikes ¶ 107 on the basis that plaintiff appears to lack standing to bring a claim under UCL’s unfair prong. The UCL was enacted to protect fair competition and authorizes claims by consumers and competitors. Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949. “When a plaintiff who claims to have suffered injury from a direct competitor’s ‘unfair’ act or practice invokes section 17200, the word ‘unfair’ in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 187. Plaintiff is plainly not a consumer, nor is it a competitor to KFHP for purposes of its payment-related claims in this case. Even if it had grounds to sue as a competitor, plaintiff does not allege any harm to competition, much less a recognized antitrust violation.

Finally, the court strikes ¶ 113 on the basis that plaintiff concedes the UCL does not provide for the recovery of attorneys’ fees. (Opposition, 6:21-24). Plaintiff argues that it can seek attorneys’ fees “where the action has been brought under Code of Civil Procedure section 1021.5,” yet identified no authority indicating that section 1021.5 may serve as a substantive basis for a prayer for attorneys’ fees at the pleading stage.

The court will hear from counsel for plaintiff as to whether leave to amend is requested.