Preview
Electronically Filed
9/25/2020 11:53 PM
Superior Court of California
HELTON LAW GROUP, APC County of Stanislaus
1 EDWARD STUMPP (State Bar No. 157682) Clerk of the Court
CASEY E. MITCHNICK (State Bar No. 298550) By: Rachel Nunez, Deputy
2 ATTORNEYS AT LAW
1590 Corporate Drive
3 Costa Mesa, CA 92626
TELEPHONE: (562) 901-4499
4
FACSIMILE: (562) 901-4488
5
ATTORNEYS FOR PLAINTIFFS
6
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 FOR THE COUNTY OF STANISLAUS
10
11 DOCTORS MEDICAL CENTER OF Lead Case No: 2021796
MODESTO, INC., [Consolidated with Case Nos. 9000631 and
12 CV-19-003530]
Plaintiff,
13 vs. ASSIGNED TO: JUDGE JOHN FREELAND
DEPT.: 23
14 GARDNER TRUCKING, INC., a California
15 Corporation; and DOES 1 through 25, UNLIMITED – DAMAGES EXCEED $25,000
inclusive,
16 PLAINTIFF’S OPPOSITION TO
Defendants. DEFENDANT’S MOTION FOR SUMMARY
17 JUDGMENT OR IN THE ALTERNATIVE
SUMMARY ADJUDICATION
18
[Filed concurrently with Plaintiff’s Opposition to
19 Separate Statement; Declarations in Support of
Opposition; and Evidentiary Objections]
20
DATE: October 9, 2020
21 TIME: 8:30 a.m.
DEPT.: 23
22
[Plaintiff Intends to Appear Telephonically at
23 Hearing]
24 COMPLAINT FILED: 09/20/16
25 TRIAL DATE: 11/10/20
26 ///
27 ///
28 ///
1
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 TABLE OF CONTENTS
2 PAGE(S)
3 I. INTRODUCTION ................................................................................................................. 5
4 II. BRIEF STATEMENT OF FACTS ......................................................................................... 6
5 III. LEGAL ARGUMENT ........................................................................................................... 8
6 A. Summary Judgment Should Be Denied as to the Cause of Action for Breach of An
7 Implied Contract Because Plaintiffs Can Establish the Necessary Elements
8 Creating a Triable issue of Fact and Defendant’s Purported Disclaimers Do Not
9 Establish a Complete Defense ..................................................................................... 9
10 B. Whether Third Party Plan Administrators Were Agents of Defendant With
11 Authority to Authorize Services and Form Implied in Fact Contracts is a Disputed
12 Question of Fact ....................................................................................................... 12
13 C. Summary Judgment Should Be Denied as to the Cause of Action for Quantum
14 Meruit Because Plaintiffs Can Establish the Necessary Elements Creating a Triable
15 issue of Fact.............................................................................................................. 14
16 D. Summary Judgment Should Be Denied as to the Cause of Action for Open Book
17
Account Because Plaintiffs Can Establish the Necessary Elements Creating a
18
Triable issue of Fact ................................................................................................. 15
19
E. Summary Judgment Should Be Denied as to the UCL Cause of Action Because
20
Plaintiffs Can Establish the Necessary Elements Creating a Triable issue of Fact...... 16
21
F. Plaintiffs’ Causes of Action are Not Preemption by ERISA ...................................... 18
22
IV. CONCLUSION .................................................................................................................... 20
23
24
25
26
27
28
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PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
TABLE OF AUTHORITIES
1
PAGE(S)
2 Cases
3 Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826 .................................................................... 8
4 Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 .......................................................... 14
5 Bersa Technologies, Inc. v. Sup. Court (1978) 78 Cal.App.3d 237 .................................................... 8
6 Brantley v. Pisar, (1996) 42 Cal.4th 1591 ......................................................................................... 8
7 California Medical Association v. Lackner (1981) 117 Cal.App.3d 552 .......................................... 10
8 Cedars Sinai Med. Ctr. v. Mid- West Nat'l Life Ins. Co. (2000) 118 F.Supp.2d 1002 ................. 11, 12
9 Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters, (2007) 497 F.3d 972 ........................... 18, 19
10 Chandler v. Roach (1957) 156 Cal.App.2d 435 ................................................................................. 9
11 Children's Hospital Central California v. Blue Cross of California (2014) 226 Cal.App.4th
12 1260.......................................................................................................................................... 14
13 Colarassi v. Coty, U.S. Inc. (2002) 97 Cal.App.4th 1142 .................................................................. 8
14 Comty. Hosp. of the Monterey Peninsula, (2015) 119 F.Supp.3d 1042 ............................................ 16
15 D’Amico v. Board of Medical Examiner, (1974) 11 Cal.3d 1..........................................................8-9
16 Dorman v. Int'l Harvester Co. (1975) 46 Cal.App.3d 11 ........................................................... 10, 11
17 Enloe Med. Ctr. v. Principal Life Ins. Co., 2011 WL 6396517, at *6 (E.D. Cal. 2011) ...................... 9
18 Hospice of Metro Denver, Inc. v. Group Health Ins., Inc., (10th Cir. 1991) 944 F.2d 752 ......... 18, 19
19 Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56 ................................................................. 9
20 Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.4th 1076 ................................................... 8
21 Maggio, Inc. v. Neal, (1987) 196 Cal.App.3d 745 ........................................................................... 15
22 Markow v. Rosner, (2016) 3 Cal.App.5th 1027 ............................................................................... 13
23 Memorial Hospital System v. Northbrook Life Ins. Co., (5th Cir. 1990) 904 F.2d 236 ............... 18, 19
24 Morris B. Silver M.D., Inc. v. International Longshore & Warehouse etc. (2016) 2 Cal.App.5th
25 793........................................................................................................................................ 5, 18
26 O'Bryne v. Portfolio Recovery Associates LLC, 2013 WL 1223590, at *5 (S.D. Cal. 2013) ............. 16
27
Pacific Bay Recovery, Inc. v. California Physicians' Services, Inc. (2017) 12 Cal.App.5th 200 ....... 12
28
Podosky v. First Healthcare Corp., (1996) 50 Cal.App.4th 632 ...................................................... 16
3
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 Port Medical Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5th 153 ........... 8
2 Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497...... 14
3 Rutledge v. Hewlett-Packard Co., (2015) 238 Cal.App.4th 1163 ............................................... 16, 17
4 The Meadows v. Employers Health Ins., (1995) 47 F.3d 1006 ................................................... 18, 19
5 UFCW & Emp'rs Benefit Tr. v. Sutter Health, (2015) 241 Cal.App.4th 909 .................................... 13
6 Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622 .............................................................. 12
7 Waisbren v. Peppercorn Prods., Inc. (1995) 41 Cal.App.4th 246 ...................................................... 9
8 Yanchor v. Kagan (1971) 22 Cal.App.3d 544 .................................................................................. 14
9 Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240 .............................................................. 9
10
11 Statutes
12 Business and Professions Code § 17200................................................................................ 6, 16, 17
13 California Code of Regulations, tit. 28, § 1300.71........................................................................... 14
14 Civil Code § 1621 ........................................................................................................................... 10
15 Civil Code § 2300 ........................................................................................................................... 12
16 Civil Code § 3294(b)(3) .................................................................................................................. 16
17 Code of Civil Procedure § 437c, subd. (c) ......................................................................................... 8
18 Code of Civil Procedure § 437c, subd. (f) ......................................................................................... 8
19 Health & Safety Code § 1317(d) ..................................................................................................... 20
20 United States Code, tit. 29, § 1144(a).............................................................................................. 18
21
22 Other
23 California Civil Jury Instructions (2017), CACI No. 305 .................................................................. 9
24 California Civil Jury Instructions (2017), CACI No. 3709............................................................... 12
25
26
27
28
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PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF RECORD:
2 Plaintiffs DOCTORS MEDICAL CENTER OF MODESTO, INC.; DOCTORS HOSPITAL OF
3 MANTECA, INC.; LOS ALAMITOS MEDICAL CENTER, INC.; EMANUEL MEDICAL CENTER;
4 and LAKEWOOD REGIONAL MEDICAL CENTER, INC. (hereinafter collectively referred to as
5 “Plaintiffs” or “Hospitals”) submits this Opposition to Defendant GARDNER TRUCKING, INC.’s
6 (hereinafter “Defendant”) Motion for Summary Judgment or in the Alternative Summary Adjudication
7 (hereinafter “Motion”).
8 I. INTRODUCTION
9 The Defendant’s Motion is based on three flawed positions all of which are both factually and
10 legally unsupported and raise a long list of disputed material facts, to wit, including: 1) ERISA
11 Preemption, 2) Lack of Authority, and 3) Unilateral Disclaimers.
12 ERISA preemption has been briefed before this Court on numerous occasions and the ERISA
13 preemption argument fails for the same reasons the Court has found in the past. Namely that as before,
14 Defendant erroneously relies on Morris B. Silver M.D., Inc. v. International Longshore & Warehouse
15 etc., (2016) 2 Cal.App.5th 793 in alleging Plaintiffs’ claims are preempted by ERISA. But the Court in
16 Silver cited to and relied upon authority finding that claims by third party medical providers for
17 deceptive and unfair practices are not preempted. Defendant’s Motion provides no admissible evidence
18 that would alter the previous determinations of this Court.
19 Defendant ignores the law on the apparent authority and instead focuses on the private purported
20 agreements between some of the various entities involved, namely the various third-party
21 administrators (“TPA”) hired to carried out Gardner Trucking’s scheme, with only self-serving
22 conclusory statements that violate the Best Evidence Rule. There is no prior written contract at issue
23 and Plaintiffs proceed on an implied contract theory. Whether certain individuals had authority to
24 negotiate a prior written contract is irrelevant. The salient issue, that Defendant fails to address, is the
25 position it put certain TPAs and/or medical management companies in by requesting that they respond
26 to the inquires Defendant directs the Plaintiff to make. Defendant cannot direct the Plaintiffs to
27 designated representatives and at the same disavow the representative’s authority to respond.
28
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PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 Additionally, the Defendant provides no admissible evidence that any specific disclaimers were
2 given, certainly not as to each disputed claim, and mischaracterizes the nature of the disclaimer
3 Defendant purports to rely on. For example, Defendant points to a disclaimer regarding authorizing the
4 medical necessity of certain services but fails to address whether any of the disputed claims were denied
5 for lack of medical necessity – they were not. Thus, even if properly established, such a disclaimer
6 would be irrelevant. Defendant’s motion merely raises numerous disputed issues of material fact.
7 Defendant’s Motion also fails on this position as the law does not favor the use of such unilateral
8 statements, when there is no evidence that such a communication was ever received.
9 Finally, Defendant fails to address their routine business practice of paying claims according to
10 the member’s benefits, while at the same time mispresenting that claims were paid in full after applying
11 a “self-reported discount.” (Krambeck Depo., 104:1-105:22; 107:10-108:9). Such a business practice,
12 standing on its own, supports a claim under Cal. Bus. & Prof. Code § 17200.
13 II. BRIEF STATEMENT OF FACTS
14 Defendant was a participant in a written contract with a provider network that provided
15 Defendant contractual discounts off the Hospitals’ charges, but Defendant chose to terminate such
16 written contract. In the absence of a written contract, Defendant and its plan enrollees are not entitled
17 to any contractual discount off the Hospitals’ charges and the Hospitals are entitled to the reasonable
18 value of its services, which are the Hospitals’ billed charges.
19 For claims involved in this consolidated matter that did not involve emergent situations, there
20 is a verification process between the Plaintiffs and the Defendant prior to healthcare benefits being
21 provided to the Defendant’s plan members. Verification of insurance eligibility is when the hospital
22 staff validates that a patient has the insurance they are providing to the hospital and ensure they are
23 eligible on the dates of service that care is provided. (Baccellieri Decl. ¶ 8). Verification of benefits
24 includes determining what a payor is quoting as far as benefits, which may include rates, co-payments,
25 deductibles, co-insurance, maximums, etc. (Id.) Authorizations refer to medical authorization and
26 validating that the inpatient and outpatient services are medically necessary or have been pre-
27 authorized. (Id.)
28
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PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 Because the Gardner Trucking’s member’s eligibility of benefits could not be verified using the
2 Passport system used by many hospitals, Plaintiffs would have to place telephone calls to verify
3 eligibility with payors, like the Defendant. (Baccellieri Decl. ¶ 10). In the case of Gardner Trucking,
4 the calls would go to delegated TPAs and not directly to Gardner Trucking. (Id.). For outpatient
5 procedures, authorization is obtained by the physician who is scheduling the services and the hospital
6 will subsequently validate that the services are authorized. (Baccellieri Decl. ¶ 13). Authorization is
7 confirmed by either contacting the designated medical management company or receipt of written
8 authorization. (Id.). For Gardner Trucking, there is no ability to contact or communicate with anyone
9 from Gardner Trucking. (Id.). The Plaintiffs had to contact the TPAs designated by Gardner Trucking
10 as identified on the members insurance cards. (Id.).
11 All contact to verify eligibility and obtain authorization (if necessary) is done through entities such
12 as TPAs or other medical management companies that Defendant Gardner Trucking delegated the
13 responsibility to communicate with the Hospitals and speak on behalf of the Defendant. (Baccellieri Decl.
14 ¶ 14). The Plaintiffs relied on the representations of these medical management companies/TPAs prior to
15 providing medical care (except in emergent situations) and expected based on these representations that the
16 Hospitals will receive compensation for the services provided. (Id.). Based on these representations, it was
17 the Plaintiffs’ expectation that they would receive the compensation rates provided by the medical
18 management company or TPA, but if no rates are provided, then compensation will be based on the
19 Plaintiffs’ publicly published charges. (Id.).
20 Defendant’s TPAs, like HealthSCOPE Benefits, administered Defendant’s claims, which included
21 reviewing submitted charges and making a determination as to the amount to compensate the provider for
22 the services performed. (See, Mitchnick Decl., Exhibit “1”; Souza Depo., 37:24-38:9). ClaimDoc, LLC
23 provided similar services and answered questions on behalf of the TPAs regarding the amount of
24 compensation to be paid to noncontracted providers like Plaintiffs for the services performed and assisted
25 them in those determinations. (See, Mitchnick Decl., Exhibit “1”; Souza Depo., 38:10-17).
26 Under these circumstances, Defendant is not entitled to Summary Judgment based solely on
27 limited purported disclaimers and/or internal arrangements that may or may not limit the authority of
28 representatives that the Defendant delegates to interact with Plaintiffs.
7
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 III. LEGAL ARGUMENT
2 A motion for summary judgment may only be granted when no triable issue exists as to any
3 material fact, and the moving party is entitled to a judgment as a matter of law. Cal. Code Civ. Proc. §
4 437c, subd. (c). The party moving for summary judgment “bears the burden of persuasion that there is
5 no triable issue of material fact and that he is entitled to judgment as a matter of law.” Port Medical
6 Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5th 153, 169. In addition, “[a]
7 defendant moving for summary judgment ‘must show [] that one or more elements of the cause of
8 action … cannot be established’ by the plaintiff.” Id., citing Cal. Code Civ. Proc. § 437c. California
9 Code of Civil Procedure §437c(f) provides that on a motion for summary judgment, the test is whether
10 there is any “triable issue of material fact” as to the particular claim, issue or defense sought to be
11 adjudicated. Cal. Civ. Proc. Code §437c. If there is a single such issue, the motion must be denied.
12 Bersa Technologies, Inc. v. Sup. Court (1978) 78 Cal.App.3d 237. The court does not weigh the
13 plaintiff’s evidence presented “as though it were sitting as the trier of fact.” Colarassi v. Coty, U.S. Inc.
14 (2002) 97 Cal.App.4th 1142, 1149.
15 A party moving for summary judgment faces a high burden “from commencement to
16 conclusion” of the summary judgment proceeding, and “bears the burden of persuasion that there is no
17 triable issue of material fact and that he is entitled to judgment as a matter of law.” Aguilar v. Atlantic
18 Richfield Co. (2001) 25 Cal.4th 826, 850. Defendants moving for summary judgment must show that
19 the plaintiff “does not possess and cannot reasonably obtain, needed evidence” Id. at 854.
20 Conversely, a plaintiff opposing a motion for summary judgment need only demonstrate a triable issue
21 of material fact as to the plaintiff’s claim. Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.4th
22 1076, 1092.
23 In a summary judgment motion, the moving party’s declarations and evidence will be strictly
24 construed “in order to avoid unjustly depriving the plaintiff of a trial.” Brantley v. Pisar, (1996) 42
25 Cal.4th 1591, 1601. In contrast, the declarations and evidence offered in opposition to a summary
26 judgment motion must be liberally construed and doubts as to whether the motion should be granted
27 should resolved in favor of the opposing party. D’Amico v. Board of Medical Examiner, (1974) 11
28
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PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 Cal.3d 1, 20. The summary judgment procedure is a drastic one, and as a matter of policy is used with
2 caution. Id.
3 In addition to the benefit of more relaxed burdens of persuasion and production, the party
4 opposing a motion for summary judgment is entitled to favorable evidentiary treatment.(Waisbren v.
5 Peppercorn Prods., Inc. (1995) 41 Cal.App.4th 246, 251-52 (“the moving party's affidavits are strictly
6 construed while those of the opposing party are liberally construed.”). “[I]n order to resolve any
7 evidentiary doubts or ambiguities in plaintiff’s favor,” the moving Defendant’s declarations and
8 evidence will be strictly construed in determining whether they negate or disprove an essential element
9 of the plaintiff’s claim. Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64 (defendants must
10 make “a showing that would forecast the inevitability of a nonsuit”).
11 A. Summary Judgment Should Be Denied as to the Cause of Action for Breach of An
12 Implied Contract Because Plaintiffs Can Establish the Necessary Elements
13 Creating a Triable issue of Fact and Defendant’s Purported Disclaimers Do Not
14 Establish a Complete Defense.
15 The elements of an implied-in-fact cause of action requires the same basic elements of a breach
16 of contract cause of action, including mutual consent by both contracting parties. See Judicial Council
17 of California Civil Jury Instructions (2017), CACI No. 305. “The essential elements of an implied-in-
18 fact contract and an express contract are the same, namely, mutual assent and consideration.” Chandler
19 v. Roach (1957) 156 Cal.App.2d 435, 440. The difference between an implied and an express contract
20 is mainly the mode of proof. Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 246.
21 Additionally, Courts have repeatedly found that communications regarding coverage and
22 authorization can form the basis of an implied-in-fact contract. Enloe Med. Ctr. v. Principal Life Ins.
23 Co., 2011 WL 6396517, at *6 (E.D. Cal. 2011) (rejecting ERISA plan’s argument that “a telephone
24 confirmation of coverage and benefits cannot constitute a promise to pay” and finding that a contract
25 may be created based on an authorization call). Indeed here, by the Defendant’s third-party
26 administrators’ verification and authorization on behalf of Defendant, Defendant manifested its
27 agreement and assent to pay the claims for services rendered to the patients, and Plaintiff reasonably
28 relied upon such authorizations when rendering medically necessary services to such patients.
9
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 In California Medical Association v. Lackner (1981) 117 Cal.App.3d 552, 557 (“CMA”), the
2 court found that the State Department of Health Services’ regulations establishing requirements for its
3 payment of health care providers’ claims for services provided to Medi-Cal members amounted to an
4 offer to contract. By complying with such requirements for payment – i.e., by obtaining “provider
5 numbers” to be used for billing and rendering services to Medi-Cal members – the health care providers
6 accepted the State’s offer. Thus, the court found that the parties’ conduct formed an implied in fact
7 contract. Id.
8 The Court in CMA rejected the State’s argument that no implied in fact contract was created
9 because a fixed rate was necessary for creation of a contract, and in that case the providers’
10 reimbursements could vary depending on such factors as the providers’ usual charges. Id. at 561. The
11 Court rejected this argument, holding that the existence of a fixed price term is not a prerequisite for
12 contract formation because a reasonable price can be implied, so long as the variation in price is in
13 proportion to some objectively determined base or is reasonable. Id. at 561 (citing 1 Corbin on
14 Contracts (1963 § 98, pp. 438-439.) Thus, the CMA Court found the use of the providers’ “usual
15 charges” in setting the price term sufficient, and the offer, “through the regulations, and the providers’
16 acceptance of it, constituted an implied contract” under Cal. Civil Code § 1621. Id. at 561.
17 Furthermore, the issues raised by the Defendant regarding the purported prerecorded message
18 that automatically played before the telephone calls, or after the Hospital verified eligibility and
19 received authorization to provided services was ineffective as it was not explicitly negotiated between
20 parties. Generally, disclaimers of warranties are disfavored in the law and are ineffectual unless
21 explicitly negotiated between buyer and seller. See Dorman v. Int'l Harvester Co. (1975) 46
22 Cal.App.3d 11. Blanket prerecorded disclaimers are “bland and substantially meaningless terms and
23 conditions” that should not be “above the individually and expressly negotiated terms and conditions.”
24 Id. at 20. To the extent that these meaningless terms are elevated above the negotiated terms it would
25 “highlight the absurdity of a rule of law” because to “adhere to such a rule means that the law presumes
26 that the buyer” “intends to nullify in general all the things for which he has specifically bargained and
27 will pay” Id. at 20-21. Here, the pre-recorded message was not even communicated by Defendant, and
28 Defendant has failed to provide admissible evidence demonstrating that any prewritten script was read.
10
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 A brief automated pre-recorded message that provides no additional details as to whom or where
2 Plaintiff was to acquire more information is meaningless. No specific details as to each patient was
3 provided in these automated messages or in the purported call notes that all contain blank spaces and
4 missing information. Defendant’s purported disclaimers are also inapposite to the issue of implied
5 contract. For example, the disclaimers on the patients’ insurance identification cards state that “This
6 card is for identification. It is NOT and guarantee of eligibility.” See Krambeck Decl., Exhibit D. But
7 eligibility is not the basis for a denial of payment, itis the amount of payment that is at issue and
8 Plaintiff does not rely solely on the identification card as the basis for an implied contract. The
9 identification cards contain other statements regarding benefits but then direct the provider to call
10 Provider Services, i.e. the TPAs/medical management companies. In other words, the purported
11 disclaimers are in fact “bland and substantially meaningless” compared to the Plaintiffs efforts to
12 contact Defendant’s designee for confirmation of benefits and authorization to proceed with providing
13 services.
14 By the same token Defendant’s reference to incomplete call notes also misses the mark, even
15 assuming that Defendant has established they were effectively communicated and agreed to. See
16 Krambeck declaration Exhibit 5, GT001136. “This is a recommendation regarding medical necessity
17 only, and is not a guarantee of payment.” The accounts in dispute do not involve medically necessity
18 determinations as they have been for the most part paid in part. Again, the issue is the amount of
19 payment and disclaimers regarding medical necessity are irrelevant.
20 The parties never negotiated the terms of the disclaimers and the disclaimers, even if provided,
21 were ineffective. Courts have held that “a disclaimer of warranties must be specifically bargained for,
22 so that a disclaimer given to the buyer after he signs the contract is not binding”. Id. at 13. (Emphasis
23 in original). Here, Defendant has failed to demonstrate that the pre-recorded messages were played
24 before or after the patient’s eligibility was verified and services authorized, making disclaimer not
25 binding.
26 Defendants also cite to an inapplicable federal cases, including Cedars Sinai Med. Ctr. v. Mid-
27 West Nat'l Life Ins. Co. (2000) 118 F.Supp.2d 1002, 1008, in which the Court found that “Neither party
28 intended to be contractually bound by the [verification] conversation, so, as a matter of law, no contract
11
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 was formed.” Unlike the provider in Cedars Sinai Med. Ctr. v. Mid- West Nat'l Life Ins. Co., Defendant
2 and/or its agent not only verified each patients coverage, but also explicitly authorized services.
3 (Complaint ¶ 62). Defendant’s reliance on Pacific Bay Recovery, Inc. v. California Physicians'
4 Services, Inc. (2017) 12 Cal.App.5th 200, is inapplicable because unlike the Plaintiffs, the provider did
5 not provide emergency services. Instead, Pacific Bay Recovery, Inc only brought suit for one (1) claim
6 in which addiction and mental health services were provided to a single patient. Nonetheless, the Court
7 still found that an implied-in-fact contract was created between parties. Here, the claims at issue
8 includes claims for inpatient, outpatient, post- stabilization, and emergency services. Additionally, as
9 the Court found in Pacific Bay Recovery, Inc. v. California Physicians' Services, Inc. (2017) 12
10 Cal.App.5th 200, when Defendant or its agent rendered authorization an implied-in-fact contract was
11 created.
12 Finally, whether an implied contract exists and the terms of the contract is a question of fact for
13 the trial court. See Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 636. Plaintiffs continue
14 to allege an implied-in-fact contract was created between them and the Defendant. Given that
15 Defendants have contested this alleged fact alleged, it is clear disputes as to material facts remain.
16 Consequently, Defendants’ Motion must be overruled.
17 B. Whether Third Party Plan Administrators Were Agents of Defendant With
18 Authority to Authorize Services and Form Implied in Fact Contracts is a Disputed
19 Question of Fact
20 Pursuant to Cal. Civil Code § 2300 “an agency is ostensible when the principal intentionally, or
21 by want of ordinary care, causes a third person to believe another to be his agent who is not really
22 employed by him.” See also See Judicial Council of California Civil Jury Instructions (2017), CACI
23 No. 3709. By their Motion, Defendant takes the position that the plan administrators were not agents
24 and did not have authority to enter into contracts on behalf of Defendant. However, pursuant to well
25 established case law and statute, Defendant is wrong. Due to Defendant’s actions, Plaintiffs reasonably
26 believed that the plan administrators possessed authority to act on behalf of Defendant.
27 First, it was reasonable for Plaintiffs to rely on the authority of the plan administrators. Patients
28 were provided with identification cards issued by Defendant that contained “a telephone number” to
12
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 the applicable plan administrator “to verify benefits and eligibility” (Motion, 10:7-8). No other number
2 was included on the identification card. (Baccellieri Decl., ¶ 13). When patients presented at the
3 Hospitals and provided their identification cards, Plaintiffs called the only number on the card. The
4 plan administrator was notified of each patients’ treatment and admission to the Hospitals. The plan
5 administrator then verified the patients’ eligibility and benefits and authorized the Hospitals’ provision
6 of services. Not only was it reasonable for Plaintiffs to rely on a plan administrator’s verification of
7 eligibility and authorization of treatment. but this belief was a result of Defendant’s actions, not solely
8 upon the plan administrator’s conduct. (Baccellieri Decl., ¶ 14). Defendant never made itself available
9 to authorize services or confirm plan eligibility. (Id.). Defendant did not include its own telephone
10 number or contact information on the identification cards. (Id.). This is unlike Markow v. Rosner,
11 (2016) 3 Cal.App.5th 1027, in which the Court found that the physician could not be found to be a
12 hospital’s ostensible agent because, “in the conditions of admissions forms that the “patient initialed
13 and signed on 25 separate occasions, the hospital unambiguously informed the patient that all
14 physicians furnishing services to patients were independent contractors, not agents or employees of the
15 hospital”. (emphasis added) Instead, Defendant only included the numbers of plan administrators on
16 the identification card, directing Plaintiffs to call the plan administrators, not Defendant.
17 Next, when the plan administrators verified eligibility or authorized treatment on behalf of
18 Defendant, Defendant manifested its agreement and assent to pay the claims for services rendered to
19 patients. Defendant incorrectly relies on UFCW & Emp'rs Benefit Tr. v. Sutter Health, (2015) 241
20 Cal.App.4th 909 to argue that a health plan was not bound by the terms of the written contract between
21 the plan administrator and health care provider. The Court in UFCW & Emp'rs Benefit Tr. v. Sutter
22 Health, (2015) 241 Cal.App.4th 909 found that it was not reasonable for the provider to believe that
23 “Blue Shield was UEBT's agent for all purposes” such as contract negotiations because of the health
24 plan’s “act of providing its members with Blue Shield cards”. Id at 932. (Emphasis added). At issue in
25 the case was an arbitration clause that was a result of extensive and repeated contract negotiations
26 between parties. However, the Court also went on to state “UEBT's use of Blue Shield cards…
27 suggested actions of an agent acting on behalf of a principal in plan administration.” Id. Here, the plan
28
13
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE SUMMARY ADJUDICATION
1 administrators never negotiated written contracts on behalf of Defendant. Instead, by authorizing
2 services and verifying eligibility, the plan administrators administered the terms of the Plan.
3 At minimum, whether ostensible agency exists remains as a triable question of fact that is
4 sufficient to withstand summary judgement. See Yanchor v. Kagan (1971) 22 Cal.App.3d 544, 550.
5 Through its opposition and declarations in support of the opposition, Plaintiffs have established all
6 elements necessary to make the terms of the implied-in-fact contract binding upon Defendants by the
7 doctrine of ostensible authority. This includes that Defendant intentionally created the impression that
8 the plan administrators were its agents, Plaintiffs reasonably believed that the plan administrators were
9 agents, and Plaintiffs were harmed due to Defendants failure to fulfill the terms of the implied in fact
10 contract. To the extent that Defendant argues otherwise, a question of fact is in dispute. Accordingly,
11 Defendant’s Motion should be denied.
12 C. Summary Judgment Should Be Denied as to the Cause of Action for Quantum
13 Meruit Because Plaintiffs Can Establish the Necessary Elements Creating a
14 Triable issue of Fact
15 Defendant’s Motion asserts that Plaintiffs’ quantum meruit cause of action fails, arguing that
16 the services were provided at the patient’s requests, not Defendant’s, and Defendant did not receive
17 any benefit. The law clearly supports quantum meruit actions against healthcare payors.
18 Quantum meruit refers to an obligation created by the law “to pay for services performed under
19 circumstances disclosing that they were not gratuitously rendered.” Children's Hospital Central
20 California v. Blue Cross of California (2014) 226 Cal.App.4th 1260, 1262. The dire
Preview
Electronically Filed 9/25/2020 11:53 PM Superior Court of California HELTON LAW GROUP, APC County of Stanislaus 1 EDWARD STUMPP (State Bar No. 157682) Clerk of the Court CASEY E. MITCHNICK (State Bar No. 298550) By: Rachel Nunez, Deputy 2 ATTORNEYS AT LAW 1590 Corporate Drive 3 Costa Mesa, CA 92626 TELEPHONE: (562) 901-4499 4 FACSIMILE: (562) 901-4488 5 ATTORNEYS FOR PLAINTIFFS 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF STANISLAUS 10 11 DOCTORS MEDICAL CENTER OF Lead Case No: 2021796 MODESTO, INC., [Consolidated with Case Nos. 9000631 and 12 CV-19-003530] Plaintiff, 13 vs. ASSIGNED TO: JUDGE JOHN FREELAND DEPT.: 23 14 GARDNER TRUCKING, INC., a California 15 Corporation; and DOES 1 through 25, UNLIMITED – DAMAGES EXCEED $25,000 inclusive, 16 PLAINTIFF’S OPPOSITION TO Defendants. DEFENDANT’S MOTION FOR SUMMARY 17 JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 18 [Filed concurrently with Plaintiff’s Opposition to 19 Separate Statement; Declarations in Support of Opposition; and Evidentiary Objections] 20 DATE: October 9, 2020 21 TIME: 8:30 a.m. DEPT.: 23 22 [Plaintiff Intends to Appear Telephonically at 23 Hearing] 24 COMPLAINT FILED: 09/20/16 25 TRIAL DATE: 11/10/20 26 /// 27 /// 28 /// 1 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 TABLE OF CONTENTS 2 PAGE(S) 3 I. INTRODUCTION ................................................................................................................. 5 4 II. BRIEF STATEMENT OF FACTS ......................................................................................... 6 5 III. LEGAL ARGUMENT ........................................................................................................... 8 6 A. Summary Judgment Should Be Denied as to the Cause of Action for Breach of An 7 Implied Contract Because Plaintiffs Can Establish the Necessary Elements 8 Creating a Triable issue of Fact and Defendant’s Purported Disclaimers Do Not 9 Establish a Complete Defense ..................................................................................... 9 10 B. Whether Third Party Plan Administrators Were Agents of Defendant With 11 Authority to Authorize Services and Form Implied in Fact Contracts is a Disputed 12 Question of Fact ....................................................................................................... 12 13 C. Summary Judgment Should Be Denied as to the Cause of Action for Quantum 14 Meruit Because Plaintiffs Can Establish the Necessary Elements Creating a Triable 15 issue of Fact.............................................................................................................. 14 16 D. Summary Judgment Should Be Denied as to the Cause of Action for Open Book 17 Account Because Plaintiffs Can Establish the Necessary Elements Creating a 18 Triable issue of Fact ................................................................................................. 15 19 E. Summary Judgment Should Be Denied as to the UCL Cause of Action Because 20 Plaintiffs Can Establish the Necessary Elements Creating a Triable issue of Fact...... 16 21 F. Plaintiffs’ Causes of Action are Not Preemption by ERISA ...................................... 18 22 IV. CONCLUSION .................................................................................................................... 20 23 24 25 26 27 28 2 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION TABLE OF AUTHORITIES 1 PAGE(S) 2 Cases 3 Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826 .................................................................... 8 4 Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 .......................................................... 14 5 Bersa Technologies, Inc. v. Sup. Court (1978) 78 Cal.App.3d 237 .................................................... 8 6 Brantley v. Pisar, (1996) 42 Cal.4th 1591 ......................................................................................... 8 7 California Medical Association v. Lackner (1981) 117 Cal.App.3d 552 .......................................... 10 8 Cedars Sinai Med. Ctr. v. Mid- West Nat'l Life Ins. Co. (2000) 118 F.Supp.2d 1002 ................. 11, 12 9 Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters, (2007) 497 F.3d 972 ........................... 18, 19 10 Chandler v. Roach (1957) 156 Cal.App.2d 435 ................................................................................. 9 11 Children's Hospital Central California v. Blue Cross of California (2014) 226 Cal.App.4th 12 1260.......................................................................................................................................... 14 13 Colarassi v. Coty, U.S. Inc. (2002) 97 Cal.App.4th 1142 .................................................................. 8 14 Comty. Hosp. of the Monterey Peninsula, (2015) 119 F.Supp.3d 1042 ............................................ 16 15 D’Amico v. Board of Medical Examiner, (1974) 11 Cal.3d 1..........................................................8-9 16 Dorman v. Int'l Harvester Co. (1975) 46 Cal.App.3d 11 ........................................................... 10, 11 17 Enloe Med. Ctr. v. Principal Life Ins. Co., 2011 WL 6396517, at *6 (E.D. Cal. 2011) ...................... 9 18 Hospice of Metro Denver, Inc. v. Group Health Ins., Inc., (10th Cir. 1991) 944 F.2d 752 ......... 18, 19 19 Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56 ................................................................. 9 20 Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.4th 1076 ................................................... 8 21 Maggio, Inc. v. Neal, (1987) 196 Cal.App.3d 745 ........................................................................... 15 22 Markow v. Rosner, (2016) 3 Cal.App.5th 1027 ............................................................................... 13 23 Memorial Hospital System v. Northbrook Life Ins. Co., (5th Cir. 1990) 904 F.2d 236 ............... 18, 19 24 Morris B. Silver M.D., Inc. v. International Longshore & Warehouse etc. (2016) 2 Cal.App.5th 25 793........................................................................................................................................ 5, 18 26 O'Bryne v. Portfolio Recovery Associates LLC, 2013 WL 1223590, at *5 (S.D. Cal. 2013) ............. 16 27 Pacific Bay Recovery, Inc. v. California Physicians' Services, Inc. (2017) 12 Cal.App.5th 200 ....... 12 28 Podosky v. First Healthcare Corp., (1996) 50 Cal.App.4th 632 ...................................................... 16 3 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 Port Medical Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5th 153 ........... 8 2 Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497...... 14 3 Rutledge v. Hewlett-Packard Co., (2015) 238 Cal.App.4th 1163 ............................................... 16, 17 4 The Meadows v. Employers Health Ins., (1995) 47 F.3d 1006 ................................................... 18, 19 5 UFCW & Emp'rs Benefit Tr. v. Sutter Health, (2015) 241 Cal.App.4th 909 .................................... 13 6 Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622 .............................................................. 12 7 Waisbren v. Peppercorn Prods., Inc. (1995) 41 Cal.App.4th 246 ...................................................... 9 8 Yanchor v. Kagan (1971) 22 Cal.App.3d 544 .................................................................................. 14 9 Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240 .............................................................. 9 10 11 Statutes 12 Business and Professions Code § 17200................................................................................ 6, 16, 17 13 California Code of Regulations, tit. 28, § 1300.71........................................................................... 14 14 Civil Code § 1621 ........................................................................................................................... 10 15 Civil Code § 2300 ........................................................................................................................... 12 16 Civil Code § 3294(b)(3) .................................................................................................................. 16 17 Code of Civil Procedure § 437c, subd. (c) ......................................................................................... 8 18 Code of Civil Procedure § 437c, subd. (f) ......................................................................................... 8 19 Health & Safety Code § 1317(d) ..................................................................................................... 20 20 United States Code, tit. 29, § 1144(a).............................................................................................. 18 21 22 Other 23 California Civil Jury Instructions (2017), CACI No. 305 .................................................................. 9 24 California Civil Jury Instructions (2017), CACI No. 3709............................................................... 12 25 26 27 28 4 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF RECORD: 2 Plaintiffs DOCTORS MEDICAL CENTER OF MODESTO, INC.; DOCTORS HOSPITAL OF 3 MANTECA, INC.; LOS ALAMITOS MEDICAL CENTER, INC.; EMANUEL MEDICAL CENTER; 4 and LAKEWOOD REGIONAL MEDICAL CENTER, INC. (hereinafter collectively referred to as 5 “Plaintiffs” or “Hospitals”) submits this Opposition to Defendant GARDNER TRUCKING, INC.’s 6 (hereinafter “Defendant”) Motion for Summary Judgment or in the Alternative Summary Adjudication 7 (hereinafter “Motion”). 8 I. INTRODUCTION 9 The Defendant’s Motion is based on three flawed positions all of which are both factually and 10 legally unsupported and raise a long list of disputed material facts, to wit, including: 1) ERISA 11 Preemption, 2) Lack of Authority, and 3) Unilateral Disclaimers. 12 ERISA preemption has been briefed before this Court on numerous occasions and the ERISA 13 preemption argument fails for the same reasons the Court has found in the past. Namely that as before, 14 Defendant erroneously relies on Morris B. Silver M.D., Inc. v. International Longshore & Warehouse 15 etc., (2016) 2 Cal.App.5th 793 in alleging Plaintiffs’ claims are preempted by ERISA. But the Court in 16 Silver cited to and relied upon authority finding that claims by third party medical providers for 17 deceptive and unfair practices are not preempted. Defendant’s Motion provides no admissible evidence 18 that would alter the previous determinations of this Court. 19 Defendant ignores the law on the apparent authority and instead focuses on the private purported 20 agreements between some of the various entities involved, namely the various third-party 21 administrators (“TPA”) hired to carried out Gardner Trucking’s scheme, with only self-serving 22 conclusory statements that violate the Best Evidence Rule. There is no prior written contract at issue 23 and Plaintiffs proceed on an implied contract theory. Whether certain individuals had authority to 24 negotiate a prior written contract is irrelevant. The salient issue, that Defendant fails to address, is the 25 position it put certain TPAs and/or medical management companies in by requesting that they respond 26 to the inquires Defendant directs the Plaintiff to make. Defendant cannot direct the Plaintiffs to 27 designated representatives and at the same disavow the representative’s authority to respond. 28 5 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 Additionally, the Defendant provides no admissible evidence that any specific disclaimers were 2 given, certainly not as to each disputed claim, and mischaracterizes the nature of the disclaimer 3 Defendant purports to rely on. For example, Defendant points to a disclaimer regarding authorizing the 4 medical necessity of certain services but fails to address whether any of the disputed claims were denied 5 for lack of medical necessity – they were not. Thus, even if properly established, such a disclaimer 6 would be irrelevant. Defendant’s motion merely raises numerous disputed issues of material fact. 7 Defendant’s Motion also fails on this position as the law does not favor the use of such unilateral 8 statements, when there is no evidence that such a communication was ever received. 9 Finally, Defendant fails to address their routine business practice of paying claims according to 10 the member’s benefits, while at the same time mispresenting that claims were paid in full after applying 11 a “self-reported discount.” (Krambeck Depo., 104:1-105:22; 107:10-108:9). Such a business practice, 12 standing on its own, supports a claim under Cal. Bus. & Prof. Code § 17200. 13 II. BRIEF STATEMENT OF FACTS 14 Defendant was a participant in a written contract with a provider network that provided 15 Defendant contractual discounts off the Hospitals’ charges, but Defendant chose to terminate such 16 written contract. In the absence of a written contract, Defendant and its plan enrollees are not entitled 17 to any contractual discount off the Hospitals’ charges and the Hospitals are entitled to the reasonable 18 value of its services, which are the Hospitals’ billed charges. 19 For claims involved in this consolidated matter that did not involve emergent situations, there 20 is a verification process between the Plaintiffs and the Defendant prior to healthcare benefits being 21 provided to the Defendant’s plan members. Verification of insurance eligibility is when the hospital 22 staff validates that a patient has the insurance they are providing to the hospital and ensure they are 23 eligible on the dates of service that care is provided. (Baccellieri Decl. ¶ 8). Verification of benefits 24 includes determining what a payor is quoting as far as benefits, which may include rates, co-payments, 25 deductibles, co-insurance, maximums, etc. (Id.) Authorizations refer to medical authorization and 26 validating that the inpatient and outpatient services are medically necessary or have been pre- 27 authorized. (Id.) 28 6 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 Because the Gardner Trucking’s member’s eligibility of benefits could not be verified using the 2 Passport system used by many hospitals, Plaintiffs would have to place telephone calls to verify 3 eligibility with payors, like the Defendant. (Baccellieri Decl. ¶ 10). In the case of Gardner Trucking, 4 the calls would go to delegated TPAs and not directly to Gardner Trucking. (Id.). For outpatient 5 procedures, authorization is obtained by the physician who is scheduling the services and the hospital 6 will subsequently validate that the services are authorized. (Baccellieri Decl. ¶ 13). Authorization is 7 confirmed by either contacting the designated medical management company or receipt of written 8 authorization. (Id.). For Gardner Trucking, there is no ability to contact or communicate with anyone 9 from Gardner Trucking. (Id.). The Plaintiffs had to contact the TPAs designated by Gardner Trucking 10 as identified on the members insurance cards. (Id.). 11 All contact to verify eligibility and obtain authorization (if necessary) is done through entities such 12 as TPAs or other medical management companies that Defendant Gardner Trucking delegated the 13 responsibility to communicate with the Hospitals and speak on behalf of the Defendant. (Baccellieri Decl. 14 ¶ 14). The Plaintiffs relied on the representations of these medical management companies/TPAs prior to 15 providing medical care (except in emergent situations) and expected based on these representations that the 16 Hospitals will receive compensation for the services provided. (Id.). Based on these representations, it was 17 the Plaintiffs’ expectation that they would receive the compensation rates provided by the medical 18 management company or TPA, but if no rates are provided, then compensation will be based on the 19 Plaintiffs’ publicly published charges. (Id.). 20 Defendant’s TPAs, like HealthSCOPE Benefits, administered Defendant’s claims, which included 21 reviewing submitted charges and making a determination as to the amount to compensate the provider for 22 the services performed. (See, Mitchnick Decl., Exhibit “1”; Souza Depo., 37:24-38:9). ClaimDoc, LLC 23 provided similar services and answered questions on behalf of the TPAs regarding the amount of 24 compensation to be paid to noncontracted providers like Plaintiffs for the services performed and assisted 25 them in those determinations. (See, Mitchnick Decl., Exhibit “1”; Souza Depo., 38:10-17). 26 Under these circumstances, Defendant is not entitled to Summary Judgment based solely on 27 limited purported disclaimers and/or internal arrangements that may or may not limit the authority of 28 representatives that the Defendant delegates to interact with Plaintiffs. 7 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 III. LEGAL ARGUMENT 2 A motion for summary judgment may only be granted when no triable issue exists as to any 3 material fact, and the moving party is entitled to a judgment as a matter of law. Cal. Code Civ. Proc. § 4 437c, subd. (c). The party moving for summary judgment “bears the burden of persuasion that there is 5 no triable issue of material fact and that he is entitled to judgment as a matter of law.” Port Medical 6 Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5th 153, 169. In addition, “[a] 7 defendant moving for summary judgment ‘must show [] that one or more elements of the cause of 8 action … cannot be established’ by the plaintiff.” Id., citing Cal. Code Civ. Proc. § 437c. California 9 Code of Civil Procedure §437c(f) provides that on a motion for summary judgment, the test is whether 10 there is any “triable issue of material fact” as to the particular claim, issue or defense sought to be 11 adjudicated. Cal. Civ. Proc. Code §437c. If there is a single such issue, the motion must be denied. 12 Bersa Technologies, Inc. v. Sup. Court (1978) 78 Cal.App.3d 237. The court does not weigh the 13 plaintiff’s evidence presented “as though it were sitting as the trier of fact.” Colarassi v. Coty, U.S. Inc. 14 (2002) 97 Cal.App.4th 1142, 1149. 15 A party moving for summary judgment faces a high burden “from commencement to 16 conclusion” of the summary judgment proceeding, and “bears the burden of persuasion that there is no 17 triable issue of material fact and that he is entitled to judgment as a matter of law.” Aguilar v. Atlantic 18 Richfield Co. (2001) 25 Cal.4th 826, 850. Defendants moving for summary judgment must show that 19 the plaintiff “does not possess and cannot reasonably obtain, needed evidence” Id. at 854. 20 Conversely, a plaintiff opposing a motion for summary judgment need only demonstrate a triable issue 21 of material fact as to the plaintiff’s claim. Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.4th 22 1076, 1092. 23 In a summary judgment motion, the moving party’s declarations and evidence will be strictly 24 construed “in order to avoid unjustly depriving the plaintiff of a trial.” Brantley v. Pisar, (1996) 42 25 Cal.4th 1591, 1601. In contrast, the declarations and evidence offered in opposition to a summary 26 judgment motion must be liberally construed and doubts as to whether the motion should be granted 27 should resolved in favor of the opposing party. D’Amico v. Board of Medical Examiner, (1974) 11 28 8 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 Cal.3d 1, 20. The summary judgment procedure is a drastic one, and as a matter of policy is used with 2 caution. Id. 3 In addition to the benefit of more relaxed burdens of persuasion and production, the party 4 opposing a motion for summary judgment is entitled to favorable evidentiary treatment.(Waisbren v. 5 Peppercorn Prods., Inc. (1995) 41 Cal.App.4th 246, 251-52 (“the moving party's affidavits are strictly 6 construed while those of the opposing party are liberally construed.”). “[I]n order to resolve any 7 evidentiary doubts or ambiguities in plaintiff’s favor,” the moving Defendant’s declarations and 8 evidence will be strictly construed in determining whether they negate or disprove an essential element 9 of the plaintiff’s claim. Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64 (defendants must 10 make “a showing that would forecast the inevitability of a nonsuit”). 11 A. Summary Judgment Should Be Denied as to the Cause of Action for Breach of An 12 Implied Contract Because Plaintiffs Can Establish the Necessary Elements 13 Creating a Triable issue of Fact and Defendant’s Purported Disclaimers Do Not 14 Establish a Complete Defense. 15 The elements of an implied-in-fact cause of action requires the same basic elements of a breach 16 of contract cause of action, including mutual consent by both contracting parties. See Judicial Council 17 of California Civil Jury Instructions (2017), CACI No. 305. “The essential elements of an implied-in- 18 fact contract and an express contract are the same, namely, mutual assent and consideration.” Chandler 19 v. Roach (1957) 156 Cal.App.2d 435, 440. The difference between an implied and an express contract 20 is mainly the mode of proof. Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 246. 21 Additionally, Courts have repeatedly found that communications regarding coverage and 22 authorization can form the basis of an implied-in-fact contract. Enloe Med. Ctr. v. Principal Life Ins. 23 Co., 2011 WL 6396517, at *6 (E.D. Cal. 2011) (rejecting ERISA plan’s argument that “a telephone 24 confirmation of coverage and benefits cannot constitute a promise to pay” and finding that a contract 25 may be created based on an authorization call). Indeed here, by the Defendant’s third-party 26 administrators’ verification and authorization on behalf of Defendant, Defendant manifested its 27 agreement and assent to pay the claims for services rendered to the patients, and Plaintiff reasonably 28 relied upon such authorizations when rendering medically necessary services to such patients. 9 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 In California Medical Association v. Lackner (1981) 117 Cal.App.3d 552, 557 (“CMA”), the 2 court found that the State Department of Health Services’ regulations establishing requirements for its 3 payment of health care providers’ claims for services provided to Medi-Cal members amounted to an 4 offer to contract. By complying with such requirements for payment – i.e., by obtaining “provider 5 numbers” to be used for billing and rendering services to Medi-Cal members – the health care providers 6 accepted the State’s offer. Thus, the court found that the parties’ conduct formed an implied in fact 7 contract. Id. 8 The Court in CMA rejected the State’s argument that no implied in fact contract was created 9 because a fixed rate was necessary for creation of a contract, and in that case the providers’ 10 reimbursements could vary depending on such factors as the providers’ usual charges. Id. at 561. The 11 Court rejected this argument, holding that the existence of a fixed price term is not a prerequisite for 12 contract formation because a reasonable price can be implied, so long as the variation in price is in 13 proportion to some objectively determined base or is reasonable. Id. at 561 (citing 1 Corbin on 14 Contracts (1963 § 98, pp. 438-439.) Thus, the CMA Court found the use of the providers’ “usual 15 charges” in setting the price term sufficient, and the offer, “through the regulations, and the providers’ 16 acceptance of it, constituted an implied contract” under Cal. Civil Code § 1621. Id. at 561. 17 Furthermore, the issues raised by the Defendant regarding the purported prerecorded message 18 that automatically played before the telephone calls, or after the Hospital verified eligibility and 19 received authorization to provided services was ineffective as it was not explicitly negotiated between 20 parties. Generally, disclaimers of warranties are disfavored in the law and are ineffectual unless 21 explicitly negotiated between buyer and seller. See Dorman v. Int'l Harvester Co. (1975) 46 22 Cal.App.3d 11. Blanket prerecorded disclaimers are “bland and substantially meaningless terms and 23 conditions” that should not be “above the individually and expressly negotiated terms and conditions.” 24 Id. at 20. To the extent that these meaningless terms are elevated above the negotiated terms it would 25 “highlight the absurdity of a rule of law” because to “adhere to such a rule means that the law presumes 26 that the buyer” “intends to nullify in general all the things for which he has specifically bargained and 27 will pay” Id. at 20-21. Here, the pre-recorded message was not even communicated by Defendant, and 28 Defendant has failed to provide admissible evidence demonstrating that any prewritten script was read. 10 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 A brief automated pre-recorded message that provides no additional details as to whom or where 2 Plaintiff was to acquire more information is meaningless. No specific details as to each patient was 3 provided in these automated messages or in the purported call notes that all contain blank spaces and 4 missing information. Defendant’s purported disclaimers are also inapposite to the issue of implied 5 contract. For example, the disclaimers on the patients’ insurance identification cards state that “This 6 card is for identification. It is NOT and guarantee of eligibility.” See Krambeck Decl., Exhibit D. But 7 eligibility is not the basis for a denial of payment, itis the amount of payment that is at issue and 8 Plaintiff does not rely solely on the identification card as the basis for an implied contract. The 9 identification cards contain other statements regarding benefits but then direct the provider to call 10 Provider Services, i.e. the TPAs/medical management companies. In other words, the purported 11 disclaimers are in fact “bland and substantially meaningless” compared to the Plaintiffs efforts to 12 contact Defendant’s designee for confirmation of benefits and authorization to proceed with providing 13 services. 14 By the same token Defendant’s reference to incomplete call notes also misses the mark, even 15 assuming that Defendant has established they were effectively communicated and agreed to. See 16 Krambeck declaration Exhibit 5, GT001136. “This is a recommendation regarding medical necessity 17 only, and is not a guarantee of payment.” The accounts in dispute do not involve medically necessity 18 determinations as they have been for the most part paid in part. Again, the issue is the amount of 19 payment and disclaimers regarding medical necessity are irrelevant. 20 The parties never negotiated the terms of the disclaimers and the disclaimers, even if provided, 21 were ineffective. Courts have held that “a disclaimer of warranties must be specifically bargained for, 22 so that a disclaimer given to the buyer after he signs the contract is not binding”. Id. at 13. (Emphasis 23 in original). Here, Defendant has failed to demonstrate that the pre-recorded messages were played 24 before or after the patient’s eligibility was verified and services authorized, making disclaimer not 25 binding. 26 Defendants also cite to an inapplicable federal cases, including Cedars Sinai Med. Ctr. v. Mid- 27 West Nat'l Life Ins. Co. (2000) 118 F.Supp.2d 1002, 1008, in which the Court found that “Neither party 28 intended to be contractually bound by the [verification] conversation, so, as a matter of law, no contract 11 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 was formed.” Unlike the provider in Cedars Sinai Med. Ctr. v. Mid- West Nat'l Life Ins. Co., Defendant 2 and/or its agent not only verified each patients coverage, but also explicitly authorized services. 3 (Complaint ¶ 62). Defendant’s reliance on Pacific Bay Recovery, Inc. v. California Physicians' 4 Services, Inc. (2017) 12 Cal.App.5th 200, is inapplicable because unlike the Plaintiffs, the provider did 5 not provide emergency services. Instead, Pacific Bay Recovery, Inc only brought suit for one (1) claim 6 in which addiction and mental health services were provided to a single patient. Nonetheless, the Court 7 still found that an implied-in-fact contract was created between parties. Here, the claims at issue 8 includes claims for inpatient, outpatient, post- stabilization, and emergency services. Additionally, as 9 the Court found in Pacific Bay Recovery, Inc. v. California Physicians' Services, Inc. (2017) 12 10 Cal.App.5th 200, when Defendant or its agent rendered authorization an implied-in-fact contract was 11 created. 12 Finally, whether an implied contract exists and the terms of the contract is a question of fact for 13 the trial court. See Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 636. Plaintiffs continue 14 to allege an implied-in-fact contract was created between them and the Defendant. Given that 15 Defendants have contested this alleged fact alleged, it is clear disputes as to material facts remain. 16 Consequently, Defendants’ Motion must be overruled. 17 B. Whether Third Party Plan Administrators Were Agents of Defendant With 18 Authority to Authorize Services and Form Implied in Fact Contracts is a Disputed 19 Question of Fact 20 Pursuant to Cal. Civil Code § 2300 “an agency is ostensible when the principal intentionally, or 21 by want of ordinary care, causes a third person to believe another to be his agent who is not really 22 employed by him.” See also See Judicial Council of California Civil Jury Instructions (2017), CACI 23 No. 3709. By their Motion, Defendant takes the position that the plan administrators were not agents 24 and did not have authority to enter into contracts on behalf of Defendant. However, pursuant to well 25 established case law and statute, Defendant is wrong. Due to Defendant’s actions, Plaintiffs reasonably 26 believed that the plan administrators possessed authority to act on behalf of Defendant. 27 First, it was reasonable for Plaintiffs to rely on the authority of the plan administrators. Patients 28 were provided with identification cards issued by Defendant that contained “a telephone number” to 12 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 the applicable plan administrator “to verify benefits and eligibility” (Motion, 10:7-8). No other number 2 was included on the identification card. (Baccellieri Decl., ¶ 13). When patients presented at the 3 Hospitals and provided their identification cards, Plaintiffs called the only number on the card. The 4 plan administrator was notified of each patients’ treatment and admission to the Hospitals. The plan 5 administrator then verified the patients’ eligibility and benefits and authorized the Hospitals’ provision 6 of services. Not only was it reasonable for Plaintiffs to rely on a plan administrator’s verification of 7 eligibility and authorization of treatment. but this belief was a result of Defendant’s actions, not solely 8 upon the plan administrator’s conduct. (Baccellieri Decl., ¶ 14). Defendant never made itself available 9 to authorize services or confirm plan eligibility. (Id.). Defendant did not include its own telephone 10 number or contact information on the identification cards. (Id.). This is unlike Markow v. Rosner, 11 (2016) 3 Cal.App.5th 1027, in which the Court found that the physician could not be found to be a 12 hospital’s ostensible agent because, “in the conditions of admissions forms that the “patient initialed 13 and signed on 25 separate occasions, the hospital unambiguously informed the patient that all 14 physicians furnishing services to patients were independent contractors, not agents or employees of the 15 hospital”. (emphasis added) Instead, Defendant only included the numbers of plan administrators on 16 the identification card, directing Plaintiffs to call the plan administrators, not Defendant. 17 Next, when the plan administrators verified eligibility or authorized treatment on behalf of 18 Defendant, Defendant manifested its agreement and assent to pay the claims for services rendered to 19 patients. Defendant incorrectly relies on UFCW & Emp'rs Benefit Tr. v. Sutter Health, (2015) 241 20 Cal.App.4th 909 to argue that a health plan was not bound by the terms of the written contract between 21 the plan administrator and health care provider. The Court in UFCW & Emp'rs Benefit Tr. v. Sutter 22 Health, (2015) 241 Cal.App.4th 909 found that it was not reasonable for the provider to believe that 23 “Blue Shield was UEBT's agent for all purposes” such as contract negotiations because of the health 24 plan’s “act of providing its members with Blue Shield cards”. Id at 932. (Emphasis added). At issue in 25 the case was an arbitration clause that was a result of extensive and repeated contract negotiations 26 between parties. However, the Court also went on to state “UEBT's use of Blue Shield cards… 27 suggested actions of an agent acting on behalf of a principal in plan administration.” Id. Here, the plan 28 13 PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION 1 administrators never negotiated written contracts on behalf of Defendant. Instead, by authorizing 2 services and verifying eligibility, the plan administrators administered the terms of the Plan. 3 At minimum, whether ostensible agency exists remains as a triable question of fact that is 4 sufficient to withstand summary judgement. See Yanchor v. Kagan (1971) 22 Cal.App.3d 544, 550. 5 Through its opposition and declarations in support of the opposition, Plaintiffs have established all 6 elements necessary to make the terms of the implied-in-fact contract binding upon Defendants by the 7 doctrine of ostensible authority. This includes that Defendant intentionally created the impression that 8 the plan administrators were its agents, Plaintiffs reasonably believed that the plan administrators were 9 agents, and Plaintiffs were harmed due to Defendants failure to fulfill the terms of the implied in fact 10 contract. To the extent that Defendant argues otherwise, a question of fact is in dispute. Accordingly, 11 Defendant’s Motion should be denied. 12 C. Summary Judgment Should Be Denied as to the Cause of Action for Quantum 13 Meruit Because Plaintiffs Can Establish the Necessary Elements Creating a 14 Triable issue of Fact 15 Defendant’s Motion asserts that Plaintiffs’ quantum meruit cause of action fails, arguing that 16 the services were provided at the patient’s requests, not Defendant’s, and Defendant did not receive 17 any benefit. The law clearly supports quantum meruit actions against healthcare payors. 18 Quantum meruit refers to an obligation created by the law “to pay for services performed under 19 circumstances disclosing that they were not gratuitously rendered.” Children's Hospital Central 20 California v. Blue Cross of California (2014) 226 Cal.App.4th 1260, 1262. The dire