This case was last updated from Los Angeles County Superior Courts on 01/03/2022 at 15:02:56 (UTC).

FIDEL M. LARA, JR., M.D. VS COMMUNITY FAMILY CARE MEDICAL GROUP IPA, A PROFESSIONAL MEDICAL CORPORATION, ET AL.

Case Summary

On 08/18/2020 FIDEL M LARA, JR , M D filed a Contract - Business lawsuit against COMMUNITY FAMILY CARE MEDICAL GROUP IPA, A PROFESSIONAL MEDICAL CORPORATION. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are JAMES C. CHALFANT and GREGORY KEOSIAN. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******1551

  • Filing Date:

    08/18/2020

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

JAMES C. CHALFANT

GREGORY KEOSIAN

 

Party Details

Plaintiff

LARA FIDEL M. JR. M.D.

Defendants

COMMUNITY FAMILY CARE MEDICAL GROUP IPA A PROFESSIONAL MEDICAL CORPORATION

QUALIFIED HEALTHCARE INC.

Attorney/Law Firm Details

Plaintiff Attorneys

KAPLAN JESSE A

KAPLAN JESSE ABRAHAM

Defendant Attorney

STEINBERG CRAIG S

 

Court Documents

Minute Order - MINUTE ORDER (STATUS CONFERENCE RE ARBITRATION)

10/7/2021: Minute Order - MINUTE ORDER (STATUS CONFERENCE RE ARBITRATION)

Minute Order - MINUTE ORDER (STATUS CONFERENCE RE ARBITRATION)

4/7/2021: Minute Order - MINUTE ORDER (STATUS CONFERENCE RE ARBITRATION)

Notice - NOTICE NOTICE OF CONTINUANCE OF ARBITRATION STATUS CONFERENCE

4/7/2021: Notice - NOTICE NOTICE OF CONTINUANCE OF ARBITRATION STATUS CONFERENCE

Notice of Change of Address or Other Contact Information

10/28/2020: Notice of Change of Address or Other Contact Information

Notice of Ruling - NOTICE OF RULING RULING RE DEFENDANT COMMUNITY FAMILY CARE MEDICAL GROUP IPA, INC.'S MOTION TO COMPEL ARBITRATION

10/7/2020: Notice of Ruling - NOTICE OF RULING RULING RE DEFENDANT COMMUNITY FAMILY CARE MEDICAL GROUP IPA, INC.'S MOTION TO COMPEL ARBITRATION

Notice of Entry of Judgment - NOTICE OF ENTRY OF JUDGMENT OR ORDER

10/5/2020: Notice of Entry of Judgment - NOTICE OF ENTRY OF JUDGMENT OR ORDER

Notice - NOTICE OF ENTRY OF JUDGMENT

10/5/2020: Notice - NOTICE OF ENTRY OF JUDGMENT

Notice of Status Conference and Order

10/7/2020: Notice of Status Conference and Order

Minute Order - MINUTE ORDER (HEARING ON MOTION TO COMPEL ARBITRATION)

10/7/2020: Minute Order - MINUTE ORDER (HEARING ON MOTION TO COMPEL ARBITRATION)

Notice of Ruling - NOTICE OF RULING ON THE OSC RE: PRELIMINARY INJUNCTION

9/30/2020: Notice of Ruling - NOTICE OF RULING ON THE OSC RE: PRELIMINARY INJUNCTION

Brief - BRIEF SUPPLEMENTAL OPENING BRIEF ISO OSC RE PRELIMINARY INJUNCTION - REDACTED

9/30/2020: Brief - BRIEF SUPPLEMENTAL OPENING BRIEF ISO OSC RE PRELIMINARY INJUNCTION - REDACTED

Order - ORDER RE: PRELIMINARY INJUNCTION

10/1/2020: Order - ORDER RE: PRELIMINARY INJUNCTION

Notice - NOTICE OF POSTING UNDERTAKING RE PRELIMINARY INJUNCTION

10/2/2020: Notice - NOTICE OF POSTING UNDERTAKING RE PRELIMINARY INJUNCTION

Notice of Lodging - NOTICE OF LODGING UNDER SEAL OF EXHIBIT 1 OF THE PLAINTIFFS SUPPLEMENTAL OPENING BRIEF IN SUPPORT OF THE OSC RE: PRELIMINARY INJUNCTION AND SUPPLEMENTAL DECLARATION OF JESSE KAP

10/2/2020: Notice of Lodging - NOTICE OF LODGING UNDER SEAL OF EXHIBIT 1 OF THE PLAINTIFFS SUPPLEMENTAL OPENING BRIEF IN SUPPORT OF THE OSC RE: PRELIMINARY INJUNCTION AND SUPPLEMENTAL DECLARATION OF JESSE KAP

Undertaking

10/2/2020: Undertaking

Objection - OBJECTION OBJECTIONS TO EVIDENCE OFFERED IN SUPPORT OF OSC

9/29/2020: Objection - OBJECTION OBJECTIONS TO EVIDENCE OFFERED IN SUPPORT OF OSC

Order - ORDER - DECISION ON APPLICATION FOR PRELIMINARY INJUNCTION: GRANTED

9/29/2020: Order - ORDER - DECISION ON APPLICATION FOR PRELIMINARY INJUNCTION: GRANTED

Order - ORDER RE EVIDENTIARY OBJECTIONS TO THE DECLARATIONS OF RON BRANDT AND CRAIG STEINBERG

9/29/2020: Order - ORDER RE EVIDENTIARY OBJECTIONS TO THE DECLARATIONS OF RON BRANDT AND CRAIG STEINBERG

48 More Documents Available

 

Docket Entries

  • 02/28/2022
  • Hearing02/28/2022 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 10/07/2021
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Status Conference (re Arbitration) - Held - Continued

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  • 10/07/2021
  • DocketMinute Order ( (Status Conference re Arbitration)); Filed by Clerk

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  • 04/07/2021
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Status Conference (re Arbitration) - Held - Continued

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  • 04/07/2021
  • DocketMinute Order ( (Status Conference re Arbitration)); Filed by Clerk

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  • 04/07/2021
  • DocketNotice (Notice of Continuance of Arbitration Status Conference); Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 10/28/2020
  • DocketNotice of Change of Address or Other Contact Information; Filed by Jesse Abraham Kaplan (Attorney)

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  • 10/19/2020
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion for Preliminary Injunction - Not Held - Rescheduled by Court

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  • 10/19/2020
  • Docketat 2:00 PM in Department 61, Gregory Keosian, Presiding; Hearing on Motion for Preliminary Injunction - Not Held - Taken Off Calendar by Party

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  • 10/07/2020
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion to Compel Arbitration - Not Held - Rescheduled by Court

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50 More Docket Entries
  • 09/03/2020
  • DocketDeclaration (Declaration in Support of Ex Parte Application); Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 09/03/2020
  • DocketProof of Service (not Summons and Complaint); Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 09/03/2020
  • DocketDeclaration (Declaration in Support of Ex Parte Application); Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 08/27/2020
  • DocketProof of Service by Substituted Service; Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 08/27/2020
  • DocketProof of Service by Substituted Service; Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 08/24/2020
  • DocketMotion to Compel Arbitration; Filed by Community Family Care Medical Group IPA, a Professional Medical Corporation (Defendant)

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  • 08/18/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 08/18/2020
  • DocketCivil Case Cover Sheet; Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 08/18/2020
  • DocketSummons (on Complaint); Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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  • 08/18/2020
  • DocketComplaint; Filed by Fidel M. Lara, Jr., M.D. (Plaintiff)

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Tentative Rulings

Case Number: 20STCV31551    Hearing Date: October 07, 2020    Dept: 61

Defendant Community Family Care Medical Group IPA, Inc.’s Motion to Compel Arbitration is DENIED as moot. Proceedings unrelated to provisional remedies under Civil Procedure § 1281.8 are ordered stayed.

  1. MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Community moves to compel arbitration based on a professional services provider agreement executed by Community and Plaintiff on December 8, 2017. (Motion Exh. A.) The agreement provides for arbitration of disputes “arising under this Agreement.” (Ibid.)

Plaintiff contends the motion is moot because he initiated arbitration with JAMS on September 1, 2020. (Opposition Exh. 1.) Plaintiff agrees that a stay is warranted for the arbitration, but argues that such a stay should not affect his recently obtained order granting his request for a preliminary injunction ordering Community to provide termination notices to various health plans. (Opposition at pp. 1–2.)

The court agrees that the motion is essentially moot, as the parties have commenced arbitration through JAMS, as provided in the agreement that Community seeks to enforce. (Motion at pp. 4–5.) A stay of proceedings in this court is therefore warranted pursuant to Code of Civil Procedure § 1281.4, excepting proceedings related to the pursuit of provisional remedies, such as preliminary injunctions, under Code of Civil Procedure § 1281.8.

The motion is therefore DENIED, and a stay is ordered pursuant to Code of Civil Procedure § 1281.4.

Plaintiff to provide notice.

Case Number: 20STCV31551    Hearing Date: September 29, 2020    Dept: 85

Fidel M. Lara, Jr., M.D. v. Community Family Care Medical Group IPA, et al., 20STCV31551 Tentative decision on application for preliminary injunction: granted

Plaintiff Fidel M. Lara, Jr., M.D. (“Lara”) applies for a preliminary injunction to compel Defendant Community Family Care Medical Group, IPA (“CFC”) to provide all relevant health plans, including without limitation LA Care Health Plan (“LA Care”), with a termination task notification (“Termination Notice”) by a date certain, so that those health plans can process the termination of the Professional Services Provider Agreement dated December 1, 2017 between Plaintiff and Defendant (the “CFC Provider Agreement”); and if CFC fails to issue the Termination Notification by that date certain, the court’s order shall be deemed the Termination Notification to all relevant health plans.

The court has read and considered the moving papers,[1] supplemental brief,[2] opposition, and reply, and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiff Lara commenced this proceeding on August 18, 2020, alleging causes of action for: (1) intentional interference with contractual relations; (2) breach of the covenant of good faith and fair dealing; (3) declaratory relief; and (4) unfair business practices. The Complaint alleges in pertinent part as follows.

CFC is an independent practice association (“IPA”). In the managed health care industry, an IPA is an entity that contracts with health plans to arrange for the delivery of health care to patients who enroll in the plan. Lara was previously contracted with multiple IPAs, including CFC and non-party Regal Medical Group (“Regal”). Lara has contracted with Regal for a number of years (“Regal Agreement”).

In approximately December 2017, Lara, CFC, and Defendant Qualified Healthcare (“Qualified”) entered into a Professional Services Provider Agreement dated December 1, 2017 (“CFC Provider Agreement”). Pursuant to the CFC Provider Agreement, Lara was retained by CFC and Qualified as an independent contractor to provide primary care physician services to patients who were members of certain health plans, in particular those patients who chose Lara to act as their primary care physician.

In late 2019, Lara decided that he wanted to end his relationship with CFC and Qualified. Around the same time, Lara also decided that he desired to have an exclusive relationship with Regal for a certain category of patients. By agreeing to become exclusive with Regal, Lara would only see health plan member patients through Regal, not through CFC. In late 2019, Lara and Regal amended the Regal Agreement to memorialize his new exclusive relationship with Regal. As a consequence of Lara’s decision to work exclusively with Regal, he needed to terminate all of his contractual relationships with other IPAs, including CFC.

On December 27, 2019, Lara provided CFC and Qualified with the required 90 days written notice of his intention to terminate the CFC Provider Agreement. Based on that notice, the CFC Provider Agreement should have been terminated around March 27, 2020. CFC ignored Lara’s termination notice.

When Lara learned that CFC had failed to terminate the CFC Provider Agreement, he contacted CFC’s credentialing department, which informed him that only certain individuals at CFC could authorize the issuance of a termination. Lara unsuccessfully attempted to contact such individuals before sending another request for termination on March 13, 2020, which was also ignored. On March 19, 2020, Lara sent another written notice of termination, explicitly stating that the new termination date would be June 19, 2020. CFC continued to ignore Lara’s new termination notice.

CFC responded five months after Lara’s initial termination notice, claiming that, as a result of his termination, Lara would be required to forfeit almost his entire compensation from CFC over the past year which CFC claimed was roughly $69,000. CFC misquoted and misconstrued the CFC Provider Agreement by incorrectly taking the position that Lara’s termination was conditioned on or would only be effective upon his repayment of that amount.

To date, CFC continues to refuse to send a Termination Notice to any health plan. The health plans remain unable to process Lara’s termination of the CFC Provider Agreement. Consequently, even though Lara is contracted exclusively with Regal, CFC continues to force Lara to see his patients through CFC.

Based on CFC’s wrongful conduct, Lara has and will continue to suffer significant and extraordinary harm. Lara has lost and will continue to lose capitation revenue that he would have otherwise earned under the Regal Agreement had CFC not prevented Lara from performing under that contract.

2. Course of Proceedings

On September 8, 2020, the court granted Lara’s ex parte application for order to show cause re: preliminary injunction (“OSC”). Lara indicated that the Summons, Complaint, and moving papers had previously been served.

According to proofs of service on file, CFC was served with the Summons and Complaint on August 21, 2020 via substituted service. The documents were thereafter mailed the same day. CFC was served with the moving papers via email on September 3, 2020 and with the order granting the ex parte application via mail on September 8, 2020.

On September 11, 2020, the court granted CFC’s ex parte application for an order requiring Lara to appear for expedited deposition, permitting a two-hour deposition on a limited basis. The court directed the parties to produce documents by September 15, 2020 and for Lara to file any supplemental moving papers by September 17, 2020.

On September 18, 2020, the court granted in part Lara’s ex parte application to for a protective order, permitting the parties to redact tax ID numbers and contract rates from all filed documents. The court noted CFC's LA Care Agreement was previously ordered for attorney's eyes only and that any filing must be under seal.

B. Applicable Law

An injunction is a writ or order requiring a person to refrain from a particular act; it may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. CCP §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160.[3] It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. See Scaringe v. J.C.C. Enterprises, Inc., (1988) 205 Cal.App.3d 1536. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.

A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2).[4] Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. See e.g. Ancora-Citronelle Corp. v. Green, (1974) 41 Cal.App.3d 146, 150. Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §527(a). For this reason, a pleading alone rarely suffices. Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007). The burden of proof is on the plaintiff as moving party. O’Connell v. Superior Court, (2006) 141 Cal.App.4th 1452, 1481.

A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.

In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. Doe v. Wilson, (1997) 57 Cal.App.4th 296, 304. The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. See CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.

C. Statement of Facts

1. Plaintiff’s Evidence[5]

Lar practices internal medicine and provides health care for several hundred patients. Lara Decl., ¶¶ 1-2. Most of his patients have health plans, including LA Care, Health Net, Blue Shield, and Blue Cross. Lara Decl., ¶4.

CFC is an IPA. Lara Decl., ¶5. In the managed care industry, an IPA contracts with health plans to deliver care to patients enrolled in the health plan. Id. In turn, the IPA contracts with physicians to deliver care to the patients. Id. A health plan’s members are free to choose any primary care physician in the health plan’s network. Id. A patient’s choice of doctor is paramount to the patient. Id. Once the patient has chosen his or her primary care physician, the patient can select an IPA such as CFC or the health plan will assign the patient an IPA. Id. Most patients are agnostic about their IPA so long as they are assigned to their chosen doctor. Id.

In December 2017, Lara and CFC entered into the CFC Provider Agreement. Lara Decl., ¶6, Ex. 1. Pursuant to the CFC Provider Agreement, Lara was an independent contractor who would provide primary care physician services to patients who were members of certain health plans, in particular those patients who had specifically chosen him as their primary care physician and have been assigned by the health plans to CFC. Id. Most of the patients Lara sees through CFC are members of LA Care. Lara Decl., ¶4.

In November 2018, Lara entered into the Regal Provider Agreement with Regal. Lara Decl., ¶7, Ex. 2. Like his relationship with CFC, Lara provides primary care physician services to patients who were members of certain health plans, in particular those patients who had specifically chosen him as their primary care physician and had been assigned to Regal by the health plan. Id.

In approximately late 2019, Lara decided that he wanted an exclusive relationship with Regal for a certain category of patients. Lara Decl., ¶8. By agreeing to contract exclusively with Regal, Lara would only see certain health plan member patients through Regal, not through other IPAs like CFC. Id. In December 2019, Lara and Regal amended the Regal Provider Agreement to memorialize his exclusive relationship with Regal. Lara Decl., ¶8, Ex. 3. Under this exclusive arrangement, Lara agreed to see his commercial, senior, and Medi-Cal patients through Regal or one other IPA called Healthcare Partners. Id. Lara did not contract with Healthcare Partners to see Medi-Cal patients. Id. As a result, he contracts semi-exclusively with Regal for his commercial and senior patients, and fully exclusively for Medi-Cal patients. Id.

An IPA is required to formally notify all relevant health plans of termination of a relationship with a physician, for purposes of the patients’ continuity of care. Lara Decl., ¶13. If a physician has terminated his contractual relationship with a given IPA, a health plan (LA Care) must make efforts to ensure that the physician's patients can continue seeing the physician of the patient's choice through an IPA that still contracts with the physician. Id.

In late 2019, Lara also decided that he wanted to end his relationship with CFC. Lara Decl., ¶9. On December 27, 2019, Lara sent CFC the required 90 days written notice of intention to terminate the CFC Provider Agreement. Lara Decl., ¶10, Ex. 4. Based on that notice, the CFC Provider Agreement should have been terminated around March 27, 2020. Id. CFC ignored Lara’s termination notice and did not respond. Lara Decl., ¶11.

Lara spoke with LA Care's Karen Rios, who informed him that CFC had not provided LA Care with the required formal Termination Notice. Lara Decl., ¶12. Id. Lara called CFC's credentialing department, which informed him that only certain individuals at CFC, namely Ronald Brandt (“Brandt”) or Jason Westhafer (“Westhafer”), could authorize the issuance of the Termination Notice. Id. Lara attempted to contact CFC's Brandt by telephone, but Brandt did not return his telephone call. Id

On March 13, 2020, Lara sent another letter to CFC requesting that CFC acknowledge his termination of the CFC Provider Agreement and provide LA Care with the required Termination Notice. Lara Decl., ¶14, Ex. 5. Once again, CFC ignored the request. Id. Lara sent another written notice of termination on March 19, 2020 stating that the new termination date would be June 19, 2020. Lara Decl., ¶15, Ex. 6.

Lara subsequently communicated with Angie Lageson (“Lageson”), LA Care's Director of Provider Contracting & Relationship Management. Lara Decl., ¶16. Lageson informed Lara that CFC had not issued the required Termination Notice. Id. She informed Lara that, until CFC provided a formal Termination Notice, a health plan will not recognize or process the termination of the contractual relationship between a physician and IPA, and instead will continue to act as if that contractual relationship is ongoing. Lara Decl., ¶18. LA Care would not consider Lara to have exclusively contracted with Regal until CFC provided it with the appropriate Termination Notice. Id. LA Care would be forced to transfer to CFC all of Lara’s current patients seen through Regal and he would not be able to see any new patients through Regal. Id.

On May 29, 2020, CFC sent Lara a letter in response to his termination notices. Lara Decl., ¶17, Ex. 7. To date, CFC has not initiated the Termination Notice with any health plan. Lara Decl., ¶19.

On June 26, 2020, Lara’s counsel, Jesse Kaplan, Esq. (“Kaplan”), sent a letter to CFC concerning the termination of the CFC Provider Agreement. Kaplan Decl., ¶2, Ex. 1. The June 26 letter provided CFC with a June 29, 2020 deadline to comply, but CFC failed to do so or respond. Id.

On July 2, 2020, counsel for CFC, Craig Steinberg, Esq. (“Steinburg”), sent Kaplan a letter in response to the June 26 letter. Kaplan Decl., ¶3, Ex. 2. In Steinburg’s letter, CFC acknowledged termination of the CFC Provider Agreement and indicated that it would take the steps to release Lara from that contract pursuant to section 6.3. Id.

Later that day, Lara and Kaplan contacted Lageson and informed them that CFC stated that it would take steps to release Lara from the CFC Provider Agreement. Kaplan Decl., ¶4. Lageson responded that she would ask CFC for a Termination Notice. Id. Lageson subsequently contacted Kaplan, informing him that Brandt had emailed that CFC was not releasing Lara and would not issue the Termination Notice. Id.

On July 3, 2020, Kaplan sent an e-mail to CFC's counsel and LA Care pressing CFC to initiate the required termination task notification. Kaplan Decl., ¶5, Ex. 3. In response, CFC stated it would release Lara from his CFC provider agreement in accord with the terms of the agreement, as previously stated. Id.

Kaplan spoke with Lageson several times in early July 2020 to see if LA Care would make an exception and process Lara's termination of the CFC Provider Agreement without the formal Termination Notice. Kaplan Decl., ¶6, Ex. 4. LA Care stated that it could not make an exception and it was unable to process Lara’s termination from CFC without CFC’s Termination Notice. Kaplan Decl., ¶7, Ex. 5.

On July 15 and 16, 2020, Kaplan reiterated Lara's request to CFC that it provide the required Termination Notice, and informed CFC of the consequences of refusing. Kaplan Decl., ¶8, Ex. 6. CFC refused to provide a straightforward response and only confirmed that it no longer had a contract with Lara. Id.

On July 15 and 16, 2020 Kaplan attempted to meet and confer with Steinburg. Kaplan Decl., ¶9, Ex. 7. On July 16, 2020, Kaplan sent Steinburg a letter placing CFC on notice that CFC's failure to provide the required Termination Notice was interfering with Lara's Regal Provider Agreement and preventing him from seeing any patients through Regal. Kaplan Decl., ¶10, Ex. 8. CFC never responded to the letter. Kaplan Decl., ¶11.

On August 26, 2020, Kaplan met and conferred with Steinburg about Lara’s contemplated application/motion for a TRO and preliminary injunction. Kaplan Decl., ¶12, Ex. 9. Steinberg stated that CFC would not initiate the Termination Notice. Id. Steinberg presented Lara with two options: (1) he could continue seeing his patients through CFC on a fee-for-service basis indefinitely; or (2) he could stop seeing those patients. Id.

CFC' s refusal to issue the Termination Notice to LA Care -- the health plan which most of Lara’s patients are affiliated -- is preventing him from seeing any patients through Regal, the IPA which he is now exclusively contracted. Lara Decl., ¶22. This includes new patients. Id. In early July 2020, LA Care transferred to CFC all of the patients Lara saw through Regal because CFC had yet to initiate the Termination Notice. Id. Additionally, Lara cannot see any new patients who are LA Care members through Regal. Id. Rather, he must see new LA Care members/patients through CFC, even though the CFC Provider Agreement has been terminated. Id.

CFC’s refusal to issue the Termination Notice is forcing Lara to see his patients through CFC against his will. Lara Decl., ¶20.

CFC has not paid Lara for seeing his patients after June 2020. Lara Decl., ¶21. As a result, Lara’s practice is in jeopardy. If he is not able to see his patients through an IPA that will pay him, he will be forced to close his practice. Lara Decl., ¶23.

Pursuant to the court’s order, on September 15, 2020, CFC produced certain documents, including a Participating Physician Group Services Agreement (“LA Care Agreement”). Kaplan Supp. Decl., ¶¶ 2-3, Ex. 1.

CFC’s documents included an email string dated July 2, 2020, which referenced a text message that CFC did not produce. Kaplan Supp. Decl., ¶¶ 7-8, Ex. 5. On September 16, 2020, Kaplan requested that CFC’s counsel produce the text message. Kaplan Supp. Decl., ¶8, Ex. 6. CFC has not responded to the request. Id.

2. Defendant’s Evidence

At Brandt’s direction, CFC has informed Lara (through his counsel) and LA Care that the CFC Provider Agreement has been terminated. Brandt Decl., ¶4. As required by the contract, CFC expects and requires that Lara continue to see and provide care to his CFC-member patients even though he terminated the contract. Brandt Decl., ¶5. CFC will pay Lara according to the terms of the contract. Id. CFC proposed to pay Lara 100% of the State mandated fees for Medi-Cal beneficiaries if Lara continues to see CFC patients, but Brandt’s understanding is that Lara has not agreed to accept that payment arrangement. Id. Thus, as provided in section 6.5 of the CFC Provider Agreement, since no other payment arrangement has been agreed upon with Lara, CFC is arranging for Lara’s CFC members to be transferred to another CFC-contracted provider. Id.

Nothing in the CFC Provider Agreement or the LA Care Agreement (between CFC and LA Care) requires CFC to release its members to be transferred to another IPA after Lara (or any other CFC contracted doctor), terminates his or her contract with CFC. Brandt Decl., ¶7. Brandt is unaware of any rule, regulation, or law that requires the same. Brandt Decl., ¶8.

The health plans, including LA Care, have been informed that Lara’s contract with CFC was terminated and he is no longer a CFC-contracted doctor. Brandt Decl., ¶9. Brandt’s understands that the LA Care Agreement requires CFC to provide LA Care with electronic notice of the termination of Lara’s contract (the Termination Notice). Id. At Brandt’s instruction, CFC has given such notice to LA Care and all other health plans. Id.

There are 461 Medi-Cal “patients” assigned to Lara through CFC by various health plans. Brandt Decl., ¶10a. LA Care has the most of these patients, but Health Net and Care 1st also have Medi-Cal beneficiaries assigned to Lara through CFC. Id.

CFC has no control over the assignment of Medi-Cal beneficiaries by these health plans. Brandt Decl., ¶10b. The health plans assign individuals to primary care doctors, then to an IPA with which both the doctor and the health plan contracts. Id. The health plan members can choose their doctor and/or IPA, but that rarely happens in the Medi-Cal system. Most Medi-Cal members are assigned to an IPA and primary care doctor by the health plans. Id.

If a doctor contracts with multiple IPAs that all contract with a health plan, as is usually the case, the health plan selects the IPA to which the plan’s beneficiary will be assigned. Brandt Decl., ¶10d. The IPA has no control or say over this. Id. The IPA simply learns each month from the health plan’s reports which patients are no longer assigned to it and what new patients are now assigned to it. Id.

A health plan’s assignment of a member to an IPA carries with it a group of specialty providers and facilities (e.g., hospitals) with which the IPA contracts. Brandt Decl., ¶10c. There can be overlap, but there may not be. For instance, in the San Fernando Valley, CFC contracts with Valley Presbyterian Hospital and Regal Medical Group contracts with Mission Community Hospital. Id. Thus, if a CFC patient is admitted to Valley Presbyterian and then is transferred from CFC to Regal while hospitalized, the patient either will have to be transferred to Mission Community Hospital or Regal will have to enter into a “letter of agreement” with Valley Presbyterian to pay for its care of Regal’s assigned member. Id.

Lara’s claim that CFC is preventing him from being assigned new members by LA Care or any other health plan is false. Brandt Decl., ¶10e. CFC has no influence or control over whether LA Care or any other health plan assigns beneficiaries to Lara through Regal or any other IPA. Brandt Decl., ¶10e. If Lara contracts with Regal and Regal contracts with the health plan, there is nothing CFC can do to prevent the health plans from assigning its beneficiaries to Lara. Brandt Decl., ¶10f.

Although any given health plan beneficiary may be “assigned” to Lara, only a small fraction of those assigned beneficiaries ever obtain medical services from him. Brandt Decl., ¶10g. A member’s assignment is not equivalent to a doctor-patient relationship, which only occurs if/when the patient chooses to obtain care from Lara. Id.

As an IPA, CFC maintains a network of health care providers. Brandt Decl., ¶10h. All Medi-Cal beneficiaries assigned to CFC by a health plan have access to that network. Id. It includes not only the primary care provider the member is assigned to, but medical specialists like cardiologists and oncologists, ancillary doctors like podiatrists and optometrists, hospitals, labs, pharmacies, and the full range of health care providers. Id. CFC contracts with these providers so that its members – who are also its patients – have access to almost any care they need in-network. Id. When care is needed that CFC does not provide in-network, it either authorizes an out-of-network provider to provide the care or enters into a one-time “letter of agreement” with the provider to provide the care. Id.

CFC’s profit comes from the difference between the health plan’s payment and it expenditure to provide care to its members. Brandt Decl., ¶11. At the heart of “managed care” is CFC’s utilization review and care management. Id. These are medical care decisions that constitute the practice of medicine and are therefore made by its Medical Directors. Id.

Health plans pay CFC a capitated rate, which is a fixed dollar amount per month for each member assigned to CFC. Brandt Decl., ¶12. Because a single sick patient can be very expensive (a heart or lung transplant patient, for instance) it is essential to CFC’s profitability and ability to stay in business to have many healthy patients among whom to spread those costs. Id. The more members CFC has, the more net profits it will generate because of the ability to spread costs among a larger group. Id.

If an IPA consents to a transfer of its members, the standard industry practice is for the health plan to honor the request of a physician to “bulk transfer” his or her members to another IPA. Brandt Decl., ¶13. If CFC is ordered to consent for its members to be transferred by Lara to Regal, the CFC members assigned to Lara will likely be “block transferred” and CFC will lose about 461 CFC-members. Id. If CFC’s members are bulk transferred to Regal without those patients being given a choice ahead of time, at least some will have their specialty care disrupted. Brandt Decl., ¶19.

It is impossible for CFC to calculate the monetary damages it would suffer because CFC has no way of knowing how long those members would have remained in the Medi-Cal managed care program or how healthy they are or will be. Id. CFC will, however, lose about $30,000 per month in upstream capitated payments plus additional revenue from its hospital shared-risk agreements. Brandt Decl., ¶14. In the 12 months it will take to resolve the dispute with Lara, CFC will lose about $500,000 from the transfer of CFC’s members to Regal, which CFC will never be able to recover if it prevails in the arbitration with Lara. Id.

As of September 18, 2020, LA Care’s website shows that Lara provides services for LA Care’s beneficiaries through Regal, among others. Steinburg Decl., ¶6, Ex. D. However, as of the same date, LA Care’s website shows that Lara is not listed as eligible or available to provide Medi-Cal services to LA Care’s members through Regal. Steinburg Decl., ¶7, Ex. E. LA Care does not list Lara for Medi-Cal services as associated with any IPA but CFC. Brandt Decl., ¶18. The fact that LA Care does not recognize Lara for Medi-Cal services through Regal means that LA Care will not assign any MediCal members to Lara through Regal. Steinburg Decl., ¶¶ 8-9. CFC has nothing to do with this action; it is entirely between LA Care and Regal. Brandt Decl., ¶18.

LA Care also has stopped assigning new members through the Heritage Provider Network IPAs, including Regal. Brandt Decl., ¶16. LA Care members assigned through the Heritage-affiliated IPAs such as Regal are being moved either to another IPA with which they contract (for semi-exclusive providers) or to LA Care’s direct system, LA Care Direct. Steinburg Decl., ¶¶ 15-16, Ex. G. This is why Lara is not getting new patients from LA Care through Regal. Id. Lara has chosen not to contract with LA Care Direct. Id.

Lara’s number of CFC-members recently has increased because he has had more CFC-members assigned to him. Brandt Decl., ¶17. This has occurred because CFC is the only entity with which Lara has any form of relationship to see LA Care’s Medi-Cal beneficiaries. Id. The CFC Provider Agreement between CFC and Lara requires that he continue seeing CFC members until they are assigned to another doctor. That process takes the health plan several months as it must give each beneficiary written notice of the change and allow the member to choose to accept or not accept it. Id.

On July 2, 2020, Steinburg sent Kaplan a letter informing him that CFC acknowledged Lara’s termination of the CFC Provider Agreement. Steinburg Decl., ¶4, Ex. B. On July 16, 2020, Steinburg sent an email to Kaplan and Lageson confirming that CFC no longer contracts with Lara. Steinburg Decl., ¶5, Ex. C.

CFC has two pending related cases against Regal, asserting that Regal and its affiliates have engaged in an illegal kickback scheme in which they pay CFC’s primary care physicians between $10,000 and $100,000 to induce them to terminate their contract with CFC and cause their CFC-member patients to be transferred to Regal or one of its affiliates. Steinburg Decl., ¶10. The Regal Provider Agreement between Lara and Regal requires Lara to assist with the transition of enrollees to Regal. Steinburg Decl., ¶11, Ex. F.

Lara has acquiesced to CFC’s demand for binding arbitration to resolve all disputes and the matter will now be resolved in binding arbitration with JAMS. Brandt Decl., ¶15.

D. Analysis

Lara applies for a mandatory preliminary injunction (a) to compel CFC to provide all relevant health plans, including LA Care, with the Termination Notice by a date certain so that those health plans can process the termination of the CFC Provider Agreement, and (b) if CFC fails to issue the Termination Notice by that date certain, the court’s order shall be deemed the Termination Notice to all relevant health plans.

CFC opposes, arguing that (a) Lara seeks a mandatory injunction, (b) CFC Provider Agreement section 6.5 must be interpreted to CFC’s benefit and to preclude an implied covenant, (c) Lara cannot has chosen to work with CFC post-termination and he cannot show irreparable harm because LA Care does not recognize him as contracting with Regal for Medi-Cal, (d) CFC notified LA Care of the termination of the CFC Provider Agreement and is not required to consent to Lara’s request that all members assigned to him be transferred to Regal, and (e) the balance of harms works in CFC’s favor.

1. Lara Seeks a Mandatory Injunction Where an Arbitration Award Would Be Ineffectual

Mandatory injunctions compel a party to do “that which ought to be done,” or require affirmative action by the enjoined party. Civil Code §3367(2). Prohibitory injunctions prohibit a party from doing “that which ought not to be done” (Civ. Code §3368), or require “a person to refrain from a particular act.” CCP §525.

A mandatory injunction carries a heavy burden: “The granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 1487, 1493. The right to a mandatory preliminary injunction must be clearly established, and irreparable injury must flow from the refusal to grant it. Davenport v. Blue Cross of California, (“Davenport”) (1997) 52 Cal.App.4th 435, 448.

The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. Though prohibitory in form, an injunction may be mandatory in effect. Davenport v. Blue Cross, (1997) 52 Cal.4th 435, 447. A preliminary injunction is prohibitory if it requires a person to refrain from an act and is mandatory if it requires the performance of an affirmative act that changes the position of the parties. Id. at 446. “An order enjoining action by a party is prohibitory in nature if its effect is to leave the parties in the same position as they were prior to the entry of the judgment. The injunction is mandatory in effect if its enforcement would be to change the position of the parties and compel them to act in accordance with the judgment rendered.” Musicians Club of Los Angeles v. Superior Court, (1958) 165 Cal.App.2d 67, 71. “If an injunction compels a party to surrender a position he holds and which upon the facts alleged by him he is entitled to hold, it is mandatory. [Citations.] An injunction is prohibitory if its effect is to leave the parties in the same position as they were prior to the entry of the judgment, while it is mandatory in effect if its enforcement would be to change the position of the parties and compel them to act in accordance with the judgment rendered.” Paramount Pictures v. Davis, (1964) 228 Cal.App.2d 827, 836 (citation omitted).

CFC argues that the issuance of a mandatory injunction would alter the status quo and effectively nullify its right to arbitration, constituting an abuse of discretion. Opp. at 2-4. In support of its argument, CFC relies on Davenport, supra, 52 Cal.App.4th at 435.

In Davenport, Blue Cross denied payment for plaintiff’s cancer treatment, and the trial court issued a mandatory injunction ordering Blue Cross to pay for the treatment. The court of appeal reversed, finding that mandatory injunctions are subject to close scrutiny and are not permitted except in extreme cases. Id. at 446. If the injunction were allowed to stand, Blue Cross would have to authorize and pay for the treatment requested by plaintiff, even though the question of the coverage for this treatment would be the central issue at arbitration. Id. at 543. The trial court’s order would mean Blue Cross had effectively already lost the case in substance, whatever the outcome of the arbitration. Id.

CFC asserts that the instant situation is analogous because the issuance of a mandatory injunction would grant Lara the ultimate relief he is seeking and deny CFC a meaningful arbitration on the merits. Opp. at 4. In Davenport, the court found a mandatory injunction to be an abuse of discretion even when the plaintiff’s life was at stake. Opp. at 4. Ordering CFC to engage in the termination task and transfer its patients to Regal will effectively determine the case and result in the release and transfer of the patients to Regal. Opp. at 4.

CFC is wrong. Lara does seek a mandatory injunction, but CFC would not lose the right to adjudicate the claims through arbitration if an injunction is issued. Unlike Davenport, where the subject of the preliminary injunction was Blue Cross’s duty to pay for the treatment, the subject of the preliminary injunction is simply a notice. Lara seeks only a mandatory injunction that CFC provide the Termination Notice, not that CFC consent to the transfer of patients. That notice would not resolve the entire dispute that is in arbitration. The parties’ arbitration concerns the lawfulness of Lara’s exclusive Regal Provider Agreement and the alleged damage to CFC flowing from a transfer of Lara’s patients from CFC to Regal. These are issues of money for which CFC can be compensated and are not directly at issue on Lara’s application for a preliminary injunction.

Lara correctly states (Reply at 8) that the CFC Provider Agreement contains language expressly allowing the parties to seek a judicial preliminary injunction and that CCP section 1281.8 provides that a preliminary injunction may be issued where the parties are in arbitration if any arbitration award would be ineffectual. CCP §1281.8; Jay Bharat Developers, Inc. v. Minidis, (2008) 167 Cal.App.4th 437, 446-47) Part of Lara’s claim in arbitration is that he does not want to do business with CFC. An arbitration award in his favor on that subject would be ineffectual because he would have been compelled to be a CFC provider in the interim until such an award.

In sum, Lara seeks a mandatory preliminary injunction. The mandatory injunction is available to him upon a clear showing of his right and irreparable injury from a refusal to grant it. See Davenport, supra, 52 Cal.App.4th at 448. It may be issued only if arbitration award would be ineffectual.

2. Probability of Success

Lara asserts that he has shown a probability of success on his claims for breach of the covenant of good faith and fair dealing and intentional interference with contractual relations.

a. The Implied Covenant of Good Faith and Fair Dealing

Section 6.5 of the CFC Provider Agreement states: “Under any termination of this Agreement, [CFC] shall pay for Contracted Services rendered to any Beneficiary who retains eligibility under the applicable Plan or by operation of law and who is under the care of [Lara] at the time of such termination. [Lara] shall continue to provide Contracted Services to any such Beneficiary until: (i) the Beneficiary is transferred to another Participating Provider, or (ii) an alternate source of payment for such services, acceptable to [Dr. Lara], has been found.” Lara Decl., Ex. 1, p.11.

“Participating Provider” is defined as “a physician, medical group, hospital, skilled nursing facility, home health care agency, or any other duly licensed institution, facility or health care professional under contract with [CFC] or an Affiliate to provide Covered Services to Beneficiaries pursuant to a Benefits Agreement.” Ex. 1, p. 3 (§1.18).

To establish a breach of the covenant of good faith and fair dealing, plaintiff must show: (1) a contract between the parties; (2) plaintiff fulfilled all obligations under the contract; (3) any conditions precedent for defendant’s performance occurred or were excused; (4) defendant did not act fairly or in good faith and prevented plaintiff from receiving the benefits of the contract; and (5) plaintiff was harmed. Herskowitz v. Apple Inc., (N.D. Cal. 2013) 940 F.Supp.2d 1131.

There is no dispute that the parties entered into the CFC Provider Agreement and that it has been terminated. CFC acknowledges that Lara properly terminated the CFC Provider Agreement with the required 90 days written notice. Lara Decl., Exs. 4-6; Kaplan Decl., Exs. 2-3, 7-9.

Lara asserts that any obligation he had to continue to see patients through CFC post-termination ended when he found a new source of payment, Regal, pursuant to section 6.5 of the CFC Provider Agreement. App. at 13.

CFC contends that Lara’s argument is based on a mischaracterization of section 6.5 of the CFC Provider Agreement. CFC asserts that section 6.5 is about paying Lara for services he must provide post-termination; it requires Lara to continue seeing CFC’s patients post-termination and assures that he will be paid for doing so. CFC argues that section 6.5 requires Lara to continue to provide service to CFC’s members until CFC transfers his patients to another CFC doctor or until CFC and Lara come to an agreement for another source of payment. Contrary to the court’s first read of the provision, section 6.5(ii) does not permit Lara to choose an alternate source of payment -- in this case Regal -- and asserts that CFC must propose the alternative source of payment. CFC proposed an alternate source of payment: a fee-for-service basis at 100% of Medi-Cal rates. Whether or not Lora accepts that alternate source does not permit him to force the transfer of CFC’s patients to Regal. Opp. at 6.

CFC’s argument is inconsistent with section 6.5. CFC does not rely on extrinsic evidence and its argument is based solely on the plain meaning of Section 6.5. Section 6.5 concerns the parties’ rights and duties after termination of the CFC Provider Agreement. CFC is correct that section 6.5 governs the parties’ post-termination conduct and that it requires CFC to pay Lara for services rendered to any eligible plan member. It obligates Lara to continue to provide services to any such beneficiary until one of two events happens: (i) the beneficiary is transferred to another physician or (ii) an alternate source of payment for such services has been found that is acceptable to Lara.

Contrary to CFC’s contention, nothing in section 6.5(ii) states that CFC is entitled to screen, propose, or be the alternate source of payment. Rather, the point of section 6.5 (i) and (ii) is that Lara is obligated to continue seeing plan beneficiaries until either they are transferred to another doctor or Lara obtains an alternate source of payment, CFC has no involvement in the alternate source process.

Even if arguendo section 6.5(ii) permits CFC to propose an alternate source of payment, it cannot control the alternate source Lara chooses. As Lara argues (Reply at 2), CRT’s argument that it can control the alternate source of payment is inconsistent with section 6.5’s purpose, which is to require Lara to continue seeing patients only until another physician or until he is happy with a different payment source. To give CFC control over the “alternate source of payment” would negate this purpose and ignore the “acceptable to Lara” language of section 6.5(ii). Lara does have an alternate source of payment – it is Regal.

CFC argues that Lara cannot force the transfer of CFC’s patients to another IPA. If CFC is required to allow the transfer of its members, that would nullify its express post-termination right under section 6.5(i) that Lara’s patients may be transferred to another CFC physician. Opp. at 6.

Lara properly rebuts this argument by noting that section 6.5 contemplates either the transfer of his patients to another CFC physician or transfer to another IPA with Lara remaining as the physician. LA Care’s Provider Manual makes it clear that it is the patient’s choice whether to stay with Lara (and his new IPA) or with CFC and a new physician. Reply Kaplan Decl., Ex. 3.

CFC notes that no covenant of good faith and fair dealing can be implied which forbids acts and conduct authorized by the express provisions of the contract. If defendants were given the right to do what they did by the express provisions of the contract, there can be no breach. Carma Developers, Inc. v. Marathon Development California, Inc., (2019) 2 Cal.4th 342. Opp. at 6-7. CFC also argues that injunctive relief is an equitable remedy and there is no equity in denying CFC’s contractual right to transfer Lara’s patients to another physician. Opp. at 7. These arguments do not aid CFC because section 6.5 does not expressly permit CFC to transfer Lara’s patients to another doctor. That is only one of two alternatives available to the patient, and Lara is entitled have his patients make that choice, not CFC.

Lara points out that the Termination Notice is a ministerial task that enables Lara to see his patients through another IPA; it does not perform that transfer process in and of itself. Reply at 3. While CFC contends that it has provided notice to LA Care of the CFC Provider Agreement’s termination through a July 16, 2020 email from its counsel to Lara’s counsel and Lageson of LA Care (Opp. at 13), this is plainly not the case. LA Care requires a formal Termination Notice and the fact that CFC has not provided it is evidenced by CFC’s own evidence that LA Care’s online directory does not show Lara as a provider through Regal. Opp. at 11. See post.

By refusing to initiate the formal Termination Notice that LA Care requires, CFC is breaching the covenant of good faith and fair dealing by unfairly interfering with and frustrating Lara’s right to terminate the CFC Provider Agreement and see those of his patients who choose to remain with him through another IPA. App. at 13-14. CFC has sent deceptive communications to LA Care stating that it had not release Lara from the CFC Provider Agreement for the purpose of frustrating Lara’s attempt to terminate the contract. Supp. Br. at 2-4. CFC’s actions have forced Lara to continue to see his patients through CFC rather than Regal, his IPA of choice. App. at 14.

Lara has shown a likelihood of success on his claim for breach of the covenant of good faith and fair dealing.

b. Intentional Interference with Contractual Relations

The elements required to substantiate a cause of action for intentional interference with contractual relations are: (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's conduct resulted in an actual breach or disruption of the contractual relationship; (3) defendant's intentional acts were designed to induce a breach or disruption of the contractual relationship; and (5) resulting damage. Pacific Gas & Electric Co. v. BearStearns & Co., (1990) 50 Cal.3d 1118, 1126.

Lara argues that he has met all the required elements, as there is no dispute as to the existence of the CFC Provider Agreement or that Lara properly terminated the contract. Yet, CFC has interfered with the Regal Provider Agreement by refusing to initiation the required Termination Notice and effectuate the transfer of his patients to Regal. App. at 14.

Lara is correct. By not providing the Termination Notice, CFC is forcing Lara to see LA Care and other health plan patients through it and not Regal. This action interferes with Lara’s contractual relationship with Regal. Lara has demonstrated a likelihood of success on his claim.

3. Balance of Hardships

In determining whether to issue a preliminary injunction, the second factor which a trial court examines is the interim harm that plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach, (2014) 232 Cal.App.4th 1171, 1177. This factor involves consideration of the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo. Id.

a. Lara’s Harm

Lara asserts that the balance of hardships favors him because he has and continues to suffer irreparable harm due to CFC’s refusal to initiate the Termination Notice, which forces him to continue seeing his patients through CFC and prevents him from seeing them through Regal. App. at 11; Supp. Br. at 7-8; Reply at 3-4. LA Care has been forced to transfer patients that Lara was seeing through Regal to CFC. CFC also is not paying Lara, placing his solo practice in serious jeopardy of shutting down. App. at 11.

CFC wrongly argues that Lara is not suffering irreparable harm because his obligation to continue to see patients is a contractual obligation under section 6.5 of the CFC Provider Agreement. Opp. at 8. Lara has admitted at deposition that his harm is of his own making because he has refused multiple offers to allow for his patients to request a move away from CFC, including a direct contract with LA Care. Opp. at 9-10; Steinberg Decl., Ex. A, pp. 41, 45. CFC acknowledges that Lara may have a claim for monetary damages from lost fees but disputes that Lara is being forced to do business with CFC. Opp. at 9.

As Lara points out, his options other than Regal as IPA are irrelevant. He could choose a different IPA or enter into a direct contract with LA Care, but each option still would require a Termination Notice from CFC. Reply at 4. Lara explains why he chose Regal and also rebuts any harm to his patients from a Termination Notice because the patient can always opt out of a transfer. Reply at 6-7.

CFC asserts that its actions have not harmed Lara because LA Care refuses to recognize Lara’s contract with Regal for Medi-Cal business. As of September 18, 2020, LA Care’s website does not acknowledge any relationship between Lara and Regal for Medi-Cal patients (Steinburg Decl., Exs. D, E), which CFC claims that this is a dispute between Lara and LA Care. Opp. at 11. CFC also notes that LA Care previously notified all its providers that LA Care’s Medi-Cal business was being moved away from the Heritage IPAs (including Regal) and that the physician’s patients would either need to go to another IPA with which the physician contracted or see them under LA Care Direct. Steinburg Decl., Ex. G. CFC argues that Lara’s Regal Medi-Cal members were moved because of this policy change, not because of CFC’s actions. Opp. at 11.

As Lara notes (Reply at 5), CFC ignores the final sentence of Exhibit G, which states that if Lara chooses not to contract with LA Care Direct, his Regal Medi-Cal members would remain assigned to him through Regal. Lara provides evidence confirming that LA Care is not permitting him to see patients through Regal only because CFC has not initiated the Termination Notice. Lara Decl., ¶18; Kaplan Reply Decl., Ex. 1, pp. 32-34, 38-41; Kaplan Decl., Ex. 6. The evidence supports Lara’s position that CFC’s refusal to initiate the Termination Notice is the reason why LA Care cannot permit Lara to see his Medi-Cal patients through Regal.

b. CFC’s Harm

CFC contends that the balance of hardships favors it because the issuance of an injunction would require it to move its 461 members with Lara to another IPA. Opp. at 12. These members generate approximately $30,000 per month in revenue for CFC but the total lost profits are impossible to calculate because moving these members to another IPA would diminish its standing with specialists and hospitals and lead to a disruption of patient care for its members. Opp. at 12.

Lara contends that CFC will suffer no harm because it will only lose the benefits of its CFC Provider Agreement with Lara. App. at 11; Reply at 6. CRC’s harm is based on a false premise that it has the right to retain patients post-termination of the CFC Provider Agreement. Because that contract has been terminated, there can be no harm from effectuating the termination. App. at 11; Reply at 6.

As for harm to CFC patients, Lara notes (Reply at 6-8) that CFC overlooks the fact that patients may choose to remain within CFC’s network if they do not wish to transfer to Regal. Kaplan Supp. Decl., Ex. 3, p.14. Regal will also usually allow a patient to see a specialist even if that specialist is out of network. Brandt Decl., ¶¶ 10h, 19.

Aside from the monetary harm, CFC’s alleged harm is speculative and based on conjecture that its patients would not choose to remain within the CFC network. CFC also provides no evidence supporting its claim that the transfer of its members would inevitably result in reputational harm or disruption in patient care.

c. Conclusion

Lara has shown that he is suffering harm from having to continue to do business with CFC, an IPA with which he does not want to work and whom the CFC Provider Agreement’s post-termination provision does not require him to do. Lara also has shown monetary harm from CFC’s failure to pay him, and that he would suffer additional monetary harm in an unstated amount if he cannot fulfill his Regal Provider Agreement. CFC has shown that an injunction would cause it to suffer monetary damages in an unstated amount if an injunction is issued, but it has not shown any reputational harm or disruption of services to its patients. The balance of hardships favors Lara.

4. The Bond

The court must address the issue of bond. The purpose of a bond is to cover the defendant’s damages from an improvidently issued injunction. CCP §529(a). In setting the bond, the court must assume that the preliminary injunction was wrongly issued. Abba Rubber Co. v. Seaquist, (“Abba”) (1991) 235 Cal.App.3d 1, 15. The attorney’s fees necessary to successfully procure a final decision dissolving the injunction also are damages that should be included in setting the bond. Id. at 15-16. While Abba reasoned that the plaintiff’s likelihood of prevailing is irrelevant to setting the bond, a more recent case disagreed, stating that the greater the likelihood of the plaintiff prevailing, the less likely the preliminary injunction will have been wrongly issued, and that is a relevant factor for setting the bond. Oiye v. Fox, (2012) 211 Cal.App.4th 1036, 1062. The court will discuss the bond with counsel at the hearing.

CFC asks for at least a $500,000 bond to protect CFC from is economic losses, presumably the loss of approximately $30,000 per month in revenue and lost profits from diminished standing with specialists and hospitals and lead to a disruption of patient care for its members. Opp. at 14. Lara points out that (a) CFC will only lose revenue if a patient is wrongly transferred to Regal, (b) the $30,000 per month is CFC’s revenue, not profits, from Lara’s patients and its monthly profits from Lara’s patients is unlikely to exceed $3,000-5,000 per month, (c) Lara intends to seek a prompt arbitration hearing in 90 days, and (d) the court should consider his strong showing of a probability of success. Reply at 10.

The court will discuss the bond with counsel at hearing.

E. Conclusion

The application for a preliminary injunction is granted. Lara has made a clear showing of his right to a mandatory injunction and irreparable injury from a refusal to grant it. See Davenport, supra, 52 Cal.App.4th at 448. He also has shown that an arbitration award would be ineffectual if a preliminary injunction is not granted because he will be compelled to do business with CFC until the award.

A mandatory preliminary injunction shall issue compelling CFC to provide all relevant health plans, including LA Care, with the Termination Notice in the form and manner required by LA Care by October 7, 2020 so that those health plans can process the termination of the CFC Provider Agreement. CFC shall concurrently provide an email copy of the Termination Notice to Lara’s counsel. If CFC fails to provide the Termination Notice by October 7, this order shall be deemed the Termination Notice to all relevant health plans.


[1] The court has not read or considered the footnotes in Petitioner Lara’s moving papers, supplemental brief, and reply because they do not meet the 12-point type requirement of CRC 2.104.

[2] Lara improperly lodged his entire supplemental brief conditionally under seal. He was only authorized to lodge the LA Care Agreement under seal, not his entire supplemental brief. The supplemental brief will be considered by the court, but it is ordered stricken. Lara’s counsel is ordered to refile his supplemental brief without Exhibit 1 and file Exhibit 1 under seal.

[3] The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.

[4] However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).

[5] All of CFC’s written objections to the Lara declaration are overruled, either because the hearsay statement is received for notice or as Lara’s permissible interpretation of the impacts from the lack of a Termination Notice.

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