This case was last updated from Los Angeles County Superior Courts on 08/14/2019 at 08:37:31 (UTC).

POMONA VALLEY HOSPITAL MEDICAL CENTER VS KAISER FOUNDATION

Case Summary

On 11/14/2017 POMONA VALLEY HOSPITAL MEDICAL CENTER filed an Other lawsuit against KAISER FOUNDATION. This case was filed in Los Angeles County Superior Courts, Pomona Courthouse South located in Los Angeles, California. The Judge overseeing this case is GLORIA WHITE-BROWN. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9796

  • Filing Date:

    11/14/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Pomona Courthouse South

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

GLORIA WHITE-BROWN

 

Party Details

Plaintiff and Cross Defendant

POMONA VALLEY HOSPITAL MEDICAL CENTER

Defendants and Cross Plaintiffs

KAISER PERMANENTE INSURANCE COMPANY

KAISER FOUNDATION HEALTH PLAN INC

SOUTHERN CALIFORNIA PERMANENTE MEDICAL

THE PERMANENETE MEDICAL GROUP

KAISER FOUNDATION HOSPITALS

SOUTHERN CALIFORNIA PERMANENTE MEDICAL GROUP

THE PERMANENTE MEDICAL GROUP

KAISER FOUNDATION HEALTH PLAN INC.

Not Classified By Court

PALOMAR HEALTH

Attorney/Law Firm Details

Plaintiff Attorneys

BELURIS TERESE A. MOSHER

MOSHER BELURIS TERESE ANNE

Defendant and Cross Plaintiff Attorneys

STRONG SABRINA HERON

SHLESINGER AMIR

 

Court Documents

Declaration

6/21/2019: Declaration

Order

6/27/2019: Order

Order

6/27/2019: Order

Legacy Document

2/28/2018: Legacy Document

Order

3/7/2018: Order

Case Management Statement

3/23/2018: Case Management Statement

Proof of Service (not Summons and Complaint)

4/23/2018: Proof of Service (not Summons and Complaint)

Legacy Document

5/21/2018: Legacy Document

Objection

7/10/2018: Objection

Proof of Service (not Summons and Complaint)

9/14/2018: Proof of Service (not Summons and Complaint)

Opposition

9/17/2018: Opposition

Proof of Service (not Summons and Complaint)

9/26/2018: Proof of Service (not Summons and Complaint)

Separate Statement

10/12/2018: Separate Statement

Opposition

10/30/2018: Opposition

Opposition

2/14/2019: Opposition

Order Appointing Court Approved Reporter as Official Reporter Pro Tempore

3/4/2019: Order Appointing Court Approved Reporter as Official Reporter Pro Tempore

Reply

4/15/2019: Reply

Order

4/22/2019: Order

163 More Documents Available

 

Docket Entries

  • 04/21/2020
  • Hearingat 08:30 AM in Department J at 400 Civic Center Plaza, Pomona, CA 91766; Jury Trial

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  • 04/13/2020
  • Hearingat 08:30 AM in Department J at 400 Civic Center Plaza, Pomona, CA 91766; Final Status Conference

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  • 10/30/2019
  • Hearingat 08:30 AM in Department J at 400 Civic Center Plaza, Pomona, CA 91766; Hearing on Motion for Protective Order

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  • 08/13/2019
  • Docketat 08:30 AM in Department J, Gloria White-Brown, Presiding; Jury Trial ((10-15 day estimate)) - Not Held - Advanced and Continued - by Court

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  • 08/05/2019
  • Docketat 08:30 AM in Department J, Gloria White-Brown, Presiding; Final Status Conference - Not Held - Advanced and Continued - by Court

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  • 08/02/2019
  • Docketat 08:30 AM in Department J, Gloria White-Brown, Presiding; Hearing on Motion for Leave (Motion for Leave To File Amended Cross-Complaint) - Not Held - Taken Off Calendar by Party

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  • 07/03/2019
  • DocketNotice of Ruling; Filed by Kaiser Foundation Health Plan, Inc. (Defendant); Kaiser Foundation Hospitals (Defendant)

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  • 07/01/2019
  • Docketat 08:30 AM in Department J, Gloria White-Brown, Presiding; Hearing on Motion to Compel Discovery (not "Further Discovery") - Not Held - Taken Off Calendar by Party

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  • 06/27/2019
  • Docketat 08:30 AM in Department J, Gloria White-Brown, Presiding; Hearing on Motion to Continue Trial - Held - Motion Granted

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  • 06/27/2019
  • DocketOrder (Tentative Ruling); Filed by Clerk

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230 More Docket Entries
  • 12/01/2017
  • DocketRtn of Service of Summons & Compl; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 12/01/2017
  • DocketRtn of Service of Summons & Compl; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 12/01/2017
  • DocketRtn of Service of Summons & Compl; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 12/01/2017
  • DocketRtn of Service of Summons & Compl; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 12/01/2017
  • DocketProof of Service (not Summons and Complaint); Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 12/01/2017
  • DocketRtn of Service of Summons & Compl; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 11/16/2017
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 11/14/2017
  • DocketComplaint; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 11/14/2017
  • DocketCivil Case Cover Sheet; Filed by Pomona Valley Hospital Medical Center (Plaintiff)

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  • 11/14/2017
  • DocketSummons (on Complaint); Filed by Clerk

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Tentative Rulings

Case Number: KC069796    Hearing Date: December 18, 2019    Dept: J

HEARING DATE: Wednesday, December 18, 2019

NOTICE: OK[1]

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

______________________________________________________________________________

 

Plaintiff/Cross-Defendant Pomona Valley Hospital Medical Center’s DEMURRER TO

SECOND AMENDED CROSS-COMPLAINT

Responding Party: Defendants/Cross-Complainants, Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals

Tentative Ruling

Plaintiff/Cross-Defendant Pomona Valley Hospital Medical Center’s Demurrer to Second

Amended Cross-Complaint is SUSTAINED. The court will hear from counsel for Plaintiff as to whether leave to amend is requested, and as to which cause(s) of action, and will require an offer of proof if so.

Background

This is a dispute about how much Plaintiff Pomona Valley Hospital Medical Center (“PVHMC”) should be paid for emergency medical services Plaintiff provided to members of Kaiser Foundation Health Plan, Inc. (“KFHP”) from October 1, 2017-December 31, 2017.

On April 9, 2018, Kaiser Permanente Insurance Company (“KPIC”), Kaiser Foundation Hospitals (“KFH”), The Permanente Medical Group (“PMG”) and Southern California Permanente Medical Group (“SCPMG”) were ordered dismissed, per PVHMC’s counsel’s request.

On September 28, 2018, the court sustained PVHMC’s demurrer to the FACC, without leave to amend. On March 27, 2019, PVHMC filed a First Amended Complaint (“FAC”), asserting causes of action against KFHP, KFH, and Does 1-100 for:

  1. Breach of Written Contract

  2. Quantum Meruit

On October 1, 2019, KFHP and KFH filed a Second Amended Cross-Complaint (“SACC”), asserting causes of action therein against PVHMC and Roes 1-25 for:

  1. Breach of Written Contract

  2. Restitution/Unjust Enrichment

  3. Restitution/Unjust Enrichment

The Final Status Conference is set for April 13, 2020. A jury trial is set for April 21, 2019.

Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (internal citations omitted).)

A demurrer for uncertainty, moreover, will be sustained only where the complaint is so bad that the defendant cannot reasonably respond. (CCP § 430.10(f); see Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.)

Discussion

PVHMC demurs, per CCP § 430.10(e)&(f), to the first through third causes of action in the SACC.

Meet and Confer

 

The court is now satisfied that an adequate CCP § 430.41 meet and confer has transpired, based upon the statements made in the Declaration of Amanda Hayes-Kibreab filed on December 2, 2019. The court will proceed to the merits of the demurrer.

Request for Judicial Notice

 

KFHP’s and KFH’s Request for Judicial Notice (“RJN”) is ruled on as follows: GRANTED in part as to Exhibit 1 (i.e., “Notice of Ruling on Demurrer to Kaiser Foundation Health Plan, Inc.’s First Amended Cross-Complaint,” with attached tentative ruling dated September 28, 2018, later adopted), to the extent that the court takes judicial notice of the tentative ruling dated September 28, 2018, later adopted; GRANTED in part as to Exhibit 2 (i.e., “Notice of Ruling on Defendants’ Motion to Continue Trial Date,” with attached tentative ruling dated June 27, 2019, later adopted), to the extent that the court takes judicial notice of the tentative ruling dated June 27, 2019, later adopted; GRANTED as to Exhibit 3 (i.e., “Notice of Ruling on Defendants’ Motion for Leave to File Second Amended Cross-Complaint,” with attached tentative ruling dated October 1, 2019, later adopted), to the extent that the court takes judicial notice of the tentative ruling dated October 1, 2019, later adopted; GRANTED as to Exhibit 4 (i.e., “Notice of Ruling on Demurrer,” with attached tentative ruling dated July 17, 2018, later adopted), to the extent that the court takes judicial notice of the tentative ruling dated July 17, 2018, later adopted; GRANTED as to Exhibit 5 (i.e., Department of Managed Healthcare’s responses to public comments during the rulemaking for section 1300.71 of Title 28, California Code of Regulations, obtained from Legislative Intent Services); and DENIED as to Exhibit 6 (i.e., a certified copy of the Department of Managed Health Care’s Memorandum of Points and Authorities in Opposition to Verified Petition for Writ of Administrative Mandamus and Declaratory Relief, Blue Cross of California v. Rouillard et al., Sacramento County Superior Court Case No. 34-2014-80001733 (Sept. 29, 2014)).

PVHMC’s RJN is ruled on as follows: GRANTED as to Exhibit A (i.e., three pages from demurrer to PVHMC’s complaint filed January 16, 2018), to the extent that the court takes judicial notice of its existence and filing date.

 

Procedural Contentions

 

KFHP and KFH contend that PVHMC filed the instant demurrer five days after the last day to respond to the SACC. Not so. The SACC was deemed filed on October 1, 2019; KFHP and KFH were ordered to give notice. PVHMC’s obligation to serve and file a responsive pleading is counted from KFHP’s and KFH’s service of notice of that ruling on PVHMC. On October 4, 2019, KFHP and KFH filed and mail-served a notice of ruling. CCP §1013(a) provides, in relevant part, that “any period of notice and any right or duty to do any act or make any response within any period or on a date certain after service of the document, which time period of date is prescribed by statute or rule of court, shall be extended five calendar days, upon service by mail, if the place of address and the place of mailing is within the State of California. . .” PVHMC’s deadline to respond to the SACC, then, was 30 days from the date of service of notice (i.e., October 4, 2019), plus five days because the notice was mail-served (i.e., October 9, 2019). The November 4, 2019 filing of the demurrer was timely.

KFHP and KFH also take issue with the form of the demurrer, arguing that “PVHMC has not filed the demurrer itself.” (Opposition, p. 2, fn. 1.) This argument is not well-taken. The first page of PVHMC’s notice of demurrer and demurrer includes the separate paragraphs stating each ground of the demurrer to each separate cause of action. If KFHP and KFH is complaining that the notice of demurrer and demurrer do not have independent caption pages, there is no such requirement; even if there was, KFHP and KFH can hardly claim any prejudice sustained by such an omission.

 

 

 

 

Merits

First Cause of Action (i.e., Breach of Written Contract)

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

KFH has alleged as follows: on or about August 1, 2004, KFH and PVHMC entered into a written contract (attached thereto as Exhibit 1) for hospital services “whereby PVCMV agreed it would be reimbursed for emergency hospital services and authorized post-stabilization services provided to KFHP members in accordance with the terms of this agreement and the members’ individual health plan membership agreement with KFHP (hereinafter, ‘Agreement’).” (SACC, ¶9.) On October 1, 2017, the Agreement was terminated. (Id., ¶10.) PVHMC was required to comply with the terms of the Agreement, “including the requirement to submit claims with a UB 92 Form invoice, which has been completed in accordance with the standards of the National Uniform Billing Committee and consistent with Medicare Billing Guidelines, the authorization number if applicable, and sufficient records that are reasonably relevant and necessary to determine KFH’s liability.” (Id., ¶15.) PVHMC failed to comply with these claims submission requirements and “[u]pon information and belief,. . . breached these terms by submitting duplicative, incomplete, misleading and/or miscoded claims.” (Id., ¶16.) PVHMC accepted overpayments from KFH and has failed to return or refund them, such that KFH is entitled to damages for these overpayments. (Id., ¶¶17 and 19.)

PVHMC argues that KFH’s breach allegations are vague and conclusory because KFH has not “identi[fied] any single specific claim, when it was submitted, or of what the alleged ‘duplicative, incomplete, misleading/and/or miscoded’ material in the claim consisted.” (Demurrer 6:24-26.) KFH, in turn, contends that PVHMC is improperly attempting to impose a heightened pleading standard not applicable to a breach of contact cause of action.

In City of Hope Nat. Medical Center v. Superior Court (1992) 8 Cal.App.4th 633, 637, a hospital provided medical care to a patient and, having obtained an assignment from the patient authorizing direct payment to the hospital, billed and paid the patient’s insurer. The insurer subsequently determined that the patient’s treatment was experimental and thus not covered by his policy. When the hospital refused the insurer’s request for a refund, the insurer sued the hospital for declaratory relief, breach of contract, unjust enrichment and conversion. The hospital moved for summary judgment, contending an insurer is not entitled to reimbursement of payments made to a hospital unless the payments were induced by the hospital’s fraudulent conduct. The Second District, Division One Court of Appeal issued a writ of mandate directing the trial court to vacate its denial of the hospital’s motion for summary judgment and to enter summary judgment for the hospital, determining that restitution does not apply “if the mistaken payment is made to a bona fide creditor of a third person—a creditor without fault because it made no misrepresentations to the payor and because it had no notice of the payor’s mistake at the time the payment was made. Stated plainly, if it’s your mistake, you get to pay for it—unless the recipient misled; [sic] you or accepted the payment knowing you didn’t owe it.” (Id. at 637.)

In American Psychometric Consultants, Inc. v. Workers’ Comp. Appeals Bd. (1995) 36 Cal.App.4th 1626, the Second District Court of Appeal annulled orders of the Workers’ Compensation Appeals Board upholding orders by workers’ compensation judges granting requests by employers or carriers for restitution of medical-legal fees they paid more then then 2 years earlier to medical lien claimants; in determining that the employers/carriers could not recover the overpayments, the court explained as follows:

“Equity often leaves parties similarly innocent, similarly confused or similarly knowledgeable about the law in the positions in which they find themselves. Confusion or mistakes about the law offers no comfort to either side in these disputes before the court. ‘[I]t is generally well settled that where a person with full knowledge of the facts voluntarily pays money under a mistake or law on a demand not legally enforceable against him, he cannot recover it in the absence of unjust enrichment, fraud, duress, or improper conduct of the payee.

More modern doctrine is that mistakes of law and mistakes of fact (where restitution is often ordered) should be treated alike, and it emphasizes the importance of other factors in determining whether restitution should be granted. Such factors as detrimental change in position, hardship, the implementation of some important public policy or transactional stability are considered.

The passage of time involved in the present cases—between payment and attempted recoupment—suggest the likelihood that substantial changes in financial position took place. ‘[I]n cases where the plaintiff and the defendant are equally to blame for the mistake under which the money was paid, or equally innocent in respect thereto, an alteration of position on the part of the payee is held to prevent liability in an action for recovery.” (Id. at 1646-1647 [citations omitted].)

KFH argues that City of Hope is a coverage case, whereas this case is about an alleged overpayment; however, KFH provides no reason why this distinction is of significance.

Based on the above authority, then, KFH’s conclusory allegations of “duplicative, incomplete, misleading and/or miscoded claim” are insufficient to describe the conduct by PVHMC that allegedly breached the Agreement. Moreover, even if these allegations were sufficiently specific and factual to meet normal pleading requirements applicable to non-fraud claims, KFH cannot distinguish this case form City of Hope or American Psychometrics. In City of Hope, the insurer’s claim was premised on its subsequent determination that the services rendered were experimental and thus not covered by the insured’s policy. The hospital, as provider of the services at issue, was arguably in as good a position as the insurer to know that the services were experimental; as such, it could be argued that the hospital had constructive notice that the patient lacked coverage for said services. In American Psychometrics, at least one of the claims was based on the allegation that the provider had not even rendered the services for which it billed, such that the provider was at least complicit in, if not entirely responsible for, the insurer’s mistaken payment. Restitution was nevertheless afforded.

PVHMC’s demurrer to the first cause of action is SUSTAINED.

Second Cause of Action (i.e., Restitution/Unjust Enrichment)

KFH has alleged that, during the contracted period, PVHMC submitted claims to KFH that “it knew or should have known were duplicative, incomplete, misleading and/or miscoded,” that KFH was unaware that PVHMC submitted supplicative, incomplete, misleading and/or miscoded claims and thus processed and paid them pursuant to the Agreement, that PVHMC received these overpayments and was on notice that it received double payments and/or overpayments, that it would be unjust to permit PVHMC to continue to retain these overpayments, and that KFH is entitled to restitution. (SACC, ¶¶21-24.)

However, “[a]s a matter of law, an unjust enrichment claim does not lie where the parties have an enforceable express contract.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.) Again, the Agreement is attached to the SACC as Exhibit A, and identifies the billing and payment obligations that are the subject of this cause of action. Accordingly, PVHMC’s demurrer to the second cause of action is SUSTAINED.

Third Cause of Action (i.e., Restitution/Unjust Enrichment)

KFHP has alleged that, during the non-contracted period (identified in ¶1 as “since October 1, 2017”), PVHMC submitted claims to KFHP “that it knew or should have known were duplicative, incomplete misleading and/or miscoded,” that KFHP did not know that PVHMC submitted duplicative, incomplete and/or miscoded claims and thus processed and paid the reasonable value of the non-contracted emergency medical services provided to its members, that PVHMC received these overpayments and was on notice that it received double payments and/or overpayments, that KFHP complied with its state-mandated obligations to pay PVHMC promptly for certain emergency services PVHMC provided to KFHP members from October 2017-present, and that it would be unjust to allow PVHMC to continue to retain these overpayments. (Id., ¶¶26-29.)

“The fact that a recipient has obtained a benefit without paying for it does not of itself establish that the recipient has been unjustly enriched.” (Restatement (Third) of Restitution and Unjust Enrichment § 2 (2011); Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 134 [“mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefor” (Citation omitted).]). “Even when a person has received a benefit from another, he is required to make restitution only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.” (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51 [quotations and citation omitted].) “[I]f a person receives a benefit because of another’s mistake, policy may dictate that the person making the mistake assume the risk of the error.” (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1663.) Where a benefit is conferred due to unilateral mistake and the receiving party has no knowledge of the mistake, restitution is commonly denied: “[i]n other words, innocent recipients may be treated differently than those persons who acquire a benefit with knowledge. (Id. at 1663-1664.) Again, no such allegations have been pled here.

PVHMC’s demurrer to the third cause of action is SUSTAINED.

Administrative Non-Compliance

Finally, it appears to court that PVHMC’s demurrer to the SACC must be SUSTAINED for the additional reason that KFPH and KFH fail to allege that it complied with the mandatory administrative process for seeking recoupment of overpayments.

“The Knox-Keene Act is a comprehensive system of licensing and regulation under the jurisdiction of the Department of Managed Care.” (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 215). Health & Safety Code § 1371.1(a)(1) provides, in relevant part, that:

“Whenever a health care service plan, including a specialized healthcare service plan, determines that in reimbursing a claim for provider services an institutional or professional provider has been overpaid, and then notifies the provider in writing through a separate notice identifying the overpayment and the amount of the overpayment, the provider shall reimburse the health care service plan within 30 working days of receipt by the providers of the notice of overpayment unless the overpayment of portion thereof is contested by the provider in which case the health care service plan shall be notified, in writing, within 30 working days. . .”

If words used in a statute are “clear and unambiguous there is no need for construction, nor it is necessary to resort to indicia of the intent of the Legislature. . .” (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735.) “The word ‘whenever’ indicates that the mode prescribed is exclusive.” (City of Oakland v. Burns (1956) 46 Cal.2d 401, 406.)

Additionally, KFH ignores that Paragraph 3.C. of the Agreement requires KFH to follow Health & Safety Code § 1371.1 when seeking to recoup alleged overpayments; as such, even if this process were optional for the non-contracted period, it is mandatory for the contracted period.

Again, the demurrer is SUSTAINED in its entirety.


[1] The court previously determined in its December 2, 2019 tentative ruling, adopted as the court’s order, that any notice deficiency was waived. On December 2, 2019, the court continued the hearing on the demurrer to December 18, 2019 on the basis of insufficient CCP § 430.41 meet and confer; notice was waived.

Case Number: KC069796    Hearing Date: December 02, 2019    Dept: J

HEARING DATE: Monday, December 2, 2019

NOTICE: Not OK[1]

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

______________________________________________________________________________

 

Plaintiff/Cross-Defendant Pomona Valley Hospital Medical Center’s DEMURRER TO

SECOND AMENDED CROSS-COMPLAINT

Responding Party: Defendants/Cross-Complainants, Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals

Tentative Ruling

The hearing on Plaintiff/Cross-Defendant Pomona Valley Hospital Medical Center’s Demurrer to Second Amended Cross-Complaint is CONTINUED TO _________________.

Background

This is a dispute about how much Plaintiff Pomona Valley Hospital Medical Center (“Plaintiff”) should be paid for emergency medical services Plaintiff provided to members of Kaiser Foundation Health Plan, Inc. (“KFHP”) from October 1, 2017-December 31, 2017.

On April 9, 2018, Kaiser Permanente Insurance Company (“KPIC”), Kaiser Foundation Hospitals (“KFH”), The Permanente Medical Group (“PMG”) and Southern California Permanente Medical Group (“SCPMG”) were ordered dismissed, per Plaintiff’s counsel’s request.

On September 28, 2018, the court sustained Plaintiff’s demurrer to the FACC, without leave to amend. On March 27, 2019, Plaintiff filed a First Amended Complaint (“FAC”), asserting causes of action against KFHP, KFH, and Does 1-100 for:

  1. Breach of Written Contract

  2. Quantum Meruit

On October 1, 2019, KFHP and KFH filed a Second Amended Cross-Complaint (“SACC”), asserting causes of action therein against Plaintiff and Roes 1-25 for:

  1. Breach of Written Contract

  2. Restitution/Unjust Enrichment

  3. Restitution/Unjust Enrichment

The Final Status Conference is set for April 13, 2020. A jury trial is set for April 21, 2019.

Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (internal citations omitted).)

A demurrer for uncertainty, moreover, will be sustained only where the complaint is so bad that the defendant cannot reasonably respond. (CCP § 430.10(f); see Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.)

Discussion

Plaintiff demurs, per CCP § 430.10(e)&(f), to the first through third causes of action in the SACC.

Plaintiff’s demurrer is CONTINUED to ___________________. CCP §§ 128 and 430.41[2]. CCP § 430.41 was added October 1, 2015, and effective for any and all demurrers filed after January 1, 2016, requires a demurring party in certain civil actions, before filing the demurrer, to engage in a specified meet and confer process with the party who filed the pleading demurred to for the purpose of determining whether an agreement can be reached as to the filing of an amended pleading that would resolve the objections to be raised in the demurrer.

Plaintiff’s counsel David J. Tassa (“Tassa”) submitted a declaration, advising that on October 30, 2019, he met and conferred telephonically with Ben Watson (“Watson”), counsel for KFHP and KFH, “regarding the issues in KFHP’s and KFH’s SACC raised in Plaintiff’s demurrer.” (Novemeber 4, 2019 Tassa Decl., ¶2.) Tassa further advises that, “[u]pon meeting and conferring, Kaiser’s counsel informed me that Kaiser did not intend to amend its Cross-Complaint to address the issues raised during the telephonic meet and confer.” (Id.)

Watson, however, advises that “[o]n October 30, 2019, Ms. Hayes-Kibreab and her colleague, David Tassa[,] conveyed PVHMC’s intent to demur on two of the four grounds raised in PVHMC’s demurrer, which are arguments IV-C and IV-D in PVHMC’s demurrer. PVHMC did not raise any other grounds for demurrer on or after this call.” (Watson Decl., ¶3 [emphasis added].)

Tassa, in reply, advises that “[o]n October 30, 2019, during our telephonic meet and confer call with Kaiser’s counsel, I conveyed our intent to demur to the entire SACC because it fails to state a cause of action and because, even if it could state a cause of action, it was uncertain. More specifically, I informed Mr. Watson and his colleague of PVHMC’s position that a health plan could not seek reimbursement for mistaken overpayments, and that additional allegations were insufficient to get around this rule. I further conveyed PVHMC’s position that the entire SACC was subject to dismissal under the Knox-Keene Act and DMHC regulations setting forth a mandatory process for health plans seeking to recoup overpayments. Mr. Watson and his colleague did not express any surprise at the grounds for demurrer I expressed during this call, and indicated that Kaiser disagreed with the positions I expressed for the reasons set forth in the briefing on Kaiser’s Motion for Leave to File the SACC. . .” (November 21, 2019 Tassa Decl., ¶2 [emphasis in original].)

Counsel obviously disagree as to the nature and scope of the meet and confer efforts which transpired with respect to this instant demurrer. Accordingly, the court determines that it would be appropriate under the circumstances to CONTINUE the hearing to ____________________ to enable counsel to further meet and confer.

Plaintiff’s counsel is instructed to file a declaration in compliance with CCP § 430.41(a)(3) at least 10 court days prior to the continued hearing date.

Moving party is to give notice.

 

 

 

 


[1] The demurrer was filed and served via overnight mail on November 4, 2019, for a December 2, 2019 hearing. The demurrer should have been served via overnight mail on November 3, 2019 (i.e., where the notice is served by facsimile transmission, express mail or other method providing overnight delivery, the 16-court-days’ notice period under CCP § 1005(b) is extended by two calendar days. The time for service and filing is computed by counting backwards 16 court days from the hearing sate, excluding the day of the hearing, plus counting backward an additional 2 calendar days because of service by fax, express mail or overnight delivery (CCP §12c.) November 11, 26, and 27, 2019 were court holidays and are excluded from the notice calculation. With that said, “[i]t is well settled that the appearance of a party at the hearing of a motion and his or her opposition to the motion on its merits is a waiver of any defects or irregularities in the notice of the motion.” (Tate v. Superior Court (1975) 45 Cal.App.3d 925, 930.) The court determines that any notice deficiency has been waived. The court does not rule on any of the other procedural arguments raised in KFHP’s and KFC’s opposition at this juncture.

[2] This provision reads, in relevant part, as follows: “(a) Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. If an amended complaint, cross-complaint, or answer is filed, the responding party shall meet and confer again with the party who filed the amended pleading before filing a demurrer to the amended pleading.

(1) As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.

(2) The parties shall meet and confer at least five days before the date the responsive pleading is due. If the parties are not able to meet and confer at least five days prior to the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer. The 30-day extension shall commence form the date the responsive pleading was previously due, and the demurring party shall not be subject to default during the period of the extension. Any further extensions shall be obtained by court order upon a showing of good cause.

(3) The demurring party shall file and serve with the demurrer a declaration stating either of the following:

(A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer.

(B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith…”

Case Number: KC069796    Hearing Date: October 30, 2019    Dept: J

HEARING DATE: Wednesday, October 30, 2019

NOTICE: OK

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

______________________________________________________________________________

 

Non-Party Palomar Health’s MOTION FOR PROTECTIVE ORDER

Responding Party: None (unopposed, as of 10/24/19, 1:23 p.m.; due 10/17/19)

Tentative Ruling

Non-Party Palomar Health’s unopposed Motion for Protective Order is GRANTED.

Background

This is a dispute about how much Plaintiff Pomona Valley Hospital Medical Center (“Plaintiff”) should be paid for emergency medical services Plaintiff provided to members of Kaiser Foundation Health Plan, Inc. (“KFHP”) from October 1, 2017-December 31, 2017.

On April 9, 2018, Kaiser Permanente Insurance Company (“KPIC”), Kaiser Foundation Hospitals (“KFH”), The Permanente Medical Group (“PMG”) and Southern California Permanente Medical Group (“SCPMG”) were ordered dismissed, per Plaintiff’s counsel’s request.

On September 28, 2018, the court sustained Plaintiff’s demurrer to the FACC, without leave to amend. On March 27, 2019, Plaintiff filed a First Amended Complaint (“FAC”), asserting causes of action against KFHP, KFH, and Does 1-100 for:

  1. Breach of Written Contract

  2. Quantum Meruit

On October 1, 2019, KFHP and KFH filed a Second Amended Cross-Complaint (“SACC”), asserting causes of action therein against Plaintiff and Roes 1-25 for:

  1. Breach of Written Contract

  2. Restitution/Unjust Enrichment

  3. Restitution/Unjust Enrichment

The Final Status Conference is set for April 13, 2020. A jury trial is set for April 21, 2019.

Legal Standard

“The court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence. The court may make this determination pursuant to a motion for protective order by a party or other affected person. This motion shall be accompanied by a meet and confer declaration under Section 2016.040.” (CCP §2017.020(a); see also CCP § 2019.030.) “A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (CCP § 2016.040.)

“When an inspection, copying, testing, or sampling of documents, tangible things, places, or electronically stored information has been demanded, the party to whom the demand has been directed, and any other party or affected person, may promptly move for a protective order. This motion shall be accompanied by a meet and confer declaration under Section 2016.040.” (CCP § 2031.060(a).) “The court, for good cause shown, may make any order that justice requires to protect any party or other person from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP § 2031.060(b).) The protective order may provide that all or some of the items or categories of items in the demand need not be produced or made available at all or be made only on specified terms and conditions. (Ibid.)

Discussion

Non-Party Palomar Health (“Palomar”) moves the court, per CCP §§ 2017.020(a) and 2031.060(b), for a protective order prohibiting Plaintiff from enforcing its document production requests to KFHP with respect to Palomar’s trade secret information. In the alternative, Palomar requests that the court amend the current protective order to ass a “Highly Confidential: Outside-Counsel Only” designation, thereby preventing Plaintiff’s business persons from viewing Palomar’s trade secret information.

Palomar first became aware of this suit when, by letter dated May 6, 2019, counsel for KFHP and KFH notified Palomar that KFHP and KFH were in a dispute with Plaintiff and that KFHP had received from Plaintiff discovery requests in the litigation. (Kern Decl., ¶2, Exh. A.) Counsel for KFHP and KFH advised that KFHP, in responding to said requests, intended to produce by May 17, 2019 “any existing written contract[s], including all amendments, between Kaiser and Palomar Pomerado Health. . .,” under the terms of an enclosed protective order. (Id.) Counsel for KFHP and KFH further advised that:

“[a] contract or amendment that contains a description of reimbursement rates

or sums, or similar pricing information, will be designated and marked ‘HIGHLY CONFIDENTIAL’ pursuant to the terms of the protective order. All other contracts or amendments will be marked ‘CONFIDENTIAL’ under the protective

order. Please note that documents marked ‘HIGHLY CONFIDENTIAL’ may be

viewed by [Plaintiff’s] Chief Financial Officer and by its Executive Vice

President under page twelve of the protective order. The protective order

contains no confidentiality designation more restrictive than ‘HIGHLY CONFIDENTIAL.’ Therefore, there is no ‘Attorney’s Eyes Only’

designation.” (Id.)

Palomar thereafter notified KFHP and KFH that its contracts included trade secret information and unsuccessfully met and conferred with Plaintiff, by asking Plaintiff to either withdraw its request for Palomar’s records or, at least, agree to a Highly Confidential: Outside-Counsel Only designation such that Palomar’s contracts would not be shown to Plaintiff’s business people. (Id., ¶¶4-5.) After further meet and confer efforts, Plaintiff agreed to stay its request for production of documents, and thus KFHP’s potential obligation to produce these contracts, until the court had an opportunity to review the instant motion. (Id., ¶6.) On June 20, 2019, Palomar’s counsel John Kern (“Kern”) emailed a copy of Palomar’s draft motion and proposed order to counsel for KFHP and KFH and counsel for Plaintiff, requesting they stipulate to Palomar’s proposal or indicate their desire to meet and confer further. (Id., ¶7, Exh. B.) Counsel for KFHP and KFH did not oppose amending the protective order and took no position on Palomar’s broader request to block discovery of Palomar’s materials altogether, while Plaintiff’s counsel was unable to review the papers or engage in additional discussions on the tabletable offered by Kern. (Id., ¶8)

The court determines, based on the above, that an adequate meet and confer has transpired. It is Palomar’s position that the court should block discovery of Palomar’s contracts altogether, on the basis that said contracts include trade secret information (i.e., rates, rate structures, and financial terms).

Evidence Code § 1060 provides that “[i]f he or his agent or employee claims the privilege, the owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another form disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.” The Uniform Trade Secrets Act (“UTSA”) defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civil Code § 3426.1.)

“[T]he party claiming the privilege has the burden of establishing its existence. Thereafter, the party seeking discovery must make a prima facie, particularized showing that the information sought is relevant and necessary to the proof of, or defense against, a material element of one or more causes of action presented in the case, and that it is reasonable to conclude that the information sought is essential to a fair resolution of the lawsuit. It is then up to the holder of the privilege to demonstrate any claimed disadvantages of a protective order. Either party may propose or oppose less intrusive alternatives to disclosure of the trade secret, but the burden of upon the trade secret claimant to demonstrate that an alternative to disclosure will not be unduly burdensome to the opposing side and that it will maintain the same fair balance in the litigation that would have been achieved by disclosure.” (Bridgestone/Firestone, Inc. v. Superior Court (1992) 7 Cal.App.4th 1384, 1393.)

The court determines that Palomar has met its burden of establishing the existence of the trade secret privilege. The sensitivity of rate information is recognized in 28 C.C.R § 1300.51(d)(K)(1) (regulating copies of contracts with providers that are exhibits to plan applications: “If a contract shows the payment to be rendered a provider, delete such minimum portion of the contract as is necessary to prevent disclosure of such information, by blanking out or other suitable means”) and § 1300.51(d)(K)(3) (requiring materials to be marked “confidential.”)

Further, Palomar’s Chief Financial Officer (“CFO”), Carlos Bohorquez (“Bohorquz”), explains that Palomar’s contract with Kaiser contains rates, rate structures and financial terms which constitute trade secrets. (Bohorquez Decl., ¶8.) Palomar, a non-profit local health care district, is the successor entity of the Escondido Community Hospital, North San Diego County’s first hospital. (Id., ¶3.) In 1948, the citizens of San Diego formed the Northern San Diego County Hospital District, which was renamed Palomar Pomerado Health in 1984 and subsequently named Palomar Health. (Id.) Palomar’s voted-defined healthcare district serves communities in an 850 square mile area and its trauma center covers 2,200 square miles of South Riverside and North San Diego Counties. (Id.)

Palomar, which is both publicly and privately funded, obtains revenues from local property taxes as well as from bond measures, which provide a baseline of support, but are not by themselves sufficient to fund a hospital or health care district. (Id., ¶5.) Palomar, then, also seeks reimbursements from insurers, Medi-Cal and Medicare, and its partners. (Id.) For Palomar to fulfill its public mission, including by repaying its public bond obligations, it is essential that it control costs and look for new and better opportunities to generate revenue. (Id.) Palomar’s strict revenue generation capacities make its rates both important and vulnerable. (Id.)

For example, in 2004, after over 200 town hall meetings, Proposition BB passed. (Id., ¶6.) Proposition BB is a bond measure that funded repairs of aging hospital facilities and also helped construct the newest Palomar hospital, the Palomar Medical Center Poway, which is a 288-bed acute care facility. (Id.) Payment for this bond was funded by an ad valorem property tax levied on the district’s residents. (Id.) Palomar uses its revenues to pay back the funding from this bond measure and is able to do so, in part, because of its rate structures. (Id.) Palomar derives independent economic value from the fact that its rates are not generally known. (Id., ¶14.) Hospital rates are closely guarded secrets since knowledge of a particular deal with one insurer would necessarily drive down the rates of the other insurers, forcing a downward spiral. (Id.). Palomar, like other health care districts throughout the state, operates on a thin margin and can do so because it obtains preferable rates, to the extent possible, form private insurers. (Id.) This is in part because keeping rates secret forces insurers to compete, rather than permitting them to join their market power against Palomar. (Id.) If those rates and related terms became known, Palomar would lose its competitive ability to participate in the health care market. (Id., ¶6.)

Bohorquez further explains that Palomar actively conceals its trade secrets from any individual or entity without a specific need to know by keeping records with trade secret information, both electronic and hardcopy, under strict control and limits access to these files. (Id., ¶9.) Palomar’s agreement with Kaiser contains a strict confidentiality provision. (Id., ¶13.) There are no more than 15 people at Palomar with access to Palomar’s trade secrets, including the Kaiser contract. (Id., ¶9.) Palomar actively takes steps to prevent the disclosure of this information, including by limiting employee access to trade secrets, redacting trade secrets from public records, using confidentiality provisions, and using encryption and robust IT systems. (Id.) Persons who are permitted to see Palomar’s trade secrets, must agree to keep them confidential. (Id.) Even in such circumstances when contracts must be disclosed, Palomar narrowly tailors the information it provides to meet that specific need by redacting or providing partial versions of the records which contain trade secrets. (Id., ¶12.) If this information is produced to Plaintiff (or any other party), that information cannot be unseen. (Id., ¶15.) The public dissemination of detailed contract information would not only breach the protections within the contract, but ultimately the public which benefits from lower rates. (Id., ¶18.)

The burden, then, is shifted to Plaintiff to “make a prima facie, particularized showing that the information sought is relevant and necessary to the proof of, or defense against, a material element of one or more causes of action presented in the case, and that it is reasonable to conclude that the information sought is essential to a fair resolution of the lawsuit.” Bridgestone/Firestone, supra, 7 Cal.App.4th at 1393.) Plaintiff, however, has failed to oppose the motion; accordingly, the court determines that Plaintiff has not met its burden.

Palomar’s unopposed motion is GRANTED.