Orthopedic Specialists of Southern California v. Public Employees' Retirement System
228 Cal. App. 4th 644
| Cal. Ct. App. | 2014Background
- OSSC, an out-of-network provider, treated a CalPERS member under a PERS Choice plan.
- CalPERS paid only a small portion of OSSC’s charges.
- OSSC sought the remaining balance of $297.46 and potential class damages.
- The PERS Choice EOC sets payment at 60% of the Allowable Amount, with the member bearing 40% plus any excess.
- The EOC defines the Allowable Amount by specified formulas and permits pre-treatment determination with Anthem.
- Trial court sustained CalPERS’ demurrer without leave to amend; OSSC appeals seeking contract-based or implied promises to pay usual rates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EOC obligates payment of usual and customary rates | OSSC seeks usual and customary rate rather than 60% of Allowable Amount | EOC governs, paying 60% of Allowable Amount and member’s responsibility | Demurrer proper; EOC governs |
| Whether there was an enforceable oral promise against a government entity | CalPERS authorized treatment and allegedly promised payment | Oral promise cannot be enforced against a government agency | Oral promise unenforceable against CalPERS |
| Whether the action is amenable to class treatment | Class of ~5,000 out-of-network providers exists for underpayments | Action not amenable to class treatment | Class treatment not available; dismissal affirmed |
| Whether OSSC can pursue implied-in-contract theories against a public entity | Implied contract theories available to seek payment | Public entities cannot be sued on quasi-contract theories | Implied-contract theories not enforceable against CalPERS |
Key Cases Cited
- Mintz v. Blue Cross of California, 172 Cal.App.4th 1594 (Cal. App. 2009) (re demurrer standard; contract interpretation for health plans)
- Prospect Medical Group, Inc. v. Northridge Emergency Medical, 45 Cal.4th 497 (Cal. 2009) (out-of-network emergency payments; direct claims against plans)
- Bell v. Blue Cross of California, 131 Cal.App.4th 211 (Cal. App. 2005) (ER physicians’ rights to certain payments under plans)
- Janis v. California State Lottery Com., 68 Cal.App.4th 824 (Cal. App. 1998) (oral promises against public entities; non-enforceability)
- Katsura v. City of San Buenaventura, 155 Cal.App.4th 104 (Cal. App. 2007) (implied contracts with public entities; limits)
- Children's Hospital Central California v. Blue Cross of California, 226 Cal.App.4th 1260 (Cal. App. 2014) (application of 28 Cal. Code Regs. §1300.71(a)(3)(B) vs (C))
- Consumer Watchdog v. Department of Managed Health Care, 225 Cal.App.4th 862 (Cal. App. 2014) (Knox-Keene Act applicability)