ATON CENTER, INC., Plaintiff and Appellant, v. UNITED HEALTHCARE INSURANCE COMPANY et al., Defendants and Respondents.
D080122
COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Filed 7/27/23
CERTIFIED FOR PUBLICATION
(Super. Ct. No. 37-2019-00054459-CU-BC-NC)
Law Office of John W. Tower and John W. Tower for Plaintiff and Appellant.
Dorsey & Whitney, Kent J. Schmidt, Michelle S. Grant and Alan J. Iverson (pro hac vice) for Defendants and Respondents.
INTRODUCTION
This lawsuit arises from a payment dispute between a healthcare provider and an insurance company. The provider contends it was underpaid for
FACTUAL AND PROCEDURAL BACKGROUND
I.
Factual Background1
United Healthcare Insurance Company, United Behavioral Health operating under the brand Optum (“UBH“), and United Healthcare Services, Inc. (collectively, “United“) are insurers and third-party claims administrators for group health plans sponsored by employers that provide health benefits to their covered employees and dependents. United provides covered individuals with access to a network of providers who have contracted to accept established fees in exchange for being included in United‘s provider network. United does not have rate agreements with providers that are not part of its network. Before admitting or providing treatment to an individual covered by a policy issued or administered by United, out-of-network providers often contact United by phone to confirm the individual has out-of-network benefits. After verifying the individual‘s consent, United provides the out-of-network provider with the requested information, including whether the individual has out-of-network insurance benefits, and individual member responsibility amounts, such as co-payments, co-insurance, and deductible. This is known as a verification of benefits (VOB) call.
ATON Center, Inc. (Aton) is an inpatient substance abuse treatment facility. Described by its chief executive officer, James Brady, as a “luxury” treatment center, it has offered residential substance abuse and subacute detoxification services since 2009.
At all relevant times, Aton was not part of United‘s provider network and had no in-network contract with United. Before admitting prospective patients covered by healthcare plans issued or underwritten by United, three
During VOB calls, Aton‘s employees asked only whether the rate of reimbursement was “based on UCR, MCR, MNRP, or AA.” They did not ask how much Aton could expect to be paid. Brady preauthorized Aton‘s intake team to admit prospective patients whose policies provided out-of-network coverage using the UCR reimbursement rate. For patients whose policies provided out-of-network coverage at a reimbursement rate other than UCR, the admission decision was made by Brady.
This action arises out of United‘s alleged underpayment of claims pertaining to 29 individuals who sought and received treatment from Aton between November 2016 and May 2019. During VOB calls, United‘s representatives advised members of Aton‘s intake team that the reimbursement rate for 20 of the 29 individuals was based on the MNRP or Medicare rates, and that the MNRP reimbursement methodology relied on rates published by Medicare. Brady personally approved the admission of these 20 individuals. For the remaining nine individuals, United‘s representatives informed Aton‘s intake team during VOB calls that the rate of reimbursement was UCR. Aton contends that United should have reimbursed 50 percent of Aton‘s billed charges for those plans with reimbursement rates based upon the MNRP or Medicare rates, and 100 percent of Aton‘s billed charges for those plans whose reimbursement rate was based upon the UCR rate. Instead, United allegedly paid Aton a substantially lesser amount.
II.
Procedural Background
A. Pleadings
In a complaint filed in superior court in October 2019, Aton asserted causes of action for (1) breach of oral contract, (2) intentional misrepresentation, (3)
United demurred, arguing in part that Aton‘s causes of action were preempted by
In opposition, Aton argued its causes of action were not preempted by
The trial court sustained United‘s demurrer as to Aton‘s cause of action for quantum meruit based on deficiencies in its supporting allegations. The court overruled the demurrer on all other grounds, including ERISA preemption, explaining that “[a]t this stage of the case, the Court is unable to conclude that the complaint‘s causes of action are preempted by ERISA Section 514.”
B. United‘s Motion for Summary Judgment or Alternatively, Summary Adjudication
After conducting discovery, United moved for summary judgment or alternatively, summary adjudication of the remaining causes of action in the complaint. It submitted the following evidence in support of its motion.
a. Declaration of Lisa Schmidt
Lisa Schmidt, UBH‘s director of customer service, oversaw call agents taking inbound VOB calls from providers.
Schmidt averred that United representatives conducting VOB calls are not authorized to enter into commitments or contracts to pay or to guarantee coverage. The representatives merely give the provider “preliminary information” about a particular member‘s insurance benefits; they do not determine how claims associated with the member‘s treatment will be paid. At the verification stage, UBH does not know what services will ultimately be provided, what codes will be used to bill for those services, what rates will be charged by the provider, or whether the services will be provided and billed in accordance with billing guidelines, among other conditions in the member‘s benefit plan. For an out-of-network provider, the amount that will be paid on a particular claim is only determined after receiving the claim, reviewing it, and applying the plan‘s terms and limitations to the provider‘s charge. To the extent the terms of the member‘s out-of-network benefit plan result in United paying an out-of-network provider less than the amount billed, the providеr may bill the member for any difference between the amount reimbursed and the billed charge.
b. Aton‘s VOB Forms
United also submitted Aton‘s VOB forms memorializing VOB calls relating to the terms of insurance plans covering the subject 29 patients. These forms showed that in the VOB calls, United representatives had informed Aton the rate of reimbursement provided by plans covering 20 patients was based on MNRP or Medicare rates; for plans covering the remaining nine patients, United representatives had informed Aton‘s intake team the rate of reimbursement was “based on UCR.”
c. Deposition Testimony of Aton‘s Intake Team
Aton employees Reed, Mann, and Liggett were responsible for placing VOB calls to insurers.
Reed, Aton‘s intake director, created the VOB form in addition to conducting VOB calls. The VOB process “is to call and using that [VOB] form to get the information that we need.” During VOB calls, Reed and his team “try to get information about rates of reimbursement,” but their primary concern “is whether or not the coverage is there and the patient is eligible for services.”
Reed further testified that the verification of benefits process happens prior to admission. Upon admission, Aton requires patients to sign an “Insurance Agreement” form stating: ” ‘[I]t is essential to understand that no guarantees are made in advance or at any time that insurance will cover treatment and at what rate.’ ” When patients complete this form, Aton does not know how much the insurer will pay. Aton could not guarantee “how [the patient‘s] insurance company is going to reimburse,” because as Reed explained, “We can‘t give those numbers, because we don‘t have them.” At the time of admission, Aton also requires patients to sign a “Financial Agreement” form that says the patient is ” ‘wholly responsible’ ” for Aton‘s daily rate, including any portion not reimbursed by the insurer. Neither Reed nor Liggett could remember a single promise United made during a VOB call. Mann testified that Aton does not inform United during VOB calls that Aton expects to collect a percentage of its billed charges. She did not know what monetary amounts were associated with the reimbursement rates listed on the VOB form or whether they were the ” ‘same or different’ ” from billed charges.
d. Deposition Testimony of Aton‘s CEO
Brady testified on behalf of Aton regarding the facts supporting each of Aton‘s claims, including breach of contract. He had not listened to nor read transcriptions of VOB calls and was “not sure of what verbiage goes back and forth.” He testified, “I get the meat and potatoes [from] the VOB forms . . . . That‘s all I have to look at. We don‘t record [United‘s] calls.”
Brady described the oral contracts between Aton and United as follows: “Us calling and asking for the benefit. The benefit being quoted. Us under that benefit quoted having an acceptance by taking the patient into the facility. [¶] Us then performing under the conditions noted in the verification; be it . . . the prior authorization and having the proper licensure, accreditation, and then providing the services that meet or exceed the level of care . . . that were being billed to United or Optum . . . . [¶] And then the final piece of the contract is I guess reimbursement or compensation, and that‘s the reason we‘re here is we believe that wasn‘t fully met on [United‘s] side.” “So again, there‘s been an offer, it seems, the VOB. An acceptance; the admission of the patient. Performance; which we‘ve treated the patient. And then compensation is somewhat lacking.”
Brady specifically considered “the verification of benefits quotation” to be an offer. It was his belief that “when Aton affirmatively calls United and asks
Aton did not ask during VOB calls whether reimbursement rates corresponded with billed charges. Brady testified that when Aton had asked that question in the past, “the answer has been, ‘We don‘t know. You‘ll know when the claim processes.’ ” When Aton is quoted the UCR or MNRP reimbursement rates, Aton “believes” it knows what those rates should be.
Brady testified that UCR means the “usual and customary rate.” He understands UCR to correspond to 100 percent of Aton‘s billed charges. He explained: “[W]hat I bill is reasonable because I bill it, I bill it to everybody the same way, and I know what my geographic area is and therefore that is UCR.” He believed United understands UCR the same way based on how Aton was typically paid on UCR policies.
On the topic of the MNRP reimbursement rate, Brady testified his understanding that MNRP means 50 percent of billed charges is derived in part from a United plan document “[p]lus hundreds of payments at 50 [percent] of [the] billed charge.” When asked if he knows whether United understands MNRP to be 50 percent of billed charges “in all cases,” Brady stated, “I‘m not United. I can‘t figure out what United thinks.”
Brady was unaware whether United representatives “intentionally concealed anything[.]” He testified, “I‘m unaware of what their intention was. I do know that we have been misquoted benefits if we‘re paid contrary to what our historical reimbursement was, and [the] number of plans I‘ve looked at[.]”
e. Evidence Relating to the Preauthorization Process
Dr. Kevin Murphy is tasked by Aton with demonstrating to insurers that a patient meets the criteria for “this level of care.” The purpose of the authorization process is to demonstrate medical necessity. Murphy never discusses rates of reimbursement during authorization. During the authorization process, United makes no representations to Murphy regarding payment.
Between December 2016 and May 2019, United sent Aton over 50 letters authorizing “SA Detox Residential Adult” or “SA Residential Adult” services. Each authorization letter contained the following language: ” ‘Payment for services described in this letter is subject to the member‘s eligibility at the time services are provided, including employment or Healthcare Exchange premium payment status, benefit plan limitations, and availability of remaining coverage. An eligibility disclaimer was given at the time of this benefit
2. United‘s Moving Arguments
Based on the foregoing evidence, United argued that Aton could not establish one or more elements of each of the complaint‘s remaining causes of action.
More specifically, United argued summary adjudication of Aton‘s breach of oral and implied contract causes of action was appropriate because Aton could not demonstrate the existence of mutual assent or consideration. United had not agreed during VOB calls to reimburse 100 percent or 50 percent of the amounts Aton billed for treatment. United‘s payment obligation was dependent on the terms of the operative benefit plans and was determined only after claims were submitted.
No evidence of actual, affirmative or knowing misrepresentations existed to support Aton‘s causes of action for intentional misrepresentation and negligent misrepresentation. Aton could not show United representatives conducting VOB calls intentionally concealed any facts, nor could it prove United had a duty to disclose the amount it would pay, defeating its fraudulent concealment cause of action. Nor could Aton establish the unfair, unlawful, or fraudulent business practices needed to support its cause of action for violation of the UCL.
C. Aton‘s Opposition to United‘s Motion
1. Aton‘s Evidence Filed in Support of Its Opposition
In opposition to United‘s motion, Aton submitted additional testimony from Brady, Reed, Mann, Liggett, and Schmidt, as well as testimony of three other individuals (Nikki Weidlund, an Aton employee who filled out one of the VOB forms submitted in support of United‘s motion; and Chi Mao and Denise Strait, both representatives of United), and an expert witness (Luisa Davis).
Aton‘s evidence did not include transcripts, recordings, or other like evidence establishing what United‘s representatives said during the VOB calls at issue. Instead, its evidence generally concerned Aton‘s understanding that UCR and MNRP reimbursement rates equated to 100 percent and 50 percent, respectively, of the amount Aton billed for its services. Brady was the chief source of this understanding.
Aton also submitted a declaration from Brady in which he averred that at the time of the “claims at issue in this lawsuit,” his understanding was that “United‘s MNRP pricing method was based on Medicare rates for the service provided.” Because there was no Medicare rate for residential substance abuse treatment, Brady “understood based on payment history and [his own] understanding of the [United] plans thаt United was to pay 50[ percent] of billed charges.”
Aton‘s excerpts of the Reed, Mann, and Liggett depositions largely overlapped with the excerpts submitted by United and did not change the substance of the testimony relied upon by United.
In Aton‘s excerpts of Schmidt‘s deposition testimony, Schmidt agreed United representatives gave providers accurate information about members’ insurance benefits. The representatives would only provide “the method, the reimbursement program,” which would be either “UCR or MNRP.” To her knowledge, United‘s representatives did not ever inform providers “that one of the methods of payment could be 50 percent of a bill [sic] charge[.]”
Weidlund, the Aton employee who completed one VOB form, testified she understood when she filled out the form that MNRP meant a rate of reimbursement of 50 percent of the billed charge. However, the source of her understanding of the meaning of MNRP was not established.
The specific duties or position of Mao, the apparent United employee, were not established. In the deposition excerpt submitted by Aton, Mao responded
Davis, an expert on medical and substance use disorder claim billing and bill review, opined: “[F]or the VOB‘s in which [Aton] was informed the allowed amount was to be based on the UCR, [Aton] should be paid it‘s [sic] billed amount. In the VOB‘s in which [Aton] was informed that the MNRP CMS/Medicare rate pricing methodology would be used to determine allowed amounts, the allowed amount should have been 50[ percent] of the billed amount.”
Finally, Aton submitted one page of a 12-page explanation of benefits it received from United. The page reflected payment for several days of treatment of one of the 29 patients whose claims were at issue.4
2. Aton‘s Opposition Arguments
In opposition, Aton argued its VOB and authorization processes created binding oral and/or implied contracts with United because Aton alleged that it was told it “would be paid” based on the UCR or MNRP reimbursement methods. Aton argued that United, “[b]y representing that it would pay the UCR . . . [,] provided a recognized method by which the amount it would pay would be objectively determined.” Aton also emphasized that Brady “understood that [Aton] and [U]nited were entering into oral or implied agreements.”
As for its promissory estoppel cause of action, Aton asserted that “[s]pecific representations/promises regarding payment rates” are “an appropriate factual predicate for promissory estoppel,” but it cited no evidence of the purported promises.
Aton argued it possessed evidentiary support for its intentional misrepresentation, negligent misrepresentation, and fraudulent concealment causes of action based on the VOB forms United filed in support of summary judgment, which Aton claimed showed United “misrepresented its payment
D. United‘s Reply
In reply, United argued in part that Aton, having previously disavowed reliance on the terms of the patients’ underlying ERISA plans when it opposed United‘s demurrer, was judicially estopped from relying on plan terms to oppose summary judgment.
United also argued Aton had failed to carry its burden of presenting evidence that United representatives made payment promises or commitments during VOB calls, much less promises or commitments to pay 100 percent or 50 percent of the amount Aton ultimately billed for those claims, and that Aton also failed to introduce evidence showing United fraudulently misrepresented or concealed facts during the calls.
E. Trial Court‘s Ruling
The trial court granted United‘s summary judgment motion in a detailed minute order issued in November 2021.
As an initial matter, the court ruled that Aton was foreclosed from relying on the terms of United‘s plans to support its claims. The court explained that Aton had contended, and the court had accepted in partially overruling United‘s demurrer on ERISA preemption grounds, that Aton was not “(1) attempting to assert an ERISA claim; (2) alleging a breach of an ERISA plan; (3) requesting plan benefits; or (4) alleging claims based upon what the policies and/or plans may set as the payment rate.” As a result, Aton was judicially estopped from taking a contrary position on summary judgment.
The trial court then analyzed the parties’ evidence and arguments pertaining to each of Aton‘s causes of action and concluded United had succeeded in showing, as to each cause of action, that Aton could not establish one or more necessary elements. The court granted United‘s motion in its entirety. Judgment in favor of United and against Aton was entered in December 2021. Aton was served with notice of the judgment‘s entry in January 2022.
In challenging entry of summary judgment, Aton largely focuses on establishing the trial court committed legal errors. To a lesser extent, it attempts to demonstrate its evidentiary showing was sufficient to create a factual dispute precluding entry of summary judgment. As we discuss, Aton fails to establish that summary judgment was erroneously granted.
I.
Standard of Review
“Summary judgment is appropriate only ‘where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law.’ ” (Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618.) A triable issue of material fact exists only if “the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).)
A defendant moving for summary judgment has the initial burden of presenting еvidence that a cause of action lacks merit because the plaintiff cannot establish an element of the cause of action or there is a complete defense. (
Whether the trial court erred by granting United‘s motion for summary judgment is a question of law we review de novo. (See Samara v. Matar (2018) 5 Cal.5th 322, 338.) ” ‘[W]e examine the facts presented to the trial court and determine their effect as a matter of law.’ ” (Regents of University of California v. Superior Court, supra, 4 Cal.5th at p. 618.) “We review the entire record, ‘considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained.’ [Citation.] Evidence presented in
” ‘[A]lthough we use a de novo standard of review here, we do not transform into a trial court.’ ” (Dinslage v. City and County of San Francisco (2016) 5 Cal.App.5th 368, 379 (Dinslage).) We approach a summary judgment appeal, as with any appeal, with the presumption the appealed judgment is correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) Therefore, ” ‘[o]n review of a summаry judgment, the appellant has the burden of showing error, even if he did not bear the burden in the trial court.’ ” ” (Dinslage, at p. 379.)
II.
Oral and Implied Contract Causes of Action
A. Relevant Legal Principles
The elements of a breach of oral contract cause are: “(1) existence of the contract; (2) plaintiff‘s performance or excuse for nonperformance; (3) defendant‘s breach; and (4) damages to plaintiff as a result of the breach.” (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239 [elements of breach of contract]; Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453 [elements of breach of oral contract and breach of written contract claims are the same].) “A cause of action for breach of implied contract has the same elements as does a cause of action for breach of contract, except that the promise is not expressed in words but is implied from the promisor‘s conduct.” (Yari v. Producers Guild of America, Inc. (2008) 161 Cal.App.4th 172, 182;
B. The Trial Court‘s Ruling
The trial court granted summary adjudication of Aton‘s breach of oral contract cause of action on the ground United succeeded in showing Aton could not establish the existence of an oral contract.
“Contract formation requires mutual consent, which cannot exist unless the parties ‘agree upon the same thing in the same sense.’ ” (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208 (Bustamante), quoting
In determining that Aton could not show the mutual consent required to form an oral contract, the trial court compared the asserted basis of Aton‘s oral contract cause of action (that the VOB calls constituted offers, and Aton‘s admission of patients constituted acceptances) with the evidence produced by the parties. The court elaborated in detail on the facts and evidence that in its view tended to show there was “no mutual assent or meeting of the minds between [Aton] and [United] during the VOB process as to the subject claims.” These facts included the following:
United representatives conducting VOB calls only verify benefits and are not authorized to enter into commitments or contracts to pay or guarantee coverage. They did not know at the verification stage what services would ultimately be provided or the rates the provider would charge for those services. During VOB calls, insurers do not agree to pay at a specific reimbursement rate or promise to pay a certain amount, nor does Aton learn how much it will be paid for a particular claim. Liggett could not recall a single promise made by United or an occasion when he believed a contract was formed during a VOB call.
Brady admitted he did not know whether United representatives were authorized to enter into contracts, nor did he know whether Aton informed United of its belief that the VOB calls were contracts. He also did not know whether United‘s representatives possessed information about the correlation
Thе trial court concluded: “At best, [Aton] has established that it believed oral contracts were formed during the VOB process. However, there
is no evidence . . . [Aton] ever communicated that belief to [United], or [that United] held the same view.”Turning to Aton‘s implied contract cause of action, the trial court stated it shared a common factual predicate with Aton‘s oral contract cause of action. The court ruled that for the same reasons Aton failed to demonstrate mutual assent to enter an oral contract, it also failed to demonstrate mutual assent to enter an implied-in-fact contract. To the extent Aton‘s implied contract claim was based on previous payments, historical knowledge, or the parties’ history, Aton failed to establish that United “agreed to pay the subject claims the same as it had paid previous claims.”
C. Analysis of Aton‘s Contentions on Appeal
1. Aton‘s Reliance on Unpublished Federal Cases Upholding Contract Claims Fails to Persuade Us the Trial Court Erred
Aton contends the trial court erred as a matter of law by concluding its evidence fell short of establishing the mutual consent necessary to form oral or implied agreements between itself and United. Its challenge is principally derived from a line of cases in which courts have considered the viability of breach of contract claims predicated on contracts allegedly formed during VOB and/or authorization calls between a provider and insurer.
In several of the cases cited by Aton, contract claims based on such communications were rejected on the ground that ” ‘within the medical insurance industry, an insurer‘s verification
In Pacific Bay Recovery, supra, 12 Cal.App.5th 200, this court reached a similar conclusion and affirmed a trial court‘s ruling sustaining a demurrer to a breach of implied contract cause of action. There, the provider alleged it contacted the insurer to obtain prior authorization, was advised the prospective patient was insured for the treatment to be rendered and that the provider “would be paid” for the treatment, and “was led to believe that it would be paid a portion or percentage of its total billed charges, which charges correlated with usual, reasonable and customary charges.” (Id. at p. 216.) We held these allegations “lack[ed] the specific facts required for us to determine there was any meeting of the minds between the parties,” including because “it does not аppear the parties reached any sort of agreement as to the rate [the insurer] would pay [the provider].” (Ibid.) We further held the provider failed to state a cause of action for estoppel because it “has not alleged a promise clear and unambiguous in its terms.” (Id. at p. 215, fn. 6.)
Aton does not dispute the consensus reached by the above district courts, namely, that ” ‘within the medical insurance industry, an insurer‘s verification is not the same as a promise to pay.’ ” (TML Recovery, LLC v. Humana Inc., supra, 2019 WL 3208807, at p. *4.) It argues the cases rejecting contract claims premised on verification and/or authorization calls are distinguishable because in each of them, “the insurers were only asked and the providers were only informed that the subject patient was ‘insured, covered, and eligible for coverage’ under [the insurers‘] plan for the services [the provider] provided.” It contends the viability of its contract claims should instead be decided in accordance with the following cases where courts have upheld such claims.
In Summit Estate, Inc. v. Cigna Healthcare of California, Inc. (N.D. Cal. Oct. 10, 2017) No. 17-CV-03871-LHK, 2017 WL 4517111, the district court denied the defendant insurers’ motion pursuant to
In Aton Center, Inc. v. Blue Cross and Blue Shield of Illinois (S.D. Cal. Feb. 16, 2021) No. 3:20-cv-00500-WQH-BGS, 2021 WL 615051, the court denied a
And in Aton Center, Inc. v. Carefirst of Maryland, Inc. (D. Md. Dec. 14, 2021) No. DKC 20-3170, 2021 WL 5909101, the district court granted the provider leave to amend its complaint to assert a breach of express contract claim where the proposed pleading alleged the defendant insurers stated during VOB calls they ” ’would pay for inpatient treatment’ ” at specified percentages of the provider‘s billed charges. (Id. at p. *3, italics added.) The court concluded the complaint alleged “sufficiently definite promises” including because it “specif[ied] the precise percent of the billed amount that [the insurer] allegedly promised to pay during the VOB calls[.]” (Ibid.)
Aton contends its oral and implied contract claims are like the contract claims in these three cases because “[t]he evidence before the trial court here went well beyond simply verifying coverage” and showed “United informed [Aton] it would pay for either of its treatments (detox care or residential treatment) under the UCR or MNRP pay rates.” (Italics added.) Aton argues, “where (as here) facts go beyond mere verification of coverage and into promises to pay for treatment . . . at a specific rate,” courts allow contract claims to proceed. United responds that the cases Aton relies upon are distinguishable because they were decided in procedural contexts other than summary judgment.
Instead, our difficulty with Aton‘s challenge to the trial court‘s ruling is that it is built on two unfounded factual assertions: that its evidence showed United‘s representatives conducting VOB calls used words constituting an offer or promise (e.g., that United “would pay” Aton); and that United and Aton mutually understood the “UCR or MNRP pay rates” corresponded with 100 percent and 50 percent, respectively, of Aton‘s billed charges. As we shall discuss, Aton produced no evidence tending to show United‘s representatives made promises or offers during VOB calls. It also failed to introduce evidence that both sides possessed the same understanding of the UCR and MNRP reimbursement rates. For these reasons, Aton‘s authorities are inapposite.
As Aton implicitly concedes by repeatedly asserting that the evidence before the trial court showed United representatives told Aton that United “would pay” Aton for certain types of treatment at specific rates, the use of such words during VOB calls is material to Aton‘s claim that an oral contract was formed during the calls. In the case of an express agreement, mutual assent is manifested in words, usually “through the medium of an offer . . . communicated to the offeree and an acceptance . . . communicated to the offeror.” (1 Witkin, Summary of Cal. Law (11th ed. 2017) Contracts, § 117, pp. 158–159 [citations omitted].) ” ’ “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” ’ ” (City of Moorpark v. Moorpark Unified Sch. Dist. (1991) 54 Cal.3d 921, 930.) Determining whether a particular communication reasonably constitutes an express offer requires an examination of the words used by the purported offeror as well as the circumstances surrounding the offer. (See e.g., ibid.; 1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 130–132, pp. 170-173.)
As Aton acknowledges and as courts like those in the cases referenced above have held, when an insurer merely provides information about a prospective patient‘s healthcare plan in response to a provider‘s inquiries,
The difficulty with Aton‘s challenge is that contrary to its contentions, no evidence was introduced showing United representatives conducting VOB calls used words objectively manifesting contractual offers or promises of payment. United‘s moving evidence established that its representatives who conducted VOB calls were not authorized to enter into commitments or contracts or guarantеe payment, which supported a reasonable inference that no express promises or offers to pay were made during the VOB calls at issue. United further established through Reed‘s testimony that during the VOB process, insurers do not agree to pay at a specific reimbursement rate. Reed also testified he regarded VOB forms as information rather than as contracts. In the excerpts of Brady‘s deposition testimony submitted by United, Brady described the VOB calls as “[Aton] calling and asking for the benefit. The benefit being quoted.” Brady‘s description established only that United provided plan information in response to Aton‘s inquiries, the very sort of communications that have been held to fall short of forming the basis of an oral contract. United‘s moving evidence thus supported the conclusion the VOB calls were devoid of communications objectively manifesting an intent to contract.
In opposition, Aton introduced no evidence at all of the actual words used by United representatives during VOB calls, much less evidence tending to
On appeal, Aton again cites no evidence establishing that United representatives said anything during VOB calls that, when reasonably interpreted, conveyed an intent to enter into a contract. Instead, Aton asserts, “United informed [Aton] it would pay for either of its treatments (detox care or residential treatment) under the UCR or MNRP pay rates.” (Italics added.) Aton cites two pages of VOB forms (one completed by Reed, the other by Liggett) in support of this assertion. However, these forms only reflect that Reed and Liggett learned from a United representative that a prospective patient‘s policy used the UCR or MNRP reimbursement rate. They do not indicate what the United representative‘s actual words were or otherwise reflect that the representative said United “would pay” for the prospective patient‘s treatment. Moreover, Reed, the creator of the VOB forms, testified Aton‘s VOB forms are merely informational. Aton‘s citation to the forms therefore fails to establish that its communications with United went “beyond VOB . . . calls describing the type of treatment and specific billing ratеs.”6 (Aton Center, Inc. v. Blue Cross and Blue Shield of Illinois, supra, 2021 WL 615051, at p. *5.)
Aton relies in part on Brady‘s declaration that United “historically paid” 50 percent of Aton‘s billed charges “under the MNRP method.” However, this only establishes Brady‘s unilateral expectation that United‘s future reimbursements would reflect its historical payment rates; it does not establish that the parties mutually agreed during VOB calls that United‘s payment of the subject claims would comport with its payment of prior claims. Aton also relies on Brady‘s deposition testimony that UCR means “[u]sual, customary, reasonable” and Aton “meet[s] all those criteria.”7 Again, however, this evidence shows only that Brady believed Aton‘s rates were usual, customary, and reasonable, not that United held the same belief.
Aton also attempts to rely on “the language United uses in its own plan.” We decline to consider this evidence. Aton has not challenged the trial court‘s ruling that Aton is judicially estopped from asserting claims “based upon what the policies and/or plans may set as the payment rate.” As a result, the ruling is binding on appeal (RMR Equipment Rental, supra 65 Cal.App.5th at p. 392) and Aton may not rely on the terms of United‘s plan to resurrect its claims.
Aton also relies on the averment of its expert that for “the VOB[s] in which [Aton] was informed that the allowed amount was to be based on the UCR, [Aton] should be paid its billed amount.” However, this statement merely reflects the expert‘s opinion of the operation of the UCR reimbursement methodology in hindsight. It does not establish that United held the same view or that it agreed during VOB calls to fully reimburse Aton whatever it ultimately billed for a particular treatment.
Finally, although Aton refers to United‘s authorization of treatment in the heading of the relevant section of its opening brief on appeal, it does not go on to present a developed argument explaining how the authorizations evidenced agreements to pay Aton at specified rates. Any such argument has been forfeited. (Oak Valley Hospital Dist. v. State Dept. of Health Care Services (2020) 53 Cal.App.5th 212, 228 [undeveloped arguments are forfeited on appeal].) Even if we were to consider the
In short, Aton fails to cite record evidence supporting either of its factual assertions. As a result, it fails to establish that the trial court erred by concluding it lacked evidence to prove the mutual assent necessary to establish the existence of an oral or implied contract with United.
Aton‘s appellate reliance on Bristol SL Holdings, Inc. v. Cigna Health and Life Ins. Co. (9th Cir. Jan. 14, 2022) 2022 WL 137547 (mem. dispo.) (Bristol SL Holdings) does not persuade us to reach a different conclusion about the viability of its contract claims. There, the district court granted summary judgment in favor of Cigna after concluding there was “a lack of discussion between the two parties over the ‘usual, customary, and reasonable rate’ (UCR)” and because it determined that automatic disclaimers played before verification and authorization calls prevented formation of any contract. (Id. at p. *1.) The Ninth Circuit reversed in a memorandum disposition, holding the first of these determinations was simply incorrect—the provider did, in fact, “introduce evidence of discussions over UCR, which the district court improperly ignored.” (Ibid.) As for the disclaimers, the appellate court held they did not eliminate the possibility contracts were formed during the calls. (Ibid.)
Unlike Bristol SL Holdings, here we have been presented with no evidence of “discussions over UCR” that the trial court improperly ignored. Although the trial court did note the existence of disclaimers in United‘s authorization lettеrs, it cited this as one of numerous factors supporting its finding that Aton failed to establish mutual assent, unlike Bristol SL Holdings in which the district court viewed such disclaimers as independently precluding contract formation. Moreover, Bristol SL Holdings did not address ERISA preemption, and the disclaimer language it considered (that any information provided ” ‘does not guarantee coverage or payment’ “) was unlike the disclaimer
2. Aton‘s Additional Arguments Lack Merit
Aton separately advances seven additional arguments challenging the trial court‘s summary adjudication of its oral and implied contract causes of action. We address each and conclude none justify reversal of summary judgment.
Aton‘s first argument is addressed to the trial court‘s finding that United representatives responsible for conducting VOB calls were not authorized to enter into contracts to pay or guarantee coverage on United‘s behalf. Aton asserts the authority of United‘s representatives “could not be adjudicated at the summary judgment stage because their agency in that regard presented a question of fact.” It is well settled, however, that issues of fact appropriately serve as the basis for entry of summary judgment when they are not in dispute. (See
Aton contends “a jury could find [United representatives‘] actual or ostensible authority was implied” based on evidence United‘s representatives provided “payment rates” to Aton. We are not persuaded. “Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.” (
Second, Aton maintains the parties did not have to inform each other of their intent to enter into a contract for a contract to be formed. This point
Aton‘s third argument consists of a series of disconnected assertions that again fail to establish reversible error. It argues (1) “it does not matter that both sides may have differing views on the meaning of the VOB calls” because mutual consent is determined under an objective standard; (2) mutual consent is ultimately an issue of fact; (3) to the extent Brady‘s understanding of VOB calls differed from that of Aton‘s intake team, Brady‘s understanding “is the one that matters,” and any internal misunderstanding raises a factual issue precluding summary judgment. The first and second points are true, but do not establish reversible error given our conclusion the summary judgment record was devoid of evidence of communications during the VOB calls that objectively manifested mutual assent. The third point lacks merit because Brady‘s unilateral, undisclosed, subjective interpretation of the VOB calls (which, we note, was not informed by actual knowledge of what was said during the calls) is nоt evidence of mutual assent. (See Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 956 [“The parties’ undisclosed intent or understanding is irrelevant to contract interpretation.“].)
And to the extent Aton claims its own internal misunderstanding about the VOB calls “raises . . . a factual dispute, precluding summary judgment,” it confuses the issue. The mutual assent required for United and Aton to form a contract is assent between United and Aton, not between Aton‘s employees and its CEO. (See
Aton‘s fourth argument relies on California Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 482 and
Fifth, Aton contends the trial court‘s reliance on the “boilerplate disclaimer” contained within “some authorization letters United issued after the VOB calls” is misplaced because a meeting of the minds could objectively be found “from the verification calls alone.” However, Aton identifies no record evidence supporting its assertions. As we have already discussed, Aton failed to introduce evidence of statements during verification calls from which an objective manifestation of intent to enter a binding agreement might be gleaned. We again pass on Aton‘s unexplained, unsupported assertion to the contrary. (Dinslage, supra, 5 Cal.App.5th at p. 379 [“An appellant who fails to pinpoint the evidence in the record indicating the existence of triable issues of fact will be deemed to have waived any claim the trial court erred in granting summary judgment.“].)
Aton‘s sixth challenge to the trial court‘s ruling is directed at the contract element of consideration. As a separate ground for granting summary adjudication, the trial court ruled that Aton‘s oral contract cause of action failed because “[d]uring the VOB process . . . [Aton] did not need to treat [United‘s] members and [United] was under no obligation to pay [Aton] for services“; as a result, there was no “bargained-for-exchange” between the parties. We need not and do not address Aton‘s challenge to this ruling, which served as an independent basis for the court‘s decision to grant summary adjudication. Mutual consent and consideration are separate elements of contract formation (see
We disagree that the court failed to comprehend the full scope of Aton‘s implied contract claim. The court expressly considered that Aton‘s implied contract claim, in addition to relying on VOB calls, also relied on “previous payments, historical knowledge, [and] the parties’ history.” The court concluded its reliance on these matters was unavailing as Aton “provides no evidence that [United] agreed to pay the subject claims the same as it had paid previous claims.” Aton, responding to the latter point about the paucity of its evidence, points to evidence that the сlaims of one of the 29 subject patients were paid at disparate rates. We disagree that this is evidence of an implied agreement to pay at any particular rate.8 (See Pacific Bay Recovery, supra, 12 Cal.App.5th at p. 216 [no implied contract where plaintiff alleged the insurer “did pay a portion of the billed charges, but [the provider] argue[d] it was not enough“].)
In sum, Aton fails to establish that the trial court erred by granting summary adjudication of its oral and implied contract causes of action.
III. Promissory Estoppel Cause of Action
“The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’ ” (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 901.)
Aton challenges this conclusion, arguing, “United did more than merely provide coverage information in vague terms. It gave reimbursement methods often supported by specific percentages, and then authorized specific treatment for patients for a specific duratiоn. That is enough for a trier of fact to find a clear promise.” (Italics added.)
We disagree. ” ’ “[A] promise is an indispensable element of the doctrine of promissory estoppel. The cases are uniform in holding that this doctrine cannot be invoked and must be held inapplicable in the absence of a showing that a promise had been made upon which the complaining party relied to his prejudice . . . .” [Citation.] The promise must, in addition, be “clear and unambiguous in its terms.” [Citation.] “Estoppel cannot be established from . . . preliminary discussions and negotiations.” ’ ” (Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411, 417 (Granadino); see Pacific Bay Recovery, supra, 12 Cal.App.5th at p. 215, fn. 6 [provider failed to state a cause of action for estoppel because it did not allege “a promise clear and unambiguous in its terms“].)
Aton is confusing the requirement of specificity with the requirement of the existence of a promise. “A ‘promise’ is an assurance that a person will or will not do something.” (Granadino, supra, 236 Cal.App.4th at p. 417.) As we have already discussed, United‘s moving evidence tended to establish that no commitments were made by United representatives during VOB calls. To the contrary, United‘s evidence established that VOB calls were not “promises to pay.” In opposition, Aton identified no evidence supporting a reasonable inference that clear and unambiguous promises or assurances of payment at rates corresponding to Aton‘s billed charges were actually made during the VOB calls at issue or the authorization process. Aton‘s appellate assertions, which are unsupported by citations to record evidence, that United “gave” reimbursement methods and then authorized treatment fall short of establishing that United promised to pay Aton in accordance with Aton‘s expectations.9
IV. Intentional Misrepresentation, Negligent Misrepresentation, and Fraudulent Concealment
In a single section of its opening brief on appeal, Aton collectively challenges the trial court‘s summary adjudication of its second, third, and fourth causes of action for intentional misrepresentation, negligent misrepresentation, and fraudulent concealment. The trial court granted summary adjudication of these causes of action after determining evidence supporting several elements of each cause of action was lacking.
The elements of intentional misrepresentation “are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.) The trial court granted summary adjudication of Aton‘s intentional misrepresentation upon concluding that United succeeded in showing that Aton could not prove United made misrepresentations, knew any alleged misrepresentations were false, or intended to induce Aton‘s reliance on the purported misrepresentations.
The elements of negligent misrepresentation are: “(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing
The elements of fraudulent concealment are “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606.) The trial court concluded that Aton could not establish the elements of United‘s concealment or suppression of a material fact; United‘s duty to disclose the purported material fact; and United‘s intent to defraud Aton.
Aton asserts five collective challenges to these rulings. First, it asserts that its ”fraud claims . . . raise factual issues.” (Boldface and italics omitted.) In part, Aton points to two unpublished federal district court orders. (Summit Estate, Inc. v. Cigna Health and Life Insurance Co. (N.D. Cal. Mar. 30, 2022) No. 5:20-cv-04697-EJD, 2022 WL 958380, *3–4; Broad Street Surgical Center, LLC v. UnitedHealth Group, Inc. (D.N.J. Mar. 6, 2012) No. 11–2775 (JBS/JS), 2012 WL 762498, *12.) However, these decisions are inapposite because they addressed the sufficiency with which the provider‘s complaint alleged fraud or negligent misrepresentation. Aton‘s only attempt to identify a factual dispute precluding summary adjudication of its “fraud claims” is this assertion: “Given that United paid substantially less than what was promised and less than how it had even historically reimbursed [Aton] provides the sort of circumstantial evidence needed to support the fraud claims.” This argument runs afoul of the rule that ” ‘something more than nonperformance is required to prove the defendant‘s intent not to perform his promise.’ ” (Tenzer v. Superscope (1985) 39 Cal.3d 18, 30.) “[I]f plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.” (Id. at p. 31.) Accordingly, we reject Aton‘s first argument.
Aton‘s second and third arguments are perfunctory and undeveloped. Its second argument is: “that United‘s VOB team may have only innocently
Aton‘s fourth argument is that United has a duty “to accurately provide the payment reimbursement rate when it voluntarily agrees to do so.” Its fifth argument makes the related point that “triable issues of fact remain whether representations concerning the rate of percentage promised were accurate” given that “at minimum, reimbursement at 50[ percent] was promised.” In support of the latter argument, Aton cites testimony from a United representative regarding the interpretation of language of a particular insurance plan. Simply put, the cited testimony does not support Aton‘s factual assertion. We also agree with United‘s contention that the trial court‘s unchallenged judicial estoppel ruling applies, and as a result, Aton is foreclosed from attempting to revive its claims by relying on evidence of “what the policies and/or plans may set as the payment rate.” We thus reject Aton‘s fourth and fifth arguments. In sum, we conclude Aton has failed to establish that the trial court erred by summarily adjudicating its causes of action for intentional misrepresentation, negligent misrepresentation, and fraudulent inducement.
V. Violation of the UCL
The last cause of action disposed of on summary judgment was Aton‘s cause of action for violation of the UCL. ”
[Citation.] An act can be alleged to violate any or all of the three prongs of the UCL—unlawful, unfair, or fraudulent.” (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554.) However, the remedies available for violation of the UCL are limited. Only equitable remedies can be obtained; damages cannot be recovered. (Korea Supply Co., at p. 1144.)
The trial court ruled that Aton‘s cause of action for violation of the UCL failed for a number of reasons. It found that Aton could not maintain its UCL claims, which were equitable in nature, because it had an adequate remedy at law—its other causes of action for which it sought money damages, which the court ruled was “true even if the plaintiff‘s non-UCL claims ultimately fail.” It also found that United had succeeded in demonstrating that Aton could not establish that United actually engaged in any unlawful, unfair, or fraudulent business act or practice.
On appeal, Aton challenges the trial court‘s ruling only insofar as it held Aton could not establish the fraud prong of its UCL claim. Aton asserts that if this court reverses the summary adjudication of its intentional misrepresentation or fraudulent concealment causes of action, we “must likewise reverse judgment on the UCL claim.” We are not reversing the court‘s summary adjudication of Aton‘s intentional misrepresentation or fraudulent concealment causes of action, so Aton‘s UCL claim cannot be revived on the basis of the asserted merit of those causes of action.
Next, Aton contends fraud was sufficiently established because it “alleges a . . . continuing pattern of conduct by United in underpaying claims” which creates a financial risk for patients as well as the potential for relapse. This argument runs afoul of the summary judgment statute, which provides that a party opposing summary judgment may not “rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists[.]” (
Finally, Aton asserts that it “should be allowed to plead claims for both monetary damages under the fraud claims and injunctive relief as alternative remedies.” However, even if the opportunity to amend the complaint remained available at this late juncture, the trial court ruled that Aton‘s UCL claim fails for reasons independent of concerns about Aton‘s ability to seek overlapping legal and equitable remedies. The proposed amendment would not resolve these additional concerns, which are fatal to the viability of its UCL claim. (See Vailette v. Fireman‘s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685 [“leave to amend should not be
DISPOSITION
The judgment is affirmed. United is entitled to its costs on appeal. (
DO, J.
WE CONCUR:
HUFFMAN, Acting P. J.
O‘ROURKE, J.