Opinion
This writ proceeding arises out of a lawsuit filed by the Los Angeles City Attorney against a health insurer, a managed health care service plan, and their parent corporation concerning coverage rescission practices. Defendants demurred to the complaint on multiple grounds, and the
The principal issue presented is whether the regulatory and enforcement authority of California’s Department of Managed Health Care (DMHC) over managed health care service plans, pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Health & Saf. Code, § 1340 et seq.; hereafter the Knox-Keene Act), strips the city attorney of the authority to pursue the unfair competition and false advertising claims alleged in the complaint. We conclude that the DMHC’s regulatory and enforcement authority does not preclude the city attorney from pursuing the unfair competition and false advertising claims.
BACKGROUND 1
I. The Complaint
On April 16, 2008, the city attorney filed suit on behalf of the People of the State of California against Wellpoint, Inc., Anthem Blue Cross of California, Inc. (Blue Cross), and Anthem Blue Cross Life and Health Insurance Company (Blue Cross Insurance), alleging claims under both the unfair competition law (Bus. & Prof. Code, § 17200 et seq.; hereafter the UCL) and the false advertising law (id., § 17500 et seq.; hereafter the FAL). 2 Blue Cross is a managed health care service plan subject to the Knox-Keene Act and regulated by the DMHC. Blue Cross Insurance is a life and disability insurer subject to the Insurance Code and regulated by California’s Department of Insurance (DOI). Both Blue Cross and Blue Cross Insurance are subsidiaries of Wellpoint.
The city attorney’s claims all relate to “postclaims underwriting,” a practice prohibited by section 1389.3 of the Health and Safety Code and section 10384 of the Insurance Code: “No health care service plan shall engage in the practice of postclaims underwriting. For purposes of this section, ‘postclaims underwriting’ means the rescinding, canceling, or limiting of a plan contract due to the plan’s failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract. This
The complaint alleges that Blue Cross and Blue Cross Insurance have engaged in a practice of violating the statutory prohibition on postclaims underwriting with respect to their individual and family health coverage. 3 According to the complaint, unless an application for health coverage on its face “indicates that the applicant has a medical condition or history that may materially impact the risk of assuming coverage,” Blue Cross and Blue Cross Insurance’s underwriters do not contact the applicant’s doctors or obtain the applicant’s medical records before issuing coverage. “[N]o steps of any kind are taken to determine the accuracy of the responses provided in an application that is regular on its face and that does not itself indicate a serious underwriting risk.” The complaint alleges that most applications are regular on their face and do not indicate a serious underwriting risk.
After Blue Cross or Blue Cross Insurance issues coverage, however, certain types of claims for benefits will trigger an investigation of the information provided in the application. According to the complaint, defendants have compiled a list of medical diagnoses that appear to be “associated with conditions whose treatment [is] likely to be costly.” Whenever defendants receive a claim involving one of those diagnoses, “the claims processing is automatically suspended,” and defendants undertake an investigation to try to identify any discrepancies between the claimant’s medical records and the information provided by the claimant in the original application for coverage. If they find a discrepancy, they notify the claimant and take additional steps to rescind coverage, “irrespective of whether there is any evidence that [the discrepancies] were the result of intentional misconduct.” Even if no discrepancy is found, “the suspension of processing of the claim may have caused a substantial delay in approval of the claim, resulting in postponement of
The complaint further alleges that defendants engage in a number of other acts and practices, all related to their alleged practice of postclaims underwriting, that are unlawful, unfair, or fraudulent within the meaning of the UCL or constitute false advertising within the meaning of the FAL. For example, the complaint alleges that many of the medical history questions on defendants’ application forms are “exceedingly and unnecessarily confusing and compound,” “call for the [applicant] to make medical judgments,” or are otherwise “ambiguous and unintelligible to the average consumer,” thereby inducing applicants to provide incorrect or incomplete responses, which defendants can later use to rescind coverage if the applicant develops a medical condition requiring expensive treatment.
In a similar vein, the complaint alleges that the members of defendants’ sales force “typically lack the expertise to take an accurate medical history,” receive little training in that area, and are paid commissions only on applications that are accepted. “The commission payment structure, combined with the lack of training, works to incentivize agents to downplay to consumers the significance of questions in the application that might produce information that could result in the rejection of the application, or that might jeopardize the sale by causing the consumer to be put in a risk category that carries a higher premium for coverage than the agent had previously quoted. As a consequence, agents frequently ‘help’ consumers fill out applications so that the consumer will qualify for coverage at the rate quoted.”
In addition, the complaint alleges that defendants’ advertising and marketing of their individual and family health coverage convey “untrue and misleading information” to consumers. Again, the allegations all relate to postclaims underwriting. For example, the complaint alleges that defendants purport to cover various medical conditions requiring expensive treatment, but defendants fail to disclose that being diagnosed with one of those conditions will trigger an investigation aimed at rescinding coverage. More broadly, defendants do not “disclose their practice of postclaims underwriting and illegal rescission” to applicants for individual and family health coverage, and defendants instead make “untrue and misleading assertions about their integrity and reliability.”
Finally, the complaint alleges that defendants issued a press release on February 23, 2008, stating that they “had taken steps in 2006 ‘to strengthen and make more transparent [their] process for rescinding policies in order to further minimize the possibility of errors.’ ” The press release listed several specific steps that defendants had purportedly taken in 2006, but the complaint alleges that the claims in the press release were “false or misleading.”
On the basis of those and related allegations, the complaint alleges claims against all defendants under the UCL and the FAL. The prayer for relief seeks the full range of remedies authorized by those statutes, including (1) injunctive relief prohibiting defendants “from engaging in the unlawful, unfair and/or fraudulent business acts and practices and deceptive advertising” described in the complaint, (2) reinstatement of all health coverage that was wrongfully rescinded as a result of the conduct alleged in the complaint, (3) disgorgement, and (4) civil penalties of $2,500 per violation of the UCL and the FAL.
II. The Demurrer
Defendants moved to strike certain allegations in the complaint and demurred to the complaint on multiple grounds, only three of which are at issue in this writ proceeding. 4 First, defendants argued that all of the claims against Blue Cross should be dismissed because “the power to regulate, investigate and initiate enforcement actions against [Blue Cross] has been entrusted exclusively to the DMHC” under the Knox-Keene Act. Thus, according to defendants, the city attorney’s UCL and FAL claims against Blue Cross are barred by the DMHC’s exclusive regulatory and enforcement powers. 5
Second, defendants argued that the trial court should abstain from deciding the claims in the complaint. Defendants contended that “this case would require the [c]ourt to assume general regulatory powers over the health care industry,” but that is “a task . . . better accomplished by the DMHC and DOI, the agencies charged by the Legislature with the necessary enforcement powers to ensure compliance.”
The DMHC filed an amicus curiae brief in support of defendants’ demurrer. Defendants also sought judicial notice of certain documents relating to regulatory and enforcement actions already undertaken by the DOI and the DMHC, two of which are of particular relevance to this proceeding. Both documents postdate the city attorney’s April 16, 2008, lawsuit against defendants.
One document is a report of a survey conducted by the DMHC to assess compliance by Blue Cross and other health care service plans with the statutory prohibition on postclaims underwriting. The survey of Blue Cross included review of 90 case files that were randomly selected from “a log of individual policy rescissions occurring between January 2004 and June 2006.” The DMHC concluded that Blue Cross had failed to comply with the statutory prohibition in two respects: First, in 39 of the 90 reviewed cases, Blue Cross “did not conduct a thorough and complete pre-enrollment underwriting investigation prior to approving the application.” Second, in the cases in which the preenrollment investigation was inadequate, Blue Cross did not base its decision to rescind coverage on a finding of willful misrepresentation. Indeed, the DMHC “found no evidence” that Blue Cross “considers the intent of the enrollee to commit willful misrepresentation before rescinding coverage.” The report was issued to Blue Cross on July 23, 2008, and “issued to the public file” one week later.
The other document is a settlement agreement between Blue Cross and the DMHC that resulted from the DMHC’s investigation but actually preceded issuance of the DMHC’s report. The effective date of the agreement is July 18, 2008. The agreement states that Blue Cross has made a “voluntary decision” to allow “former enrollees” (defined as persons whose individual or family, health coverage was rescinded between Jan. 1, 2004, and July 18, 2008) to purchase individual or family coverage “going forward without medical underwriting.” Blue Cross also agreed that it would not rescind any individual or family coverage issued on or before the agreement’s effective date, but Blue Cross reserved the right to rescind “in accordance with California law” any individual and family coverage issued thereafter. Elsewhere, the agreement further states that Blue Cross “contends that its actions regarding rescission were [already] in accordance with California law” and that the agreement is not, and shall not be construed as, “any sort of
In addition, under the settlement Blue Cross agreed to “undertake reasonable efforts” to “make a written offer to provide a financial settlement” to some (but not necessarily all) of the “former enrollees” to cover their “out-of-pocket medical expenses,” which are defined as “those charges or a portion of charges from a medical provider” that Blue Cross would otherwise have paid “but for the rescission.” Should disputes about the amounts of the individual financial settlements arise, the agreement provides for alternative dispute resolution. Under the settlement Blue Cross also agreed to pay “an administrative fine” of $10 million and to undertake certain forms of “corrective action” pursuant to a “corrective action proposal” that Blue Cross was to submit to the DMHC.
Finally, the settlement agreement provides broadly that it is a full settlement of all DMHC claims against Blue Cross concerning any rescissions that occurred before the agreement’s effective date: “By entering into this [settlement [agreement, the parties hereby settle all pending enforcement matters and all issues, accusations, and claims that the [DMHC] has or may have against [Blue Cross], including, without limitation, any alleged violation of section 1389.3 of the Health and Safety Code or any other provision of the [Knox-Keene Act], relating to or arising from any rescission of [individual or family health coverage] that may have occurred on or before July 18, 2008. The [DMHC’s] Final Report of the Non-Routine Medical Survey on Post-Claims Underwriting . . . regarding [Blue Cross’s] rescission practices will not be referred to the Division of Enforcement for any further administrative action or otherwise referred for enforcement.” (Italics added.) The agreement also acknowledges that Blue Cross “is currently involved in private litigation regarding rescission issues,” but the agreement provides that “[a]ny settlement agreements arising out of the private litigation shall have no [ejffect on the terms of this settlement agreement.”
On appeal, defendants ask that we judicially notice certain additional documents concerning actions the DOI has taken against Blue Cross Insurance. The documents postdate the trial court’s hearing on defendants’ demurrer, and the record does not indicate that the documents were ever submitted to the trial court.
6
We nonetheless grant defendants’ request that we judicially notice the DOI documents (and we also grant the other requests for judicial notice submitted by the parties and their amici curiae). The documents reflect
III. The Trial Court’s Ruling
On March 3, 2009, the trial court entered a detailed order overruling defendants’ demurrer in its entirety. The court rejected all three of the defense arguments described above—the court concluded that (1) the DMHC’s regulatory and enforcement powers under the Knox-Keene Act do not preclude the city attorney’s UCL and FAL claims, (2) defendants’ judicial abstention argument is “not well taken,” and (3) defendants “have not established the applicability of the primary jurisdiction doctrine.”
At the same time, the court ruled pursuant to Code of Civil Procedure section 166.1 that “there is a controlling question of law as to which there are substantial grounds for difference of opinion, appellate resolution of which may materially advance the conclusion of [this] litigation.” Defendants filed a petition for writ of mandate seeking review of the ruling on the demurrer, and we issued an order to show cause. We also granted the requests of various third parties, including the DMHC, to file amicus curiae briefs. The DMHC contends, as it did in the trial court, that the demurrer should have been sustained.
I. The City Attorney Has Standing to Bring This Action Under the UCL and the FAL
Defendants argue that the city attorney “has no standing to enforce California’s health plan laws” either directly or pursuant to the UCL and the FAL, because “[t]he DMHC’s exclusive regulatory and enforcement authority displaces and subordinates the power of other government prosecutors to regulate health plans or assert that their conduct violates state laws [such as] the Knox-Keene Act.” 7 We disagree.
The city attorney has express statutory authority to file suit on behalf of the People under the UCL: “Actions for relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or a district attorney or by a county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or by a city attorney of a city having a population in excess of 750,000, or by a city attorney in a city and county or, with the consent of the district attorney, by a city prosecutor in a city having a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of a board, officer, person, corporation, or association, or by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204, italics added.) The city attorney also has express statutory authority to sue on behalf of the People under the FAL. (Bus. & Prof. Code, § 17535 [granting the city attorney authority to sue under the FAL in terms largely identical to those used in the UCL].) Defendants do not contend to the contrary.
The UCL and the FAL also contain the following provision: “Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Bus. & Prof. Code, §§ 17205, 17534.5.) “Therefore, the fact that there are alternative remedies under a specific statute does not preclude a UCL remedy, unless the statute itself provides that the remedy is to be exclusive.”
(State of California
v.
Altus Finance
(2005)
Existing case law attests to the breadth of the UCL and the cumulative nature of its remedies, both in general and in the specific contexts of the Knox-Keene Act and postclaims underwriting. First, unlawful business practices that are actionable under the UCL “include[] ‘ “anything that can properly be called a business practice and that at the same time is forbidden by law.” ’ ”
(Farmers Ins. Exchange v. Superior Court
(1992)
As applied in this case, the foregoing authorities point unambiguously to the conclusion that the city attorney has authority to sue under the UCL for violation of Health and Safety Code section 1389.3 (i.e., the Knox-Keene
The DMHC nonetheless contends that the absence of such a statute does not doom defendants’ argument, because “[t]he Legislature cannot and need not anticipate every situation that might arise and supply a rule for each situation,” and “[t]he Legislature was not required to provide catch phrases to preempt the [city attorney’s] actions here.” The Legislature did, however, supply a rule for the situation before us—the UCL and the FAL expressly provide that the city attorney may sue for redress under the UCL and the FAL
unless some other statute provides to the contrary.
(Bus. & Prof. Code, §§ 17205, 17534.5;
Altus, supra,
In their petition for rehearing, defendants contend that they have indeed cited statutes that “expressly preclude!] the city attorney from suing under the [UCL and FAL] based on violations of the Knox-Keene Act.” Defendants first point to Health and Safety Code section 1394, which provides in its entirety as follows: “The civil, criminal, and administrative remedies available to the director pursuant to this article are not exclusive, and may be sought and employed in any combination deemed advisable by the director to enforce the provisions of this chapter.”
According to defendants, that statute supports their position for the following reasons: The statute “empowers the DMHC director to select ‘any combination’ of remedies to be sought,” including UCL and FAL claims based on violations of the Knox-Keene Act. By leaving the “combination” of available remedies to the discretion of the DMHC director, defendants conclude, the statute strips other law enforcement officials of their power to bring UCL and FAL claims based on violations of the Knox-Keene Act without the director’s prior authorization.
Defendants’ argument fails because it ignores the requirement that in order for a statute to deprive the city attorney of authority to sue under the UCL or FAL, it must do so
expressly.
(Bus. & Prof. Code, §§ 17205, 17534.5.) On its face, Health and Safety Code section 1394 does not meet that requirement. It authorizes the DMHC director to pursue the remedies “available to the director” “in any combination” that the director “deem[s] advisable.” (Health & Saf. Code, § 1394.) But the statute says nothing about
The other statutes cited in defendants’ petition for rehearing fare no better. Health and Safety Code section 1392 authorizes the DMHC director to bring an action for an injunction and any ancillary or other equitable relief, or to ask that the Attorney General do so, but the statute says nothing about the authority of anyone else—whether private citizens or public prosecutors—to pursue such remedies. Health and Safety Code section 1386 authorizes the DMHC director to suspend or revoke the license of a health care service plan if the director determines that the licensee has committed acts or omissions that are grounds for disciplinary action, which include engaging in “any conduct that constitutes fraud or dishonest dealing or unfair competition, as defined by [the UCL].” (Health & Saf. Code, § 1386, subd. (b)(7).) But the statute says nothing about the authority of anyone (including the DMHC director) to bring an action under the UCL or FAL. (Defendants’ petition for rehearing also cites Health & Saf. Code, §§ 1387 and 1393.5, but we address those statutes in fn. 9, post.)
Lacking the requisite statutory provision to support their argument of exclusivity, defendants instead rely primarily on an overbroad reading of
Van de Kamp v. Gumbiner
(1990)
Gumbiner
says nothing at all about the authority of any public official—the Attorney General, a district attorney, or a city attorney—to sue a health care service plan under the UCL or the FAL in connection with an alleged violation of the Knox-Keene Act. Defendants nonetheless contend that
Gumbiner
is controlling here because, for example, it states that the intent of certain legislation “was to ensure that sole regulatory authority [over health care service plans] was vested in the Department [of Corporations]”
(Gumbiner, supra,
Defendants’ argument fails because Gumbiner’s references to the “sole” authority of the Department of Corporations do not carry the broad significance that defendants attribute to them. Those references mean only that (1) the Attorney General’s Office was stripped of both its common law authority and its authority under certain specified statutes to regulate health plans, and (2) the Knox-Keene Act expressly gave regulatory authority concerning health plans to the Department of Corporations (and later to the DMHC) and did not give it to anyone else. But in the case before us, we are dealing with two statutes, the UCL and the FAL, that do expressly give the city attorney authority to sue as long as no other statute expressly provides to the contrary.
Gumbiner
does not hold or even state in dictum that some other statute provides to the
contrary—Gumbiner
does not involve, and hence says
Defendants’ attempt to distinguish
McKale
is likewise unavailing.
McKale
involved UCL claims brought by a district attorney to enforce certain provisions of the Mobilehome Parks Act and related sections of the former Administrative Code. (McKale,
supra,
Defendants’ petition attempts to dispose of McKale in a single short paragraph, arguing that “McKale did not involve a situation where exclusive enforcement authority was vested in a single governmental agency.” The argument fails because it assumes that the DMHC’s enforcement authority is “exclusive” in the relevant sense, but that is precisely the point at issue. No statute says it is, just as in McKale no statute said the authority of the Commission on Housing and Community Development was exclusive in the relevant sense. 9 Rather, defendants’ sole basis for the claim of exclusivity (apart from Gumbiner, which we have already explained is irrelevant) is that the Knox-Keene Act gives enforcement authority to the DMHC and
Defendants’ reliance on various other cases is similarly misplaced. For example, defendants cite
Samura v. Kaiser Foundation Health Plan, Inc.
(1993)
Samura
is of no use to defendants here, because Health and Safety Code section 1389.3 (like Ins. Code, § 10384) both defines the term “post-claims underwriting” and expressly provides that postclaims underwriting is unlawful. Postclaims underwriting is thus an “act[] which [is] made unlawful by the Knox-Keene Act” and hence may be enjoined under the UCL.*
11
(Samura, supra,
We are not the first court to reach that conclusion. In
Ticconi,
the defendant health insurer relied on
Samura
in arguing that the Insurance Code provisions dealing with postclaims underwriting “do not provide a basis for a UCL action” because they are merely “regulatory in nature.”
(Ticconi, supra,
160
Defendants also rely on
Altus,
for the proposition that “when a state agency has exclusive jurisdiction over a subject, the authority of other prosecutors is displaced whenever they seek to act concurrently, in a manner that would ‘essentially duplicate the [regulating agency’s] legal action.’ ” (Quoting
Altus, supra,
Defendants cite no statutory provision that expressly vests exclusive enforcement power in the DMHC. Altus therefore supports the city attorney, not defendants. The city attorney’s UCL and FAL claims do not duplicate any enforcement powers that a statute expressly makes the exclusive province of the DMHC.
Defendants also argue that we should show deference to the DMHC’s view that the city attorney lacks standing to pursue this action against Blue Cross. We disagree. Although “[t]he construction of a statute by the executive department charged with its administration is entitled to great weight and substantial deference”
(Bell, supra,
Finally, both defendants and the DMHC advance various public policy arguments aimed at showing that the city attorney’s suit constitutes pernicious “dual regulation” of health plans and will have an adverse effect on California’s fragile health care “ecosystem.” Such arguments are properly addressed to the Legislature, not to this court. The statutory language is unambiguous—the UCL and the FAL expressly give the city attorney authority to sue unless otherwise provided to the contrary, and, as relevant here, no other statute does provide to the contrary.
Further, defendants’ and the DMHC’s public policy arguments are not persuasive. Defendants and the DMHC concede, as they must, that private plaintiffs can pursue UCL actions based on violations of the Knox-Keene Act.
(Bell,
supra,
For all of the foregoing reasons, we conclude that the city attorney has standing to pursue the complaint’s UCL and FAL claims against Blue Cross.
II. The Trial Court Did Not Abuse Its Discretion by Declining to Abstain
Defendants argue that “[t]he trial court should have abstained as to
all
the claims in this case.” We review the trial court’s decision for abuse of discretion.
(Alvarado v. Selma Convalescent Hospital
(2007)
Case law states that a court may abstain from adjudicating a suit that seeks equitable remedies if “granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency.”
(Alvarado, supra,
The trial court could have reasonably concluded that none of those circumstances is present in the city attorney’s action. First, the city attorney is not asking the court to assume or interfere with the functions of an administrative agency. Rather, the city attorney is asking the court to perform an ordinary judicial function, namely, to grant relief under the UCL and the FAL for business practices that are made unlawful by statute. The relief requested by the city attorney will not interfere with the functions of either the DOI or the DMHC, including the relief that those agencies have already secured by settlements. If the city attorney prevails on the complaint in its entirety and the trial court awards all of the relief sought, then that relief will in no way hinder Blue Cross, Blue Cross Insurance, the DMHC, or the DOI from performing all of their obligations under their respective settlement agreements. There is thus no conflict and no interference. Indeed, the DMHC expressly agreed in its settlement with Blue Cross that any possible future settlement of pending private litigation concerning coverage rescissions “shall have no [ejffect on the terms of’ the DMHC settlement. If the settlement of that private litigation, on whatever terms the parties might agree to, will have
Second, the city attorney’s suit does not call upon the court to determine complex economic policy. The Legislature has already made the relevant policy determinations by defining and outlawing postclaims underwriting. The court is, in the main, merely being called upon to enforce those statutory prohibitions. 13
Third, the city attorney is not seeking injunctive relief that would be unnecessarily burdensome for the court to monitor or enforce. There is no indication in the city attorney’s complaint that it is asking for the court to monitor anyone or anything. The city attorney is asking for an injunction. If the trial court issues an injunction, then defendants will be expected to comply with it, but that does not impose on the court any active role in monitoring compliance. (See
Ticconi, supra,
Accordingly, the trial court did not exceed the bounds of reason when it rejected defendants’ arguments that (1) the city attorney’s action “seeks equitable relief that would, if granted, interfere with the functions of the administrative agencies” charged with regulating Blue Cross and Blue Cross Insurance, (2) the city attorney “seeks relief in conflict with what the regulating agencies have directed,” and (3) “the equitable relief sought by the [c]ity [attorney could be burdensome for the courts to enforce and monitor.”
Moreover, all of those arguments relate only to the injunctive relief sought in the complaint, but the complaint does not seek only injunctive relief. Rather, it also seeks restitution and civil penalties. Consequently, defendants’ arguments cannot show that the trial court should have abstained from adjudicating the complaint in toto, because those arguments concern only one of the several remedies that the city attorney seeks. For that reason as well, defendants’ arguments cannot show that the trial court’s decision exceeded the bounds of reason.
For all of the foregoing reasons, we conclude that the trial court did not abuse its discretion by declining to abstain.
Defendants argue that the trial court should have applied the doctrine of primary jurisdiction and stayed or dismissed the city attorney’s suit pending the outcome of further administrative proceedings. We review the trial court’s ruling on the primary jurisdiction issue for abuse of discretion.
(Jonathan Neil & Assoc., Inc.
v.
Jones
(2004)
The doctrine of primary jurisdiction “ ‘comes into play whenever enforcement of the [plaintiff’s] claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.’ ”
(Farmers, supra,
We conclude that defendants’ primary jurisdiction argument fails at the threshold because defendants do not identify any issues that the trial court ought to refer to the DOI or the DMHC for determination. In the preliminary opposition to the petition, the city attorney pointed out that gap in defendants’ argument. In their subsequent briefing, however, defendants still did not identify a single issue that the court ought to refer for agency determination. The essence of the primary jurisdiction doctrine is this: If litigation presents issues that are not “ ‘within the conventional competence of the courts’ ” and “ ‘the judgment of a technically expert body’ ” would aid judicial decision-making, then the court may refer those issues to that body.
(Farmers, supra,
The petition is denied. Real party in interest shall recover its costs of this writ proceeding.
Mallano, P. J., and Chaney, J., concurred.
A petition for a rehearing was denied January 12, 2010, and the opinion was modified to read as printed above. Petitioners’ petition for review by the Supreme Court was denied March 30, 2010, S179753.
Notes
Because we are reviewing a ruling on a demurrer, we assume the truth of the complaint’s properly pleaded factual allegations.
(City of Stockton
v.
Superior Court
(2007)
Blue Cross asserts in the petition that it was erroneously sued as “Anthem Blue Cross of California, Inc.” and that its actual name is “Blue Cross of California dba Anthem Blue Cross.”
By stating that all of the claims in the city attorney’s complaint relate to postclaims underwriting, we do not mean to suggest that the city attorney’s only claim under the UCL is for unlawful conduct in violation of the statutes that expressly prohibit postclaims underwriting. On the contrary, the complaint also alleges that defendants have engaged in unfair and fraudulent conduct, as well as conduct that is allegedly unlawful because it allegedly violates legal principles derived from case law or from statutes other than Health and Safety Code section 1389.3 and Insurance Code section 10384.
The cover of the petition for writ of mandate states that it seeks review of the ruling on the motion to strike, and the petition’s prayer for relief likewise refers to the ruling on the motion to strike. The memorandum of points and authorities in support of the petition, however, raises no arguments concerning the motion to strike. The city attorney’s preliminary opposition to the petition pointed this out, and petitioners did not address the issue in their reply. Accordingly, we will not further discuss the motion to strike.
Defendants raised this argument with respect to Blue Cross alone because it is subject to the Knox-Keene Act and regulated by the DMHC, whereas Blue Cross Insurance is subject to the Insurance Code and is regulated by the DOI.
In the trial court, defendants introduced certain related documents, including a press release describing the DOFs actions.
As noted above, this argument relates only to the DMHC (which regulates Blue Cross), not to the DOI (which regulates Blue Cross Insurance). The argument accordingly does not affect the city attorney’s claims against Blue Cross Insurance.
The DMHC was created by statute in 1999 (Health & Saf. Code, § 1341), so it did not exist when Gumbiner was decided in 1990.
Defendants cite a provision of the Knox-Keene Act that allows for certain civil penalties that “shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the director [of the DMHC].” (Health & Saf. Code, § 1387, subd. (a); see also id., § 1393.5.) Thus, only the DMHC may seek the civil penalties authorized by that provision of the Knox-Keene Act. The city attorney, however, is seeking civil penalties under the UCL, not under the Knox-Keene Act. The UCL expressly provides that its remedies and penalties are cumulative to the remedies and penalties available under all other California laws unless a statute expressly provides to the contrary. No statute expressly provides that the Knox-Keene Act’s and the UCL’s civil penalties are mutually exclusive.
Defendants also attempt to distinguish McKale on the ground that in McKale the agency “with enforcement authority” had not “actually exercised that authority,” as the DMHC has here by investigating and settling with Blue Cross. The attempt fails, because the DMHC’s exercise of its authority is irrelevant unless a statute provides that such exercise makes the DMHC’s authority exclusive. No such statute exists.
For identical reasons, defendants’ reliance on
California Medical Assn. v. Aetna U.S. Healthcare of California, Inc.
(2001)
In addition, courts may abstain when federal enforcement of the subject law would be preferable in certain respects
(Alvarado, supra,
As described ante, the complaint does seek to remedy certain practices that do not in themselves constitute postclaims underwriting, such as defendants’ use of allegedly flawed application forms. But as also described ante, the alleged flaws in the application forms all relate to postclaims underwriting—the city attorney’s argument is that the flaws in the application forms tend to induce applicants to provide inaccurate or incomplete responses, which defendants can then use as grounds to rescind coverage when defendants engage in postclaims underwriting.