LONG BEACH MEMORIAL MEDICAL CENTER et al. v. KAISER FOUNDATION HEALTH PLAN, INC., et al.
B304183, consolidated with B306322
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION TWO
Filed 11/4/21
Michael P. Vicencia, Judge
CERTIFIED FOR PARTIAL PUBLICATION*
(Los Angeles County Super. Ct. No. NC061310)
* This opinion is published as to all but Sections IV and V of the Discussion.
King & Spalding, Marcia Augsburger, Daron Tooch, Anne Voigts, and Amanda Hayes-Kibreab for California Hospital Association, Sharp Healthcare, Natividad Medical Center, Pomona Valley Hospital Medical Center, and Kaweah Delta Health Care District as Amici Curiae on behalf of Plaintiffs and Appellants.
Manatt, Phelps & Phillips, Gregory N. Pimstone, Joanna S. McCallum, John T. Fogarty, Marina Shvarts; Kellog, Hansen, Todd, Figel & Frederick, David C. Frederick, Daniel G. Bird, Joseph L. Wenner, and Jayme L. Weber for Defendants and Appellants.
* * * * * *
Under federal and state law, a hospital is required to provide “necessary stabilizing treatment” for any person in an “emergency medical condition.” (
This appeal raises three issues of first impression regarding the scope of a hospital‘s lawsuit to collect reimbursement from a plan with which it has no contract, as well as the law applicable in that lawsuit. First, in addition to quantum meruit, may a hospital sue for the tort of intentionally paying an amount that is less than what a jury might later determine is the “reasonable and customary value” of the emergency medical services, and thereby obtain punitive damages? Second, in addition to quantum meruit, may the hospital sue for injunctive relief under California‘s unfair competition law (
For the reasons described more fully below, we hold that the answer to all three question is “no.” Because we also reject challenges to several of the trial court‘s evidentiary rulings in the
FACTS AND PROCEDURAL BACKGROUND
I. Facts
A. The parties
1. The hospitals
The Long Beach Memorial Medical Center and the Orange Coast Memorial Medical Center (individually, Long Beach Memorial and Orange Coast Memorial; collectively, the hospitals) operate three hospitals in the region encompassing the southern portion of Los Angeles County as well as the northern portion of Orange County.
The hospitals price their medical services using two rates—namely, (1) the full-price rate they bill, which operates like the “sticker price,” and (2) the discounted rate they agree to accept. The hospitals collect their full, billed rate only one to 10 percent of the time. Usually, the hospitals agree to accept a lesser amount, which is typically expressed as a percentage of the full, billed rate. That amount varies, depending on whether the payor is a government program (such as Medicare or Medi-Cal), a health plan or health insurance company that has negotiated a contract with the hospitals (a so-called “managed care agreement“), a member of a so-called “rental network” which negotiates rates with hospitals on behalf of network members, or an individual paying cash.
For instance, between 2015 and 2017, the hospitals agreed to accept the following rates from the following groups:
| Payor | Percentage of full, billed rates |
|---|---|
| Medi-Cal | 10% |
| Medicare | 15% |
| Health plans with contractual “managed care agreements” | Typically, between 40% and 65%, with between 44% and 52% paid for trauma and emergency services |
| Member of a “rental network” | Typically, between 60% and 85% |
| Individuals paying cash | 22% |
Between 2015 and 2017, the average rate which the hospitals agreed to accept for emergency medical services—across all of these categories—was 27 percent of the hospitals’ full, billed rates.
2. The Kaiser entities
Kaiser Foundation Health Plan, Inc. (Kaiser) is an “insurance company” that provides medical insurance to its enrollees. Kaiser Foundation Hospitals is a related entity, and operates hospitals throughout California, although none in the communities served by the hospitals.
B. Prior contracts between the hospitals and Kaiser
In the past, Kaiser had entered into managed care agreements with the hospitals; Kaiser let its agreement with Orange Coast Memorial expire in 2008 and let its agreement with Long Beach Memorial expire in June 2015. Under the most
| Service | Percentage of full, billed rates |
|---|---|
| General medical services | 47% |
| Emergency room services | 56% |
| Outpatient trauma services | 73.4% |
| Inpatient trauma services | 76% |
C. Postcontractual payments
Although Kaiser allowed its managed care agreements with the hospitals to expire, Kaiser‘s enrollees would still sometimes seek emergency medical care from the hospitals, and under the Knox-Keene Act, the hospitals were obligated to provide emergency medical care to those enrollees.
Between July 2015 and October 2015, Kaiser joined several different rental networks and, pursuant to those networks’ agreements with the hospitals, ended up paying the hospitals between 75 and 85 percent of the hospitals’ full, billed rates for the emergency medical services provided to their enrollees.
In October 2015, Kaiser used an internal methodology for calculating the reasonable value of medical services. Between October 2015 and October 2017, the hospitals provided prestabilization emergency medical services to 3,609 Kaiser enrollees, and billed Kaiser for those services at their full-billed rate for a total of $31,007,982. Using its internal methodology,
II. Procedural Background
A. Pleadings
1. The hospitals’ complaint(s)
In August 2017, the hospitals sued Kaiser, Kaiser Foundation Hospitals, Kaiser Permanente Insurance Company, and The Permanente Medical Group, Inc.
In the operative, second amended complaint filed in May 2018, the hospitals sued Kaiser, Kaiser Foundation Hospitals, and Kaiser Permanente Insurance Company3 for (1) breach of contract (namely, breaching the rental network contracts), (2) breach of an implied contract and recovery of services rendered—that is, quantum meruit—under the Knox-Keene Act, (3) the tort of intentionally violating the “statutory duty under the Knox Keene Act to provide and pay for the reasonable and customary value of” emergency medical services by “implement[ing] a provider reimbursement structure that systematically fails to pay [and] underpays” the hospitals,4 and (4) violating the unfair competition law by “systematically failing to pay [and] underpaying” the reimbursement required by the Knox-Keene Act. The hospitals sought reimbursement for underpayments made between October 2015 and October 2017 allegedly totaling $26,750,000, punitive damages for the intentional tort, and an
2. Kaiser‘s cross-complaint
Kaiser filed a cross-complaint to recapture any payments it may have made to the hospitals in excess of the reasonable value of the emergency medical services provided.
B. Summary adjudication of intentional tort and unfair competition claims
Kaiser moved for summary adjudication of the hospitals’ intentional tort and unfair competition claims. Following briefing and a hearing, the trial court granted the motion and dismissed those two claims. The court ruled that recognizing an intentional tort for underpayment of reimbursement costs would “undermine the carefully balanced and comprehensive managed health care scheme established by the Knox-Keene Act” and would be “full of pitfalls that [the court] can‘t begin to comprehend.” The court ruled that recognizing an unfair competition claim for underpayment made no sense because enjoining Kaiser from “paying inadequate reimbursement” was not a workable injunction.
As the summary adjudication motion was being litigated, the hospitals voluntarily dismissed Kaiser Permanente Insurance Co. as a defendant.
C. Trial
After two days of pretrial hearings, the trial court convened a three-day jury trial.
The trial was a proverbial battle of the experts. The hospitals’ expert testified that the reasonable value of the hospitals’ emergency services was 85 percent of the hospitals’ full, billed rate, which came to $27,137,053.25. Subtracting
Midtrial, the court granted a nonsuit as to Kaiser Foundation Hospitals.
The jury returned a special verdict finding that Kaiser—the sole remaining defendant—had paid the hospitals “an amount equal to or greater than [the] reasonable value” of the hospitals’ services, and that the reasonable value of those services was $16,524,537. Because that amount was precisely the amount Kaiser had already paid as reimbursement, Kaiser voluntarily dismissed its cross-claim.
D. Costs
Kaiser filed a memorandum of costs seeking $229,903.96 in costs as the prevailing party.
The hospitals filed a motion to tax costs, arguing that (1) Kaiser was not the prevailing party, and (2) many of the line items were not recoverable or reasonable. Following further briefing, the trial court granted the hospitals’ motion to tax “in its entirety” and awarded no costs.
E. Appeal and cross-appeal
Following the entry of judgment, the hospitals filed a timely notice of appeal. Following the postjudgment order denying all costs, Kaiser filed a timely notice of cross-appeal.5
I. Pertinent Background of Regulatory Scheme
Under the federal Emergency Medical Treatment and Active Labor Act (
However, when the hospital or other medical providers do not have a contract with the plan, the plan is statutorily obligated to reimburse the hospital or providers for the “reasonable and customary value [of] the [emergency] health care services rendered.” (
If a hospital or other medical provider believes that the amount of reimbursement it has received from a health plan is below the “reasonable and customary value” of the emergency services it has provided, the hospital or provider may assert a quantum meruit claim against the plan to recover the shortfall. (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 213-214, 221 (Bell); Prospect Medical, supra, 45 Cal.4th at p. 505; Children‘s Hospital Central California v. Blue Cross of California (2014) 226 Cal.App.4th 1260, 1273 (Children‘s Hospital).) As the plaintiff in a quantum meruit lawsuit, the hospital or provider bears the burden of establishing that the plan‘s reimbursement was less than the “reasonable and customary value” of its services. (Children‘s Hospital, at p. 1274.)
II. Propriety of Pretrial Dismissal of the Hospitals’ Intentional Tort and Unfair Competition Claims
The hospitals argue that that the trial court erred in granting summary adjudication of their claims against Kaiser for (1) intentionally reimbursing them at an amount below the “reasonable and customary value” of the emergency medical
Like summary judgment, summary adjudication is appropriate when the moving party shows “[it] is entitled to a judgment as a matter of law” (
A. Tort of intentional failure to reimburse the “reasonable and customary value” of emergency medical services
Because ‘“[a] tort, whether intentional or negligent, involves a violation of a legal duty . . . owed by the defendant to the person injured,“’ and because the existence of a legal duty turns on whether the “‘“sum total“‘” of “‘“policy“‘” “‘“considerations“‘” favors “‘“say[ing] that the particular plaintiff is entitled to [the] protection“‘” of tort law, our task in deciding whether to recognize a tort for intentionally failing to reimburse a hospital or medical provider for the “reasonable and customary value” of emergency medical services is to “examine and weigh the relevant ‘considerations of policy‘” and to ask whether the
The relevant policy considerations counsel against recognizing a legal duty by health plans—compensable via a tort—not to reimburse hospitals and other medical providers of emergency medical services at an amount less than the “reasonable and customary value” of those services.
The social benefits of recognizing such a duty are slight. The hospitals have provided no evidence or argument suggesting that inadequate reimbursement for emergency medical services under the Knox-Keene Act is a widespread problem (see Cedars, supra, 18 Cal.4th at p. 13 [looking whether “problem” to be solved by tort liability is “widespread“]), or that the problem is not
The social costs of recognizing a new tort duty, on the other hand, are staggering. The trial court lamented that such a new tort would be “full of pitfalls” too numerous to enumerate. We agree, but will enumerate a few.
First, recognizing a legal duty—and, on the basis of that duty, an intentional tort—not to underreimburse a hospital the “reasonable and customary value” of emergency medical services runs afoul of the longstanding principle that tort “liability . . . for purely economic losses is ‘the exception, not the rule.‘” (Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 400; Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 715; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 58; Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 81-82 (Harris) [“our Supreme Court has advised against judicial activism where an extension of tort remedies is sought for a duty whose breach previously has been compensable by contract remedies“]). This principle rests on the premise that economic relationships are typically governed by contracts or by comprehensive government regulation, and recognizes that tort liability creates incentives that alter the conduct of market participants and thus runs the risk of
Second, recognizing a legal duty—and, on the basis of that duty, an intentional tort—not to underreimburse a hospital the “reasonable and customary value” of emergency medical services would inevitably lead to an outcome fundamentally at odds with one of the avowed purposes of the Knox-Keene Act to “help[]
Third, recognizing a legal duty—and, on the basis of that duty, an intentional tort—not to underreimburse a hospital the “reasonable and customary value” of emergency medical services would create a powerful incentive for a hospital or other medical provider to bring such a tort claim in every case. By statute, punitive damages are available whenever a tortfeasor is “guilty of oppression, fraud, or malice” (
The hospitals and their amici respond with what boil down to two arguments.
First, the hospitals argue that Kaiser is already under a tort duty not to violate the Knox-Keene Act‘s provisions because Centinela, supra, 1 Cal.5th 994, previously recognized a negligence-based tort grounded in the Knox-Keene Act, and because a negligent violation of this duty must necessarily be subsumed within an intentional violation of the same duty. This argument rests on an incorrect and overgeneralized reading of Centinela. Centinela held that a health plan has a legal duty, enforceable in a tort claim, (1) not to negligently “delegate its
Because we conclude that there is no legal duty not to negligently or intentionally underreimburse a hospital or other medical provider, the trial court properly dismissed the hospitals intentional tort claim based on that duty‘s nonexistence.
“As its name suggests, California‘s unfair competition law bars ‘unfair competition’ and defines the term as a ‘business act or practice’ that is (1) ‘fraudulent,’ (2) ‘unlawful‘, or (3) ‘unfair.‘” (Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1135 (Shaeffer), quoting
Because a plaintiff states a claim under the unlawful prong of the unfair competition law by showing that the challenged practice violates a California “statute or regulation” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1265 (Gutierrez); Aryeh, supra, 55 Cal.4th at p. 1196), a plaintiff may as a general matter state a claim under the unfair competition law for a violation of the Knox-Keene Act. (See Bell, supra, 131 Cal.App.4th at pp. 217, fn. 6, 221 & fn. 9 [unfair competition claim based on failure to reimburse under
The unfair competition law affords two types of relief—namely, restitution and injunctive relief. (
As applied to a violation of the Knox-Keene Act‘s requirement for reimbursement of emergency medical services, the restitution available under the unfair competition law would be entirely duplicative. The hospitals may certainly seek restitution for Kaiser‘s violation of its Knox-Keene Act duty to reimburse them for the “reasonable and customary value” of the emergency medical services they provided to Kaiser enrollees, but that restitutionary award is indistinguishable from the award they would receive through their quantum meruit claim.
What is more, the injunctive relief the hospitals seek—that is, an order enjoining Kaiser from violating the Knox-Keene Act by underpaying for emergency medical services in the future—is legally unavailable. To the extent it requires Kaiser more specifically not to underpay reimbursement when its enrollees receive emergency medical services in every future instance, it is difficult to see how Kaiser could comply: It is impossible for Kaiser to definitively know the “reasonable and customary value” of emergency medical services until a jury fixes that value, but Kaiser is statutorily obligated to pay some reimbursement amount within 30 or 45 days of rendering those services. If Kaiser incorrectly estimates the “reasonable and customary” value and underpays, it will have violated the injunction and will ostensibly be subject to contempt penalties. To us, such an injunction would be “‘so vague that [persons] of common intelligence must necessarily guess at its meaning and differ as to its application‘“; as such, it would be invalid and could not form the basis for the “potent weapon” of contempt. (In re Berry (1968) 68 Cal.2d 137, 156; People v. Uber Technologies, Inc. (2020) 56 Cal.App.5th 266, 316; see generally People ex rel. Gascon v. HomeAdvisor, Inc. (2020) 49 Cal.App.5th 1073, 1082 [“‘An injunction must be sufficiently definite to provide a standard of conduct for those whose activities are to be proscribed . . .‘“].) To the extent it requires Kaiser more generally to “obey the law,” such an injunction would be equally invalid. (City of Redlands v. County of San Bernardino (2002) 96 Cal.App.4th 398, 416 [“a court may not issue a broad injunction to simply obey the law . .
Thus, the trial court properly dismissed the hospitals unfair competition claim to the extent it sought injunctive relief but erred in dismissing that claim to the extent it sought restitution.9 The latter error was harmless, however, given that the hospitals were able to effectively pursue restitution as part of their quantum meruit claim. (Cf. Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 352 [where cause of action is duplicative of another cause of action in the complaint, it is “superfluous” and subject to summary adjudication].)
III. Propriety of the Jury Instruction Defining “Reasonable and Customary Value”
The hospitals and their amici level two different complaints at the trial court‘s jury instruction defining “reasonable and customary value.” We independently examine instructional issues. (People v. Scully (2021) 11 Cal.5th 542, 592.)
A. Pertinent facts
In its initial instructions given prior to the presentation of evidence, the trial court instructed the jury that (1) it would be “asked to decide” the “reasonable value” of the emergency medical services the hospitals provided, (2) “reasonable value” is defined as “what a hypothetical buyer would have offered and what a hypothetical seller would have accepted” for those services, (3) in assessing reasonable value, the jury may “consider” (a) “all of the
At the conclusion of trial, the court instructed the jury in pertinent part:
“The measure of recovery in quantum meruit is the reasonable value of the services. Reasonable value is the price that a hypothetical willing buyer would pay a hypothetical willing seller for the services, neither being under compulsion to buy or sell, and both having full knowledge of all pertinent facts. Reasonable value can be described as the ‘going rate’ for those services in the market.
“In determining reasonable value, you should consider the full range of transactions presented to you, but you are not bound by them. You may choose to use the transactions you believe reflect the price that a hypothetical willing buyer would pay a hypothetical willing seller for the services. On the other hand, you may reject transactions you believe do not reflect the price that a hypothetical willing buyer would pay a hypothetical willing seller for the services.”
(Italics added.)
B. Analysis
The hospitals argue that the trial court erred in telling the jury to determine “reasonable value” by looking at what a “hypothetical willing buyer” would pay a “hypothetical seller” for the services. Amici, by contrast, argue that the trial court erred
In Children‘s Hospital, supra, 226 Cal.App.4th 1260, the court held that the “reasonable and customary value” of reimbursement for emergency medical services under the Knox-Keene Act is pegged to the “[r]easonable” or “fair market value” of those services. (Id. at p. 1274.) Children‘s Hospital went on to define that value as “the price that ‘“a willing buyer would pay to a willing seller, neither being under compulsion to buy or sell, and both having full knowledge of all pertinent facts.“’ [Citation.]” (Ibid.) As one would anticipate given the quantum meruit claim at issue, Children‘s Hospital borrowed its “reasonable market value” standard from the law of quantum meruit. (Id. at pp. 1274-1275.) That law looks to the “reasonable value of [the] services” in the “open market,” and explicitly acknowledges that this value may be different than the price fixed by a prior contract between the parties to that case. (Maglica v. Maglica (1998) 66 Cal.App.4th 442, 450 (Maglica).) The determination of reasonable value is to account for a “wide variety of evidence.” (Children‘s Hospital, at p. 1274.)
Under this law, the trial court‘s reference to a “hypothetical buyer” and “hypothetical seller” was entirely appropriate. “Fair market value” is defined in many other contexts as that amount that “hypothetical buyers and sellers” would pay in a “hypothetical transaction.” (South Bay Irrigation Dist. v. California-American Water Co. (1976) 61 Cal.App.3d 944, 976; People v. Seals (2017) 14 Cal.App.5th 1210, 1217; Xerox Corp. v. County of Orange (1977) 66 Cal.App.3d 746, 752-753; County of San Diego v. Assessment Appeals Board No. 2 (1983) 140 Cal.App.3d 52, 57; People ex rel. Dept. of Transportation v. Clauser/Wells Partnership (2002) 95 Cal.App.4th 1066, 1083, fn. 15.) This makes sense. Where, as here, the reimbursement transactions at issue between the hospitals and Kaiser are compelled by the Knox-Keene Act and federal law, and where fair market value by definition looks to a fully consensual transaction, a determination of fair market value is necessarily hypothetical. As a result, and contrary to what the hospitals strenuously urge, the absence of the word “hypothetical” in the definition of “reasonable value” set forth in Children‘s Hospital is of no consequence.
Not only is it legally appropriate to key “reasonable value” to the price fixed by a willing “hypothetical buyer” and willing “hypothetical seller” in a “hypothetical transaction,” but it is affirmatively helpful because it emphasizes another pertinent legal principle—namely, that the parties’ prior actual transactions are not dispositive. (Maglica, supra, 66 Cal.App.4th at p. 450.) For much the same reason, amici‘s argument that the prior transactions should be accorded extra weight—rather than be treated as one of the colors in the prism of the “wide variety of evidence” relevant to reasonable value—is legally incorrect. (See Children‘s Hospital, supra, 226 Cal.App.4th at p. 1274.)
At oral argument, the hospitals articulated a new challenge to the instruction—namely, that the portion of the instruction allowing the jury to “reject transactions you believe do not reflect the price that a hypothetical willing buyer would pay a hypothetical willing seller for the services” improperly empowered the jury to capriciously disregard relevant evidence bearing on the “reasonable and customary value” of the services provided, and thereby undercut the earlier portion of the
IV. Propriety of Evidentiary Rulings
The hospitals and amici challenge the trial court‘s (1) limitation on their expert witness‘s testimony and (2) rulings regarding four categories of evidence bearing on the “reasonable and customary” value of the emergency medical services at issue in this case. We review evidentiary rulings for an abuse of discretion (People v. Dworak (2021) 11 Cal.5th 881, 895), but independently review any subsidiary questions of law (Goel, supra, 11 Cal.App.5th at p. 1060).
A. Limitation on expert opinion testimony
1. Pertinent facts
In accordance with the trial court‘s pretrial ruling, the hospitals’ expert witness opined to the jury that the “reasonable and customary value” of the emergency medical services provided to Kaiser‘s enrollees should be fixed at 90 percent of the hospitals’ full, billed rates. The expert calculated his 90 percent figure by taking the average of the following three percentages: (1) 83 percent, which represented the “course of dealing” between Kaiser and the hospitals, and was calculated by (a) taking the percentage from the parties’ most recent contract (51 percent), (b) adding 15 percent to reflect that the hospitals, without a contract,
Partway through the expert‘s testimony, the trial court questioned the expert outside the jury‘s presence. After the expert was unable to answer several of the court‘s questions, the court ruled that the third percentage in the expert‘s calculation—that is, 100 percent for the hospitals’ full, billed rate—must be excluded. The court cited three reasons for its ruling: (1) the expert could not explain why the hospitals’ full, billed rate accounted for one-third of his calculation when only eight percent of the hospitals’ clientele paid the full rate; (2) the expert did not show that the small percentage of transactions where the full, billed rate was paid had any resemblance to the transactions at issue here; and (3) the expert did not explain why the hospitals’ full, billed rates being on the lower end of full, billed rates vis-a-
When the jury returned, the court informed the jury that, after “a long discussion,” “the court concluded that the third prong [regarding the full, billed rates] doesn‘t belong there.” The expert then opined that the relevant percentage was 85 percent (that is, the average of the other two percentages—83 percent and 87 percent).
2. Analysis
A witness may testify as an expert if he possesses the requisite “special knowledge, skill, experience, training, or education,” on any “subject that is sufficiently beyond common experience that the opinion of an expert would assist the trier of fact” if it is “[b]ased on a matter . . . perceived by or personally known to the [expert]” and “is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject . . . .” (
The trial court did not abuse it discretion in prohibiting the expert from relying upon the hospitals’ full, billed rates as one-
The hospitals respond with three arguments.
First, they argue that their full, billed rates are relevant. This is true, but beside the point. The issue here is not whether they are relevant, but whether the expert offered any rational reason for giving the full, billed rate such prominence in his calculation. He did not, and this was “too great a . . . gap” in his analysis.
Second, the hospitals assert that the trial court went beyond the gatekeeper role approved by Sargon, supra, 55 Cal.4th at pp. 771-772, because (1) the three bases Sargon articulated for excluding expert testimony do not include exclusion for expert testimony with analytical gaps, and (2) the trial court merely disagreed with their expert‘s conclusions, which is an impermissible basis for excluding testimony under Sargon. These assertions lack merit. There is no question that Sargon expressly empowered a trial court to exclude expert testimony whenever “‘there is simply too great an analytical gap between the data and the opinion offered.’ [Citation.]” (Id. at p. 771.) We reject the hospitals’ argument that our Supreme Court did not mean what it said. Further, the trial court in this case did not disagree with the expert‘s conclusion; instead, the court excluded the evidence because the expert could not explain the part of his “‘methodology‘” that the court excluded, which is precisely what Sargon contemplates. (Id. at p. 772 [“the gatekeeper‘s focus ‘must be solely on principles and methodology, not on the conclusions that they generate’ [citation]“].)
Third, the hospitals contend that the trial court exuded “palpable” “hostility” toward their expert, which they imply taints the court‘s evidentiary rulings and otherwise prejudiced the hospitals. This contention finds no support whatsoever in the record. To be sure, the court told the expert to remain on the stand as the court excused the jury in order to probe the basis for the expert‘s opinion, vigorously examined the expert regarding the reasons for treating the full, billed rate as one-third of his calculation, and ultimately told the jury that it had ruled that the full, billed rate “doesn‘t belong there.” But this conduct confirms that the trial court was merely doing what Sargon requires—namely, acting as a gatekeeper to ensure that the trier of fact is not presented with expert testimony based on logically unsupported methodologies. The court‘s conduct, as well as its demeanor in undertaking that conduct, was nowhere near the type of “persistent[]” “discourteous and disparaging remarks” aimed at “discredit[ing]” one party that crosses over the line into judicial misconduct. (People v. Santana (2000) 80 Cal.App.4th 1194, 1206-1207.)
The hospitals and their amici argue that the trial court erred in excluding from the jury‘s consideration four “relevant data point[s]” bearing on the “reasonable and customary value” of the emergency medical services the hospitals provided: (1) what Kaiser paid other hospitals for emergency medical services, (2) the hospitals’ full, billed rates, (3) what Kaiser received when its affiliated hospitals provided emergency medical services to the hospitals’ enrollees (because the hospitals self-insured their employees), and (4) what methodology Kaiser used internally to calculate the “reasonable and customary” value it would pay the hospitals for emergency medical services.10
We reject the first two challenges at the outset for the simple reason that the trial court never excluded those “data point[s].” Although the trial court did not allow the hospitals’ expert to discuss what Kaiser paid other hospitals for emergency medical services because those rates were not part of the expert‘s methodology or opinion, the contracts setting forth those payments were admitted into evidence. The court also admitted evidence of what percentage of the hospitals’ full, billed rates
We now turn to the two categories of evidence that were excluded.
1. Pertinent facts
a. The hospitals’ payments to Kaiser
During the direct examination of one of the hospitals’ vice presidents, the hospital asked if there were “situations in which [the hospitals are] the party who pays Kaiser for emergency trauma services.” When the vice president answered that such situations exist because the hospitals “self-insure[] [their] employees,” the trial court said, “Oh, no. Move on.”
b. Kaiser‘s internal methodology
In two different motions in limine, Kaiser moved to exclude evidence of its internal methodology on the grounds that it was both irrelevant and subject to exclusion under
2. Analysis
Evidence is “relevant” if it has “any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action.” (
a. The hospitals’ payments to Kaiser
The trial court did not abuse its discretion in excluding evidence of what the hospitals (in their role as self-insurers of their employees) paid Kaiser for emergency medical services for two reasons.
The hospitals’ sole argument on appeal is that evidence of what they paid Kaiser is relevant. As explained above, we agree with the hospitals on this point but nevertheless conclude there was no abuse of discretion to exclude the evidence under
b. Kaiser‘s internal methodology
The trial court did not abuse its discretion in excluding evidence of Kaiser‘s internal methodology for calculating its reimbursement payments to the hospitals. We need not address whether a health plan‘s internal methodology is relevant in the first place because, assuming its base relevance, the trial court acted within its discretion in excluding the evidence under
In its cross-appeal, Kaiser argues that the trial court erred in flatly denying its motion for costs, seemingly on the ground that Kaiser was not the “prevailing party” because its failure to prevail on its cross-complaint for overpayment canceled out its victory in defending against the hospitals’ claims. We independently review whether a party is entitled to costs as a matter of right (Charton v. Harkey (2016) 247 Cal.App.4th 730, 739), and conclude that the trial court erred.
The statute governing costs expressly specifies that a “defendant” is a prevailing party entitled to costs “where neither plaintiff nor defendant obtains any relief.” (
The judgment is affirmed. The order denying costs is reversed and remanded for the trial court to consider the hospitals’ previously raised objections to specific cost items. Kaiser and Kaiser Foundation Hospitals are entitled to their costs on the appeal and cross-appeal.
CERTIFIED FOR PARTIAL PUBLICATION.
______________________, J.
HOFFSTADT
We concur:
_________________________, Acting P. J.
ASHMANN-GERST
_________________________, J.
CHAVEZ