Pacific Bay treated an individual who was a subscriber to a Blue Shield health plan. It submitted invoices to Blue Shield for payment for the services rendered to the subscriber in the amount of $3,500 each of the 31 days of treatment. Blue Shield paid Pacific Bay for six days of treatment at the billed rate of $3,500 per day. Pacific Bay contends it was underpaid and brought suit against Blue Shield to recover the additional amount it claimed to be owed. The court sustained Blue Shield's demurrer to the first amended complaint (FAC) without leave to amend, finding that Pacific Bay had not shown that it was entitled to any payment from Blue Shield.
Here, Pacific Bay argues the court erred in sustaining the demurrer without leave to amend. It frames the issue before this court as follows: Is Blue Shield obligated to pay Pacific Bay, an out-of-network nonemergency provider, a usual, customary, and reasonable rate for services Pacific Bay provided to a Blue Shield subscriber? On the record before us, we answer this question in the negative. As such, we affirm the judgment in this matter, which followed the superior court sustaining Blue Shield's demurrer to the FAC.
FACTUAL AND PROCEDURAL BACKGROUND
Allegations in the FAC
Blue Shield is a health care service plan under the Knox-Keene Act. The Department of Managed Health Care (DMHC) regulates Blue Shield.
Pacific Bay specializes in treating substance abuse and narcotic addiction and has treated numerous patients, including patients who are subscribers and/or members of a Blue Shield health care plan. Pacific Bay has a
A Blue Shield subscriber was admitted to Pacific Bay's program on December 1, 2014. At that time, the subscriber belonged to a Blue Shield PPO plan and was covered under a policy or certificate of insurance that was issued and underwritten by Blue Shield. This plan ensured the subscriber's access to medically necessary treatments, care, procedures, and surgeries by medical providers. However, Pacific Bay was an "out-of-network provider" that had no preferred provider contracts or other contracts with Blue Shield at the time it rendered services for the subscriber.
Pacific Bay contacted Blue Shield to obtain prior authorization, precertification, and consent to render treatment and perform procedures on the subscriber. Blue Shield advised Pacific Bay that the subscriber was insured, covered, and eligible for coverage under Blue Shield's PPO plan for the services to be rendered by Pacific Bay at facilities operated by Pacific Bay. In addition, Pacific Bay believed Blue Shield would pay for the services it provided the subscriber. Blue Shield did not advise Pacific Bay that the applicable plan or policy was subject to certain exclusions, limitations, or qualifications, which might result in denial of coverage of the services provided to the subscriber. Also, Blue Shield did not offer Pacific Bay copies of the relevant policies or certificate of insurance coverage applicable to the subscriber. Pacific Bay was led to believe that it would be paid a portion or percentage of its total billed charges.
Pacific Bay appealed Blue Shield's payment for the services, but did not receive a satisfactory answer. The majority of Pacific Bay's invoices remained unpaid.
Pacific Bay's Suit
Believing it had been underpaid by Blue Shield, Pacific Bay filed a complaint in San Diego Superior Court, alleging six causes of action (recovery on payment for services rendered, quantum meruit, breach of implied contract, declaratory relief, estoppel, and violation of regulations). The thrust
Blue Shield demurred to the original complaint, arguing that it could not be liable to Pacific Bay, an out-of-network provider without any contract with Blue Shield, for any amount beyond what the terms of the governing evidence of coverage (EOC)
In opposing the demurrer, Pacific Bay argued it was a provider under section 1300.71, subdivision (a)(3)(B) of title 28 of the California Code of Regulations, and thus, was entitled to the reasonable and customary value of the services rendered. Pacific Bay also maintained that its claims for breach of implied contract and estoppel could not be determined as a matter of law so a demurrer to those causes of action was inappropriate.
Pacific Bay filed the FAC, which included the same six causes of action as the original complaint. Blue Shield demurred to the FAC, arguing that Pacific Bay did not address any of the problems the court identified in ruling on the demurrer to the original complaint. In opposing the demurrer, Pacific Bay again insisted that it was entitled to payment under section 1300.71, subdivision (a)(3)(B) of title 28 of the California Code of Regulations. Echoing its ruling on the demurrer to the original complaint, the court sustained the demurrer to the FAC, finding that Pacific Bay had not alleged any facts upon which it was entitled to payment from Blue Shield. The court did not grant leave to amend the FAC.
The court subsequently entered judgment, dismissing the FAC with prejudice. Pacific Bay timely appealed.
DISCUSSION
"On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action." (City of Dinuba v. County of Tulare (2007)
"[W]hen [a demurrer] is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse." (City of Dinuba v. County of Tulare , supra ,
The Knox-Keene Act governs health care service plans. The Knox-Keene Act "is 'a comprehensive system of licensing and regulation' [citation], formerly under
DMHC regulations govern submission and payment of claims. For example, section 1300.71 of title 28 of the California Code of Regulations is entitled "Claims Settlement Practices." This regulation is authorized by sections 1371 and 1371.35. These statutes impose procedural requirements on claim processing and subject health care service plans to disciplinary action and penalties for failure to timely comply with those requirements. (California Medical Assn. v. Aetna U.S. Healthcare of California, Inc., supra ,
"The DMHC explained in its initial statement of reasons that California Code of Regulations, title 28, section 1300.71 was 'necessary to clearly define terms relating to claim settlement and reimbursement, and provide procedures for plans and providers to prevent unreasonable delays in payment of provider claims.' Further, the DMHC wanted to clarify 'the meaning of unfair payment practices and the term "complete and accurate claim." ' " (Children's Hospital Central California v. Blue Cross of California (2014)
"(A) For contracted providers with a written contract, including in-network point-of-service (POS) and preferred provider organizations (PPO): the agreed upon contract rate;
"(B) For contracted providers without a written contract and noncontracted providers, except those providing services described in paragraph (C) below: the payment of the reasonable and customary value for the health care services rendered based upon statistically credible information that is updated at least annually and takes into consideration: (i) the provider's training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) other aspects of the economics of the medical provider's practice that are relevant; and (vi) any unusual circumstances in the case; and
"(C) For non-emergency services provided by non-contracted providers to PPO and POS enrollees: the amount set forth in the enrollee's Evidence of Coverage." (Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(A)-(C).)
In its opening brief, Pacific Bay echoes paragraph 24's allegations, contending that Blue Shield was required to reimburse Pacific Bay's claims under section 1300.71, subdivision (a)(3)(B) of title 28 of the California Code of Regulations. Further, Pacific Bay maintains that it is a noncontracted provider referred to in subdivision (a)(3)(B), asserting it "would make no sense if this regulation applied only to emergency providers[.]" However, Pacific Bay ignores the exception to this subdivision found in paragraph (C): "For non-emergency services provided by non-contracted providers to PPO and POS enrollees: the amount set forth in the enrollee's Evidence of Coverage." (Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(C).)
Here, Pacific Bay admits that it was an out-of-network provider with no contract with Blue Shield. It alleges that the subject subscriber belonged to a
Nevertheless, in its opening brief, Pacific Bay hints that "it possibly should be classified as an emergency provider" because "many of its patients suffer from the scourges of drug and alcohol addiction and often, like many emergency room patients, lack the ability to engage in thoughtful examinations of the marketplace and frequently act out of desperation." Thus, Pacific Bay appears to assert that a provider can become an emergency provider based on the capability of the patient to examine the marketplace and make a reasoned decision to engage a certain medical provider. However, Pacific Bay does not provide any authority to support this theory.
Section 1317.1 defines an "emergency medical condition" as "a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in any of the following: [¶] (1) Placing the patient's health in serious jeopardy. [¶] (2) Serious impairment to bodily functions. [¶] (3) Serious dysfunction of any bodily organ or part." (§ 1317.1, subd. (b)(1)-(3).)
Nowhere in the FAC does Pacific Bay allege that the subject subscriber requested treatment for an emergency medical condition. There was no allegation that the Blue Shield subscriber needed Pacific Bay to provide immediate medical attention to avoid (1) placing the subscriber's health in jeopardy, (2) serious impairment to bodily
" 'Emergency services and care' means medical screening, examination, and evaluation by a physician and surgeon, or, to the extent permitted by applicable law, by other appropriate licensed persons under the supervision of a physician and surgeon, to determine if an emergency medical condition or active labor exists and, if it does, the care, treatment, and surgery, if within the scope of that person's license, necessary to relieve or eliminate the emergency medical condition, within the capability of the facility." (§ 1317.1, subd. (a)(1).)
In the FAC, Pacific Bay does not allege that it was providing emergency services or care to the Blue Shield subscriber. Further, it does not contend that it could plead additional facts that it provided the subscriber emergency medical services or care.
In short, we find nothing in the FAC that supports Pacific Bay's newly raised contention that it could be an emergency services provider in the context of the instant matter.
At most, in its reply brief, Pacific Bay contends that it was a question of fact sufficient to defeat demurrer whether the subscriber's substance abuse issues would have qualified as a "psychiatric emergency" under section 1317.1, subdivision (a)(2)(A).
In Gould, supra ,
The Court of Appeal annulled the WCAB decisions. The court concluded the WCAB had applied an incorrect burden of proof in deciding whether Dr. Gould was entitled to fees in excess of the schedule. The court remanded the matter for a determination of whether Dr. Gould's fees for the psychotherapy sessions were reasonable. The court stated that, in deciding whether fees in excess of the schedule were reasonable, "the WCAB may consider evidence regarding the medical provider's training, qualifications, and length of time in practice; the nature of the services provided; the fees usually charged by the medical provider; the fees usually charged in the general geographical area in which the services were rendered; other aspects of the economics of the medical provider's practice that are relevant; and any unusual circumstances in the case." (Gould , supra ,
Gould, supra,
Pacific Bay's challenge to the Claims Settlement Practices regulation is based on a faulty premise. Pacific Bay claims that Blue Shield, relying on Orthopedic Specialists, supra ,
In Orthopedic Specialists, supra ,
The remainder of Pacific Bay's argument that the subject regulation is void fares no better. Pacific Bay maintains that a health care service plan is prohibited from engaging in an unfair payment pattern. (§ 1371.37, subd. (a).) It also insists that reducing the amount of payment or denying complete and accurate claims constitutes an unjust payment pattern. (§ 1371.37, subd. (c)(2).) Pacific Bay then notes that the regulation provides a list of 20 practices that would qualify as an unfair payment plan, but does not include "denying complete and accurate claims." (See Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(8)(A)-(T).) Pacific Bay thus argues that the regulation is invalid as it alters or amends the authorizing statute because it does not specifically list "denying complete and accurate claims" as an unfair payment plan. We are not persuaded.
Although it had the opportunity to address this issue in the superior court below and in its opening and reply briefs here, Pacific Bay did not mention
For example, in its opening brief, Pacific Bay maintains it is entitled to quantum meruit as set forth in Children's Hospital,
In its reply brief, Pacific Bay finally addresses the elements of a quantum meruit cause of action and the allegations in the complaint. Quantum meruit permits the recovery of the reasonable value of services rendered. (Palmer v. Gregg (1967)
Here, Pacific Bay is using quantum meruit to recover something to which it is not entitled under the Knox-Keene Act or its applicable regulations. As we discuss above, the amount Blue Shield owed Pacific Bay for treatment of the subscriber is limited by the applicable EOC. (See Orthopedic Specialists, supra ,
Pacific Bay's breach of implied contract claim fares no better than its quantum meruit cause of action.
Pacific Bay maintains that it pled an implied contract in two ways. First, it argues Blue Shield's conduct of paying a portion of the invoices Pacific Bay submitted shows the existence of an implied contract. Not so. The fact that Blue Shield only paid for six of the 31 days of treatment undermines Pacific Bay's claim that the parties ever agreed to the same contractual terms. By way of Blue Shield's conduct, it appears that it believed it was to pay for only six days. In contrast, Pacific Bay argues that it was to be paid for the entire length of treatment. Thus, the allegations in the FAC, based on Blue Shield's payment of some of the invoices, does not exhibit any mutual intent as to the essential terms of the implied contract.
Second, Pacific Bay contends that it properly alleged the elements of an implied contract in paragraphs 13 and 14 of the FAC. In paragraph 13, Pacific Bay alleged that it "contacted Blue Shield to obtain prior authorization, pre-certification and consent to render treatment and perform procedures upon" the subscriber. "At all relevant times, [Pacific Bay] was advised by representatives of Blue Shield that the [subscriber] was insured, covered, and eligible for coverage under the respective Plan or Policy for the services to be rendered by [Pacific Bay], at facilities operated by [Pacific Bay] and that [Pacific Bay] would be paid for performance of the procedures, care, and/or treatment rendered by Blue Shield." In paragraph 14, Pacific Bay further averred that it "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."
These allegations lack the specific facts required for us to determine there was any meeting of the minds between the parties. At best, Pacific Bay's allegations show that Blue Shield admitted that the subscriber was covered under one of its health plans and that it would pay something for Pacific Bay's treatment of the subscriber. What type of treatment or the extent of treatment is not described. In addition, it does not appear the parties reached any sort of agreement as to the rate Blue Shield would pay Pacific Bay. Indeed, Pacific Bay alleged it was led to believe Blue Shield would pay "a portion or percentage of its total billed charges, which charges correlated with usual, reasonable and customary charges." Blue Shield did pay a portion of the billed charges, but Pacific Bay argues it was not enough. However, we cannot say Blue Shield's payments breached any implied contract because there is no indication in the FAC what exactly Blue Shield agreed to pay.
In conclusion, as an out-of-network, nonemergency service provider, Pacific Bay was entitled to payment for treating Blue Shield's subscriber
DISPOSITION
The judgment is affirmed. Blue Shield is awarded its costs on appeal.
WE CONCUR:
NARES, J.
HALLER, J.
Notes
Statutory references are to the Health and Safety Code, unless otherwise specified.
An evidence of coverage is a contract between a health plan and a subscriber that provides the terms of coverage, which generally include benefits, covered services, premiums, how much the prescriber pays, conditions, and limitations.
In its first demurrer, Blue Shield argued: "[I]f a health plan member chooses to obtain health care services from an out-of-network provider ... the member assumes the responsibility to pay that provider over and above whatever the plan may pay under the governing contract with its member (the 'Evidence of Coverage'); the health plan has no direct liability to the health care provider." Pacific Bay never addressed that argument.
Section 1317.1, subdivision (a)(2)(A) provides: " 'Emergency services and care' also means an additional screening, examination, and evaluation by a physician, or other personnel to the extent permitted by applicable law and within the scope of their licensure and clinical privileges, to determine if a psychiatric emergency medical condition exists, and the care and treatment necessary to relieve or eliminate the psychiatric emergency medical condition, within the capability of the facility."
In its opening brief, Pacific Bay neither discusses the elements of a quantum meruit claim nor explains how the allegations in the FAC stated a valid quantum meruit claim.
On appeal, Pacific Bay only addresses two of its six causes of action. In its reply brief, it discusses estoppel within the context of its quantum meruit claim. We need not address the estoppel claim because it was raised for the first time in the reply brief. (See Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., supra, 78 Cal.App.4th at pp. 894-895, fn. 10,