Opposition ObjectionsCal. Super. - 6th Dist.October 10, 2018 22861 - 1 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LAW OFFICES OF STEPHENSON, ACQUISTO & COLMAN, INC. JOY STEPHENSON-LAWS, ESQ. (SBN 113755) RICHARD A. LOVICH, ESQ. (SBN 113472) KARLENE ROGERS-ABERMAN, ESQ. (SBN 237883) CHRISTOPHER HAPAK, ESQ. (SBN 267212) GERALDINE S. GARCIA, ESQ. (SBN 319561) 303 N. Glenoaks Blvd., Suite 700 Burbank, California 91502 Telephone: (818) 559-4477 Facsimile: (818) 559-5484 Attorneys for Plaintiff CALIFORNIA SPINE AND NEUROSURGERY INSTITUTE, a California for profit corporation SUPERIOR COURT OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA UNLIMITED JURISDICTION CALIFORNIA SPINE AND NEUROSURGERY INSTITUTE, a California for profit corporation Plaintiff, v. BLUE CROSS OF CALIFORNIA doing business as ANTHEM BLUE CROSS, a California for profit corporation; FLEXTRONICS INTERNATIONAL USA, INC., a California for profit corporation; and DOES 1 THROUGH 25, inclusive, Defendants. Case No.: 18CV336117 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT Hearing on Demurrer Date: October 10, 2019 Time: 9:00 a.m. Dept.: 9 Judge: Hon. Mary Arand Complaint Filed: October 11, 2018 Trial: No date set Electronically Filed by Superior Court of CA, County of Santa Clara, on 9/26/2019 3:00 PM Reviewed By: L. Nguyen Case #18CV336117 Envelope: 3444847 18CV336117 Santa Clara - Civil L. Nguyen 22861 - 2 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND SUMMARY OF ARGUMENT California Spine and Neurosurgery Institute (“California Spine” or “Plaintiff”) hereby submits the following memorandum of points and authorities in support of its opposition to Defendant’s Demurrer to the First Amended Complaint (“FAC”) (“Demurrer”) filed by Blue Cross of California dba Anthem Blue Cross (“Anthem”) and Flextronics International USA, Inc. (“Flex”). Defendants contend that all three causes of action for breach of implied-in- fact contract, breach of express contract, and quantum meruit fail for failure to state sufficient facts to constitute an action pursuant to Civil Procedure Code Section 430.10(e). First, Defendants’ demurrer to the first and second cause of action for breach of implied-in-fact contract and breach of express contract fails on the basis that California Spine does not allege a promise by Defendants to pay Plaintiff’s full billed charges and Defendants have conduct that is sufficient to show both an agreement on a material term and conduct sufficient of consent to enter into an agreement with California Spine. Second, Defendants’ demurrer to the cause of action for quantum meruit fails on the grounds that California Spine has alleged sufficient facts to support reliance of California Spine on Defendants’ conduct and Defendants’ knowledge of the benefit conferred upon a member of health plan belonging to Defendants. II. STANDARD OF REVIEW In determining whether a demurrer has merit, a complaint must be construed "liberally . . . with a view to substantial justice between the parties." Cal. Civ. Proc. Code § 452; Stevens v. Superior Court, 75 Cal. App. 4th 594, 601 (2nd Dist. 1999). "A complaint is sufficient if it alleges facts which state a cause of action under any possible legal theory." Sunset Drive Corp. v. City of 22861 - 3 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Redlands, 73 Cal. App. 4th 215, 219 (4th Dist. 1999). "In determining the merits of a demurrer, all material facts pleaded in the complaint and those that arise by reasonable implication, but not conclusions of fact or law, are deemed admitted by the demurring party." Rodas v. Spiegel, 87 Cal. App. 4 th 513, 517 (2 nd Dist. 2001) (emphasis added). "A demurrer is simply not the appropriate procedure for determining the truth of disputed facts." Joslin v. H.A.S. Insurance Brokerage, 184 Cal. App. 3 rd 369, 374 (4 th Dist. 1986) (emphasis added). "A demurrer tests the pleading alone, and not the evidence or the facts alleged." City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal.App.4th 445, 459 (1 st Dist. 1998) (emphasis added). For that reason, "courts must assume the truth of the complaint’s properly pleaded or implied factual allegations." Schifando v. City of Los Angeles, 31 Cal. 4 th 1074, 1081 (2003) (emphasis added). III. LEGAL ARGUMENT A. The FAC Pled Sufficient Facts to Allege Breach of Implied-in-Fact Contract and Breach of Express Contract Because Conduct of the Parties Demonstrates Consent and Existence of Terms to Enter Into A Contract 1. Conduct of the Defendants Supports Consent to Enter Into a Contract Under A Totality of the Circumstances Defendants base their Demurrer to Plaintiff’s first and second cause of action upon the allegation that the facts in the FAC are insufficient to support an implied-in-fact contract and express contracted because “Plaintiff does not - and cannot - allege a promise to pay Plaintiff’s full billed charges.” (Demurrer, p. 5:21-23). Defendants’ misapprehend the nature of implied-in-fact contracts and express contracts as well as the facts pled in the FAC. Based upon the totality of the circumstances of the parties’ interactions and conduct, the trier-of-fact here 22861 - 4 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 could find that an implied-in-fact contract and express contract existed on the terms Plaintiff alleged. The California Supreme Court held that the “totality of the circumstances" is key to the determination of whether an implied-in-fact contract or oral contract exists and on what terms. Foley v. Interactive Data Corp., 47 Cal.3d 654, 682 (1988). As to establishing a promise requisite of an express or implied contract, “‘oblique language will not, standing alone, be sufficient to establish agreement’; instead, the totality of the circumstances determines the nature of the contract. Agreement may be ‘shown by the acts and conduct of the parties, interpreted in the light of the subject matter and of the surrounding circumstances.’” Id. citing Pugh v. See's Candies, Inc., 116 Cal.App.3d 311, 329 (1981). Thus, following Foley, an implied-in-fact contract as well as an express contract is established by the totality of the circumstances, including conduct and oral representations. In the present case, the FAC sufficiently states a claim for breach of implied-in-fact contract and breach of express contract. The elements of a breach of contract cause of action are “the existence of the contract, performance by the plaintiff or excuse for nonperformance, breach by the defendant, and damages.” First Commercial Mortgage Co. v. Reece, 89 Cal.App.4th 731, 745 (2001); see also CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008). “The distinction between express and implied in fact contracts relates only to the manifestation of assent; both types are based upon the expressed or apparent intention of the parties.” 1 B.E. Witkin, Summary 11 th Contracts § 102 (2017). “An implied contract is one, the existence and terms of which are manifested by conduct.” Cal. Civ. Code § 1621. Here, Plaintiff sought to correct its original Complaint and provided material facts in its FAC. Plaintiff corrected the original demanded amount in accordance with new facts, that is, the representation made by Defendants’ representative that, “insurance responsibility for reimbursement was 60%” of the usual and customary 22861 - 5 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 rate.” (FAC ¶ 16). Defendants failed to acknowledge this new fact alleged in FAC and incorrectly alleges that Plaintiff is seeking “full billed charges,” or 100% of its usual and customary charges from Defendants in the present case. (Demurrer, p. 5:22). California Spine pleaded (1) clear contract terms - i.e. California Spine would provide medically necessary services to Defendants’ health plan beneficiaries, and in return, Defendants would pay their obligation of 60% of the usual and customary rate for such services, (FAC ¶16), (2) the parties agreed to give each other something of value - i.e., surgical procedures in exchange for monetary payment, (FAC ¶¶16, 18), and (3) that the parties agreed to the terms. (FAC ¶16). The mutual agreement or intent may be inferred from the conduct of the parties including the act of California Spine providing medically necessary services to Patient L.M.D., Defendants’ health plan beneficiary, (FAC ¶¶ 11, 14- 18); affirmation that the health plan is responsible for 60% of California Spine’s usual and customary rate (FAC ¶16); and the act of Defendants making a partial payment. (FAC ¶20). 2. Agreement for Reimbursement Based on Plaintiff’s Usual and Customary Rate Supports Intent to Enter Into A Contract Defendants allege, “Plaintiff’s claim still fails because there was no meeting of the minds regarding the reimbursement amount.” (Demurrer, p.8:6-7). The FAC asserts that Defendants’ representative affirmed reimbursement at 60% of the usual and customary rate of the Plaintiff’s billed charges. (FAC ¶16). Here, the reimbursement term agreement upon the parties was for 60% of the usual and customary rate. Id. This statement was affirmed by Anthem representative, on behalf of Defendants, during Plaintiff’s phone call for eligibility benefits. Id. When an insurance company verifies coverage to a health care provider, “it should realize that either it is consenting to the payment of plan benefits or it should ‘accept [the] consequences for false representation of coverage 22861 - 6 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that the provider reasonably relied upon.’” Hoah, 820 F.Supp. at 1236 citing in part to Memorial Hospital System v. Northbrook Life Insurance Company, 904 F.2 nd 236 (5 th Circ. 1990). Thus, Defendants’ affirmation that reimbursement to Plaintiff would be 60% of the usual and customary rate is sufficient for material term for the parties would have a meeting for the minds and for which an implied-in-fact contract and express contract may arise. Therefore, accordingly, Defendants’ demurrer to the causes of action for breach of implied-in-fact contract and express contract should be overruled. B. The FAC Pled Sufficient Facts to Allege a Quantum Meruit Cause of Action Because Defendants Benefited from the Services Rendered by California Spine Defendants’ bases its Demurrer as to the third cause of action upon the mistaken belief, to sustain a cause of action for quantum meruit, California Spine needed to allege Anthem “requested Plaintiff’s services or received a benefit from Plaintiff.” (Demurrer, p. 10:13-14). As asserted by Defendants in its Demurrer, to recover a claim for quantum meruit, a plaintiff “must establish both that he or she was acting pursuant to either an express or implied request for such service from the defendant and that the services were intended to an did benefit the defendant.” Day v. Alta Bates Med. Ctr., 98 Cal.App.4 th 243, 248 (2002). (Demurrer, p.10:16- 18). Plaintiff has met both the request requirement and benefit requirement to recover under a theory of quantum meruit as set forth in Day. The court in Day wanted the plaintiff to show that services were performed at the request of defendant, this request must be, “an explicit or implicit request for services.” 98 Cal.App.4 th at 249. “When services are rendered by the plaintiff to a third person, the courts have required that here be a specific request therefor from the 22861 - 7 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 defendant.” Id. Here, Plaintiff rendered services in the form of minimally invasive spine surgery to a third person, Patient L.M.D. The Defendants, through their representative, May J., held themselves out to impliedly request outpatient procedures with the statement that no pre-authorization is required for outpatient procedure. (FAC ¶17). Such statement should be inferred to mean Defendants implied permission to perform outpatient procedures, like the surgery received by Patient L.M.D. from California Spine. In addition to this implied permission, Plaintiff has met the benefit requirement when Plaintiff rendered services to Patient L.M.D. The request of the Defendants created an obligation upon Plaintiff to perform services and Defendants were well aware of the fact that not only would services be received by a beneficiary to their health plan but services were rendered at Defendants’ direction. The California Supreme Court has held that “performance of services at another’s behest may itself constitute ‘benefit’ such that an obligation to make restitution may arise.” Earhart v. William Low Co., 25 Cal. 3d 503 (1979); see also Regents of Univ. of Cal. v. Principal Fin. Grp., 412 F. Supp. 2d 1037, 1047 (N.D. Cal. 2006 )(relying on Earhart to reject the argument that the plaintiff failed to state a quantum meruit claim because the benefit conferred was to its patient, as opposed to the insurer). More broadly, “Quantum meruit refers to the well- established principle that ‘the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered.’ To recover in quantum meruit, a party need not prove the existence of a contract, but it must show the circumstances were such that ‘the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made.’” Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore, 162 Cal.App.4th 1331, 1344 (2008). The FAC clearly alleged Patient L.M.D. as a member of the Anthem/Flex 22861 - 8 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 plan with a benefits identification card that signified the Anthem/Flex plan. (FAC ¶11). Defendants’ representative, May J., stated that “no pre-authorization was required for an outpatient procedure[s].” (FAC ¶17). In other words, as California Spine pled, Defendants, through their agents and statement that pre-authorization was not required for outpatient procedure, made an implied request for services rendered. (FAC ¶¶ 17, 38). When California Spine submitted its claim to Anthem, Anthem and Flex received a full appreciation of the fact their beneficiary was served and made a payment less than the agreed upon amount (FAC ¶¶ 41, 43). Defendants also contend that Plaintiff is not entitled to reimbursement beyond the plan. (Demurrer, p.10:11-12). This allegation is a premature legal conclusion which is baseless without expert testimony or evidence. This is an issue to be addressed at trial because it is the essential issue that California Spine and Defendants disagree upon, that is, the appropriate reimbursement for medically necessary services. In short, by providing medically necessary care to Patient L.M.D., California Spine necessarily conferred a benefit upon Anthem and Flex. Defendants deliver their promises made to its plan members by making healthcare available. Thus, California Spine has pled sufficient facts in its FAC to allege a quantum meruit cause of action. Thus, Defendants’ demurrer to this cause of action should be overruled. IV. CONCLUSION California Spine believes it sufficiently pled each and every cause of action found in its FAC. For the foregoing reasons, California Spine respectfully requests Defendants’ demurrer to be overruled. In the event that court should choose to sustain any portion of the demurrer, California Spine asks in the alternative that it be given leave to amend these portions of its FAC to correct any insufficiencies. 22861 - 9 - PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: 26 September 2019 LAW OFFICES OF STEPHENSON, ACQUISTO & COLMAN, INC. /s/Geraldine S. Garcia GERALDINE GARCIA Attorneys for CALIFORNIA SPINE AND NEUROSURGERY INSTITUTE, a California for profit corporation - 10 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF GERALDINE GARCIA I, GERALDINE GARCIA, declare: 1. I am an attorney licensed to practice in California and I associate with the law firm of the Law Offices of Stephenson, Acquisto, & Colman, counsel of record for plaintiff California Spine and Neurosurgery Institute (“California Spine”) in this case. I have personal knowledge of the facts stated in this declaration and if called to testify as a witness, I could and would completely testify thereto. I submit this declaration in support of Plaintiff’s Opposition to Defendant Anthem Blue Cross (“Anthem”) and Defendant Flextronics International USA, Inc. (“Flex”) Demurrer to Plaintiff’s First Amended Complaint (“FAC”) 2. I met and conferred with Nicole Medeiros, counsel of record of Defendants regarding Defendants’ Demurrer. I advised that we would be opposing the Demurrer to the FAC. 3. At this time, we are unable to resolve any part of this case. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this 26 th day of September, in Burbank, California. GERALDINE GARCIA p o s o p - 1 C O M P L A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am employed in the county of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is 303 North Glenoaks Boulevard, Suite 700, Burbank, California 91502-3226. On 26 September 2019, I served the foregoing document(s) entitled: PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT by placing a true copy thereof enclosed in a sealed envelope addressed per the attached Service List. [ ] BY U.S. MAIL: I am "readily familiar" with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the United States Postal Service on that same day with postage thereon fully prepaid at Burbank, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. [C.C.P. 1013a(3); F.R.C.P. 5(b)] [X ] BY FEDERAL EXPRESS: I caused such envelope(s), with overnight Federal Express Delivery Charges to be paid by this firm, to be deposited with the Federal Express Corporation at a regularly maintained facility on the aforementioned date. [C.C.P. 1013(c) 1013(d)] [ ] BY PERSONAL SERVICE: I caused the above-stated document(s) to be served by personally delivering a true copy thereof to the individuals identified above. [C.C.P. 1011(a); F.R.C.P. 5(b)] [ ] BY EXPRESS MAIL: I caused such envelope(s), with postage thereon fully prepaid and addressed to the party(s) shown above, to be deposited in a facility operated by the U.S. Postal Service and regularly maintained for the receipt of Express Mail on the aforementioned date. [C.C.P. 1013(c)] [ ] BY TELECOPIER: Service was effected on all parties at approximately ___:____ am/pm by transmitting said document(s) from this firm's facsimile machine (818/559-4477) to the facsimile machine number(s) shown above. Transmission to said numbers was successful as evidenced by a Transmission Report produced by the machine indicating the documents had KOOOQONUI-PUJNr-t NNNNNNNNNr-Ar-Ar-tr-tr-tp-tr-tr-tr-tb-t OONQUI-RUJNF-‘OKOOOQONUI-bWNV-‘O been transmitted completely and Without error. C.R.C. 2008(6), Cal. CiV. Proc. Code § 1013(6). [X ] BY ELECTRONIC SERVICE: By emailing true and correct copies to the persons at the electronic notification address(es) shown 0n the accompanying service list. The document(s) was/Were served electronically and the transmission was reported as complete and Without error. [X ] State: I declare under penalty 0f perjury under the laws 0f the State 0f California that the above is true and correct. Executed 0n 26 September 2019 in Burbank, California. .9 LORENA/BENCOMO lbencomo@sacfirm.com SERVICE LIST Kenneth N Smersfelt, Esq. ksmersfelt@reedsmith.com Karen A Braje, Esq. kbraie@reedsmith.com Nicole Medeiros, Esq. nmedeiros@reedsmith.com Reed Smith LLP 355 South Grand Street, Suite 2900 Los Angeles, CA 90071-3659