Demurrer__without_motion_to_strike

Motion

Cal. Super. - 2nd Dist.July 3, 2018

Electronically FILED by Superior Court of California, County of Los Angeles on 02/06/2019 06:51 PM Sherri R. Carter, Executive Officer/Clerk of Court, by M. Soto,Deputy Clerk 1 || DYKEMA GOSSETT LLP Abi Gnanadesigan (263375) agnanadesigan @dykema.com Jamie L. Lopez (260721) jlopez@dykema.com 333 South Grand Avenue Suite 2100 Los Angeles, CA 90071 Telephone: (213) 457-1800 Facsimile: (213) 457-1850 DYKEMA GOSSETT LLP Jonathan S. Feld Admitted Pro Hac Vice jteld@dykema.com 10 South Wacker Drive, Suite 2300 Chicago, IL 60606 Telephone: (312) 627-5680 Facsimile: (800) 951-0574 ~N O N n e B A W 10 1 Attorneys for Defendant HUMANA 12 BEHAVIORAL HEALTH, INC. 13 SUPERIOR COURT OF THE STATE OF CALIFORNIA 14 FOR THE COUNTY OF LOS ANGELES Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 15 STANLEY MOSK COURTHOUSE Ie LAKE HUGHES RECOVERY, a California 17 || corporation, D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E Case No. BC712690 Judge Barbara M. Scheper 18 Plaintiff, DEFENDANT HUMANA BEHAVIORAL 19 v. HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO 20 HUMANA BEHAVIORAL HEALTH, INC., a FIRST AMENDED COMPLAINT; Texas corporation and DOES 1 through 40, inclusive, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 21 THEREOF; DECLARATION OF ABI 29 Defendants. GNANADESIGAN 23 RESERVATION ID: 046347368627 24 Date: April 4, 2019 Time: 8:30 a.m. 25 Dept: 30 26 Case Remanded: November 30, 2018 First Amended Complaint Filed: January 4, 2019 27 28 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO PLAINTIFF AND ITS ATTORNEYS OF RECORD PLEASE TAKE NOTICE that on April 4, 2019, at 8:30 a.m., or as soon thereafter as the matter may be heard in Department 30 of the Superior Court for the County of Los Angeles, located at the Stanley Mosk Courthouse, 111 North Hill Street, Los Angeles, CA 90012, Defendant Humana Behavioral Health, Inc. (“Humana”) will, and hereby does, demur to the First Amended Complaint (“FAC”) filed by Lake Hughes Recovery (“Plaintiff” or “LHR”) pursuant to Code of Civil Procedure Section 430.10(e). This Demurrer is made on the grounds that Plaintiff’s second, third, fourth, fifth and sixth causes of action fail to state facts sufficient to constitute a cause of action. Counsel for the parties met and conferred on January 25, 2019 concerning the issues raised in the Demurrer, and were unable to resolve them. See Declaration of Abi Gnanadesigan, 4. This Demurrer is based upon the Notice of Demurrer and Demurrer, the attached Memorandum of Points and Authorities in support thereof, Plaintiffs” FAC, all documents on file with this Court and upon such other matters as may be properly considered by this Court in ruling on the Demurrer. Dated: February 6, 2019 DYKEMA GOSSETT LLP By:/s/ Abi Gnanadesigan Abi Gnanadesigan Attorneys for Defendant HUMANA BEHAVIORAL HEALTH, INC. 2 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page DEMURRER TO COMPLAINT .....ouitiiiiie eects cette sree eset sees neesaae see ee 8 MEMORANDUM OF POINTS AND AUTHORITIES .......ccccooiiiiiieieeee cece s s 10 I. INTRODUCTION sci vin so suman sss sn usin assis ss ia 2255550839550 55 583058553 50505547054 R854 SHFR3 45.0 SEE H 8 02 10 IL RELEVANT FACTUAL ALLEGATIONS ......oiiiiiieeeeee eee e e e 11 II. PROCEDURAL BACKGROUND ......ooiiiiiiiiiiieiienie eect eeeseeeee ee ee seeese eee 12 TV: ARGUMENT sions coms umssomommss unssmness soms rs wisn os smn coms 1 58s ms 5 sms es a 12 A. Legal Standard for DEMUITET .........cccueeieiiiirnieeiececeee c c e e 12 B. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Contract (Second Cause of ACtion)........ccceeveuveeeeeiieieeeesiiieeennns 13 1. Under California law, verification letters are not contracts to PAY cette eee eee eee sete sabes shee sabe e teen ee sane sabe eae enna 13 2. LHR failed to plead an offer and acceptance, which are required for the Verifications to constitute contracts. ...........cc.ccceeee. 14 3. LHR’s breach of contract cause of action is inadequately Plead. eee eee 15 C. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Quantum Meruit (Third Cause of ACtion) .......ccccccvvereeiiieeeeeiiiieeeeiieeeenns 17 1. Humana did not request LHR perform any of the services for which LHR seeks payment. .........ccccevveeniiiiiiiiinnienieciececneee ee 17 2. There are no private rights of action under the Health and Safety Code or Insurance Code. ..........cceeruierniiinnieennieennieeeieenieen 17 D. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Implied Contract (Fourth Cause of Action) ........cceceeecveeveenne. 18 1. The FAC does not allege that LHR accepted a definite offer from Humana because a verification of coverage does not show an implied contract 10 PAY. saswssmsnsmamassmasemnmmmssmmensmmaess 19 2. LHR has no standing to enforce the Patient DOES’s policies............ 19 E. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Contract-Third Party Beneficiary (Fifth Cause of ALCHION) wet eraae as asa sas ss seas seas sessasssssnssesessnsss sens senenentnenenenenen 20 F. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Violation of California Unfair Competition Law (Sixth Cause of ACTION) .ititiiieie ieee eect ee eee eset area ease sees ettae ae ae ae ease eetaraeaeae se ee anaes 21 G. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Money Had and Received (Seventh Cause of Action) ........ccoceevveeunennen. 22 1. LHR fails to allege Humana received money belonging to 3 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN LHR. coe ee ee 22 Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. The cause of action is barred by the two-year statute of HMITATIONS. coerce eee cess 22 V. CONCLUSION .......coiiiiiiiciei eects see sree eee sae sree sees a 23 DECLARATION ‘OF ABI GN AN ATE STC AN «xmas smsssssss sss suman ams nsamsissssimsssmsssssis ams 24 4 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Acoustics, Inc. v. Trepte Constr. Co., 14 Cal. App.3d 887 (Cal. Ct. APP. 1971) cues eae 15 Avidor v. Sutter’s Place, Inc., 212 Cal. APP.4th 1439 (2013) .eicueiiiieiie cies eters sates estes t ee sabe esbe estes tee sbae sane enneas 22 Blank v. Kirwan, 39 Cal.3A 311 (1985) woueeieiieeiie cites eee ete sate sateen test ee ebbe este ene eeteesbbe sabe enneas 13 Buford v. State of California, 104. CALADE I BL {TB sissns somsnsn ssmansnsnwsns oesossnn oss sxe 55553555 5455555 565755558 S555 57545 5055550 5450555. 08 5 13 Butler v. Sequeira, 100 Cal.APP.2d 143 (1950) ..evveenieieieeeee eee eters eabe sabe a eee sbee sabe enna enneas 13 California Med. Ass’n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App.4th 151 (Cal. Ct. APP. 2001) ..eeeeieeiieeiieeiieeie eects eee stes eaters seas 17 Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal App.ad 1371 (Cal, CE Ap. 1990) seems mss ame moms ssw smn 13 Cedars Sinai Med. Ctr. v. Mid-West Nat'l Life Ins. Co., 118 F.Supp.2d 1002 (C.D. Cal. 2000) ...ccuveereieeeieeiieeeientie cites e sree sieeve eee steers seve eeees passim Doe v. City of Los Angeles, 42 CalAth 531 (2007) ceeeeeeeeeteeetieeeeeeeteeeteeeeeee ete esate sabe e atest ee ssae este anne ss ee sabe enbe anne sate snb anne 22 Gorlach v. Sports Club Co., 209 Cal. App.4th 1497 (Cal. Ct. APP. 2012) .eeomiieiieeieeeeeeie te eras s sree eev e 18 Haggerty v. Warner, 115 CalLAPP.2d 468 (1953) nevis eae sabes e teeta sabe eabeenneas 17 Hatchwell v. Blue Shield of Cal., 198 Cal. APE3d, JOZT CUIBBY sons sumsnss suman snsnwsns nso soso ox 5 555575 5055555 565755558 55557545 S055550 5450555.08 55 19 Heritage Pacific Financial, LLC v. Monroy, 215 CalLAPP.4th 972 (2013) cuneate ste eee estes sabes teeta esate esbe anne ene 15,16 Hess v. Ford Motor Co., 27 CalAth 516 (2002) ....eeeeeieeeeeiie cise e ete e sete eebe estes tee ssae sete esse esses sabe esse anneesnsessseennes 20 Khoury v. Maly’s of Cal., 14: Cal Apps bil: B12. (1D, soramsorsssmsassoss oanmonssonesonsosiosssosasess somos sh is os sss Svs enh Sess SSE AA 21 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ladas v. Cal. State Auto. Assn., 19 CalLAPP-Ath TOT (1993) eee eee este sate eee st ee sabe sabe a eee b ee sbbe sabe ennees 14 Lazar v. Superior Court, 12 Calidth 631 (1996) .....eiiieeee ee eee ete ats sates sabes sabes sabe e ssbb eesbe ee sabe eas 13 Luv. Hawaiian Gardens Casino, Inc., S01 Cal Ath 592, (2000) consis swonssasssmmsss sons snes wens os men 55mm 05 8 3s 50 555595 555555 55 5555758 5535775548 18 McKell v. Washington Mutual, Inc., 142 Cal. ApP.4th 1457 (2000) .....eeeiiieiiie eee eee eee eee sees esate sites sabres sarees sbbe ee naae as 15 Pacific Bay Recovery, Inc. v. California Physicians’ Services, Inc., 12 Cal. APP-Sth 200 (2017) weeeueeeieeetieetee eee sate eae e tee t ee eabeenbe anne e esas este snbeanneas 19 Regents of the Univ. of Cal. v. Aetna US Health of Cal., No. SACV-10-1043-DOC-RNBx, 2011 U.S. Dist. LEXIS 165180 (C.D. Cal. IMAL. 15, 2011) cette eee eset te eee sees bee sabe setae nee ete e sabe enbeennee eben 14, 16 Reichert v. General Ins. Co., 68 Cal.2d 822 (Cal. 19608).......uueieeeeiiiee eee eects ee eee eect ae eee aae eee e stata e ee etasae ee esae ee ennaeae en 15 Rokos v. Peck, 182 Cal. App.3d 604 (Cal. Ct. APP. 1986) ....eeiiiieiieeieeeet eects eee eee sae sees 18 Rupley v. Huntsman, 159 Cal ADD 2 SOT {TIER ssissn.s smsnsn sms snswsnsn esossne mm 55055045 5553575505555 505755558 S555 57545 S355 SH50HIH 1855 20 San Mateo Union High Sch. Dist. v. Cnty. of San Mateo, 213 Cal.App.4th 418 (Cal. Ct. APP. 2013) c nit eee severe eee seas 18 Sessions Payroll Mgmt., Inc. v. Noble Const. Co., 84 CalLAPP.4th 671 (2000) ...eiieeeiie eit ette sees tee stee este sabe estes ssee sate snbeenneeenseens 20 Shaolin v. Safeco Ins. Co., T1 Crl Apps: ZGB. 1 DGD, 00mm esses onsen oss soso sss a 60s ss 0a 0 00h SS SSSR SAGAS 20 Silicon Knights v. Crystal Dynamics, 983 F.Supp. 1303 (ND. Cal. 1997) cei eee eae seers sree eee 21 Stanford Hosp. & Clinics v. Humana, Inc., No. 5:13-cv-04924-HRL, 2015 U.S. Dist. LEXIS 128210 (N.D. Cal. Sept. 23, 20 LS) tenet t tetas sabe b teat aaah te eabe ante a tee ehae ante anne eet ee eabe este enne esate sabe ennes 17 Stanford Hosp. & Clinics v. Multinational Underwriters, Inc., No. C-07-05497-JF-RS, 2008 U.S. Dist. LEXIS 100541 (N.D. Cal. Dec. 12, 2008) «eee eteeeeeeeteet ee e ete tees haat beatae bee ehae ashe e nee e tee abba enbe ante enb ee este enna eneeeneens 14, 19, 21 Stanley v. Columbia Broad. Sys., 35 Cal.2d 653 (Cal. 1950). cece e ete ebbe esha e teeta bbe enna ennes 18 6 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E SU IT E 21 00 Lo s A N G E L E S , C A 90 07 1 ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Summit Estate, Inc. v. Cigna Healthcare of Cal., Inc., No. 17-cv-03871-LHK, 2017 U.S. Dist. LEXIS 167462 (N.D. Cal. Oct. 10, 2017)......ccceccueuuee 18 Travelers Fire Ins. Co. v. Brock & Co., 47 Cal.App.2d 387 (Cal. Ct. APP. 1941) cei eae 18 Vance v. Villa Park Mobilehome Estates, 36 CHL ADD 698 (1 DDT) cxisnos snus swiss soos esis s5.065555755 05553 55-45 5555555 G57555570.55.4555555 $4553.55. S555458 57535585 5 13 Weddington Prods., Inc. v. Flick, 60 Cal.APP.4th 793 (1998)... seers see sree sees 14 Statutes Cal. Bus. & Prof. Code S17200 .......uuuueeeeeeieieieieiieeeeieeeeaeaeesaraseraraesesessaeaeeraeaea------.a----------------------.-.---.. 8 Cals CHV COIE § LOL cision ssnsnss swsason os somos mss 5.055550 5553 50-45 5555555 G5755557.455555555 455555. S5537558 S583 085 S55 3455 SOH35035 45 18 Cal. Civ. Code § 3390) ...ecvveueeureriientinieetiee cites ees eae tess sees eases seats sae s es 14 Cal. Code Civ. ProC. § 3391). uuu e eters eee essere ae ee sees ee etasbe ae ae sees anaes 22 Cal. Code Civ. Proc. § 430.1008) ..ceccovueeeeeeirieeeiiie ee eiiti eee sti ee e seivae e svae ae essss aesessssaeaesssaeessnsseees 8,13 Cal. Code Civ. Proc. § 430.100) weeeieoiiieeeeiieee cette eerie ce ette ee ertae essere es str eee e erases ss sasae ee sssaaeaeenns 13 Health & Safety Code (or California’s Knox-Keene Act)........ccooeeeiiiiiiniiiniciieceineene ec . 22 Health & Safety Code § 1371.8... eee eee esses sateen 17,18 I018; COTE § TOMI) 155005 sus swsason os somos ws 5.055557 5553 5045 5555553 49755557.55.4555535 455555. S553558 SHTR3 085 SH5 R435 SOH3485. 45 21 INS. COAE § TOO.04 .....eeeeeeeeeeeeeeeeet tae sabe seat sass ss asssss sass sssssssssssessssssnsssssnssssessnssnnenensnens 21 Ins. Code § 101:28:.13 i wssorssmususnonmsyenssmvssss swans ssomm en ows sss se en omens Sos 5s mami am 18, 21 INS. COAE § 129026... sa seat at ssssss assess assess ssssssssssssssnsssssssnsssnsssssnnnensnsnens 18 7 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEMURRER TO COMPLAINT Defendant Humana Behavioral Health, Inc. (“Humana”) demurs to the First Amended Complaint (“FAC”) of Plaintiff Lake Hughes Recovery (“Plaintiff” or “LHR”) as follows: I. Humana demurs to LHR’s Second Cause of Action for Breach of Contract on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e)." pA Humana demurs to LHR’s Third Cause of Action for Quantum Meruit on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e). 3. Humana demurs to LHR’s Fourth Cause of Action for Breach of Implied Contracts on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e). 4. Humana demurs to LHR’s Fifth Cause of Action for Breach of Contract-Third Party Beneficiary on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e). 5. Humana demurs to LHR’s Sixth Cause of Action for Violation of California Unfair Competition Law, Bus and Prof § 17200, on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e). 6. Humana demurs to LHR’s Seventh Cause of Action for Money Had and Received on the grounds that it fails to state facts sufficient to constitute a cause of action. Code of Civ. Proc. § 430.10(e). WHEREFORE, Humana prays: 1. That this Demurrer be sustained and that the above causes of action be dismissed without leave to amend; I" ! Humana does not demur LHR’s First Cause of Action because it does not contain any allegations against Humana. Rather, it alleges a breach of contract cause of action against LHR’s own patients, DOES 21-30. 8 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 For such other relief as this Court may deem just and appropriate. Dated: February 6, 2019 DYKEMA GOSSETT LLP By:/s/ Abi Gnanadesigan Abi Gnanadesigan Attorneys for Defendant HUMANA BEHAVIORAL HEALTH, INC. 9 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 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 This is Plaintiff Lake Hughes Recovery’s (“Plaintiff or “LHR”) second attempt to state a viable claim, but, like the Complaint, this First Amended Complaint (“FAC”) fails as a matter of law. LHR is a residential “out of network” addiction treatment and drug rehabilitation facility that is seeking payment for services it purportedly provided to individuals who had allegedly purchased health insurance policies from Defendant Humana Behavioral Health, Inc. (“Defendant” or “Humana”). On July 3, 2018, LHR filed its Complaint in this Court, and, on August 8, 2018, Humana removed LHR’s state court action to the United States District Court for the Central District of California on diversity jurisdiction. On November 30, 2018, the case was remanded back to this Court for lack of well-pleaded diversity jurisdiction. LHR filed its FAC on January 4, 2019. LHR does not have any basis to assert the claims against Humana set forth in the FAC because it lacks standing. LHR does not allege in the FAC that it is an in network provider because it does not have a contractual relationship with Humana. Nor does it allege that the insureds’ policies or benefits were assigned to it. Therefore, LHR does not allege that it is a party to any of the insureds’ contracts with Humana, so it does not have standing to bring this FAC and it does not have a right to enforce the insurance policies at issue. Nevertheless, in the absence of any contractual relationship with Humana, LHR attempts to plead claims such as breach of implied contract and quantum meruit, which both fail because LHR did not, and cannot, allege the necessary elements for these claims. Further, each of LHR’s causes of action against Humana fail for the following, specific reasons. LHR’s claim for breach of contract against Humana fails because: (1) under California law," a verification of services is not a contract to pay; and (2) the breach of contract claim is so " The law of the state in which an individual policy was issued is the governing state law. However, LHR fails to allege the state(s) in which the policies were issued and that the policies are identical. Thus, Humana is unable to determine which state’s law applies. Humana does not admit or concede that California state law applies to this action. Humana uses California law only for illustrative purposes when, for example, analyzing substantive elements of the asserted causes of 10 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inadequately pleaded that it does not state a claim for relief (Second Cause of Action). LHR’s claim for quantum meruit fails to allege the required element that Humana requested that LHR render the services (Third Cause of Action). LHR’s claim for breach of implied contract fails because verifications of coverage are not contracts to pay and LHR has no standing to assert such a breach of the insurance policies (Fourth Cause of Action). LHR’s claim for “breach of contract-third party beneficiary” fails because LHR is an out- of-network treatment facility that does not allege any provision of the policies was intended to make it a third party beneficiary (Fifth Cause of Action). LHR’s violation of unfair competition law claim fails because the vague allegations are not reasonably particular as required (Sixth Cause of Action). Finally, LHR’s claim for “money had and received” fails because LHR does not allege Humana “received” money intended for LHR. It also incorrectly applies a four-year statute of limitations when the dates of the alleged claims are barred by a two-year limitations period (Seventh Cause of Action). FAC { 75. Therefore, the demurrers to each of the above causes of action asserted in the FAC should be sustained without leave to amend. II. RELEVANT FACTUAL ALLEGATIONS LHR alleges that ten individuals, DOES 21-30 (the “Patient DOES”), were patients of LHR and were treated by LHR, but LHR does not reveal their identities in the FAC. FAC {3. LHR alleges it submitted requests for preauthorization of services for each of the Patient DOES before treating the Patient DOES. FAC { 16. In response, Humana provided LHR with “Notifications of Certification of Services.” FAC {17. LHR alleges that it provided treatment and services based action to explain that the FAC is inadequately pleaded. ? Humana does not demur LHR’s First Cause of Action because it does not contain any allegations against Humana. Instead, it alleges a breach of contract cause of action against LHR’s patients, DOES 21-30. 3 LHR received “Notifications of Certifications of Services” from Humana but characterizes them as “pre-approvals” in an attempt to buttress its assertion that the documents create a contract to pay. FAC 17. LHR self-servingly spins language in a document that is neither attached to nor 11 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 on the notices. FAC | 18. Upon completion of treatment and its services, LHR submitted claims to Humana for payment. FAC 19. LHR alleges that Humana made some payments, but, in early 2017, Humana notified LHR that it was demanding return of the amounts paid. FAC 20. Between September 2016 and October 2017, Humana denied LHR’s claims. FAC 21. The FAC alleges that LHR billed $412,014.00 for the services provided while Humana paid $5,380.11, leaving an unpaid balance of $406,633.89. FAC 24. In 2016, before providing services, LHR required patients to sign contracts agreeing (i) to provide their insurance policies numbers to LHR and (ii) to remain “liable for all Treatment and Services LHR provided to them at the reasonable and customary rates, in the event that their insurer does not pay for such Treatment and Services.” FAC 25. III. PROCEDURAL BACKGROUND On July 3, 2018, LHR filed an original state complaint in Los Angeles Superior Court, Case No. BC 712690, against Humana that included DOES 1-20, supposedly unknown agents of Humana. FAC 6. On August 8, 2018, Humana removed the complaint based on diversity of citizenship. FAC {7. On September 14, 2018, LHR filed its First Amended Complaint in federal court, adding, for the first time, a breach of contract cause of action against the Patient DOES 21- 30 FAC {(8. On October 12, 2018, Humana filed its Motion to Dismiss First Amended Complaint. FAC 9. As a result of Humana’s motion, on November 21, 2018, the federal court dismissed the First Amended Complaint for lack of diversity jurisdiction and remanded this matter. On November 30, 2018, this Court received the Notice of Remand from Federal Court. On January 4, 2019, LHR filed its FAC with this Court. IV. ARGUMENT A. Legal Standard for Demurrer A demurrer lies where a complaint fails to state facts sufficient to constitute a cause of quoted from in the FAC by claiming that a “certification” equates to an “authorization,” which is not supported. Id. For almost twenty years, California courts have consistently rejected this argument and ruled that verifications or certifications are not contracts to pay. Cedars Sinai Med. Ctr. v. Mid-West Nat'l Life Ins. Co., 118 F.Supp.2d 1002, 1008 (C.D. Cal. 2000). 12 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E SU IT E 21 00 Lo s A N G E L E S , C A 90 07 1 ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 action or if the complaint is uncertain, which includes ambiguous and unintelligible. Code Civ. Proc. §§ 430.10(e) and (f). A demurrer serves to test the sufficiency of a pleading by raising questions of law. Buford v. State of California, 104 Cal. App.3d 811, 818 (1980). In ruling on a demurrer, the Court is required to assume the truth of all properly pleaded material allegations of fact. Lazar v. Superior Court, 12 Cal.4th 631, 635 (1996). However, this rule does not apply to allegations expressing mere contentions, deductions or conclusions of fact or law, nor to allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, 36 Cal. App.4th 698, 709 (1995). Allegations must be sufficiently clear to apprise the defendant of the issues which he is to meet and defend. Butler v. Sequeira, 100 Cal. App.2d 143 (1950). If the demurrer is well-taken, a plaintiff must show the manner in which he or she can amend and how the proposed amendment will change the legal effect of the pleading; otherwise, the demurrer is properly sustained without leave to amend. Blank v. Kirwan, 39 Cal.3d 311, 318 (1985). B. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Contract (Second Cause of Action) 1. Under California law, verification letters are not contracts to pay. LHR’s breach of contract claim is based on Humana’s issuance of the “Notifications of Certification of Services,” or pre-certifications. These notifications typically consist of two parts: “a verification of coverage and a certification that the proposed treatment is medically necessary” (hereinafter “Verifications™). Cedars Sinai Med. Ctr. v. Mid-West Nat'l Life Ins. Co., 118 F.Supp.2d 1002, 1005 (C.D. Cal. 2000). Without attaching the Verifications to the FAC, or quoting any provision from them, LHR mis-labels the Verifications as “Pre-approvals” in an effort to allege that Humana agreed to pay for LHR’s services instead of simply verifying that the insureds had coverage through Humana and that LHR’s services were medically necessary. FAC 17. For almost twenty years, California law confirms that “within the medical insurance industry, an insurer’s verification is not the same as a promise to pay” and that such verifications do not create a contract to pay. Cedars Sinai, 118 F.Supp.2d at 1008 (no contract to pay was formed 13 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 between a health care provider and an insurer even when a pre-certification was obtained); Stanford Hosp. & Clinics v. Multinational Underwriters, Inc., No. C-07-05497-JF-RS, 2008 U.S. Dist. LEXIS 100541, at *19-21 (N.D. Cal. Dec. 12, 2008) (“Moreover, even if Multinational did consent to pay for the treatment, such consent clearly was conditioned on Multinational's review of the [forthcoming] submitted claim. Stanford cannot argue that Multinational waived the review condition by allowing Stanford to treat the patient, as waiver of a material condition of a contract is not binding unless additional consideration is provided for that waiver.”). In the insurance industry, “assurances of coverage are not promises to pay, and . . . insurance disclaimers are ubiquitous. That . . . prevent[s] the formation of a legal contract.” Regents of the Univ. of Cal. v. Aetna US Health of Cal., No. SACV-10-1043-DOC-RNBx, 2011 U.S. Dist. LEXIS 165180, at *10, *14 (C.D. Cal. Mar. 15, 2011) (emphasis added) (no valid oral contract formed where pre-certification was obtained; plaintiff “fail[ed] to present any evidence demonstrating a meeting of the minds”). Because California law clearly establishes that Verifications are not contracts to pay, Humana’s demurrer to LHR’s breach of contract cause of action should be sustained. Id. 2 LHR failed to plead an offer and acceptance, which are required for the Verifications to constitute contracts. A valid contract requires an offer, acceptance and consideration. An offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain. Weddington Prods., Inc. v. Flick, 60 Cal. App.4th 793, 811-812 (1998); see also Civ. Code § 3390(e) (a contract is not specifically enforceable unless the terms are “sufficiently certain to make the precise act which is to be done clearly ascertainable”). No contract is formed based only on the assumption, intention or expectation of one party. None of these fundamental elements is alleged. LHR does not allege that: (1) Humana communicated to LHR that it was willing to enter into a contract with LHR; (2) the communication contained specific terms; and (3) based on this specific offer, LHR could have reasonably concluded that a contract with these terms would result if it accepted the offer. See Ladas v. Cal. State Auto. Assn., 19 Cal.App.4th 761, 770 (1993) (“[a]n offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain.”). The 14 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FAC fails to allege that Humana took any actions, let alone sufficient ones, to make a contractual offer. There is no mention of (1) what specific services LHR would provide, (2) the cost for such services, (3) the period of time and what services were actually provided or (4) how much, if anything, Humana agreed to pay. Plaintiff refers again to the receipt of the Verifications as support, but LHR self-servingly, and incorrectly, labels these as “Contracts.” FAC 36. However, as a matter of law, a binding contract to pay between LHR, a third party, and Humana was not created. See Cedars Sinai, 118 F.Supp.2d, at 1008 (“within the medical insurance industry, an insurer’s verification is not the same as a promise to pay”). 3. LHR’s breach of contract cause of action is inadequately pleaded. Even assuming that the Verifications could somehow be transformed into a contractual obligation, LHR failed to plead a breach of contract with the requisite specificity. In California, “[a] cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal.App.3d 1371, 1388 (Cal. Ct. App. 1990) (citing Reichert v. General Ins. Co., 68 Cal.2d 822, 830 (Cal. 1968); see also Acoustics, Inc. v. Trepte Constr. Co., 14 Cal.App.3d 887, 913 (Cal. Ct. App. 1971). Where a plaintiff fails to allege the material terms of the contract, a demurrer should be sustained. Heritage Pacific Financial, LLC v. Monroy, 215 Cal.App.4th 972, 993 (2013) (quoting McKell v. Washington Mutual, Inc., 142 Cal. App.4th 1457, 1489 (2006)). California law requires a contract to “be pleaded either by its terms-set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference-or by its legal effect.” Id. LHR has done neither and has thus failed to adequately plead a contract. Here, LHR alleges there were multiple “contracts” between LHR and Humana, but not one is identified in the FAC. See FAC {{ 36-39. LHR does not quote verbatim from any purported contract, it does not incorporate any contract by reference and it does not attach any document to the FAC. LHR does not identify the terms of payment, the amount to be paid or what the services would be. Rather, LHR resorts to the Verifications, which are not contracts as a matter of law. 15 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cedars Sinai, 118 F.Supp.2d at 1008. Indeed, such verifications typically contain disclaimers as to payment. Aetna, 2011 U.S. Dist. LEXIS 165180, at *14-15 (“[P]ractices in the insurance industry suggest that assurances of coverage are not promises to pay, and that insurance disclaimers are ubiquitous. That, indeed, in this case, prevented the formation of a legal contract.”). Despite its reliance on them, Plaintiff does not attach the Verifications to the FAC. LHR also fails to plead the legal effect of any contract. “In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.”” Heritage, 215 Cal. App.4th at 993. All of these components are absent. To satisfy the comprehensiveness requirement, LHR should have included or described, at minimum, the typical language that a certification is not “a guarantee” of payment. Alternatively, it should have alleged that no such language was in the Verifications. Instead, LHR substitutes its own self- serving mischaracterization that the Verifications are agreements to pay, FAC |] 36-38, which is insufficient to plead a contract’s legal effect. Heritage, 215 Cal.App.4th at 993. To the extent LHR claims the individual policies were the contracts at issue, LHR similarly fails to adequately allege the legal effect of those contracts. Although LHR refers to the policies in the FAC, LHR does not attach them to the FAC, does not quote any specific contract provisions that Humana supposedly breached and does not “allege the substance of [any specific contract’s] relevant terms.” Indeed, the FAC is devoid of basic factual allegations notifying Humana of the (1) the states in which the insurance policies were issued, (2) the specific terms of the contracts under which services were provided, (3) the identities of the claimants, (4) the specific amounts that LHR alleges it should have been paid under each breach of contract, (5) the specific services that were not paid, (6) why the denial of claims was not justified and (7) what the applicable contract provisions were that support LHR’s position. Nor can it be assumed that each policy is identical. These omissions affect the case in a number of meaningful ways, including determining the governing law, the applicable statutes of limitations, available causes of action and potential affirmative defenses. Without these requisite allegations, the Court should sustain Humana’s demurrer of LHR’s breach of contract cause of 16 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 action. C. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Quantum Meruit (Third Cause of Action) 1. Humana did not request LHR perform any of the services for which LHR seeks payment. The elements for quantum meruit are: (1) performance of certain services for the defendant, (2) reasonable value, (3) services were rendered at the defendant's request and (4) services are unpaid. Cedars Sinai, 118 F.Supp.2d at 1013 (citing Haggerty v. Warner, 115 Cal.App.2d 468, 475 (1953)). In Cedars Sinai, the patient's purported health insurer did not request, either expressly or impliedly, that the health care provider treat the patient, even though it pre-certified coverage. Id. at 1013. The court held that the insurer could not be held liable to the provider in quantum meruit, under California law, for costs of the patient’s treatment. Id. Here, as in Cedars Sinai, LHR has not and cannot plead the requisite element that the services were rendered at Humana’s request. To the contrary, the services rendered by LHR to the Humana Insureds were not requested by Humana. It was the insured who requested the services, not Humana. As stated in the FAC, “potential patients approached LHR for services,” not Humana. FAC {15 (emphasis added). Accordingly, the Court should sustain Humana’s demurrer to this cause of action. 2 There are no private rights of action under the Health and Safety Code or Insurance Code. By invoking “obligations” allegedly stated in the Health and Safety code and the Insurance code, LHR attempts to disguise a claim for violation of these codes as a quantum meruit claim. However, Health and Safety Code Section 1371.8, California’s Knox-Keene Act, does not provide LHR with a private right of action. See California Med. Ass’n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App.4th 151, 161 (Cal. Ct. App. 2001) (““ [Plaintiff] does not have a general power to enforce Knox-Keene.”). “Section 1371.8 does not contain ‘clear, understandable, unmistakable terms, which strongly and directly indicate that the Legislature intended to create a private cause of action’....having reviewed the legislative history, this court finds none.” Stanford 17 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Hosp. & Clinics v. Humana, Inc., No. 5:13-cv-04924-HRL, 2015 U.S. Dist. LEXIS 128210, at *29 (N.D. Cal. Sept. 23, 2015) (quoting Lu v. Hawaiian Gardens Casino, Inc., 50 Cal. 4th 592, 597 (2010)); see also Summit Estate, Inc. v. Cigna Healthcare of Cal., Inc., No. 17-cv-03871-LHK, 2017 U.S. Dist. LEXIS 167462, at *23 (N.D. Cal. Oct. 10, 2017) (“the Court agrees with the conclusion in Stanford Hospital that § 1371.8 does not provide a private right of action . . . any attempt by Plaintiff to amend Plaintiff’s claim for injunctive relief on the basis of a § 1371.8 violation would be futile.”). Similarly, the language of Insurance Code § 10123.13 and its legislative history make clear that a private cause of action does not exist. Instead, the code and its history indicate that it is the Insurance Commissioner who is empowered to enforce its provisions, not private parties. See Ins. Code § 12926 (“The commissioner shall require from every insurer a full compliance with all provisions of this code.”). D. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Implied Contract (Fourth Cause of Action) The California Civil Code defines an implied contract as a contract “the existence and terms of which are manifested by conduct.” Cal. Civ. Code § 1621. “An implied contract is different only in that the promise is not expressed in language but implied from the promisor’s conduct.” Rokos v. Peck, 182 Cal.App.3d 604, 614 (Cal. Ct. App. 1986) (citing Stanley v. Columbia Broad. Sys., 35 Cal.2d 653, 674 (Cal. 1950)). However, no contract is implied based on the assumption, intention or expectation of one party, standing alone. Travelers Fire Ins. Co. v. Brock & Co., 47 Cal.App.2d 387, 392 (Cal. Ct. App. 1941); San Mateo Union High Sch. Dist. v. Cnty. of San Mateo, 213 Cal.App.4th 418, 439 (Cal. Ct. App. 2013) (“A contract implied in fact consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words.” (citation omitted)). The parties’ intent is a determining factor in such agreements. Gorlach v. Sports Club Co., 209 Cal. App.4th 1497, 1507-08 (Cal. Ct. App. 2012). 18 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. The FAC does not allege that LHR accepted a definite offer from Humana because a verification of coverage does not show an implied contract to pay. LHR does not allege that Humana accepted a definite offer. To the contrary, Humana (1) did not make an offer to pay; (2) did not demonstrate an intent to enter into a contract with LHR, either by words or by conduct, and (3) did not agree to pay whatever LHR charged. See Pacific Bay Recovery, 12 Cal.App.5th 200, 216 (2017) (holding there is no implied contract to pay where the insurer solely verified coverage, as there was no agreement as to what, if anything, the insurer would pay). Further, there is no mention of the terms of any alleged contract, such as (1) what services would be provided, (2) who would provide the services, (3) what the cost of such services were or (4) what the period of time was and what services would actually be provided. Instead, to support its cause of action for the breach of an implied contract, LHR alleges it submitted requests for pre-authorization and then received the Verifications. FAC {| 16-17. Once again, California law is clear: such communications do not create an implied contract. “Within the medical insurance industry, an insurer’s verification is not the same as a promise to pay.” Cedars Sinai, 118 F.Supp.2d at 1008; Stanford Hosp., 2008 U.S. Dist. LEXIS 100541 at *19-20 (“Moreover, even if Multinational did consent to pay for the treatment, such consent clearly was conditioned on Multinationals review of the [forthcoming] submitted claim. Stanford cannot argue that Multinational waived the review condition by allowing Stanford to treat the patient, as waiver of a material condition of a contract is not binding unless additional consideration is provided for that waiver.”). 2, LHR has no standing to enforce the Patient DOES’s policies. To the extent LHR’s cause of action for breach of an implied contract arises from the Patient DOES's policies with Humana, LHR does not have standing to enforce those policies. “Someone who is not a party to the contract has no standing to enforce the contract or to recover extra-contract damages for wrongful withholding of benefits to the contracting party.” Hatchwell v. Blue Shield of Cal., 198 Cal. App.3d 1027, 1034 (1988). According to its own pleadings, the insurance policies are between only Humana and its insureds. See FAC {{ 12, 58. As a “stranger” to the contracts, 19 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LHR does not have standing to assert a cause of action for breach of the insurance policies, so Humana’s demurrer of LHR’s cause of action for breach of implied contract should be sustained. E. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Breach of Contract-Third Party Beneficiary (Fifth Cause of Action) LHR’s third party beneficiary claim is futile because the FAC is devoid of allegations that the contracts between Humana and its insureds evidenced a clear intent to benefit LHR. Indeed, it is LHR that must provide the essential factual allegations because “[t]he party claiming to be a third party beneficiary bears the burden of proving that the contracting parties actually promised the performance which the third party beneficiary seeks. This remains largely a question of interpreting the written contract.” Sessions Payroll Mgmt., Inc. v. Noble Const. Co., 84 Cal.App.4th 671, 680 (2000) (citations removed); see also Hess v. Ford Motor Co., 27 Cal.4th 516, 524 (2002). LHR did not attach, quote from or sufficiently describe the terms of any contract that would allegedly make LHR a third party beneficiary. Third party beneficiary status, as a matter of law, requires specific language in contractual provisions of the insurance policy. No such language is alleged or summarized in the FAC that shows any clear intent to benefit an “out of network provider.” It is not alleged that Humana even knew of LHR when the policies were purchased. See Shaolin v. Safeco Ins. Co., 71 Cal. App.4th 268, 275 (1999) (citing Rupley v. Huntsman, 159 Cal. App.2d 307, 312 (1958) (“the California rule is that the intent to make a third party beneficiary of coverage under an insurance policy must clearly appear; the policy should be construed against finding such intent if there is any doubt.”)) . LHR alleges that it requested the policy numbers from the Patient DOES (FAC 25), and it could have requested the policies from the Patient DOES at that time as well. Nonetheless, LHR fails to quote any language, or attach any actual document, to demonstrate that there was a clear intent to designate LHR, an entity with which Humana had no relation, as a third party beneficiary. As such, the Court should sustain Humana’s demurrer of this cause of action. Shaolin, 71 Cal.App.4th at 275 (affirming the trial court’s sustaining of the demurrers for breach of contract and breach of implied contract by a third party). 20 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Violation of California Unfair Competition Law (Sixth Cause of Action) Under the unfair competition statutes, a plaintiff “must state with reasonable particularity the facts supporting the statutory elements of the violation.” Silicon Knights v. Crystal Dynamics, 983 F.Supp. 1303, 1316 (N.D. Cal. 1997) (quoting Khoury v. Maly's of Cal., 14 Cal. App.4th 612, 619 (1993)) (emphasis added). Here, LHR makes a conclusory claim that Humana violated California Insurance Code sections 10123.13 and 796.04 by rescinding “pre-approvals” for treatment, FAC 68, but any allegation with particularized facts is missing. First, LHR fails to allege a violation of Insurance Code section 10123.13. Once again, the documents that LHR calls “pre-approvals” are nothing but verifications of coverage and certifications that treatments were medically necessary. Courts have examined the language of documents like the Verifications to determine whether a contract was formed, and they concluded that a verification of benefits was not a contract because there had been no “meeting of the minds” as to payment. Multinational Underwriters, Inc., supra, 2008 U.S. Dist. LEXIS 100541, at *18-19. The same is true here: there has been no meeting of the minds as to payment of the claims. Rather, the Verifications simply stated what treatment services were certified as medically necessary. FAC 17 (“Humana . . . responded to these requests and provided LHR with individual Notification of Certification of Services (‘“Pre-approvals™), which stated the treatment services that were certified . . . .”). The FAC admits the Verifications only set forth services that were covered pursuant to the Patient DOES’s individual policies. FAC {[17. As a matter of law, the Verifications were not contracts to pay. Accordingly, Humana did not rescind any contract in violation of the insurance code. Second, LHR’s allegations of a violation of Insurance Code section 790.03(h) are nothing but a recitation of the Code provision. It simply repeats the statutory language without the required factual allegations. LHR summarily alleges that Humana misrepresented pertinent facts and policy provisions relating to coverage by refusing to pay after issuing “pre-approvals”; failed to acknowledge and act reasonably promptly upon communications; failed to affirm or deny coverage within a reasonable time; failed to attempt in good faith to effectuate prompt, fair and equitable 21 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 settlements of reasonably clear claims; compelled LHR to initiate litigation to collect payment; and failed to promptly provide a reasonable explanation for its denials. FAC 69. LHR does not provide a single factual allegation to support these assertions. Because these recitations of the statute are not specific, Humana’s demurrer to this cause of action should be sustained. See Doe v. City of Los Angeles, 42 Cal.4th 531, 551 (2007) (essential facts of a case must be pleaded; legal conclusions are insufficient). Finally, Humana does not concede that the Patient DOES’s policies are subject to the California Health and Safety Code or the Knox-Keene Act. LHR fails to allege where the Patient DOES’s policies were issued, which prevents Humana from evaluating whether California law applies to the policies. G. LHR Failed to State Facts Sufficient to Constitute a Cause of Action for Money Had and Received (Seventh Cause of Action) 1. LHR fails to allege Humana received money belonging to LHR. LHR has not, and cannot, allege the requisite elements of a claim for “money had and received.” Such a “cause of action for money had and received is stated if it is alleged that the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. The plaintiff must prove that the defendant received money intended to be used for the benefit of [the plaintiff], that the money was not used for the plaintiff’s benefit, and that the defendant has not given the money to the plaintiff.” Avidor v. Sutter’s Place, Inc., 212 Cal.App.4th 1439, 1455 (2013) (internal citations and quotation marks omitted). Here, LHR has not pleaded that Humana received any money that was supposed to be paid to LHR. The only payments Humana would have received would have been premium payments, which were not for LHR. As such, this Court should sustain Humana’s demurrer of this cause of action. 2. The cause of action is barred by the two-year statute of limitations. The statute of limitations for a cause of action for money had and received is two years. Cal. Code Civ. Proc. § 339(1) (an action upon a contract, obligation or liability not founded upon an instrument of writing must be brought within two years). Here, LHR alleges claims for money had 22 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and received based on services and treatments rendered “[w]ithin four years last past.” FAC { 75. LHR fails to specifically identify the dates of the alleged transactions or the promises to pay, but to the extent that they occurred before July 3, 2016, and are therefore outside the two-year statute of limitations, LHR has failed to state a cause of action and the claims are time-barred. V. CONCLUSION For all of the reasons stated above, Humana respectfully requests that the Court sustain its demurrers. Dated: February 6, 2019 DYKEMA GOSSETT LLP By:/s/ Abi Gnanadesigan Abi Gnanadesigan Attorneys for Defendant HUMANA BEHAVIORAL HEALTH, INC. 23 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Su IT E 21 00 Lo s A N G E L E S , C A 90 07 1 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E ~N O N n e B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF ABI GNANADESIGAN I. I am an attorney licensed to practice before all the courts in the State of California and I am a member with the law firm Dykema Gossett, LLP, attorneys of record for Defendant Humana Behavioral Health, Inc. (“Humana”). I have personal knowledge of the facts stated herein. If called and sworn as a witness, I could testify competently to the following. 2. This declaration is submitted pursuant to California Code of Civil Procedure (“CCP”) Section 430.41. 3. Pursuant to CCP Section 430.41, Humana was required to meet and confer with Plaintiff Lake Hughes Recovery (“Plaintiff or “LHR”) regarding its proposed demurrer to the FAC, including by identifying the causes of action challenged and the legal support for its position. Conversely, Plaintiff is required to provide the legal support for its position that any challenged causes of action are legally sound. Id. 4, On January 25, 2019, I spoke to counsel for Plaintiff and made a good faith attempt to meet and confer regarding the subject of this Demurrer. Despite our efforts, we were not able to reach an agreement that could resolve the objections raised in this Demurrer. I declare under penalty of perjury pursuant to the laws of the State of California that the foregoing is true and correct and that this declaration was executed on February 6, 2019 at Los Angeles, California. /s/ Abi Gnanadesigan Abi Gnanadesigan 109051.000014 4833-9502-2983.2 24 DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN Court Reservation Receipt | Journal Technologies Court Portal Journal Technologies Court Portal Page 1 of 1 Court Reservation Receipt Reservation Reservation ID: Status: 046347368627 RESERVED Reservation Type: Number of Motions: Demurrer - without Motion to Strike 1 Case Title: Case Number: BC712690 Filing Party: Humana Behavorial Health Inc (Defendant) Date/Time: April 4th 2019, 8:30AM LAKE HUGHES RECOVERY VS HUMANA BEHAVORIAL HEALTH INC Location: Stanley Mosk Courthouse - Department 30 Confirmation Code: CR-QFGZ3FLRGC2EMGC3C Fees Description Fee Qty Amount Demurrer - without Motion to Strike 60.00 1 60.00 Credit Card Percentage Fee (2.75%) 1.65 1 1.65 TOTAL $61.65 Payment Amount: Type: $61.65 Visa Account Number: Authorization: XXXX0582 024649 < Back to Main = Print Page Copyright © Journal Technologies, USA. All rights reserved. https://portal-lasc.journaltech.com/public-portal/?q=calendar/receipt/046347368627/36453 2/6/2019 D Y K E M A G O S S E T T L L P 33 3 S O U T H G R A N D A V E N U E , SU IT E 21 00 Lo s A N G E L E S , C A L I F O R N I A 90 07 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE (CODE CIV. PROC. §§ 1013 AND 2015.5) I am employed in the County of Los Angeles, State of California. Iam over the age of 18 and not a party to the within action. My business address is 333 South Grand Avenue, Suite 2100, Los Angeles, CA 90071. On the date set forth below, I served the foregoing document(s) described as: DEFENDANT HUMANA BEHAVIORAL HEALTH, INC.’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF ABI GNANADESIGAN on the interested parties in this action as follows: Adli Law Group, PC Attorney for Attorneys for Plaintiff, Marina Manoukian, Esq. (SBN 180104) LAKE HUGHES RECOVERY 444 South Flower Street, Suite 3100 Los Angeles, CA 90071 Tel: (213) 623-6546 Fax: (213) 62-6554 M (BY 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 U.S. Postal Service on the same day with postage thereon fully prepaid at Los Angeles, 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 on affidavit. O (BY E-MAIL OR ELECTRONIC TRANSMISSION) I caused a copy of the document(s) to be sent from e-mail address XXXXXX@dykema.com to the persons at the e-mail addresses listed in the Service List. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. 0 (VIA CM/ECF) M (STATE) I declare under penalpy of perjury under the laws of the State of California that the foregoing is: rye|and correct. O (FEDERAL) I declare under penalty o perjury that the foregoing is true and correct. Executed on February 6, 2019, at Los Angeles, California. { ) Cafdline Acossano \ PROOF OF SERVICE