CENTINELA FREEMAN EMERGENCY MEDICAL ASSOCIATES v. HEALTH NET OF CALIFORNIA

Appellants’ Answer Brief on the Merits

Cal.January 30, 2015

(220 Supreme court POP gePy rook ieNo. S$218497 . . JAN 3 @ 2015 In the Supreme Court of the State of California Frank A. Mecouire Clerk . Deputy CENTINELA FREEMAN EMERGENCYMEDICAL ASSOCIATION,ET AL., Plaintiffs and Appellants VS. HEALTH NET OF CALIFORNIA,INC., ET AL., Defendants and Respondents ANSWERING BRIEF ON THE MERITS After An Opinion By The Court of Appeal Second Appellate District, Division Three, No. B238867 Service on the Attorney General and the Los AngelesDistrict Attorney Required by Bus. & Prof. Code § 17209 and Cal. Rules of Court, rule 8.29(a) and (b) MICHELMAN & ROBINSON, LLP *Andrew H. Selesnick - State Bar No. 160516 Damaris L. Medina - State Bar No. 262788 Robin James - State Bar No. 150143 15760 Ventura Blvd., Sth Floor Encino, California 91436 Telephone: (818) 783-5530 Fax: (818) 783-5507. Attorneysfor Plaintiffs, Appellants, and Respondents Centinela Freeman Emergency Medical Associates,et al. No. $218497 In the Supreme Court of the State of California CENTINELA FREEMAN EMERGENCYMEDICAL ASSOCIATION,ET AL., Plaintiffs and Appellants VS. HEALTH NET OF CALIFORNIA,INC., ET AL., Defendants and Respondents ANSWERING BRIEF ON THE MERITS After An Opinion By The Court of Appeal Second Appellate District, Division Three, No. B238867 Service on the Attorney General and the Los Angeles District Attorney Required by Bus. & Prof. Code § 17209 and Cal. Rules of Court, rule 8.29(a) and (b) MICHELMAN & ROBINSON, LLP *Andrew H. Selesnick - State Bar No. 160516 Damaris L. Medina - State Bar No. 262788 Robin James - State Bar No. 150143 15760 Ventura Blvd., Sth Floor Encino, California 91436 ~ Telephone: (818) 783-5530 Fax: (818) 783-5507 Attorneys for Plaintiffs, Appellants, and Respondents Centinela Freeman Emergency Medical Associates,etal. TABLE OF CONTENTS QUESTION PRESENTED. ...........:::cccccceeeessseeeeseseeeeceseeneneeeeeeesseeeseseeanensies 1 INTRODUCTION oo... cccccccceeeeeceeeeeenneeeseteeeeeeceessusseeaeeaseeeneseeesaaaaaeesenaees1 ‘FACTUAL AND PROCEDURAL BACKGROUND.............ccccccccssseeesesertes 10 ARGUMENT........... 0: eeeecseseessceeerereeeennees veeeeeeeeeceecneneeneeeeeeeesennnesneeaeeuensnenages 15 THE KNOX-KEENE ACT PERMITS - RATHER THAN FORECLOSES - A CAUSE OF ACTION AGAINST THE HEALTH PLANS FOR NEGLIGENT DELEGATION OF THE HEALTH PLANS’ PAYMENT OBLIGATIONS AND/OR NEGLIGENT FAILURE TO RESUME PAYMENTS TO EMERGENCYPHYSICIANS WHEN THE IPAs BECOME UNABLETO PAY.......cscsecscssesteseeseesecsessnesesteeneeeess 15 A. Health and Safety Code Section 1371.25, Which Expressly Allows Common-Law Suits Against Health Plans, Defeats the Health Plans’ Argument that Statutes Exempt Them from | CommonLaw Liability...............:: cece eeeeseeeeeeeeeeneeaeneetereeeees 16 The DMHC,in Interpreting its Own Regulatory Scheme,Posits that the Knox-Keene Act and Regulations Promulgated Thereunder Do Not Bar Common Law Causesof Action by Non-Contracted Emergency Physicians..............::::ccsesseeeees 19 The Health Plans’ Authorities Are Distinguishable and Therefore Inapplicable. ..................: cess eeseeeereeeeeeeeeseeeeepenenneaes 21 The Legislature Did Not Assign the Risk of Defaulting IPAs to Emergency PhySicianns. ............:::cccccscseeecessneeteesensesteeeensaees 25 REGULATIONS PROMULGATED UNDER THE KNOX-KEENE ACT ENCOURAGE - RATHER THAN FORECLOSE - A HEALTH PLAN’S RESUMPTION OF ITS.COMPENSATION OBLIGATIONS WHENAN IPA DEFAULTS............ccccreece eeeenenenennnnneeetentees 29 THE HEALTH PLANS’ DUTY ARGUMENTSFAIL.......-.cccssseseeeeee 32 A. The Health Plans’ Duty Argument is Misplaced Because the Duty Addressed by the Court of Appeal is Not a Business- Based Duty to Protect Non-Contracted Emergency Physicians from Economic LOSSES. ..............ccccccceceeceeseeteeeeeeeenecaeeeaeetenered 32 B. Evenif the Health Plans’ Duty Analysis had a Viable Premise, the Court of Appeal Correctly Applied the Biakanja Duty FACHOIS. 0... cee eccccccceeeceeceeeeseeeeeeecneeeeeeeeereeeeeesassnnesesseaaaengeeeseeees 34 C. If this Court is Inclined to Reverse the Court of Appeal Based Solely on the Biakanja Factors, this Court Should Defer a Decision on these Factors Until the Parties Have Developed a RECOM, 0... cccccccccsscsecccccesceceecceeeeceeeeeeeseseessnnsesrseeeesuaaeeeaesdeseeee 35 THIS COURT SHOULD DISAPPROVECEP............:::ccccceeeeeeeeeee 36 A. Subsequent Case Law has Eroded CEP’s Precedential Value. ccuuecenaceeeececeeceecaeasceceeeeeeeeececeeeeeeeeeeesanseseenananeasaeeeeneauneseeaaeseegaaas 37 B. This Court Should Not Follow CEP Because CEP Neither Considered Nor Decided the Dutyat Issue in this Case....... 40 PUBLIC POLICY FAVORS IMPOSING A NEGLIGENCE-BASED DUTY ON THE HEALTH PLANS TO RESUMEPAYING EMERGENCYPHYSICIANS WHEN DELEGATEEIPAs DEFAULT.42 A. Existing Public Policy Prohibits Forcing Non-Contracted Emergency Physicians to Work Without Compensation. ...... 42 B. Requiring the Health Plans to Resume Payments to Emergency Physicians in the Event of an IPA’s Default Will Not Adversely Affect the Public Policy of a Comprehensive Managed Health Care SyStem. .........ccceccceeeeeeerettstteeeeees 47 CONCLUSION............00ccctececceeeeeceene ese aneeeeeneeeeeeeennaaneeeeeeeerenenenenesennnaaiaas 49 TABLE OF AUTHORITIES | State Cases Alvarez v. BAC Home LoansServicing, L.P. (2014) 228 Cal.App.4th 941...eeseacuuucceetsaceeesenssseaseeeteeteneetanaanas 39 Bell v. Blue Cross of California (2005) 131 Cal.App.4th 2110.00... 8, 10, 20, 21, 38, 39, 40, 41, 43, 45, 46 “Biakanja v. Irving (1958) 49 Cal.2d 647oeLecuceeeeeecuececeeceeueesesesenncneeeteneeetersenanees 38 Blank v. Kirwan (1985) 39 Cal.3d 311 vccsssrsesusavarsasaususisesseavsvavsvavavevsssesisiteseeeecanenesseees 12 California Emergency Physicians Medical Group v. PacifiCare of California (2003) 114 CalApp.4th 1127 v.cccccssssccsssessssssesssecesseeeessunnnnsnesssseses passim Cherukuri v. Shalala (6th Cir. 1999) 175 F.3d 446 occccccccccecsesecssesesesessecevsstessetseessssesseaseens 29, 30 City of Clovis v. County of Fresno (2014) 222 Cal.App.4th 1469.0...ceceteeter tertesneeteeeeseeeeseeneene 47 Cunningham v. Superior Ct. | (1986) 177 Cal.App.3d 336 ........ ccc eee center tier erittteenereees 51, 52, 54, 55 Enterprise Insurance Co. v. Mulleague (1987) 196 Cal.App.3d 528 0.0...ccceee reer terete tieneneeeretinersereeeaeenens 29 Frisk v. Superior Ct. (2011) 200 Cal.App.4th 402...seseaneananessseeneseseeneeenerertereesensntens 46 Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816 00...ceeseneeeee crete reeteneeneneentetes 23, 24, 25 Harshbargerv. City of Colton _ (1988) 197 Cal.App.3d 1335.00... ccc cc ececseeeneeeeeeeteeeetieeeteee erage 24, 25 Health and Safety Code section 1317 .......... cc ceeeeeeeeseetnteeeeeeeeeaeeeertaas 1, 14 ‘Laico v. Chevron U.S.A., Inc. (2004) 123 Cal.App.4th 649.00...eeedececaaaeaneceeeeeeeeeeceeseueeeetess 39 Ochsv. PacifiCare of California (2004) 115 Cal.App.4th 782 ooo...ceceeect e rete nner rerneeeereeeees passim Prospect Medical Group,Inc.v. Northridge Emergency Medical Group,Inc. (2009) 45 Cal.4th 497 oc ccccccceccesssesecstesseseeeseeeeeneeseesseeesseessneeneessnn passim Quelamine Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26 oo.cece cee cee ene cneeeeteeeteeeeenestetsaeeretererseges 36 Spindle v. Travelers Ins. Cos. (1977) 66 Cal.App.3d 951 oo...ceceeeceeeeee ree eeneettetraetreeeerstenees 26, 27 | Williams v. State Farm and Casualty Co. (1990) 216 Cal.App.3d 1540.0...eectetree ttre eereerneeeteesveeteteees 26 Statutes Business and Professions Code section 17200 oo. cecceee cece eee eeeeeeees 42,43 -Cal. Code Regs.., tit. 28, § 1300.71, subds. (€)(6), (€)(8) ....-.--eee34 Civil Code S@Ction 3523 0... cece cccceccessceeeceeeeeeerea eta eeeseeecseseneneneesanenee 50, 51 Health and Safety Code Section 1371.25 0.0...cece ceeeeteeeeneenes 17, 20 Health and Safety Code Section 1371.4 ......cecceeseeeeseeseenseeeeteersenneerees 15 QUESTION PRESENTED Are non-contracted emergency physicians able to maintain a | cause of action against health plans that have delegated their duty to reimburse to an independentpractice association (IPA) they knew, or had reason to know, wasfinancially unable to satisfy the obligation, and correspondingly, can non-contracted emergency physicians maintain a cause of action against health plans for failure to reassumethat duty, when the health plans knew, or had reasonto know,that the IPA wasfinancially unable to satisfy that obligation? INTRODUCTION Providers of emergencyserviceslie at the core of the safety net of our healthcare system. The law imposes a duty on these providers -- and no others -- to treat all patients seeking emergency medical services regardlessof the patient’s “insurancestatus, economicstatus [or] ability to pay.” (Health & Safety Code § 1317, © subd. (b).) In recognition of the fact that this requirement places emergency physicians in a unique and often vulnerable position within our system, lawmakers have imposed a corresponding - obligation on health plans. This corresponding obligation requires health plans to reimburse emergency physicians for the care they provide to their enrollees regardless of whether or not emergency physicians have a contract with the health plans. In California, health plans are permitted to delegatetheir obligation to pay for care providedto their enrollees, to IPAs. Physicians that do not have contracts with health plans therefore depend on a managedhealth care statutory schemewhich(1) requires health plans to pay emergency physiciansfor the emergency care and services rendered to the health plans’ enrollees, but (2) allows the health plans to delegate their emergency care paymentobligations to IPAs. Under this system, a non-contracting emergency physician who hasprovided services to an enrollee of a financially defunct IPA unjustly goes without paymentfor the emergency services rendered. Prior to 2009,this situation was untenable. However, -emergency physicians couldat leastbill the patient for the difference between the amount paid by the health plan (or an IPA) and the reasonable valueof servicesif the emergency physician received inadequate compensation from a health plan (or an IPA). This is a practice commonlyreferred to as “balancebilling.” In January 2009, emergency physicians’ right to balancebill patients ended with the publication of Prospect Medical Group,Inc. v. Northridge Emergency Medical Group, Inc. (2009) 45 Cal.4th 497 (“Prospect’).' Due to the fact that emergency physicians could no longer balancebill patients when they received inadequate ‘compensation from a health plan or an IPA, the Prospect Court ' Other types of non-emergency health care providers retained the right to balancebill. found that emergency physicians had recourse against a health plan or an IPAin the form ofa civil suit. The Prospect decision however, purposefully did not address a foreseeable and untenable consequenceof the ban on balance billing - that emergency ‘physicians would beleft without recourse if an IPA became unable to fulfill its payment obligations. The result was a system that has the unconscionable consequence of forcing emergency physicians to provide services to health plans’ enrollees for free. Although such a situation was foreseen by the Prospect Court, a decision on this ‘issue wasleft for another day. Prior to the decision in the instant case, the Court of Appeal addressedthis issue in two cases reaching contradictory results- California Emergency Physicians Medical Groupv. PacifiCare of California (2003) 111 Cal.App.4th 1127, 1136 (“CEP”) andlater Ochsv. PacifiCare ofCalifornia (2004) 115 Cal.App.4th 782, 797- 798 (“Ochs”). Faced with a split in authority, the Court of Appealin the instant case concluded that the Court in Ochs,the more recent case, reached the correct result in the context of the current landscape. The Court in Ochs held that non-contracted emergency physicians do have a cause of action against health plansfor negligent delegation. The question in front of this Court now is: whether non- contracted emergency physicians are able to maintain a cause of action against health plans that have delegated their dutyto reimburse to an IPA they knew,or had reason to know, was financially unable to satisfy the obligation, and correspondingly, whether non-contracted emergency physicians can maintain a cause of action against health plansforfailure to reassumethat duty, when the health plans knew, or had reasonto know,that the IPA was financially unable to satisfy that obligation. Although the petitioners in this case (defendants and respondents below)(collectively “Health Plans”)?initially requested review based onthe needfor a resolution of the split in authority between the CEP and the Ochs decisions, they now change course, attempting instead to rehash the faulty argument that the mere existence of a statutory and regulatory framework absolves them of their negligence. The Emergency Physicians (appellants) therefore address this argumentfirst. The Health Plans essentially argue that, because they have the right under the Knox-KeeneActto delegate their statutory responsibility to pay emergency physicians to an IPA,they can have no liability - under any circumstances or under any theory - to pay the emergency physicians whotreat the Health Plans’ enrollees after the Health Plans delegate.their payment responsibility to an IPA. 2 In this brief, “health plans”in all lower caseletters refers collectively to managed health care service plans and health insurers generally. “Health Plans” capitalized refers to the managed health care service plans and the health insurer that are the petitioners/respondents/defendantsin this case. The “Health Plans” are Blue Crossof California dba Anthem Blue Cross, Health Netof California, Inc., UHC of California f/k/a PacifiCare of California, California Physicians’ Service dba Blue Shield of California, SCAN Health Plan, Aetna Health of California, and Cigna HealthCare of California, Inc. They contendthatthis is the case evenif they knew,or should have known, that the payment responsibility could notbefulfilled. The Health Plans’ attempt to use the regulatory system as an impenetrable shield has already beenrejected by the courts and is bellied by their own position in a recent case submitted for review in this Court. Further, the Health Plans’ interpretation of the regulations is both incorrect and incomplete. It is well settled that ‘the mere existence of a regulatory system does not foreclose a private right of action, and that the Department of ManagedHealth Care (“DMHC”) doesnot have exclusive jurisdiction to enforce the provisions of the Knox-Keene Act. Courts have repeatedly allowed parallel civil and regulatory actions. Moreover, the regulatory and | statutory framework of the Knox-Keene Act actually supports the imposition of a duty on the Health Plans to reassume responsibility over their paymentobligations becauseit strengthens the managed care system. The regulations and current case law also support a finding that a causeof action against the Health Plans may exist based on commonlaw basesofliability. Contrary to the Health Plans’ assertions, an examination of the regulatory framework as a whole supports the existence ofa continuing duty against the Plans to ensure that the IPAs they _delegate to are financially capable of carrying out the Health Plans’ statutory obligations. This statutory intent is evidentin the Knox- Keene Act’s requirementthat the Health Plans remain engagedin the monitoring of the financial solvency and claims payment compliance of IPAs even after delegation. Further evidence of the Legislature’s intent that the Health Plans retain a continuing obligation exists in the health plans’ direct involvementin corrective action plans when IPAs begin to exhibit difficulty fulfilling their. financial obligations, and in the regulations’ requirementthat health plans resume payments whenIPAsdefault. The Health Plans’ response to the proposition that such a duty exists expressly in the regulations is that the procedure the Legislature put in place to monitor the solvency of IPAs and to | attemptto rehabilitate troubled IPAs is exhaustive and impenetrable. Therefore, they conclude, the regulations foreclose anyprivate right of action to enforce that duty. The Health Plans employ a misguided interpretation of the regulations that is both unsupported and inconsistent with the Health Plans’ owninterpretation of the Knox- | Keene Actin othercases. | First, the language in the regulations actually expressly contradicts the Health Plans’ assertion that no private right of action is available to hold a health plan liable for its actions either at the time of delegation, or after delegation has taken place. The Health Plansrely on the languagein the Knox-Keene Act's regulations to support their argumentthatfull liability is transferred at the time of delegation becausethe Legislature rejected the imposition of vicariousliability on health plans and IPAs in Health and Safety Code Section 1371.25.° However, the Health Plans neglected to 3 All statutory referencesin this brief are to the California Health and Safety Code unless otherwise specified. includein their analysis the entire language of the section which specifically states that anylimits on vicariousliability, “shall not preclude a finding ofliability on the part of a plan...based on the doctrines of equitable indemnity. ..or other statutory or common law .basesforliability.” This case is not aboutvicariousliability. It is about the Health - Plans’ own actions - their direct and continuous negligence in delegating to an IPA they knew,or should have known,could not fulfill the Health Plans’ statutory obligation to pay for emergency -services providedto their enrollees. The provisions of the Knox- Keene Act themselves therefore explicitly permit common-law causes of action against the Health Plans arising out of the Health Plans’ own wrongful conduct. Second,the theory that the statutory schemeis exhaustive, ‘comprehensive, andfully integrated, directly contradicts the Health Plans’ owninterpretation of the statutes and regulations of the Knox- Keene Act in a case recently submitted for this Court’s review. Similarly, the claim that a private right of action that allows emergencyphysicians to enforce the statutory or regulatory duties health plans have under the Knox-Keene Act doesnot exist, is inconsistent with the Health Plans’ own assertions to this very Court. Indeed, the Health Plans argued the exact opposite of what they arguein this casein their recent Answerto Petition for Review in case no. $220019, entitled Children’s Hospital Central California v. Blue Cross of California dba Anthem Blue Cross,Inc. etal. (“Children’s Hospital Answer’). In the Children’s Hospital Answer, the Health Plans argued that the prompt paymentregulations promulgated by the DMHCwere “not intended to alter or change existing California law.” (Children’s Hospital Answer 28.) Further, the Health Plans assured this Court that a deviation from a strict and literal interpretation of the statutory schemewill not “exempt Blue Crossor any other health care service plan from any statutory regulatory duty it may have under the Knox-KeeneActor immunize Blue Cross from governmentor private actions to enforce such duties.” (Children’s Hospital Answer 32.) The Health Plans have already admitted that the DMHC doesnot have exclusive jurisdiction to enforcethe provisions of the Knox-Keene Act, and that nothingin the Act foreclosesa private right of action to enforce the Health Plans’ duties under the Knox-KeeneAct. The Health Plans’ regulatory arguments simplyfail. Although the Health Plans have curiously chosento ignore the issue in their brief after having raised it in support of their request for review, the analysis in this case should focus on resolving the split in authority between the holdings in the CEP and Ochs cases. The analysis of the Court of Appealin the instant casein invalidating the precedential value of CEP wascorrect and should therefore control. There have been monumental changesin law that have invalidated the holding in the CEP case. A year after the CEP case, the Court in Ochs beganthe erosion of CEP’s precedential effect. Two years later, the decision in Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 (“Bell”), essentially gutted the holding in CEP,in that, the Court concluded that emergency physicians have a private right of action against health plans to recover reimbursementfor their services. Finally, in 2009, Prospect put the proverbialfinal nail | in the coffin when the Court banned the practice of balancebilling based on the consideration that, while balancebilling was no longer possible, emergencyphysicians had a remedy against health plans for improper reimbursementin the form ofa civil action. Further, the CEP decisiondoes not control because the duty considered was notthe oneatissue in this case. While CEP dealt with a duty not to cause harm to emergency physicians’financial interest, the duty at issue here is the Health Plans’ continuing duty to avoid and/or reverse delegation of their reimbursementobligations to an IPA the Health Plans know,or should know,is financially unsound. Therefore, the Health Plans’ analysis of the Biakanja* factors is misplaced. The Court of Appeal underwenta correct analysis of the Biakanja factors in reaching its conclusion that a duty against the Health Plans in this case doesin fact exist. In sum, California has a clearly expressed public policy supporting the proposition that professionals are not required to give awaytheir services for free, but rather must be - and deservetobe- fairly paid as a matter of law and soundpublic policy. This policy supersedesblind adherence to a distorted view of a statutory -schemethat the Health Plans themselves have not supported in connection with other cases. The Health Plans here simply seek to shirk their statutory duty to reimburse emergency physiciansfor the 4 Biakanja v.Irving(1958) 49 Cal.2d 647. services they are required to provide, and lay the risk of health care costs on anyonebut themselves. Contrary to the Health Plans’ contention, requiring the Health Plans to resume payments to non- ‘contracted emergency physicians should IPAs default, will not undermine the Knox-KeeneAct or adversely affect the managed health care system. A decision in favor of the Emergency Physicians will instead strengthen the system - making sure that health plans remain responsible for ensuring that IPAs can provide the services they have been entrusted to provide to their patients, and that the safety net of our managedcare system remainsintact. FACTUAL AND PROCEDURAL BACKGROUND The subject of this appeal is a judgmententered after the trial court sustained the Health Plans’ demurrer without leave to amend. (V AA 1115-1 124.) In reviewing a demurrerruling, the reviewing court assumesthetruth of all material facts pleaded and also considers matters that may be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “La Vida’ refers collectively to La Vida Medical Group & IPA, doing business as La Vida Prairie Medical Group, La Vida Multispecialty Medical Centers, Inc. and Prairie Medical Group. Each La Vida entity was,at all relevant times, a “risk bearing organization”within the meaning of section 1735.4, subdivision (g) and wassubject to the Knox-Keene Act. Eachof the Health Plans 10 was,atall relevant times, also subject to the Knox-Keene Act. (I AA 36.) | For emergencycare renderedto plan patients, an emergency care providertypically bills the entity responsible for payment. In this ‘case, La Vida was the designated payer and the Emergency Physiciansbilled La Vida for emergency services renderedto the Health Plans’ enrollees. (I AA 37-38.) However, neither the Emergency Physicians nor the enrollees had a contract with La Vida. Instead, medical care was delivered to enrollees via contracts with the Health Plans (“Plan/Enrollee Contracts”). These Plan/Enrollee Contracts obligated the Health Plans to arrange and payfor covered health care services for the enrollees in exchange for premium payments. (! AA 38.) All emergency servicesat issue in this lawsuit were provided by the | EmergencyPhysicians, and constituted covered services under the Plan/Enrollee Contracts. (1AA 38.) During the relevant time period, the Health Plans had contracts with La Vida under which the Health Plans delegated certain responsibilities to La Vida (“Delegation Contracts”). One such delegated responsibility was the obligation to pay for covered health care services rendered to enrollees under the Plan/Enrollee Contracts. In exchange for accepting the delegated responsibilities, La Vida received money on a capitated or fixed periodic payment basis. The Delegation Contracts allocated to La Vida the risk of loss if the Health Plans’ capitation payments wereinsufficient to cover the 11 costs of the medical services rendered to enrollees.” The assigned risk of loss included, but was notlimited to, the emergency services rendered by the Emergency Physicians whoare parties to this case. (| AA 38.) Not all emergency physicians are in the same compensation circumstance as the Emergency Physicians in this case. Some | emergency care providers agree to accept reduced payments from health plans or delegated payers in exchangefor being a “participating provider” of a health plan or delegated payer, a status that affords an expected increase in patient/business volume,or a _simplerbilling process resulting in lower administrative costs. Participating providers are compensatedin a predetermined amount fixed by the termsof their participating provider contracts. Physicians (including emergency physicians) who do not have participating provider contracts with a health plan or delegated payer _are considered “non-participating” or “non-contracted” with respect to that health plan or payer. (1 AA 38.) At all relevant times, the Emergency Physicians herein werenon-contracted providers with the Health Plans and with La Vida. (I AA 38.) Non-contracted emergency physicians (such as the - Emergency Physicians) are particularly vulnerable to the Health Plans’ compensation policies because Health and Safety Code § © Conversely, La Vida would have been entitled to a profit had the Health Plans’ capitation payments exceeded the costof providing care to the Health Plans’ enrollees. (Il AA 38.) 12 1317 obligates the Emergency Physiciansto treat all patients requiring emergency care regardless of the patients’ insurance coverageorability to pay, and these physicians have no contract that they can enforce against either the Health Plans ortheir delegatee IPA. The Health Plans know the Emergency Physicians are vulnerable and therefore subject them to wrongful payment practices, including non-paymentor inadequate paymentfortheir services. (I AA 39.) . While the Legislature has required emergencyphysicians to treat all persons in need of emergency services regardless of their ability to pay for the services (Section 1317), the Legislature imposed a parallel requirement on health plans andtheir delegatee IPAs to pay emergency physiciansfor the care they provide regardlessof their participating or non-contracted status. (§ 1371.4, subds.(b), (d).) (I AA 39-40.) This obligation is confirmed by regulation. (28 Cal. Code Regs. § 1300.71.4, subd. (a).) (I AA 40.) Until 2007, La Vida paid the Emergency Physiciansfor the services they rendered to the Health Plans’ enrollees. Under the Delegation Contracts, La Vida wasrequiredto befinancially solvent in order to meetits contractual obligations to the Health Plans andits obligations to the Health Plans’ enrollees. A penalty forfailure to comply with the financial solvency requirements wastermination by the Health Plans. (1 AA 41.) Beginning in 2007, and consistently thereafter, La Vida failed to comply with multiple financial requirements. Specifically, La Vida failed to meet DMHC standardsforsufficiency of working capital, 13 tangible net equity, and cash to pay provider claims. Of thos e providerclaims that La Vida paid, many were paid untimely. (I AA 41.) The Health Plans were well aware of La Vida’s deteriorating ‘financial condition. La Vida submitted quarterly and annual financial statements to the Health Plans for the purpose of informing the Health Plans of La Vida’s status. La Vida submitted these reports pursuantto the Delegation Contracts and applicable regulat ions. (| AA 41.) Moreover, throughout the duration of the Delegati on contracts, the Health Plans knewthat the Health Plans’ capi tation payments to La Vida were insufficient to cover the costs of services | rendered by the Emergency Physicians and otherprovider s. (1 AA 42.) . In October 2009, La Vida’s lenderfiled bankruptcy and withdrew $4 million from La Vida’s account. La Vida was unable to obtain replacement funding from other sources. La Vida advised the Healt Plans of this development. (I AA 42.) Despite the Health Plans’ knowledge of La Vida’s financial troubles, the Health Plans unreasonably continued to dele gate their responsibility to pay the Emergency Physicians to La Vida . Atall relevant times, the Health Plans knew or should have known that their neglect of La Vida’s financial condition would prevent the Emergency Physicians’ receipt of reasonable paymentfor their ‘covered services. The Health Plans failed to resolve th e growing numberof unpaid non-contracted Emergency Physician provider claims, ignored the warning signs of La Vida’s imminent d emise, and 14 nevertheless directed providers to continue submitting claims to La Vida. Additionally, during this period, the Health Plans continued to make capitation payments to La Vida in amounts that did not cover the costs of the services rendered. The Health Plans knewtheir capitation payments wereinsufficient and that the Emergency -Physicians were renderingservices to the Health Plans’ enrollees withlittle to no chanceof being paid appropriately. (I AA 42.) Around Mayor June of 2010 - approximately three years after La Vida’sfinancial instability became obvious, the Health Plans finally discontinued their capitation payments to La Vida and terminated the Delegation Contracts. Shortly thereafter, La Vida went out of business (| AA 42) - thereby ensuring that the Emergency Physicians would not be paid by La Vidafor treating the Health Plans’ enrollees. | ARGUMENT I. THE KNOX-KEENEACT PERMITS - RATHER THAN FORECLOSES - A CAUSEOF ACTION AGAINST THE HEALTH PLANS FOR NEGLIGENT DELEGATION OF THE HEALTH PLANS’ PAYMENT OBLIGATIONS AND/OR NEGLIGENT FAILURE TO RESUME PAYMENTS TO EMERGENCYPHYSICIANS WHEN THEIPAs BECOME UNABLETO PAY. 15 A. Health and Safety Code Section 1371.25, Which Expressly Allows Common-Law Suits Against Health Plans, Defeats the Health Plans’ Argumentthat Statutes Exempt Them from CommonLawLiability. The Health Plans devote a substantial portion of their Opening Brief on the Merits (“OBM’) to arguing that health plans who delegate their compensation obligations pursuantto rules established in the Knox-Keene Act, and regulations promulgated thereunder, cannot be held liable for emergency physicians’ | compensation underany circumstances underany theory. (OBM 22-43.) This argumentfails. First, the Health Plans cite to section 1371.25 (OMB 11, fn. 4) to support a theory of statutory preclusion. Thefirst part of section 1371.25 provides: A plan, any entity contracting with a plan, and providers are each responsible for their own acts or omissions, and are notliable for the acts or omissionsof, or the costs of defending, others. Any provision to the contrary in a contract with a provideris void and unenforceable. While the above-quoted part of section 1371.25 supports the proposition that there is no vicariousliability after delegation, it does not support the position that the Health Plans cannotbeheld liable for their own actions. In fact, the remainder of the section, which the 16 Health Plansfail to cite, explicitly makes this distinction. The languagethat follows states (with added emphasis): Nothing in this section shall preclude a finding ofliability on the part of a plan, an entity contracting with a plan, or a provider, based on the doctrines of equitable indemnity, comparative negligence, contribution, or other statutory or commonlaw basesforliability.° Thus, the Knox-Keene Act expressly allows common-law suits against health plans based on their own wrongful conduct. The regulations would therefore allow a common law action here because the wrongthatis alleged is that the Health Plans negligently delegated their duties to an IPA they knew,or should -have known,did not have the ability to fulfil the Health Plans’ obligations, and that the Health Plans failed to reassumetheir obligations after the date of delegation when they knew or should have known that the IPA would not be able to pay. The issue hereis the Health Plans’ direct actions and wrongdoing. The regulations therefore expressly allow common law causesofaction against the Health Plans in this case based on the Health Plans’ wrongful & The Court of Appeal noted that a non-contracted emergency physician generally has no recourse againsta plan for an IPA’s default. In reliance on section 1371.25, the court held that such a physician has a causeof action against the health planif the IPA’s failure to pay the physician is the result of the plan’s negligent delegation of its payment obligation to the IPA. (Opn. 36 & fn. 34.) 17 conduct - i.e. negligent delegation, and their failure to reassume their payment obligations. The Health Plans have also argued that case law precludes a per se causeof action for a health plan’s failure to compensate emergencyphysiciansin violation of Section 1317.4. The Emergency Physicians accept that case law precludes a per se cause of action for a health plan’s failure to compensate emergency physiciansin violation of Section 1317.4. (See Ochs, supra, 115 Cal.App.4th at pp. 789-793; see also opn. 27-28.)’ However, the Health Plans confuse perseliability based on violation of a statute with liability based on negligence, whichis at the heart of this action. The unavailability of a statutory cause of action does not meanthat a negligence causeof action is also unavailable - especially since Section 1371.25 permits the negligence cause of action that the ‘Health Plans are wrongfully attempting to suppress.° ” See also CEP, supra, 111 Cal.App.4th at pp. 1131-1133. 8 The availability of a cause of action based only on statutory liability would benefit the Emergency Physicians here: A statutory violation would be simpler to prove thana full-fledged negligence cause of action requiring proof of the existence of a duty owedby the defendantto the plaintiff, the defendant’s breach ofthat duty, a causal connection between the breach andtheplaintiff's damages, andthe plaintiffs actual damages (Johnson v. Prasad (2014) 224 Cal.App.4th 74, 78) - a proofthat is inherently more complex than the proofof violation of a statute. 18 B. The DMHC,in Interpreting its Own Regulatory Scheme, Posits that the Knox-Keene Act and Requlations Promulgated Thereunder Do Not Bar Common Law Causesof Action by Non- Contracted Emergency Physicians. In Bell, supra, a group of non-contracted emergency physicians sued a health plan,alleging that the health plan paid them less than thecost and value oftheir services. They sought to recoveradditional amounts as “disgorgement” and “damages” under theories of declaratory and injunctive relief, violations of Business and Professions Code section 17200, and quantum meruit. The health plan inBell argued that the DMHC hasexclusive jurisdiction to enforce the Knox-Keene Act and that the Bell plaintiff had no right to sue the health plan. (/d. at pp. 213-214.) However, the DMHC submitted an amicus curiae brief in support of the emergency physicians. The DMHC arguedthat the Knox-KeeneActleft the Bel! plaintiffs free to pursue non- administrative theories of recovery, that the Bell plaintiffs’ unfair competition claims did not infringe on the DMHC’sjurisdiction, that no bar existed to the Bell plaintiffs’ quantum meruit claim, and that the health plan’s obligation to reimburse included an obligation to do so reasonably. (/d. at pp. 215, 217-218.) The Bell court agreed with the DMHC. The Bell court noted that “[t]he construction of a statute by the executive department charged with its administrationis 19 entitled to great weight and substantial deference.” (/d. at pp. 215, 217, fn. 8.) The Bel! court held: Any doubts about Dr. Bell’s standing dissolvesin light of the [DMHC’s] support of private enforcement. An uncontroverted record establishes (1) that the [DMHC]“hasconsistently taken the position that a provideris free to seek redress in a court of law if he disputed a health plan’s determination of the reasonable and customary value of covered services as required by section 1317.4,” (2) that “providers are free to pursue alternate theories of recover to secure the reasonable value of their services based on commonlawtheories of breach of contract and quantum meruit,” and (3) that a “orovider’s private action for reimbursement underthe . . . UCL does notinfringe upon the [DMHC’s] jurisdiction over the Knox-Keene Act.” (Bell, supra, 131 Cal.App.4th at pp. 217-218 (ellipses anditalics by court).) The Bell court continued quoting the DMHCasfollows: “The [DMHC], unlike the courts, lacks the authority to set specific reimbursement rates under theories of quantum meruit and the jurisdiction to enforce a reimbursement determination on both the provider and the health plan. Because the [DMHC] cannotprovide an adequate forum, health care providers must be allowed to maintain a causeof action in court to resolve individual claims-paymentdisputes over the reasonable value of their services.” (Bell, supra, 131 Gal.App.4th at p. 218.) 20 The principles articulated by the DMHCand adopted by Bell are applicable to this case. It makeslittle sense to allow non- contracted emergencyphysicians to sue health plans when they believe they have receivedinsufficient compensation but bar them from suing plans when neither a health plan nor an IPA pays them anything at all. C. The Health Plans’ Authorities Are Distinguishable and Therefore Inapplicable. The casescited by the Health Plans do not support preclusion of a negligence causeof action simply because the Health Plans were statutorily permitted to delegate their payment obligations to La Vida. In Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816 (“Gentry”) (discussedat page 36 of the OBM),theplaintiffs alleged that they had purchased forged autographed sports items though internet sales facilitator eBay. (/d. at p. 821.) Theplaintiffs alleged, inter alia, that eBay was negligent and had engagedin unfair competition under Business and Professions Codesections 17200 et seg.by failing to provide certificates of authenticity for the autographed items, distributing false certificates, permitting false representations to be made on eBay's website, and making its own misleading | ‘representations. (/d. at p. 820.) The court held that the unfair competition and negligencecauses of action were barred by a federal statute - 47 U.S.C. § 230 - whichstates that “[n]Jo provider or 21 user of an interactive computerservice shall be treated as the publisher or speakerof any information provided by another information content provider” and that “[n]o cause of action may be brought and noliability may be imposed underany State or local law that is inconsistent with this section.” (Gentry, supra, 99 Cal.App.4th at p. 828 (quoting 42 U.S.C. § 230, subds. (c)(1), (e)(3).) The court concluded that section 230 provided immunity to eBay against the plaintiffs’ negligence and unfair completion claims. (Gentry, supra, 99 Cal.App.4th at p. 830.) In Harshbargerv. City of Colton (1988) 197 Cal.App.3d 1335 (“Harshbarger’) (also discussed at page 36 of the OBM),the plaintiffs contracted with a general contractor to build a residence. Twoinspectors employed by the defendantcity (“City”) periodically inspected the construction and represented after each inspection that the construction complied with applicable building codes. The general contractor stopped working on the house and, shortly thereafter, the City notified the plaintiffs that the house had numerouscodeviolations. The plaintiffs paid approximately $295,000 to another contractor to bring the house up to code standards. Theplaintiff sued the individual inspectors and the City for intentional misrepresentation and suppression of fact and sued the City for negligent hiring. (/d. at pp. 1338-1339.) The defendants demurred on the ground that Government Code sections 815 et seq. gavethe City (as a public entity) and the inspectors (as employees of a public entity) immunity againsttheplaintiffs’ claims. (/d. at p. 22 1339.) Thetrial court sustained the demurrer without leave to “amend (id.), and the Court of Appealaffirmed (id. at p. 1350). In contrast to Gentry and Harshbarger, the Health Plans do not cite any statute that immunizes them againstthe Emergency Physicians’ negligence causeof action. Indeed, in light of Section 1371.25, which permits commonlaw causesof action against health | plans for their own wrongful conduct, the Health Plans cannot allege such an immunity-granting statute. The Health Plans also rely on Williams v. State Farm Fire and Casualty Co. (1990) 216 Cal.App.3d 1540 (“Williams”). Theplaintiffs in Williams argued that their former insurer breached the implied | covenantof good faith and fair dealing by cancelling their policy. However, the Williams court rejected this argument, partly because the controlling statute permitted cancellation. (/d. at pp. 1543, 1549.) The Health Plans argue that the Williams court's rejection of the plaintiffs’ breach-of-the-covenant claim supports the Health Plans’claimsoftotal statutory exoneration from liability on any theory. (OBM 36.) This description of Williams is vastly oversimplified and contrary to the court’s reasoning. The court did not hold in favor of the insurer solely because a statute permitted cancellation. Instead, the Williams court also held that the agenttold the plaintiffs that the policy would be cancelled before the plaintiffs purchasedit andthat, therefore, the insurer made no misrepresentation that could support a cause of action. (Williams, supra, 216 Cal.App.3d at p.1549.) 23 Moreover, the Williams court expressly acknowledged Spindle v. Travelers Ins. Cos. (1977) 66 Cal.App.3d 951 (“Spindle”), a case _in which an insurer was held to have breached the implied covenant of goodfaith and fair dealing based on the insurer’s wrongful cancellation of the plaintiffs medical malpractice insurancepolicy. The insurer argued thatit could have no cancellation-relatedliability becausethe policy specifically permitted the insurer to cancel the policyif the insurer followed certain procedures. (/d. at pp. 954, 956.) However, the Spindle plaintiff had alleged that the insurer cancelled his policy as a result of the insurer’s malice towards him and for the purpose of discouraging other physicians/insureds from contesting a large premium increase. (/d. at pp. 954-955.) The - Spindle court held that the complaint stated a cause ofaction for breach of the covenantof good faith and fair dealing because the allegations, if proven, would constitute cancellation for an improper purpose eventhoughthe policy provided for cancellation by the insurerfor any reason. (/d. at pp. 958-959.) Thus, Spindle ‘illustrates that a cause of action exists when expressly permitted conductis performed without due care or for an improper purpose. Further, the Health Plans’ contention that a statute permitting a type of conduct gives the actor a right to perform the permitted conduct in any mannerregardless of the conduct’s effect on others ‘is nonsensical. The Court of Appeal best explained the flaw in the Health Plans’ reasoning: The [Plans’] argumentis akin to suggesting that a driver’s license provides the driver immunity for 24 negligently operating a vehicle or a handgun permit. provides the gun ownerimmunity for negligently storing or discharging the firearm. That Health and Safety Code section 1371.4, subdivision (3) provides the [Plans] with permission to delegate their statutory duties does not immunize the [Plan] for doing so negligently. (Opn. 36, fn. 33.) Simply, the Health Plans’ argumentfails. D. The Legislature Did Not Assign the Risk of Defaulting IPAs to Emergency Physicians. The Health Plans note that the Court of Appeal’s holding is based largely on statutes requiring emergency physicians totreatall patients regardlessof their ability to pay. The Court of Appeal held that becauseof this requirement, health plans should bearthe risk of compensating emergencyphysiciansif an IPA fails to pay them. (OBM 42(citing opn. 4, 33).) The Health Plans argue that “[t]hese statutes placed [the] burden[of the risk of loss of nonpayment] on | emergency physicians as a condition of their holding themselves out as emergencyservice providers” and that the Court of Appeal usurped the Legislatureinlifting this purported burden from emergencyphysicians andplacing it onto health plans. (OMB 42- 43.) The Health Plans are incorrect because the statutes upon which they rély simply do not assign to emergencyphysicians the risk of non-payment when anIPA defaults. 25 The Health Plans violate United States Supreme Court Justice Felix Frankfurter’s “three rules for mastering the meaning of a statute: ‘(1): Read the statute; (2) read the statute; (3) read the statute.” (Enterprise Insurance Co. v. Mulleague (1987) 196 Cal.App.3d 528, 535 (quoting Friendly, Benchmarks (1967) Mr. Justice Frankfurter and the Reading of Statutes, p. 202).) Read accurately, the statutes cited by the Health Plans - 42 U.S.C § 4395dd et seq. and Section 1317 (OBM 42) - do not require emergencyphysicians to necessarily forego compensation when an IPA financially collapses. 1. The Federal Emergency Medical Treatment and Labor Act does not require emergency physicians to bear the risk of a deleqatee IPA’s failure to pay them. The federal Emergency Medical Treatment and Labor Act (‘EMTALA’), codified at 42 U.S.C. § 1395dd, “regulates emergency room care in hospitals that accept Medicare patients[.]” (Cherukuri v. Shalala (6th Cir. 1999) 175 F.3d 446, 448 (“Cherukur’).) Thus, “even if EMTALA could be read to require emergencyphysiciansto treat patients for free when IPAs default (which it cannot), such requirement would only apply in the context of Medicare. Further, the language of EMTALA doesnotstate that emergency physicians are required to treat patients for free so that health plans may ‘continue to retain funds that would otherwise have compensatedthe physicians. (42 U.S.C. § 1395dd.) . 26 Moreover, EMTALA “waspassedto prevent‘patient dumping’ of the uninsured[.]” (Cherukuri, supra, 175 F.3d at 448.) Thus,to the extent the EMTALA could be read to assumetherisk of an emergency physician having to treat a patient who cannotnot pay, such risk extends only to treating patients who lack coverage through anytype of health care plan. Such risk cannot be deemed ‘to extend to emergencytreatment of patients who are covered under health plans but the health plan refuses to pay the emergency physician. Further, nothing in EMTALA suggests that an emergency physician’s agreementto treat patients for free when the patient’s IPA defaults is a condition for the practice of emergency medicine. | Accordingly, the Health Plans do not - and cannot - cite to any federal authority that supports their contention that emergency physicians necessarily consent to absorbing lossesattributable to. failed IPAs in exchangefor holding themselves out as emergency specialists. 2. Section 1317 doesnot require emergency physicians to bear the risk of a delegatee IPA’s failure to pay them. Subdivisions (a), (b), and (d) of Section 1317 require hospitals and individual emergency physicians to provide emergencycare to patients regardlessof their insurance status and/or their ability to pay. However, the Health Plansidentify no language within Section 1317 that obligates emergency physicians to forego compensation from plans whentheir delegatee IPAs become unable to pay them; 27 indeed, Section 1317 contains no such language. The Health Plans rely on Section 1317.6 subdivision (g) (OBM 42)and correctly note that this subdivision provides for revocation or suspension of licenses of hospitals that violate the statutory schemeof which Section 1317 is a part. However, subdivision (g) says nothing about emergency physician compensation.® lf the Legislature intended that emergency physicians must absorball risks of nonpaymentfortheir services, regardless of the reason for the nonpayment, as a condition of holding themselves out as emergencyphysicians, then the Legislature would have stated such language within the Knox-Keene Act. Instead, the Legislature included a statute requiring plans to pay emergency physicians who treat the health plans’ enrollees. Section 1371.4, subdivision (b) providesthat “[a] health care serviceplan, or its contracting medical providers, shall reimburse providers for emergency services and . care[.]” (Emphasis added.) Further, Section 1371.4, subdivision (c) providesthat “[playment for emergency services and care may be denied only if the health care service plan,or its contracting medical providers, reasonably determines that the emergencyservices and care were neverperformed[.]” These provisions contradictthe notion that non-compensationis a risk that emergency physicians ® Section 1317.6, subdivision (c) (which the Health Plans do not cite) governsdiscipline of “physicians and surgeons”whoviolate section 1317 ef seq. 28 must assume as a condition of practicing emergency medicine."° Accordingly, the Health Plansfail to establish that the statute requiring emergency physiciansto treat all emergency patients regardlessoftheir ability to pay reflects an intention by the. | Legislature that emergency physicians must assume therisk of non-_ payment, regardless of the reasons for nonpayment. Rather, the Legislature hasclearly stated its intention that emergency physicians should and must be paid. i. REGULATIONS PROMULGATED UNDERTHE KNOX-KEENE ACT ENCOURAGE- RATHER THAN FORECLOSE - A HEALTH PLAN’S RESUMPTION OF ITS COMPENSATION OBLIGATIONS WHEN AN IPA DEFAULTS. At pages 27-28 of the OBM,the Health Plans argue that DMHCregulations promulgated under the Knox-Keene Act support . the Health Plans’ argument that the delegation of their payment responsibilities to La Vida under section 1371.4 bars the Health 10 Of course, Section 1371.4 also includes subdivision (e) which | permits plans to delegate payment responsibilities to an IPA; and the Health Plans’ primary argumentis that this subdivision absolves them ofall post-delegationliability for compensating emergency physicians. However, subdivision (e) does not expressly provide or implicitly suggest that an emergency physician assumes the risk of a health plan’s negligent delegation or of the delegatee’s inability to pay. 29 ‘Plans’ obligation to resumetheir statutory obligations to pay the Emergency Physicians after La Vida ceased paying them. However, one such regulation reads in relevantpart: The plan’s contract witha . . . capitated providershall include provisions authorizing the plan to assumeresponsibility for the processing and timely reimbursementof provider claims in the event that the . . capitated providerfails to timely and accurately reimburseits claims (including the paymentofinterest and penalties). The plan’s obligation to assume _ responsibility for the processing and timely reimbursementof a capitated provider’s provider claims may be altered to the extent that the capitated provider has established an approvedcorrective action plan consistent with section 1375.4(b)(4) of the Health and Safety Code. The plan’s contract witha . . . capitated provider shall not relieve the plan ofits obligations to comply with sections 1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 1371.4, and 1371.8 of the Health and Safety Code and sections 1300.71, 1300.71.38, 1300.71.4, and 1300.77.4 oftitle 28. (Cal. Code Regs.., tit. 28, § 1300.71, subds. (e)(6), (e)(8), emphasis added.) This regulation reflects the DMHC’s intention that health plans are required to resumetheir provider compensation obligations. 30 The Health Plans arguethatthe first sentence of _subdivision(e)(6) - which requires the health plan/IPA contract to “authorize” the health plan’s resumption ofits claim-payment obligations - gives the health plan a choice whether to resume the claim paymentobligation. (OBM 27-28, fn. 6.) However, the Court of Appeal correctly dispensed with this contention by noting that the .second sentenceof the subdivision “refers to an ‘obligation’ to assumethat responsibility. In other words, the regulation does not merely direct the [health plan] to contractually guaranteethat it may resumethe obligation, it implies that in some circumstances the [health plan] must do so.” (Opn.9, fn. 10 (italics by court).) The Health Plans further attempt to diminish the effect of this regulation by arguing that its subject matter is the processing and timely reimbursementof provider claims rather than risk shifting, and speculating that“it is extremely implausible” that the DMHC would _ have “buried” a risk re-shifting provision in a claims-processing regulation. (OBM 28, fn. 6.) The Health Plans are making a linguistic distinction without a substantial difference: Neither a health plan, an IPA, nor any other entity can reasonably be expected to pay a non-contracted emergencyphysician for his/her servicesif the emergency physician does not ask for payment: thus, an emergency physician will be paid for his/her services only if he/she makes a claim for paymentfor those services. | Moreover, the Health Plans’ argumentthat there is no continuing obligation to delegate appropriately is nonsensical in light of the statutory scheme. If health plans were indeed foreclosed from 31 having a continuing duty to ensure that they are responsible in the delegation of their duties to an IPA, a health plan could delegate to a -solvent IPA one day and be absolvedofall liability if the IPA went out of business the next. If this were the intent of the Legislature, regulations would not have been enacted to require monitoring of an IPA’s financial situation throughout the entire period of delegation, quarterly reporting of an IPA’s financial status, the participation of ‘health plans in corrective action plans, or the statutory resumption of payments after an IPA’s default. Accordingly, the Health Plans fail to - and cannot - show that regulations promulgated under the Knox-Keene Act support their position that delegation of a health plan’s payment obligation to an ‘IPA is not continuing and categorically irreversible. lll. ©THE HEALTH PLANS’ DUTY ARGUMENTSFAIL. A. The Health Plans’ Duty Argumentis Misplaced - Because the Duty Addressedby the Court of Appeal is Not a Business-Based Duty to Protect Non-Contracted Emergency Physicians from Economic Losses. The Health Plans argue that they have no duty to resumetheir provider paymentobligations under any circumstances becausethe Health Plans have no duty to conducttheir businessaffairs to prevent “purely economic lossto third parties in their financial 32 transactions.” (OBM 43-60 (quoting from Quelamine Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 58.) This argumentfails for two reasons. First, the duty discussed in the OBMis not the duty found by the Court of Appeal. The Court of Appealidentified the duty question to be decided asfollows: Thecritical question raised by this case is (1) whether [health plans] may delegate their reimbursement duty to any IPA, regardless of the financial stability of that IPA, or (2) whetherthe [Plans] have a duty not to delegate their Health and Safety Code section 1371.4 reimbursementobligation to an IPA that the [Plans] know, or have reason to know,is financially unable to meetthat duty. (Opn. 28(italics by court).) Thus, the core of the duty considered by the Court of Appealis the financial condition of the delegatee IPA and the Health Plans’ actual or constructive knowledgethereof - not the financial condition of the Emergency Physicians. Second, the Emergency Physicians are not arguing that the Health Plans have a duty to safeguard their investments, back up their bank accounts,or protect them from bad choicesin the marketplace. Instead, the Emergency Physicians merely want to be reimbursed for services they have provided to the Health Plans’ enrollees. This case is not a business-loss case. As explained furtherin section V below,this case hasreallife and death implications for any 33 California resident and/or visitor who may require emergencycare. This case will necessarily decide whether California will blindly adhere to a distorted interpretation of the Knox-Keene Act which would force non-contracted emergency physicians to bear without recourse the consequencesof an IPA’s financial failure, a condition which these physicians have absolutely no control over. Thus, the stakes in this lawsuit are not reducible to mere economic business losses. Accordingly, the Health Plans’ entire duty analysis lacks a premise. B. Evenif the Health Plans’ Duty Analysis had a Viable Premise, the Court of Appeal Correctly Applied the Biakanja Duty Factors. | The factors generally employed by courts for establishing a duty in specific cases are set forth in Biakanja v.Irving, supra, 49 Cal.2d 647. The Health Plans argue that the Biakanja factors go against imposing a duty of non-negligent delegation of payment responsibilities to an IPA and a duty of resumption of the delegated paymentobligation if the IPA defaults. (OBM 43-60.) In a detailed ‘discussion of the Biakanja factors, the Court of Appeal reached the opposite conclusion. (Opn. 28-35.) The Emergency Physicians agree with the Court of Appeal and adoptthat sectionof the opinion. 34 C. If this Court is Inclined to Reverse the Court of Appeal Based Solely on the Biakanja Factors, this Court Should Defer a Decision on these Factors Until the Parties Have Developed a Record. _ Existence of a duty is evaluated on a case-by-case basis. (Alvarez v. BAC HomeLoansServicing, L.P. (2014) 228 Cal.App.4th 941, 944.) Although the existence of a duty is a question of law, the facts supporting the existence or absence of such a duty must be proven. (Laico v. Chevron U.S.A., Inc. (2004) 123 Cal.App.4th 649, 659.) As noted above, this case comesto this Court after the trial court sustained a demurrer without leave to amend. (V AA 1115- 1124.) Consequently, aside from judicially noticeable materials, no record was (or could have been) developed. The Health Plans make several pseudo-factual assertions that they do not support, and had no opportunity to support given the stage ofthe trial court proceeding at the time of entry ofjudgment. For example, on page 40 of the OBM,the Health Plans describe a theoretical inevitable downwardspiral that would occurif a health plan were to re-assume paymentobligations previously delegated to an IPA. The Health Plans contend that they (and similarly situated health plans) factor the delegatedfinancial obligations the IPAs will have to medical providers into the capitation payments madeto the IPAs; that re-assuming a defaulted IPAs payment obligation would 35 necessarily reduce the amountof the Health Plans’initial capitation payments in thefirst instance; that this reduction in revenue could increase the IPAsfinancial stress and interfere with an administrative corrective action plan; and that a defunct IPA would be unable to pay any of its medical providers. There is no evidencein the current record that any of these events happento IPAs as a matterof course or that they happened to La Vida specifically. One would expectthat these issues would be the subject of discovery - but this lawsuit must proceed beyond demurrer to develop sucha record. IV. THIS COURT SHOULD DISAPPROVECEP. Like the Emergency Physiciansin this case,theplaintiffs in CEP and Ochs were non-contracted emergency physicians not paid by insolvent IPAs. The Ochs court permitted the non-contracted emergency physician in that case to amend his complaint to allege a cause of action for the health plan’s negligent delegationofits compensation obligation to a financially unsound IPA. (Ochs, supra, 115 Cal.App.4th at pp. 796-797.) By contrast, the CEP court disallowed a negligence cause of action. (CEP, supra, 111 Cal.App.4th at pp. 1135-1136.) The Court of Appeal below agreed with Ochs. (Opn. 35.) In their petition for review, (at pages 21-26), the Health Plans argued that this Court must resolve the conflict between CEP and Ochs. Surprisingly, the OBM doesnot addressthis conflict or argue 36 ‘that CEPreflects a better rule of law. Nevertheless, the Emergency Physicians urge this Court to adopt the Ochs rule and disapprove CEFPto the extentit is inconsistent with Ochs. A. Subsequent Case Law has Eroded CEP’s Precedential Value. CEP was publishedin 2003. (CEP, supra, 111 Cal.App.4th at p. 1127.) When the CEP court decided that non-contracted emergency physicians may not sue health plans to recover compensation that should have been paid byfailed IPAs, emergency physicians were permitted to balancebill patients for amounts not paid by the IPAs. The CEPplaintiffs sought compensation from the health plans -pursuant to Section 1371.4 and also alleged causesofaction for violations of Business and Professions Code section 17200, implied contract, negligence, quantum meruit, and third party beneficiary of a contract. (CEP, supra, 111 Cal.4th at 1130.) The CEP court systematically and specifically denied recovery under eachof these ‘theories (id. at pp. 1131-1138) in an apparent attemptto categorically bar physicians for suing plans for compensation that should have been paid by IPAs. However, CEP did not foreclose balancebilling and thusleft the unpaid emergency physicians with a potential avenue of recovery. The Ochsplaintiff also asserted multiple theories of recovery - violations of the Knox-Keene Act, violations of Business and 37 Professions Code section 17200, negligence, declaratory and _injunctiverelief, quantum meruit, and third-party beneficiary of a contract. (Ochs, supra, 115 Cal.App.4th at p. 788.) Like the CEP court, the Ochs court denied recovery on each of the theories pleaded. (/d. at pp. 789-796.) However, the Ochs court also held that the emergencyphysician plaintiff had the right to assert a cause -of action for the health plan’s negligent delegationofits compensation obligation to an IPA that the health plan knew or should have knownwasfinancially unsound,andthatthe trial court erred in denying leave to amendto allege a negligent delegation causeof action. (/d. at p. 797.) Thus, to the extent CEP could have ‘been read to ban all superior court lawsuits by non-contracted emergency physicians to recover compensation from plans, Ochs began the erosion of CEP’s precedential effect. In 2005 (more than two years after CEP), the Court of Appeal decided Bell, supra. The Bell plaintiffs were non-contracted ‘emergency physicians who contendedthat the amounts the health plan paid to them were unreasonably low. (/d. at p. 214.) Like the CEPplaintiffs, the Bel plaintiffs alleged several causes of action - i.e., for declaratory and injunctiverelief, violations ofBusiness and Professions Codesection 17200, and quantum meruit. (/d.) - However, unlike CEP, the Bell court held that the plaintiffs had standing to pursuecourt actions against the health plan and held that the plaintiffs could proceedwith all of their pleaded causesof action. (/d. at p. 218.) Thus, to the extent CEP could have been read to ban all superior court lawsuits by non-contracted emergency 38 physicians to recover compensation from health plans, Bell further eroded CEP’s precedential effect. . In 2009, approximately six years after CEP, this Court decided Prospect, supra. Prospect held that emergency physicians were no longer permitted to balance bill their patients for the difference between the amountsbilled to an IPA or a health plan and the amountthe IPA or health plan actually paid. (Prospect, supra, 45 -Cal.4th at p. 508-509.) One ofthis Court’sjustifications for banning balancebilling was thecivil lawsuit compensation remedy made available to emergency physiciansin Bell: “Because emergency room doctors prevailed in Beil [citation], no reason exists to permit balancebilling.” (/d. at p. 508.) Thus, the compensation landscape for non-contracted emergency physicians wasvery different when CEP was decided in 2003 (whenthese physicians were allowed to balancebill) and after Prospect was decided in 2009 (when balance billing ceased)."" 1 The Court of Appeal below acknowledged the Prospect opinion’s ‘footnote 5, which states that the Prospectholdingis “limited to the precise situation before us - billing the patient for emergency services whenthe doctors have recourse againstthe patient's HMO. Weexpress no opinion regarding the situation where no such recourse is available; for example if the HMO is unable to pay or disputes coverage.” (Prospect, supra, 45 Cal.4th at pl. 507, fn. 5.) The Court of Appeal then opinedthat, if the California Supreme Court had been required to decide whether non-contracting emergency physicians not paid by IPAs could continue to balance bill, the Supreme Court would have disallowed balancebilling for these physicians as well. (Opn. 26-27, 41 & fn. 38.) In any event, after Prospect, non-contracting emergency physicians cannotrely on balancebilling as a source of compensation. 39 The combined effect of Ochs and Bell allowing non-contracted emergency physicians to pursue compensation claims against health plansin civil courts, and Prospect’s elimination of balancebilling, diminishes CEP’s value as judicial precedent. “The authority of an. ‘older case may be aseffectively dissipated by a later trend of decision as by a statement expressly overruling it. (Frisk v. Superior Ct. (2011) 200 Cal.App.4th 402, 411.) Therefore, this Court should expressly confirm CEP’s obsolescence by disapprovingit. B. This Court Should Not Follow CEP Because CEP Neither Considered Nor Decided the Duty at Issue in this Case. A case is not authority for a proposition not actually ‘considered and decided. (City of Clovis v. County of Fresno (2014) 222 Cal.App.4th 1469, 1479.) CEP did not consideror decide whether non-contracted emergency physicians may have a causeof action for a health plan’s negligent delegation of its payment responsibility to an IPA or whetherthe duty to avoid negligent delegation is a continuing duty. Therefore, CEP doesnot control the issue decided by the Court of Appeal below. The CEPplaintiffs’ negligence causeof action alleged that the plans had a duty “to use due care so as not to cause harm to [EmergencyPhysicians’ financial interest . . . .” (CEP, supra, 111. Cal.4th at p. 1135 (brackets andellipses by court).) The CEP court declined to find such a duty on the grounds that businesses 40 generally have no duty to managetheir affairs as to prevent economicinjury to third parties, and because the Legislature has approvedrisk sharing arrangements. (/d. at p. 1136.) By contrast, as explained in Section I!I above, the Emergency Physicians in this case do not allege that the Health Plans owe them a broad duty to look after their financial interests generally. Instead, the duty the Emergency Physiciansallege in this case is a Health Plan’s continuing duty to avoid and/or reverse delegationofits compensation obligation to an IPA that the Health Plans know or should knowis financially unsound. Moreover, Ochs confirmsthat the viability of negligence claims is evaluated accordingto the specific duties claimed rather than according to a one-size-fits-all standard. The Ochs court heldthat the plaintiff's cause of action for negligence based on the health plan’s alleged duty to pay for emergency services was subject to demurrer (Ochs, supra, 115 Cal.App.4th at p. 794), but that a cause of action for negligence based on the health plan’s pre-delegation duty to ascertain the financial soundnessof the delegatee IPA could proceed(id. at p. 797). Thus, the Court of Appealin the instant case and the CEP ‘court decided the existence/absenceof different duties. The fact that the CEP court found no duty in that case has no bearing on the existence of the duty alleged in this case. Accordingly, evenif Bel/ and Prospect had not diminished the precedential value of CEP, CEP would not control in this case. 41 V. PUBLIC POLICY FAVORS IMPOSING A NEGLIGENCE-BASED DUTY ON THE HEALTH PLANS TO RESUME PAYING EMERGENCY PHYSICIANS WHEN DELEGATEEIPAs DEFAULT. The Health Plans attempt to convince this Court that requiring health plans to resume payments to emergencyphysicians after an ‘IPA defaults is a threat to California’s public policy favoring a comprehensive managed health care system. The Health Plans are wrong because,(A) they ignore the competing public policy that no person, including emergency physicians, should be required to work | for free, and (B) requiring negligent-delegator health plans to resume | compensation payments to non-contracted emergency physicians will not induce the collapse of the managed care system. A. Existing Public Policy Prohibits Forcing Non- Contracted Emergency Physicians to Work Without Compensation. “For every wrong, there is a remedy” is a maxim of California jurisprudence(Civil Code Section 3523), and a longstanding principle entrenchedin the public policy of this State. Section 1317 requires that emergency physicians musttreat all patients regardless of their ability to pay. Prospect holds that emergency physicians may notbill any patient for the emergencyservices rendered, thereby removing balancebilling from the remedies available to 42 emergency physicians. (Prospect, supra, 45 Cal.4th at p. 508.) Ochs and CEP hold that emergency physicians do not have a per se causeofaction for a health plan’s violation of Section 1371.4. (Ochs, supra, 115 Cal.App.4th at pp. 789-793; CEP, supra, 111 Cal.App.4th at pp. 1132-1133.) If the civil suit remedy made available by Be// and the negligent-delegation remedy made available by Ochs wereto disappear, where would non-contracted emergency physiciansfind their remedy? If the Emergency -Physicians may not seek compensation from the patients,if they cannot obtain compensation from La Vida dueto its insolvency, and if Section 1371 .4, subdivision (e) is interpreted to relieve the Health Plans from any compensation obligation to the Emergency Physicians, how can they be paid? A conclusion that the Emergency Physicians must resign themselvesto their uncompensated status is unfair, morally repugnant, and contrary to Civil Code Section 3523. Interpreting Section 1317.4 so as to deprive the Emergency | Physicians of a remedy would be,in the words of Bell, “confiscatory,” “unconscionable,” and “unconstitutional.” (Bell, supra, 131 Cal.App.4th at p. 220.) In reaching this conclusion, the Bel! court relied in part on Cunningham v. Superior Ct. (1986) 177 Cal.App.3d 336 (“Cunningham”). Cunningham addressed whethera superior court had the right to order an attorneyin private practice to perform free pro bono services and held that such a requirementis unconstitutional. (/d. at p. 338.) 43 In Cunningham, the County of Ventura commenced a paternity action against an allegedly delinquent noncustodial father. The county sought to obtain reimbursementfor public assistance proceedsto support his alleged child and to compel the defendantto pay future child support. The defendant claimed he wasindigent. ‘The Ventura County Bar Association and the superior court had designed a program to furnish free representation for indigent defendants, under which any lawyer whoseoffice was in Ventura County could be called upon to contribute his/her legal services on a pro bono basis. The Cunningham petitioner wasthe attorney ‘selected to represent the indigent paternity defendant. The attorney refused to participate on the ground that requiring his participation without compensation wasa denial of his constitutional equal protection rights.'* The superior court held the attorney in contempt, _and his writ petition to the Court of Appealfollowed. (Id. at pp. 338- 339.) The Cunningham court held that the superior court order appointing the attorney asthe indigent defendant’s counsel violated the attorney’s constitutional right to equal protection. (Id. at p. 356.) _In reaching this conclusion, the appellate court observed: It is a legitimate state function to assist the poor [citation], but, under the Constitution, this goal cannot '2 The Cunningham attorney also argued that his practice was limited to personalinjury matters and that he had no experience with paternity cases. (Cunningham,supra, 177 Cal.App.3d at p. 339.) 44 be accomplished at the expenseof one particular group of people. It is a denial of equal protection when the government seeksto charge the cost of operation of a state function, conducted for the benefit of the public, to a particular class of persons. [Citations.] To charge the cost of operation of state functions conducted for the public benefit to one class of society is arbitrary and violates the basic constitutional guarantee of equal protection of the law. [Citation.] An attorney who is appointed to represent an indigent without compensationis effectively forced to give away a portion of his property - his livelihood. Other professionals, merchants, artisans, and state licensees are not similarly required to donate services and goodsto the poor. (id. at p. 348 (internal quotation marks omitted; emphasis added).) Cunningham'sreasoning applies here. Section 1317 requires emergencyphysicians to render emergency medical servicestoall patients that require them irrespective of the patients’ ability to pay. In enacting this statute, the Legislature intended to create a benefit to the public; and, emergency physicians’ compliance with the statute is essential to implementing the public benefit. However, there is no legitimate reason why emergency physicians (the very people whoprovide the services) should bearthefinancial burden of this public benefit alone, especially when these patients have already paid premiumsto the heaith plans to cover these services. Under Cunningham andBell, assigning this burden to the Emergency Physiciansis unconstitutional. Thus, Cunningham and 45 Bell reflect California’s public policy that professionals are absolutely entitled to compensation for their work. More specifically, the Prospect court echoed Bell by stating: “Emergency room doctors are entitled to reasonable payments for emergency services rendered to [health plan] patients.” (Prospect, supra, 45 Cal.4th atp. 509 (italics by court); see also Bell, supra, 131 Cal.App.4th at p. 219 (“However concerned we may be about _ Spiraling costs for health care service plans andtheir enrollees, those concerns cannotjustify a rule that would single out emergency care physicians and force them to work for something other than a reasonable fee.”).) The Health Plans arguethat, although the Court of Appeal -noted that the burden of providing emergencyservices “cannot be accomplished at the expenseof one particular group of people,” the Court of Appeal nevertheless impermissibly burdensonly the Health Plans with the consequencesof an IPA’sinability to pay the Emergency Physicians. (OBM 42(citing opn. 4, 33.) However, the ‘Health Planscite no authority for their assumption that the Health Plans are a “group of people” comparable to the individual lawyersin Cunningham or the individual Emergency Physiciansin this case. Moreover, to the extent the Health Plans could be deemed a “group of people,” their situation is not comparable to that of physicians who “mustpractice their profession whetheror not they are paid for their services. Moreover, assigning to health plans therisk of compensating non-contracted emergency physicians whenIPAsfail is more equitable than assigning the risk of working for no 46 compensation to these physicians because the Health Plansfreely chooseto contract with the IPAs. They have contractual, business, funding, regulatory, and supervisory relationships with their IPAs and therefore have considerable opportunity to influence the IPAs’ “financial fates. By contrast, non-contracting emergency physicians have no control whatsoever over how IPAsor health plans conduct their financial affairs, and no control over a health plan’s relationship with its contractual partner IPA. B. Requiring the Health Plans to Resume Payments to Emergency Physicians in the Event of an IPA’s Default Will Not Adversely Affect the Public Policy of a Comprehensive Managed Health Care System. The Health Plans characterize the holding of the Court of Appeal below as a “suggested dismantling of the IPA’s delegated responsibility[.]” (OBM 39.) They further argue that the post- delegation duty urged by the Emergency Physicians “would undermine the manageability and predictability of health care costs and prove detrimental to the economic efficiency of the health care system.” (OBM 41.) . These arguments ignore that non-contracted emergency physicians comprise a small proportion of the many providers within the managedhealth care system, andthatthis issue is a narrow one. A managed care health plan’s providers include physicians of 47 many disciplines (including primary care physicians, surgeons, pathologists, dermatologists, etc.), hospitals, laboratories, pharmacies, and others. If a health plan were required to compensate all providers in the event of a delegatee IPA’s insolvency, one could reasonably imagine that such requirement might possibly cause the end of managedcareasit is now constituted in California. However, such a possibility is not before this Court. Rather, the narrow issue at bench is whether a health plan is obligated to compensate non-contracted emergency physicians whena delegatee IPA fails to meet its payment obligations becauseof negligent delegation. The significance of the limited exception to the delegation rule is underscored by the Court of Appeal’s refusal to extend the exception to non-emergency physicians. (Opn. 37-39.) Therefore, allowing non-contracted emergencyphysicians to sue plans for negligent delegation of their paymentresponsibilities to IPAs, and/or negligent failure to reassumethese responsibilities when IPAs default, does not offend California’s public policy in favor of managed health care. 48 CONCLUSION Forall of the reasons discussed above, the Emergency Physicians respectfully request this Court to affirm the judgment of the Court of Appeal. nea wmeI4e Respectfully submitted this Lf day of January, 2015. aa&FZLLP By( Andrew { Soleauck Damaris L. Medina Robin James Attorneys for Appellants, Centinela Freeman Emergency Medical Associates,etal. 49 WORD COUNT CERTIFICATION |, Andrew H. Selesnick, certify as follows: | am an attorney licensed to practice in California. | am an associate with the law firm Michelman & Robinson, LLP, counsel of record for plaintiffs and appellants, Centinela Freeman Emergency Medical Associates, et al. in Supreme Court Case No. $218497. This brief was prepared on a computer using the Word processing program. This program’s word count feature showsthat this Answering Brief on the Merits contains 11,223 words. This count excludes the cover pages, signature, Table of Contents, Table of Authorities, and this Word CountCertification. | have personal knowledge of the facts stated in this certificate and could and would competently testify to them if called upon to do so. | declare under penalty of perjury, under the laws of the State of California, that all of the foregoing is true and correct, and that this -certification was executed on January 29, in Encinp, California) -- Andrew H. Selesnick O o O o Y N D B A B R W Y N O B O N O N O NY O N Y N Y N Y N O K H &| - - F e R P FE F F e S | S | = ~ _ n N n N a e ie s) N _ S o o O o ~ o O N n aa y b o i ) - Q . 28 295708 PROOF OF SERVICE Centinela Freeman Emergency Medical Assoc., et al. vs. Health Net ofCalifornia, Inc.etal. (Supreme Court Case No.: S218497) (Appeal No.: B238867; LASC Case No. BC449056) STATE OF CALIFORNIA, COUNTY OF LOS ANGELES Iam employed in the County of Los Angeles. I am over the age of eighteen years and not a party to the within entitled action; my business address is 15760 Ventura Boulevard, Sth Floor, Encino, California 91436. On January 29, 2015,I served a copy of the foregoing document(s) describedas follows: | ANSWERING BRIEF ON THE MERITSonthe party(ies) in this action as follows: *SEE ATTACHED SERVICELIST* a BY MAIL:Byplacing a true copy thereof enclosed in a sealed envelope(s) addressed as above, and placing each for collection and mailing on that date following ordinary business practices. I am “readily familiar” with this business’s practice for collecting and processing correspondencefor mailing,it is deposited in the ordinary course of business with the U.S. Postal Service in Encino, California, in a sealed envelope with postage fully prepaid. oO BY FACSIMILE:Based on an agreementofthe parties to accept service by fax transmission, I faxed the documentsto the personsat the fax numbers listed above. ‘The telephone numberofthe sending facsimile machine was (818) 783-5507. The sending facsimile machine issued a transmission report confirmingthat the transmission was complete and without error. A copy of that report is attached. Oo BY E-MAIL OR ELECTRONIC TRANSMISSION:Based on a court order or an agreementofthe parties to accept service by e-mailor electronic transmission, I caused the documents to be sent to the personsat the e-mail addresses listed above. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. 7 STATE: I declare under penalty of perjury underthe lass of the State of California that the foregoing is true and correct. Executed on January 29, 2015, at Encino, Galifornia. iséM. Tucker 1 PROOFOF SERVICE o O O o N N D N n H F P W N Y N O N O N O N Y N Y N O N N N O K H Y H K R F P F F FS F K F F e R S S Y A U n B B W w N O K & OD O O O F H I T D B W H B P W N Y K F O& O 28 295708 William A. Helvestine, Esq. Crowell & Moring LLP 275 Battery Street, 23rd Fl. San Francisco, CA 94111 - Telephone: (415) 986-2800 Facsimile: (415) 986-2827 whelvestine@crowell.com Jennifer S. Romano,Esq. Crowell & Moring LLP 515 S. Flower Street, 40th FI. Los Angeles, CA 90071 Telephone: (213) 622-4750 Facsimile: (213) 622-2690 jromano@crowell.com - Richard J. Doren, Esq. Heather L. Richardson, Esq. Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071-3197 Telephone: (213) 229-7000 Facsimile: (213) 229-7520 kpatrick@gibsondunn.com hrichardson@gibsondunn.com Gregory N. Pimstone, Esq. Jeffrey J. Maurer, Esq. . Manatt, Phelps & Phillips LLP 11355 West Olympic Blvd. Los Angeles, CA 90064 Telephone: (310) 312-4000 Facsimile: (310) 312-4224 gpimstone@manatt.com jmaurer@manatt.com William P. Donovan,Jr., Esq. Matthew D. Caplan, Esq. Cooley LLP 1333 2"Street, Suite 400 Santa Monica, CA 90401 Telephone: (310) 883-6400 Facsimile: (310) 883-6500 wdonovan@cooley.com mcaplan@cooley.com SERVICE LIST 1 Attorneys for Defendant/Respondent Health Net ofCalifornia, Inc. Attorneys for Defendant/Respondent Pacificare ofCalifornia dba Secure Horizons Health Plan ofAmerica Attorneys for Defendant/Respondent Aetna Health OfCalifornia, Inc. Attorneys for Defendant/Respondent California Physicians’ Service dba Blue Shield ofCalifornia Attorneys for Defendant/Respondent Cigna Healthcare ofCalifornia, Inc. SERVICE LIST O o O o N N NH N W O F P W O N O b w o NH N N H N H K N N O N O w r m e l L Y a v A FB P W w NB O K F DO D H O W O H N H H F P W Y N Y H F C O 28 295708 Margaret M. Grignon, Esq. Kurt C. Peterson, Esq. Kenneth N. Smersfelt, Esq. Eric C. Schaffer, Esq. Zareh Jaltorossian, Esq. Reed Smith LLP 355 South Grand Ave., Suite 2900 Los Angeles, CA 90072 Telephone: (213) 457-8000 Facsimile: (213) 457-8080 kpeterson@ReedSmith.com ksmersfelt@ReedSmith.com ecschaffer@ReedSmith.com Don A. Hernandez, Esq. Jamie L. Lopez, Esq. Gonzalez Saggio & Harlan LLP 2 N. Lake Ave., Suite 930 Pasadena, CA 91101 Astrid G. Meghrigian 715 Scott Street San Francisco, CA 94117 Long Xuan Do Francisco Javier Silva Michelle Rubalcava California Medical Association (CMA) 1201 J. Street, Ste. 200 Sacramento, CA 95814 John M. LeBlanc, Esq. Sandra I. Weishart, Esq. Hinshaw & Culbertson LLP 633 W. 5" Street, 47" FI. Los Angeles, CA 90071 _ Telephone:(213) 680-2800 Facsimile: (213) 614-7399 sweishart@mail.hinshawlaw.com Court of Appeal Second Appellate District, Division Three 300 South Spring Street Second Floor, North Tower Los Angeles, CA 90013-1213 2 Attorneys for Defendant/Respondent Blue Cross OfCalifornia dba Anthem Blue Cross Attorneys for Defendant/Respondent Scan Health Plan Amicus Curiae for Appellant California Chapter ofthe American College OfEmergency Physicians Amicus Curiae California Medical Association; Calioornia Hospital Association; California Orthopaedic Association; California Radiological Society; California Society ofPathologists Amicus Curiae California Association ofHealth Plans SERVICE LIST - N O o O N O N O N Y Y N N V N Y K F K F K F K F R e FE F FE F K e R E ~ N W N & W o N a m o m 0 oO o n~ l n N N A & W w n D - O o 28 295708 0 o N DA Ww W BB Ww W Ww Office of the Attorney General 300 South Spring Street Los Angeles, CA 90013 District Attorney’s Office 210 West Temple Street, #1800 Los Angeles, CA 90012-3210 Los Angeles Superior Court - Central Civil West Courthouse Honorable John Shepard Wiley Dept. 311 600 S. Commonwealth Ave. Los Angeles, CA 90005 3 SERVICELIST