Procedural Posture

Appellant emergency room physicians challenged a judgment of the Superior Court of Los Angeles County (California), which sustained respondent health care service plan’s demurrer without leave to amend in the physicians’ class action that sought declaratory and injunctive relief, disgorgement, and damages under the Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., or, in the alternative, reimbursement based on quantum meruit.

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Overview

The gist of the suit was that Cal. Health & Safety Code § 1371.4 impliedly required a health plan to pay non-participating providers a reasonable and customary amount for emergency services, not any amount it chose. The physicians had not contracted with the plan or otherwise agreed to accept the fees the plan paid to its contracting providers. In reversing and remanding, the court held that the California Knox-Keene Health Care Service Plan Act of 1975, Cal. Health & Safety Code § 1340 et seq., left the physicians free to pursue alternate theories to recover the reasonable value of their services. Furthermore, the physicians’ claim under the UCL did not infringe on the Department of Managed Health Care’s jurisdiction, and there was no bar to the physicians’ common law quantum meruit claim. Although the Department had jurisdiction over the subject matter of Cal. Health & Safety Code § 1371.4, as well as the rest of the Act, its jurisdiction was not exclusive, and there was nothing in § 1371.4 or in the Act generally to preclude a private action under the UCL or at common law on a quantum meruit theory. The plan’s obligation to reimburse included an obligation to do so reasonably.

Outcome

The court reversed the trial court’s judgment and remanded the cause to the trial court with directions to vacate its order sustaining the plan’s demurrer, to enter a new order overruling the demurrer and fixing the time within which the plan could answer the first amended complaint, and placing the case on track for trial.

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