AARON, J.—
Plaintiff Tenet Healthsystem Desert, Inc. (Hospital),
The trial court entered judgment for Anthem after sustaining, without leave to amend, Anthem's demurrer to Hospital's third amended complaint (TAC) with respect to the causes of action alleged against Anthem.
We conclude that the trial court erred. The TAC alleges facts with sufficient particularity to overcome a demurrer. We therefore reverse the judgment and remand the matter to the trial court for further proceedings.
A patient (Patient X) was treated in Hospital's acute care facility after an automobile accident that occurred in the days prior to May 7, 2012.
According to the allegations of the TAC, Anthem, Eisenhower and Keenan had an agreement under which the Anthem entities and Keenan would act as Eisenhower's agent in order to perform all of the administrative services on behalf of Eisenhower's "Health Plan ERISA Trust," which "provides health care benefits for employees of Eisenhower Medical Center and their family members," a group to which we infer, based on the allegations of the TAC, Patient X belonged. These administrative services are alleged to include "all communications and direct dealings with providers, such as the Hospital, including but not limited to verification of eligibility, benefits and authorization of services; negotiating with providers, such as the Hospital, concerning any matters including the entering into and/or revisions to contracts; pricing claims in accordance with the terms of the plan documents and Summary Plan Description; producing member identification cards; conducting utilization review; processing authorizations of services and responding to providers' requests for such authorizations; and coordination and management of medical care through case management."
Hospital alleges that all of the defendants "had actual knowledge of the terms of the Plan's coverage, including exclusions." Further, Hospital notes that it "does not and could not possibly maintain information regarding all exclusions from coverage for the tens (if not hundreds) of thousands of health insurance plans that cover the patients the Hospital treats each year ...."
Hospital specifically alleges that there exists "a trade custom and usage that, to the extent that a health plan and its administrators have information indicating that services are not covered under the plan, the health plan and its administrators do not authorize such services." According to the operative pleading, the trade usage and custom is "that an authorization of services constitutes an affirmative representation that, based on all of the information the health plan has been provided to date, the services are covered." (Italics added.) Even more specifically, Hospital alleges that there had been a "course of dealing between the Hospital and [all defendants] such that, to the extent that [defendants] have information indicating that services are not covered under the plan, [defendants] do not authorize such services. Accordingly, at all times mentioned there has existed a course of dealing between the Hospital and [defendants] that an authorization of services constitutes an affirmative representation that, based on all of the information the health plan has been provided to date, the services are covered. This course of dealing is, and at all times mentioned has been, certain and uniform, of general continuity and well known to the Hospital and to [defendants]."
On the morning of May 7, 2012, a Hospital admissions assistant called the 800-274-7767 number and spoke with "Aileen A." to provide notice that Patient X had been admitted to the acute care hospital within Hospital for "post-stabilization services." Aileen A. gave the Hospital admissions assistant "reference number 0225239133 and requested that the Hospital fax a clinical review of the Patient's medical condition to (888) 391-3134." Aileen A. possessed certain private information about Patient X, such as his name and date of birth, that she and Anthem and Keenan "would not have had if they were not ... agents [of Eisenhower]." In addition, Hospital was informed and believed that Anthem and Keenan hold out "fax number (888) 391-3134" as a number they use "to communicate with providers regarding information necessary to authorize care and make coverage determinations on behalf of Eisenhower."
That afternoon, a Hospital case manager faxed to the number Aileen A. had provided "a clinical review of the Patient's medical condition as of the date of service May 7, 2012." The clinical summary included information that Patient X had been brought to the emergency room by ambulance after having been in a motor vehicle accident in which he was an unrestrained driver, and that he had "tested positive for cannabis and a blood alcohol level (`ETOH' for ethyl alcohol) of .235."
On the morning of May 8, Hospital's representatives attempted to verify Patient X's benefit summary through a Web site maintained by Anthem, on behalf of Eisenhower. The Web site did not disclose the existence of an exclusion for services for injuries sustained as a result of a participant's driving with a blood-alcohol level in excess of the legal limit.
Anthem repeatedly requested clinical information pertaining to Patient X over the course of a multi-week period. Between May 7 and June 11, 2012, Anthem authorized Patient X's ICU treatment, in writing, on at least 11 occasions. Many of the authorization letters included letterhead and documents containing defendants' trademarks. For example, on May 8, Hospital received a telephone call and a letter via fax from an unnamed case manager employed by Anthem. The case manager "authoriz[ed]" Hospital to admit Patient X and to provide medical services to him "at the ICU level of care." The letter identified the case manager as an employee of Anthem, identified
On or about May 9, 2012, Hospital received a letter via fax from an unnamed case manager for Anthem "authorizing" services for Patient X through May 10 in the ICU. This letter "failed to identify that the plan had any exclusion from coverage applicable to injuries caused by a motor vehicle accident in which the Patient was driving with a blood alcohol level in excess of the legal limit."
On or about May 11, Hospital received a letter via fax from an unnamed case manager for Anthem "authorizing" medical services for Patient X through May 12 in the ICU. This correspondence did not identify a potentially applicable exclusion from coverage for the services.
On or about May 14, 2012, Dionne Myers, a case manager for Anthem, corresponded with Hospital's admissions assistant Patricia West. Myers requested additional clinical information regarding Patient X's health status in order to determine whether additional medical treatment would be authorized.
No later than May 15, Patient X's case was referred to a "discharge planner" for Anthem, Nell Steele-Alvarez. Steele-Alvarez was to make arrangements for where Patient X would go for rehabilitation after being discharged from the acute care hospital. Steele-Alvarez was provided with clinical information regarding Patient X, which she reviewed, and was aware that Patient X's injuries had resulted from a vehicle accident that occurred while he was driving with a blood-alcohol level in excess of the legal limit. Steele-Alvarez informed Hospital's case manager Janet Sobleskie that she was "investigating acute rehab facilities where the Patient would go when the Patient was discharged from [Hospital's] acute care hospital."
Later that day, Hospital received another letter via fax from an unnamed case manager for Anthem authorizing medical services for Patient X in the ICU through May 17. This correspondence did not inform Hospital of the coverage exclusion for injuries sustained as a result of driving with an illegal blood-alcohol level.
On May 16, Hospital documented that "it was not reviewing the Patient's account for potential alternative health care coverage because the existence of Patient's insurance coverage had been confirmed."
In the meantime, Anthem discharge planner Steele-Alvarez telephoned Hospital from telephone number 818-234-6095 on May 17 and May 22 to discuss with Hospital's case manager Sobleskie the plan for Patient X's rehabilitation care after his discharge from the ICU.
On June 15, Steele-Alvarez, again calling from 818-234-6095, spoke with Hospital's rehabilitation case manager Robyn Angeli. Steele-Alvarez requested that Patient X be admitted to Hospital's acute inpatient rehabilitation hospital upon his discharge from the ICU, and authorized the admission. The operative pleading alleges that in engaging in this communication with Angeli, Steele-Alvarez was acting as the agent and employee of Anthem, and that she was acting as the agent of Eisenhower as well.
On June 18, 2012, Hospital discharged Patient X from the acute care hospital and, based on the representations by Steele-Alvarez regarding authorization for Patient X's treatment in Hospital's acute rehabilitation facility, transferred and admitted Patient X as an inpatient at its acute rehabilitation hospital.
On June 20, an unnamed case manager for Anthem sent Hospital a letter on Anthem letterhead authorizing the provision of acute rehabilitation services to Patient X through June 25. That same date, Dionne Myers spoke with a representative of Hospital and verbally indicated that Hospital's provision of acute rehabilitation services to Patient X was authorized under the terms of his plan until June 25.
The operative pleading alleges that Anthem and the other defendants made these communications when they "knew or should have known the clinical information previously provided by Hospital, which specifically indicated that
In addition, the operative pleading alleges that all of the defendants "falsely represented that the Hospital's acute rehabilitation hospital services it had provided, was providing, and would provide to the Patient [were] covered under the Patient's plan and that the Plan is financially responsible for paying for such services." The pleading further alleges that the representations made by defendants were false, and that at the time the representations were made, defendants had no reasonable ground for believing them to be true. The operative pleading alleges that defendants made these misrepresentations that the services "were authorized and covered with the intent to induce the Hospital to act in reliance on them ..., or with the expectation that the Hospital would so act."
Hospital alleges that it was ignorant of the falsity of the representations made by defendants, believed them to be true, and acted in reliance on them in admitting Patient X to its acute rehabilitation facility and providing services to him there.
Hospital was not informed of the existence of the exclusion for coverage in Patient X's plan for "injuries sustained while drinking and driving" until October 24, 2012.
Hospital filed a complaint against Anthem, Eisenhower, and Keenan alleging 14 causes of action in June 2013. After demurrers and amendments, Hospital filed a second amended complaint (SAC) in November 2013.
Hospital filed the TAC in January 2014. The 276-page pleading outlines Hospital's interaction with individuals, over a period of approximately 50 days, who held themselves out as representing Anthem for purposes of reviewing and authorizing the medical care provided to Patient X. The allegations in the TAC include dates, times, the manner of communication, including correspondence, faxes and telephone calls, together with telephone and fax numbers utilized, the names of individuals and their titles, if known, the companies these individuals represented, and the factual basis for Hospital's belief that an agency relationship existed. In the TAC, Hospital pled causes of action against Anthem for negligent misrepresentation, fraud and deceit based on suppression of facts, intentional fraud, and unfair business practices in violation of Business and Professions Code section 17200.
Anthem filed a demurrer to the TAC, and the trial court again ruled that Hospital had failed to "plead fraud/misrepresentation with the requisite specificity," and failed to "set forth a single actual specific misrepresentation that was made by [Anthem] that the patient was covered." The court references pages 24 through 52 of the TAC in support of its conclusion that the TAC lacked an allegation of a misrepresentation. The trial court sustained Anthem's demurrer with respect to Hospital's causes of action for negligent misrepresentation (causes of action 1 and 10), fraud based on suppression of facts (causes of action 2 and 11), and intentional fraud (causes of action 3 and 12). This time, the court denied leave to amend, except with regard to the unfair business practices cause of action (cause of action 19), for which the court granted Hospital an additional 30 days in which to amend to attempt to plead that cause of action.
Hospital elected not to file another amended pleading with respect to the unfair business practices cause of action, instead reserving its right to appeal the ruling on the demurrer to the TAC. As a result, the trial court filed an order dismissing the action against Anthem with prejudice, and entered judgment in favor of Anthem in April 2014.
We apply the following well-established law in reviewing a trial court's order sustaining a demurrer without leave to amend: "We independently review the ruling on a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action. [Citation.] We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken. [Citation.] We construe the pleading in a reasonable manner and read the allegations in context." (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111 [55 Cal.Rptr.3d 621] (Fremont).)
When the trial court sustains a demurrer without leave to amend, "we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58] (Blank).)
As an initial matter, we must address the impropriety of Anthem's reliance on certain evidence, throughout its response brief, in attempting to demonstrate that the trial court ruled correctly in sustaining its demurrer. Anthem repeatedly refers to the contents of letters that it alleges are letters that it sent to Hospital with respect to Patient X's care. Anthem asks this court to "look at what the writings actually stated when they conveyed to Hospital the allegedly actionable misrepresentations," in an effort to demonstrate that the writings referred to in the TAC "show[] something quite different from the misimpression Hospital has created by its incomplete and vague pleading tactics."
"(1) To obtain judicial notice by a reviewing court under Evidence Code section 459, a party must serve and file a separate motion with a proposed order.
"(2) The motion must state:
"(A) Why the matter to be noticed is relevant to the appeal;
"(B) Whether the matter to be noticed was presented to the trial court and, if so, whether judicial notice was taken by that court;
"(C) If judicial notice of the matter was not taken by the trial court, why the matter is subject to judicial notice under Evidence Code section 451, 452, or 453; and
"(D) Whether the matter to be noticed relates to proceedings occurring after the order or judgment that is the subject of the appeal."
Anthem has not filed a separate motion that complies with these requirements. This, alone, would be a sufficient reason to reject Anthem's request that this court consider the contents of the letters; however, even if Anthem had
Because the evidence regarding the contents of these letters is not properly the subject of judicial notice and, in fact, no judicial notice has been taken of these letters by either the trial court or this court, the letters are not properly before us.
"The specificity requirement serves two purposes. The first is notice to the defendant, to `furnish the defendant with certain definite charges which can be intelligently met.' [Citations.] The pleading of fraud, however, is also the last remaining habitat of the common law notion that a complaint should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient `"to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud."'" (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217 [197 Cal.Rptr. 783, 673 P.2d 660] (Committee on Children's Television).)
Hospital has sufficiently met the pleading requirements for intentional fraud. First, Hospital identifies multiple written and oral communications, made by the Anthem entities and expressed to Hospital, in which Anthem authorized the services that Hospital provided to Patient X. As to a large number of communications, Hospital alleges the dates, times, and the names of the individuals who initiated these communications, which occurred over a period of approximately 50 days. Moreover, Hospital identifies at least one conversation between Anthem discharge planner Steele-Alvarez and a Hospital representative in which Steele-Alvarez, alleged to be an employee and/or agent of one or more of the Anthem defendants, not only authorized but specifically requested that Hospital admit Patient X to its acute rehabilitation facility upon his discharge from Hospital's ICU. Hospital has thus clearly pled facts that show how the statements were made (directly to agents of Hospital through telephone calls and written letters faxed to Hospital), when the statements were made (on the identified dates and the specified times), where the statements were made (at Hospital, where its representatives
Given the specificity of these numerous alleged communications, and given the allegation that the provision of an "authorization" has a specific meaning in this context, i.e., that an "authorization of services constitutes an affirmative representation that ... the services are covered," Hospital has sufficiently alleged the existence of multiple affirmative misrepresentations that the care that Hospital rendered to Patient X would be covered by his insurance plan.
For this same reason, we reject Anthem's contentions that the allegations are not sufficiently detailed as to which defendant entity employed "Aileen A." or any other individual identified in the complaint, or which defendant entity maintained each telephone number and fax number identified in the complaint. This information is uniquely within defendants' knowledge. Patient X's member identification card listed a single telephone number for care providers to contact for purposes of obtaining "`Pre-Authorization'" for care. Hospital used the number that was provided on Patient X's card to seek authorization for his care. Defendants are the entities who decided what information to place on Patient X's member identification card. Defendants are also the ones who have decided which entity is responsible for the different tasks that are required to administer Eisenhower's health insurance plan. The mere fact that the nature of defendants' relationships with each other and each entity's particular role in conducting and administering the health insurance plan at issue are unclear, does not necessitate that a court permit them to escape any responsibility at the pleading stage of a lawsuit. Hospital has alleged a number of very specific facts that provide defendant entities, who possess superior knowledge of the relationships between and among them, to be able to defend against the claims that Hospital asserts in its TAC. These specific factual allegations, including the times that various communications occurred and the telephone or fax numbers used, are also
Anthem attempts to avoid the framing of the complaint by arguing that Hospital's allegations that "Anthem authorized particular services for the patient" do not constitute misrepresentations that the services would be covered, and not excluded. However, Anthem's position is based on its argument, both in the trial court and on appeal, that it "provides no coverage for Eisenhower plan benefits,"
Beyond these allegations, the TAC alleges that "there has existed a trade custom and usage that, to the extent that a health plan and its administrators have information indicating that services are not covered under the plan, the health plan and its administrators do not authorize such services." Thus, "there has existed a trade custom and usage that an authorization of services constitutes an affirmative representation that, based on all of the information the health plan has been provided to date, the services are covered."
Anthem's assertions as to the limitations of Anthem's role in administering Eisenhower's health plan may or may not be true. However, these are factual questions that cannot be determined on a demurrer to a pleading that contains allegations that conflict with Anthem's assertions in briefing in this court. Further, Anthem's attempts to rely on evidence that it contends contradicts the allegations of the operative complaint (i.e., the contents of letters that we have determined are not the proper subject of judicial notice) is improper at this procedural juncture. Again, this matter was decided on a demurrer, which exists as a procedural mechanism to determine whether, if the allegations of the operative complaint are presumed to be true, the plaintiff has sufficiently stated a cause of action. It is not the appropriate procedural vehicle to argue the merits of the plaintiff's allegations.
Anthem's attempt to rely on Tenet Healthsystem Desert, Inc. v. Fortis, Ins. Co. (C.D.Cal. 2007) 520 F.Supp.2d 1184, 1192-1195 to argue that Hospital's allegations regarding trade usage, custom, and course of dealing should be ignored, is misplaced. If anything, Tenet supports this court's conclusion that this case was not appropriately decided on demurrer. In Tenet, the federal court was considering a motion for summary judgment; as a result, the district court's decision in Tenet was decided based on uncontroverted evidence that had been presented to the trial court, including declarations from representatives of both the plaintiff and the defendant about the communications between them regarding the patient's care, an admission by the plaintiff that it "knew of no false, misleading, or untrue statements made by Defendant in connection with the calls or at any other time" and that the "Defendant did not fail to provide it with any information" (id. at p. 1191), as well as "expert testimony regarding industry custom" (id. at p. 1192, capitalization & boldface omitted), involving "emergency room admissions" (id. at p. 1193). The
The TAC also sufficiently alleges facts to support the elements of defendants' knowledge of the falsity of the alleged misrepresentations, their intent to induce Hospital's reliance, as well as Hospital's justifiable reliance on the alleged misrepresentations. The TAC alleges that knowledge of the plan's coverage, including the exclusions, was, as between the parties, exclusively in defendants' possession, and that Hospital informed Anthem that Patient X was admitted to Hospital as a result of being "injured while driving in an automobile accident with a blood alcohol level in excess of the legal limit and positive for cannabis." The TAC alleges that Anthem knew this information because Hospital provided it to Anthem on May 7, 2012, and that Anthem continued to monitor, discuss, and authorize Patient X's treatment at Hospital on multiple occasions after having been informed about his blood-alcohol level and positive test for cannabis. In addition, the TAC alleges that Anthem knew of the coverage exclusions. As a result, any representations Anthem made that indicated to Hospital that the services Hospital was providing to Patient X would be covered are alleged to have been made with the knowledge that those representations were false.
In addition, the TAC alleges that defendants made misrepresentations to Hospital that the services "were authorized and covered with the intent to induce the Hospital to act in reliance on them ... or with the expectation that the Hospital would so act." Further, the TAC includes allegations that Hospital "was ignorant of the falsity of the representations [made by defendants] and believed them to be true," and that Hospital acted in reliance on the representations when it, for example, admitted Patient X to its acute rehabilitation facility. The TAC also alleges that Hospital refrained from seeking reimbursement from Medi-Cal for services provided to Patient X within Medi-Cal's time limits because, as a result of the representations made by Anthem, Hospital believed that defendants would pay Hospital for the services provided. These allegations sufficiently allege justifiable reliance.
Although Hospital has not alleged the existence of a fiduciary or confidential relationship, the allegations do set forth facts demonstrating that Anthem made representations to Hospital but failed to disclose facts that rendered misleading the disclosures that Anthem did make. Again, Hospital alleged that over a period of almost two months, representatives of Anthem repeatedly "authorized" the medical services that Hospital provided to Patient X, despite possessing knowledge that his care would not be covered by the insurance policy because his injuries were sustained as a result of his driving with a blood-alcohol level in excess of the legal limit. Even if Hospital had
Hospital's cause of action for unfair business practices is based on a variety of alleged conduct, including that defendants "engaged in misrepresentation [and] fraud" in their business practices with Hospital based on the same conduct underlying the other deceit-based causes of action. We therefore conclude that Hospital has sufficiently alleged facts to state a claim for unfair business practices pursuant to Business and Professions Code section 17200.
The judgment of the trial court in favor of Anthem on causes of action 1, 2, 3, 10, 11, 12 and 19 is reversed and the matter is remanded. Hospital is entitled to costs on appeal.
Nares, Acting P. J., and Irion, J., concurred.
