Filed 4/13/18 Alvarado Hospital, LLC v. Blue Shield of Cal. etc. CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.


IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO



ALVARADO HOSPITAL, LLC et al.,

Plaintiffs and Appellants,

v.

BLUE SHIELD OF CALIFORNIA LIFE AND HEALTH INSURANCE COMPANY,

Defendant and Respondent.


E066218

(Super.Ct.No. JCPRS4764)

OPINION


APPEAL from the Superior Court of San Bernardino County. Janet M. Frangie, Judge. Affirmed.
Law Offices of Herbert Hafif, Greg K. Hafif, Michael G. Dawson; and Troy A. Schell for Plaintiffs and Appellants.
Manatt, Phelps & Phillips, Gregory N. Pimstone, Joanna S. McCallum and John T. Fogarty for Defendant and Respondent.
The trial court granted a petition for coordination of four cases: (1) Prime Healthcare Services—Montclair, LLC, doing business as Montclair Hospital Medical Center (Montclair Hospital) sued California Physicians’ Service, doing business as Blue Shield of California (Blue Shield) and Blue Shield of California Life & Health Insurance Company (Blue Life); (2) Prime Healthcare Services—Shasta, LLC, doing business as Shasta Regional Medical Center (Shasta Hospital), sued Blue Shield and Blue Life; (3) Veritas Health Services, Inc., doing business as Chino Valley Medical Center (Chino Hospital), sued Blue Shield and Blue Life; and (4) Alvarado Hospital, LLC, doing business as Alvarado Hospital Medical Center (Alvarado Hospital), sued Blue Shield and Blue Life.
Montclair Hospital, Shasta Hospital, Chino Hospital, and Alvarado Hospital (collectively. the Hospitals) brought two causes of action: (1) quantum meruit, and (2) money due. The trial court granted Blue Life’s motion for summary judgment. The Hospitals contend the trial court erred by granting the motion for summary judgment. We affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
A. COMPLAINTS
The facts in this subsection are taken from the allegations in the Hospitals’ complaints. Chino Hospital is an acute care hospital in Chino, and it has an emergency department. Alvarado Hospital is an acute care hospital in La Mesa, and it has an emergency department. Montclair Hospital is an acute care hospital in Montclair, and it has an emergency department. Shasta Hospital is an acute care hospital in Redding, and it has an emergency department.
Blue Shield and Blue Life (collectively, defendants) provide health insurance plans to individuals (Insured Members). From 2010 through 2012, Shasta Hospital, Montclair Hospital, and Alvarado Hospital provided emergency care to Insured Members. From 2011 through 2012, Chino Hospital provided emergency care to Insured Members.
In the Hospitals’ first cause of action, for quantum meruit, the Hospitals alleged that “by virtue of their obligations, statutory or otherwise, Defendants implicitly requested that [the Hospitals] treat those [Insured Members] who arrived at [the Hospitals’ emergency departments] seeking care for emergency medical conditions.” Therefore, Hospitals alleged, “Defendants had and have an obligation to reimburse [the Hospitals] the reasonable and customary value of the emergency medical services provided to [the Insured Members].”
In the Hospitals’ second cause of action, for money due, the Hospitals incorporated the foregoing allegations and asserted that, despite demands from the Hospitals, defendants failed to pay the Hospitals for emergency services rendered to Insured Members. Shasta Hospital alleged it is owed no less than $9,000,000. Montclair Hospital alleged it is owed no less than $350,000. Alvarado Hospital alleged it is owed no less than $1,000,000. Chino Hospital alleged it is owed no less than $850,000.
B. MOTION FOR SUMMARY JUDGMENT
Blue Life filed a motion for summary judgment. In the motion, Blue Life asserted, “[The Hospitals] have no statutory basis for recovery against Blue . . . Life. Because [the Hospitals] do not have a contractual relationship with either Defendant, [the Hospitals] have relied on California’s Knox-Keene Act (specifically, Health & Safety Code § 1371.4) to argue that Defendants are obligated to pay the ‘reasonable and customary value’ of emergency care rendered to their enrollees—regardless of whether the Defendants requested the treatment. However, the Health & Safety Code only governs health care service plans. Blue . . . Life is not a health care service plan, it is an insurance company licensed under California’s Insurance Code and regulated by the Department of Insurance. And the Insurance Code does not contain a counterpart to Health & Safety Code § 1371.4. Thus, there is no statutory (or other) basis for [the Hospitals] to seek recovery against Blue . . . Life.” (Fn. omitted.)
C. OPPOSITION
The Hospitals opposed Blue Life’s motion for summary judgment. The Hospitals asserted there was a triable issue of fact concerning Blue Life’s obligation to pay the Hospitals because on August 22, 2010, for one patient (the patient), a preadmission notice was sent to Blue Life. On August 23, Blue Life verified the patient’s coverage. Blue Life was informed of the patient’s admission to one of the Hospitals. The Hospitals argued that by verifying coverage, Blue Life created an obligation to pay for the services rendered to the patient.
D. HEARING
The trial court held a hearing on Blue Life’s motion for summary judgment. Blue Life explained that, historically, the general rule was, if an individual were treated in an emergency room, and that hospital did not have a contract with the individual’s insurance company, then the hospital’s remedy to obtain payment was to “go after [the individual]. They had no direct access to the insurer or the health plan.”
Decades ago, the Legislature sought to treat health maintenance organizations (HMOs) differently than preferred provider organizations (PPOs). At the time, “everything was governed by the Insurance Code.” In order to treat HMOs differently, the Legislature applied the Knox-Keene Act portion of the Health and Safety Code to HMOs (Health & Saf. Code, § 1340 et seq.), which includes Health and Safety Code section 1371.4. Under Health and Safety Code section 1371.4, “[I]f there’s a dispute between the non-contracted hospital and . . . any HMO, they have to fight it out amongst themselves . . . .” However, the Insurance Code did not change. Under the Insurance Code, the noncontracted hospitals do not have a direct remedy against the insurance companies.
Blue Life “issues a bunch of different PPO’s.” Therefore, Blue Life is organized under the Insurance Code. As a result, Health and Safety Code section 1371.4, which applies to HMOs, is inapplicable to Blue Life. Thus, the Hospitals have no statutory remedy against Blue Life. Further, Blue Life asserted there is no contractual relationship between Blue Life and the Hospitals. Blue Life contended a theory of quantum meruit could not apply because there was no understanding that Blue Life would pay the Hospitals, and there was no understanding because there is not a direct relationship between Blue Life and the Hospitals either by express contract, implied contract, or statute.
The Hospitals argued there was an expectation of payment. Blue Life’s authorization of one payment created an understanding that Blue Life knew it needed to pay for its Insured Members’ emergency treatment. Blue Life explained that it paid the Insured Members’ claims based upon Blue Life’s relationship with the Insured Members. Under a PPO contract, the relationship is between the Insured Member and Blue Life. Therefore, when an Insured Member goes to a noncontract hospital, the Insured Member must pay the hospital bill and seek reimbursement, if any, from Blue Life. At times, Blue Life sends the reimbursement directly to the hospital on behalf of the insured. Therefore, the fact that Blue Life paid Insured Members’ claims at the Hospitals in the past does not create a direct relationship between Blue Life and the Hospitals.
The Hospitals asserted Insurance Code section 1133 “obligates insurance companies to pay for the services provided to their insured if their insured has assigned their benefits to that [medical] provider.” The Hospitals asserted that before a patient is discharged s/he signs a form assigning the hospital the right to receive the patients’ insurance benefit, which “creates the nexus between the hospital and the insurance company.” Blue Life asserted (1) an assignment theory would relate to a breach of contract cause of action, which is not part of this case; (2) there was no evidence of assignment; and (3) most health plan contracts include anti-assignment provisions.
E. RULING
The trial court issued a written ruling. The trial court wrote, “The undisputed facts establish that none of the [Hospitals] had a contract with [Blue Life] at any relevant time alleged in the Complaints. Blue [Life] is licensed by the California Department of Insurance as a Life and Disability Insurance Company and is governed by the rules and regulations found in the California Insurance Code. As such, Blue [Life] is under no statutory obligation to pay for emergency room services provided to its members.
“Blue [Life] offers insurance policies to its policy holders and 711 of the claims involved in this action are policies provided by Blue [Life]. [The Hospitals] fail to raise a triable issue of fact that Blue [Life] requested [the Hospitals] provide necessary medical treatment or services to Blue [Life]’s policy holders or that Blue [Life] impliedly or expressly requested or authorized the services of [the Hospitals]. There is no statutory basis for [the Hospitals] to recover for services provided by [the Hospitals] to Blue [Life’s Insured Members] under the circumstances of this action.
“[The Hospitals] have not raised a triable issue of fact that they relied on any statement by Blue [Life] and the Court cannot infer it from the fact that medical services were rendered inasmuch as [the Hospitals] are already obligated by law to provide emergency medical services prior to stabilization regardless of the patient’s ability to pay.”
DISCUSSION
A. NEW ISSUE ON APPEAL
The Hospitals request this court consider a new theory of liability on appeal. The Hospitals contend section 1317 and 1317.2a create liability for Blue Life under a theory of quantum meruit.
“It is well settled that a party to a trial court proceeding is not permitted to change [its] position and offer a new theory of the case on appeal. [Citations.] An exception to this rule exists, however, if the new theory raises only questions of law and is based solely on facts already in the record.” (Rickel v. Schwinn Bicycle Co. (1983) 144 Cal.App.3d 648, 655-656.) We address the Hospitals’ contention. However, we limit our discussion to the purely legal questions and those that can be addressed by the factual record developed in the trial court.
B. STANDARD OF REVIEW
“We review an order granting summary judgment de novo, applying the same legal standard as the trial court. [Citation.] Thus, on a motion for summary judgment, we must determine whether ‘all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” (Anderson v. Fitness International, LLC (2016) 4 Cal.App.5th 867, 876.)
When interpreting a statute, our primary task is to determine the Legislature’s intent. (Torrey Hills Community Coalition v. City of San Diego (2010) 186 Cal.App.4th 429, 440.) Therefore, the first step of interpreting a statute is to give the words their plain and ordinary meanings. If there is no ambiguity in the plain language of the statute, “ ‘then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.’ ” (Ibid.) A statute should not be interpreted in a manner that renders a portion of the statute inoperative or superfluous. (Ibid.)
C. LAW OF QUANTUM MERUIT
“Quantum meruit permits the recovery of the reasonable value of services rendered. [Citation.] To recover in quantum meruit, the ‘plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant.’ ” (Pacific Bay Recovery, Inc. v. California Physicians’ Services, Inc. (2017) 12 Cal.App.5th 200, 214-215.)
D. SECTION 1317
Section 1317 prohibits discrimination in providing emergency medical care. The section provides, in relevant part, “Emergency services and care shall be rendered without first questioning the patient or any other person as to his or her ability to pay therefor. However, the patient or his or her legally responsible relative or guardian shall execute an agreement to pay therefor or otherwise supply insurance or credit information promptly after the services are rendered.” (§ 1317, subd. (d).) The subdivision creates an obligation on the part of the patient or the patient’s legal representative to execute a payment contract, provide insurance information, or provide credit information.
The Hospitals contend that if they are not permitted to collect directly from insurance companies after rendering emergency medical care then the portion of section 1317 that requires the patient to supply insurance information is rendered superfluous. Contrary to the Hospitals’ position, the insurance portion of the statute would not be rendered superfluous because hospitals can collect directly from HMOs. (§ 1371.4, subd. (b).) If, after receiving emergency medical care, a patient presents PPO insurance information, then the hospital would presumably seek a second means of securing payment, such as a payment contract or credit information.
In sum, we are not persuaded that the statute creates a direct remedy for the Hospitals against Blue Life. The statute creates an obligation for the patient to provide payment information. There is nothing in the statute obligating an insurance company to directly pay a hospital for its services.
E. SECTION 1317.2a
1. STATUTORY LANGUAGE
Section 1317.2a, subdivision (d), provides, in relevant part, “Any third-party payor, including, but not limited to, a health maintenance organization, health care service plan, nonprofit hospital service plan, insurer, or preferred provider organization, or employer which has a statutory or contractual obligation to provide or indemnify emergency medical services on behalf of a patient shall be liable, to the extent of the contractual obligation to the patient, for the reasonable charges of the transferring hospital and the treating physicians for the emergency services provided pursuant to this article, except that the patient shall be responsible for uncovered services, or any deductible or copayment obligation.
“Notwithstanding this section, the liability of a third-party payor which has contracted with health care providers for the provision of these emergency services shall be set by the terms of that contract. Notwithstanding this section, the liability of a third-party payor that is licensed by the Insurance Commissioner or the Director of the Department of Managed Health Care and has a contractual obligation to provide or indemnify emergency medical services under a contract which covers a subscriber or an enrollee shall be determined in accordance with the terms of that contract and shall remain under the sole jurisdiction of that licensing agency.”
2. FIRST SENTENCE
We interpret the subdivision one phrase at a time, beginning with the first sentence. The first phrase is: “ ‘Any third-party payor, including, but not limited to, a . . . preferred provider organization, . . . which has a statutory or contractual obligation to provide or indemnify emergency medical services on behalf of a patient shall be liable . . . .” We understand the plain language of this phrase as creating liability for companies that issue PPOs.
The second phrase is: “shall be liable, to the extent of the contractual obligation to the patient.” We interpret the plain language of this phrase as limiting the insurance companies’ liability to that set by any contract between the insurance company and the patient.
The third phrase is: “shall be liable . . . for the reasonable charges of the transferring hospital and the treating physicians for the emergency services provided pursuant to this article.” We interpret the plain language of this phrase as providing the insurance company bears liability for the expense of emergency medical care provided to the patient by (1) a hospital that transfers the patient, and (2) the doctors who treated the patient.
The fourth phrase is: “except that the patient shall be responsible for uncovered services, or any deductible or copayment obligation.” We interpret the plain language of this section as creating an exception wherein the patient will be liable for any emergency expenses that are not covered by the patient’s contract with the insurance company.
In sum, we interpret the first sentence of the subdivision as follows: A PPO is liable, up to the policy limits, for the expense of emergency care provided to its insureds by (1) a hospital that transfers the patient, and (2) the doctors who treated the patient, but is not liable for expenses that are not covered by the policy.
The Hospitals focus on the foregoing rule, i.e., the first sentence of the subdivision. The Hospitals assert that because section 1317.2a, subdivision (d), creates liability for PPOs, the Hospitals have a direct remedy against Blue Life. The error in the Hospitals’ argument is that the first sentence of section 1317.2a, subdivision (d), does not provide to whom the PPO is liable. The sentence provides, “shall be liable, to the extent of the contractual obligation to the patient, for the reasonable charges.” The statute does not plainly set forth that the PPO is liable to the medical provider, as opposed to the patient. The sentence creates liability, but does not provide to whom the PPO is liable.
3. THIRD SENTENCE
The third sentence of section 1317.2a, subdivision (d), provides, “Notwithstanding this section, the liability of a third-party payor that is licensed by the Insurance Commissioner or the Director of the Department of Managed Health Care and has a contractual obligation to provide or indemnify emergency medical services under a contract which covers a subscriber or an enrollee shall be determined in accordance with the terms of that contract and shall remain under the sole jurisdiction of that licensing agency.”
The phrase, “Notwithstanding this section,” means “despite the foregoing rule.” (See Klajic v. Castaic Lake Water Agency (2004) 121 Cal.App.4th 5, 13 [defining “notwithstanding”].) Thus, the third sentence creates an exception to the rule that is set forth in the first sentence.
The words, “the liability,” mean the sentence concerns liability. The phrase, “of a third-party payor that is licensed by the Insurance Commissioner or the Director of the Department of Managed Health Care,” means the exception concerns the liability of particular payors, in particular those licensed by the Insurance Commissioner or the Director of the Department of Managed Health Care. In the instant case, the trial court found, “Blue [Life] is licensed by the California Department of Insurance.” Thus, Blue Life is a payor licensed by the Insurance Commissioner.
The phrase, “and has a contractual obligation to provide or indemnify emergency medical services under a contract which covers a subscriber or an enrollee,” creates a second element for qualifying for the exception. In addition to being licensed by a particular agency, the payor must also have a contract with an individual that provides for emergency medical coverage. In other words, in order for the exception to apply, the payor must (1) be licensed by a particular agency, and (2) have a contract with an individual that provides for emergency medical coverage.
The trial court found, “Blue [Life] offers insurance policies to its policy holders and 711 of the claims involved in this action are policies provided by Blue[Life].” Blue Life asserts that, because a section 1317.2a, subdivision (d), argument was not raised in the trial court in opposition to the motion for summary judgment, Blue Life did not seek to admit the contents of its contracts. Accordingly, it is unclear if the exception would apply in this case because we do not know if Blue Life’s policies provide for emergency medical coverage.
The last portion of the subdivision’s sentence provides, “shall be determined in accordance with the terms of that contract and shall remain under the sole jurisdiction of that licensing agency.” This phrase means the contract between the PPO and the insured individual will control and jurisdiction remains with the licensing agency.
In sum, we interpret the plain language of section 1317.2a, subdivision (d)’s third sentence as: Despite the rule from the first sentence in the subdivision, an entity that is (1) licensed by the Insurance Commissioner, and (2) has a contract with an individual that provides for emergency medical coverage, will have its liability determined by the contract between the insurance company and the individual. As set forth ante, it is unclear if this exception applies in this case because Blue Life’s contracts were not submitted in the trial court due to the issue not being raised in the trial court.
4. EVIDENCE
The issue raised by the Hospitals cannot be resolved on the factual record developed in the trial court. The application of section 1317.2a, subdivision (d), requires an examination of Blue Life’s contracts, so as to make a finding concerning whether Blue Life provided emergency medical coverage to its Insured Members. If Blue Life did provide emergency medical coverage in its PPO contracts, then the terms of the contract control, despite the rule created in the first sentence of section 1317.2a, subdivision (d). If the exception—i.e., the contract—controls, then the court would need to determine what liability is set forth in the contracts, i.e., to whom Blue Life is liable by the terms of the contracts.
Because (1) the issue was not raised in the Hospitals’ opposition to the motion for summary judgment, so it is being raised for the first time on appeal, and (2) the evidence necessary to the issue was not submitted with the motion for summary judgment or opposition to the motion for summary judgment, we cannot make a conclusion concerning the issue. We must conclude the matter has been forfeited for failure to raise it in the trial court. (Schellinger Brothers v. Cotter (2016) 2 Cal.App.5th 984, 996; Panopulos v. Maderis (1956) 47 Cal.2d 337, 340-341.)
F. PUBLIC POLICY
The Hospitals contend that, for public policy reasons, medical providers should have a direct remedy against insurance companies, so that medical providers do not have to sue individuals who then seek indemnity from their insurers. (See generally Ins. Code, § 23 [“The person who undertakes to indemnify another by insurance is the insurer, and the person indemnified is the insured”].) Because the issue raised on appeal was not raised in opposition to the motion for summary judgment, we do not know what portion of section 1317.2a, subdivision (d) is applicable to this case. It is unclear if the rule from the first sentence applies, or if the exception from the third sentence is applicable. If the exception in the third sentence applies, then the contract language controls—there is no need to discuss the liability rule created in the first sentence of the subdivision.
As a result, there is no point to discussing the public policies behind having the insurer be liable to the medical provider, pursuant to the rule in the first sentence of the subdivision, because it is possible that, in this case that rule does not apply. It is possible the contract between Blue Life and its Insured Members controls Blue Life’s liability. Because it is unclear if the rule or the exception applies in this case, we decline to have an academic public policy discussion concerning the rule in the first sentence of the subdivision. (Kenneally v. Knox (1960) 184 Cal.App.2d 262, 266 [abstract questions of law are moot and not subject to review].)
DISPOSITION
The judgment is affirmed. Respondent Blue Shield Of California Life & Health Insurance Company is awarded its costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS


MILLER
J.


We concur:


RAMIREZ
P. J.


McKINSTER
J.