Cnty. of Santa Clara v. Superior Court of Santa Clara

• Citation: 14 Cal.5th 1034,531 P.3d 951,310 Cal.Rptr.3d 130
• Docket Number: S274927
• Decision Date: 10 July 2023
• Parties: COUNTY OF SANTA CLARA, Petitioner, v. The SUPERIOR COURT OF SANTA CLARA, Respondent; Doctors Medical Center of Modesto, Inc., et al., Real Parties in Interest.
• Court: California Supreme Court

14 Cal.5th 1034
531 P.3d 951
310 Cal.Rptr.3d 130

COUNTY OF SANTA CLARA, Petitioner,
v.
The SUPERIOR COURT OF SANTA CLARA, Respondent;

Doctors Medical Center of Modesto, Inc., et al., Real Parties in Interest.

S274927

Supreme Court of California.

July 10, 2023

James R. Williams, County Counsel, Douglas M. Press, Assistant County Counsel, Melissa R. Kiniyalocts, Susan P. Greenberg, David P. McDonough and Hannah M. Begley, Deputy County Counsel, for Petitioner.

Aurelia M. Razo, Deputy County Counsel (San Diego); and Jennifer B. Henning for California State Association of Counties as Amicus Curiae on behalf of Petitioner.

Olson Remcho, Margaret R. Prinzing, Oakland, and Ilan Zur for National Health Economics and Policy Scholars as Amici Curiae on behalf of Petitioner.

Daponde Simpson Rowe, Michael J. Daponde and Darcy L. Muilenburg, Sacramento, for Local Health Plans of California as Amicus Curiae on behalf of Petitioner.

No appearance for Respondent.

Helton Law Group, Edward Stumpp, Mikaela Grace Cox, Casey E. Mitchnick, Irvine, Faatima Seedat; Horvitz & Levy, Mitchell C. Tilner, Peder K. Batalden, Burbank, and Beth J. Jay, San Francisco, for Real Parties in Interest.

Athene Law, Long X. Do, Sacramento, Felicia Y. Sze, San Francisco, Eric D. Chan, Los Angeles; King & Spalding, Glenn Solomon, Paul R. Johnson and Jonathan Shin for the California Medical Association and the California Hospital Association as Amici Curiae on behalf of Real Parties in Interest.

King & Spalding, Glenn Solomon, Paul R. Johnson and Jonathan Shin, Los Angeles, for San Jose Healthcare System, L.P., and Good Samaritan Hospital, L.P., as Amici Curiae on behalf of Real Parties in Interest.

Opinion of the Court by Guerrero, C. J.

14 Cal.5th 1037

310 Cal.Rptr.3d 132

Hospitals and other medical providers are required by law to provide emergency medical services without regard to the patient's insurance status or ability to pay. ( 42 U.S.C. § 1395dd(b) & (h) ; Health & Saf. Code, § 1317, subds. (a) & (b).) If the patient is enrolled in a health care service plan, by statute the plan must reimburse the medical provider for providing such emergency care under the Knox-Keene Health Care Service

14 Cal.5th 1038

Plan Act of 1975. ( Health & Saf. Code, § 1340 et seq. ; hereinafter Knox-Keene Act; id. , § 1371.4, subd. (b).) If the plan does not have a contract with the medical provider addressing the reimbursement rate, the plan must pay the provider the "reasonable and customary value" of the emergency care provided. ( Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(B).) If the plan fails to pay the reasonable and customary value of such services, the medical provider may sue the plan directly for reimbursement under a quantum meruit theory. ( Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497, 506, 87 Cal.Rptr.3d 299, 198 P.3d 86 ( Prospect Medical Group ); Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 216–217, 31 Cal.Rptr.3d 688 ( Bell ).)

We granted review to decide whether a similar claim for reimbursement of emergency medical services may be maintained against a health care service plan when the plan is operated by a public entity, or whether the Government Claims Act ( Gov. Code, § 810 et seq. ) immunizes a public entity from such a claim.

531 P.3d 954

In this case, Doctors Medical Center of Modesto, Inc., and Doctors Hospital of Manteca, Inc., (collectively, the Hospitals) provided emergency medical services to three individuals enrolled in a health care service plan operated by the County of Santa Clara (the County). The Hospitals submitted reimbursement claims to the County, but the County paid only a portion of the claimed amounts. The Hospitals sued the County for the remaining amounts based on the Knox-Keene Act's reimbursement provision. The trial court found that the Hospitals could state a quantum meruit claim against the County. On petition for writ of mandate, the Court of Appeal disagreed, holding that the County is immune from suit under the Government Claims Act and that no exception to immunity applies.

We conclude that the Government Claims Act does not bar the Hospitals’ action against the County. The immunity provisions of the Government Claims Act are directed toward tort claims; they do not foreclose liability based on contract or the right to obtain relief other than money or damages. ( Gov. Code, § 814.) The Hospitals have not alleged a conventional common law tort claim seeking money damages. Instead, they have alleged an implied-in-law contract claim based on the reimbursement provision of the Knox-Keene Act, and seek only to compel the County to comply with its statutory duty.

310 Cal.Rptr.3d 133

Accordingly, the County is not immune from suit under the circumstances and the Hospitals’ claim may proceed.

14 Cal.5th 1039

I. FACTUAL AND PROCEDURAL BACKGROUND

The County operates a health care service plan called Valley Health Plan, which is licensed and regulated by the Department of Managed Health Care (DMHC) under the Knox-Keene Act. ( Health & Saf. Code, §§ 1341, 1345, subds. (f)(1) & (j), 1349.) The Knox-Keene Act applies to private and public entities that operate health care service plans. (Id ., § 1399.5.) The Hospitals are licensed acute care hospitals in the Central Valley. The Hospitals do not have a contract with the County governing the rates payable for medical services provided to Valley Health Plan enrollees.

As previously explained, state and federal laws require hospitals and other medical providers to provide emergency medical services regardless of the patient's insurance status or ability to pay. ( 42 U.S.C. § 1395dd(b) & (h) ; Health & Saf. Code, § 1317, subds. (a) & (b).) If the patient is enrolled in a health care service plan, the Knox-Keene Act requires the plan to reimburse the medical provider for providing such emergency care. ( Health & Saf. Code, § 1371.4, subd. (b).) If no contract exists between the plan and medical provider, the plan must pay the "reasonable and customary value" of the emergency care provided. ( Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(B).)

In 2016 and 2017, the Hospitals provided emergency medical services to three patients enrolled in Valley Health Plan. The Hospitals submitted to the County claims for reimbursement totaling approximately $144,000 for the services provided. The County paid the Hospitals approximately $28,500. The Hospitals challenged the reimbursement decisions by submitting written administrative appeals, which the County denied.

The Hospitals then sued the County, alleging they are entitled to the entire amount claimed for the emergency services provided to the three patients enrolled in Valley Health Plan. The Hospitals’ operative complaint alleged a single cause of action for breach of implied contract. In that complaint, the Hospitals alleged that the Knox-Keene Act imposes a mandatory duty on health care service plans to reimburse noncontracted providers for emergency medical services and that, pursuant to the Act, the Hospitals are entitled to reimbursement at a reasonable and customary rate for the services provided to the patients enrolled in Valley Health Plan. The Hospitals further alleged that the Knox-Keene Act and the DMHC's implementing regulations gave rise to implied-in-law agreements between the Hospitals and the County, obligating the County to pay for the emergency care provided by the Hospitals at a reasonable and customary rate. The Hospitals maintained the reasonable and customary rate for the services provided to Valley Health Plan's enrollees was the $144,000 claimed by the Hospitals,

531 P.3d 955

rather than the $28,500 reimbursed by

14 Cal.5th 1040

the County. They also alleged that the County's conduct, including its partial reimbursement for care provided by the Hospitals, gave rise to implied-in-fact agreements between the Hospitals and the County.

The County demurred, asserting that the Hospitals’ implied contract claim is based on a quantum meruit theory that cannot be maintained against the County as a public entity. The trial court overruled the demurrer. It found that the Hospitals had stated facts sufficient to constitute a cause of action, "whether fashioned as a cause of action for breach of an implied in fact contract or one for quantum

310 Cal.Rptr.3d 134

meruit." The court resolved that "the public policy to promote the delivery and the quality of health and medical care to the people of the State of California outweighs the policy to limit common law, or implied contract claims against public entities." It further determined that in entering the regulated health care plan market, the County "cannot expect to rely on a public policy regarding contracts as to public entities so that it can be exempted from those regulations."

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