Dameron Hosp. Ass'n v. AAA N. Cal., Nev. & Utah Ins. Exch.

• Decision Date: 26 April 2022
• Docket Number: C086518
• Parties: DAMERON HOSPITAL ASSOCIATION, Plaintiff and Appellant, v. AAA NORTHERN CALIFORNIA, NEVADA & UTAH INSURANCE EXCHANGE, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

77 Cal.App.5th 971

293 Cal.Rptr.3d 129

DAMERON HOSPITAL ASSOCIATION, Plaintiff and Appellant,

v.AAA NORTHERN CALIFORNIA, NEVADA & UTAH INSURANCE EXCHANGE, Defendant and Respondent.

C086518

Court of Appeal, Third District, California.

Filed April 26, 2022

HATTON, PETRIE & STACKLER, Gregory M. Hatton and John A. McMahon, Newport Beach, for Plaintiff and Appellant.

CODDINGTON, HICKS & DANFORTH, Richard Wardell Loveland and Min K. Kang, Los Angeles, for Defendant and Respondent.

Opinion

HULL, J.

SUMMARY OF THE APPEAL

Appellant Dameron Hospital Association (Dameron) requires patients or their family members to sign Conditions of Admissions (COAs) when Dameron provides the patients’ medical care. The COAs at issue in this action contain language that assigns to Dameron direct payment of uninsured and underinsured motorist (UM) benefits and medical payment (MP) benefits that would otherwise be payable to those patients under their automobile insurance policies. Here, Dameron treated five of AAA Northern California, Nevada & Utah Insurance Exchange's (also known as California State Automobile Association Inter-Insurance Bureau, here CSAA) insureds for injuries following automobile accidents. Those patients had UM and/or MP coverage as part of their CSAA coverage, and Dameron sought to collect payment for those services from the patients’ UM and/or MP benefits at Dameron's full rates. Instead of paying to Dameron the lesser of either all benefits due to the patients under their UM and MP coverage, or Dameron's full charges, CSAA paid portions of those benefits directly to the patients which left balances owing on some of Dameron's bills. Dameron sued CSAA to collect UM and MP benefits it maintains CSAA owed Dameron under the assignments contained in the COAs.

The trial court concluded that Dameron could not enforce any of the assignments contained in the COAs and entered judgment in CSAA's favor following CSAA's successful motion for summary judgment.

Here, we hold Dameron cannot collect payment for emergency services from the UM or MP benefits due to patients that were covered under health insurance policies. Additionally, we find (1) the COA forms are contracts of adhesion; (2) it is not within the reasonable possible expectations of patients that a hospital would collect payments for emergency care directly out of their UM benefits; and (3) a trier of fact might find it is within the reasonable expectations of patients that a hospital would collect payments for emergency care directly out of their MP benefits. Finally, we find that the parent of a minor lacked the authority to assign UM or MP benefits payable to that minor under a policy taken out by his nonparent legal guardian. Accordingly, we conclude that Dameron could not maintain causes of action to collect MP or UM benefits due to four of the five patients directly from CSAA. However, consistent with this opinion, the trial court can consider whether an enforceable assignment of MP benefits was made by one adult patient.

FACTS AND HISTORY OF THE PROCEEDINGS

General Factual Background

O.N., P.F., Stephen L., R.D., and D.W. were each in separate vehicle accidents. All of the patients were treated for injuries at Dameron following their accidents.

At the time of the patients’ respective accidents and treatment at Dameron, they were covered by CSAA automobile insurance policies that included UM coverage and/or MP coverage. CSAA's policies described its MP coverage as follows: "We will pay reasonable expenses incurred within one year from the date of accident by an insured person who sustains bodily injury as a result of an accident covered under this Part for necessary medical, surgical, X-ray, and dental treatment, including prosthetic devices, eyeglasses, and hearing aids and necessary ambulance, hospital, professional nursing, and funeral costs." It indicated, with respect to MP benefits, "[w]e may pay the insured person or the person(s) providing the necessary services, or the person(s) responsible for payment of expenses incurred under this Part, as we deem appropriate."

CSAA described its UM coverage for bodily injury as follows: "COVERAGE D1 - UNINSURED MOTORISTS BODILY INJURY COVERAGE [¶] We will pay damages, other than punitive or exemplary damages, for bodily injury to an insured person, which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. The bodily injury must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle. [¶] Determination whether an insured person is legally entitled to recover damages or the amount of damages shall be made by agreement between the insured person and us. If no agreement is reached, the decision will be made by arbitration."

At the time of the accidents, O.N. and P.F. had health care insurance coverage. This record does not tell us if any of the other patients had health insurance.

Before they left the hospital, each patient or a member of their family signed a COA, that included the following paragraph numbered 11 regarding an assignment of insurance benefits and third party billing:

"The undersigned (for him or herself and the patient) assigns to the hospital, and to the physician(s), and to the other health care professionals providing services to the patient during this hospitalization (or on an outpatient basis) all insurance benefits of any kind that are, or that might be owed, or otherwise due for hospital and/or health care services of any kind provided to the patient. This assignment includes, but is not limited to, all health plan and health insurance benefits, all medical payments coverage under any policy of insurance, and all uninsured and underinsured motorist insurance benefits payable to or on behalf of the patient.

"The undersigned (for him or herself and the patient) authorizes direct payment to the hospital (and [to the] physicians specifically associated with the patient's medical care, and to any other health care professionals specifically associated with the patient's medical care) of any insurance benefits otherwise payable to or on behalf of the patient and/or the undersigned for this hospitalization, or for outpatient services or outpatient observation care, and for any emergency services rendered, at a rate not to exceed the hospital's, physician's, or health care professional's regular billed charges.

"Payment to the hospital pursuant to this assignment shall discharge an insurance company and/or health plan of its obligations to the patient, but only to the extent of such payment. The undersigned and the patient remain at all times financially responsible for all charges of the hospital, and for all charges of all physicians and health care professionals specifically associated with the patient's medical care, to the extent that the charges are not paid or otherwise resolved with finality by the patient's insurer and/or health plan.

"Payment of the hospital's charges by the patient's insurer or health plan may not eliminate the hospital's right to collect its charges from third parties or their liability insurers in cases where a third party is legally responsible for causing an injury, illness, or other condition treated by the hospital. In some cases, the hospital's right to collect its charges from responsible third parties and their liability insurers under California's Hospital Lien Act may be governed by a contract between the hospital and the patient's health plan or insurer. Under no circumstances shall the total amount collected and retained by the hospital for treating an injury, illness or condition caused by a third party exceed the billed charges of the hospital."

According to Craig Haupt, the Credit & Collection Manager for Dameron, who has had that position since 1989, "[a]ll patients are required to sign the COA, or to have the COA signed on their behalf, before the patient leaves the hospital. In rare cases, injured patients may leave the hospital without signing the COA, and without a family member signing on their behalf. This oversight does not excuse patients from signing the COA, and their failure to sign the COA does not change the terms and conditions under which all patients at Dameron are treated." Haupt believes COAs are "contracts of necessity."

Additional factual background will be provided as to specific patients in the discussion below.

Procedural Background

Dameron filed this action on May 11, 2011. The First Amended Complaint contains two causes of action. In the first cause of action, Dameron seeks an injunction prohibiting CSAA from engaging in "unfair business practices" in violation of Business and Professions Code section 17200 et seq. (the Unfair Competition Law). The second cause of action seeks damages and declaratory relief to remedy CSAA's alleged breach of contract in failing to honor the patients’ purported assignments of their UM and/or MP benefits to Dameron. Both causes of action hinge on Dameron's position that, in failing to honor the purported assignments and pay UM and MP benefits to Dameron, CSAA acted unfairly and/or unlawfully. The trial court sustained CSAA's demurrer to the first cause of action without leave to amend.

CSAA brought a motion for summary judgment on the first amended complaint and the trial court entered a judgment in CSAA's favor.

Dameron appeals.

DISCUSSION

IThe First Cause of Action Under the Unfair Business Practices Act

In its opening brief, Dameron does not mention, let alone ask for relief from, the trial court's ruling on the demurrer. Dameron also makes no argument as to the proper standard of review for this court to apply when reviewing rulings on demurrer. Dameron also made no argument as to why, specifically, CSAA violated the Unfair Competition Law in its opening brief. Dameron also did not include a copy of the ruling on the demurrer with its appendix. Instead, the demurrer is first addressed in CSAA's filings...