Tenet Healthsystem Desert, Inc. v. Blue Cross of Cal.

• Decision Date: 17 March 2016
• Docket Number: D069057
• Court: California Court of Appeals Court of Appeals
• Parties: TENET HEALTHSYSTEM DESERT, INC., Plaintiff and Appellant, v. BLUE CROSS OF CALIFORNIA et al., Defendants and Respondents.

245 Cal.App.4th 821

199 Cal.Rptr.3d 901

TENET HEALTHSYSTEM DESERT, INC., Plaintiff and Appellant,

v.BLUE CROSS OF CALIFORNIA et al., Defendants and Respondents.

D069057

Court of Appeal, Fourth District, Division 1, California.

Filed March 17, 2016

Helton Law Group, Carrie S. McLain, Kim M. Worobec, Huntington Beach, Teddy T. Davis and Patrick S. Ludeman for Plaintiff and Appellant.

Morgan, Lewis & Bockius,Thomas M. Peterson, Molly M. Lane, San Francisco and Lisa R. Veasman, Los Angeles, for Defendants and Respondents.

AARON, J.

IINTRODUCTION

Plaintiff Tenet Healthsystem Desert, Inc. (Hospital)¹ appeals from a judgment entered in favor of defendants Blue Cross of California, doing business as Anthem Blue Cross (Blue Cross), Anthem Blue Cross Life and Health Insurance Company (BC Life), and Anthem UM Services, Inc. (Anthem UM).² Hospital sued Anthem, as well as Eisenhower Medical Center (Eisenhower) and Keenan & Associates (Keenan), when the defendants refused to pay approximately $1,996,265.50 for the cost of medical services that Hospital provided to an insured patient following extensive communications with Anthem over a period of approximately 50 days regarding "authorization" for the services. The defendants ultimately denied coverage for the medical services based on an exclusion in the patient's policy for injuries sustained as a result of having a blood alcohol level over the legal limit. Hospital alleged that Anthem's continuing to "authorize" medical services during the patient's stay at Hospital, even after Anthem was made aware that the patient was admitted with a blood alcohol level far exceeding the legal limit, constituted a misrepresentation as to coverage, on which Hospital relied in providing care to the patient.

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.³ The trial court determined that the TAC lacked the necessary specificity to survive a demurrer.

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.

IIFACTUAL AND PROCEDURAL BACKGROUND

A. Factual background⁴

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, 2012.⁵ Patient X had a "member identification card," which "identifie[d] that the Patient has health care coverage through a plan sponsored by Eisenhower." Patient X's "member identification card identified BC Life and Keenan as Eisenhower's authorized agent[s] and administrator[s] of Eisenhower's plan," and "further identified Blue Cross as Eisenhower's and BC Life's authorized agent and administrator who administers claims under Eisenhower's plan on behalf of BC Life."

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 the defendants] such that, to the extent that [the defendants] have information indicating that services are not covered under the plan, [the defendants] do not authorize such services. Accordingly, at all times mentioned there has existed a course of dealing between the Hospital and [the 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 [the defendants]."

The operative pleading alleges that a representative of Hospital called 800–274–7767, which is the telephone number that was provided on Patient X's member identification card "as the number to call for ‘Pre–Authorization,’ " and which is a number that Hospital was informed and believes is answered "by individuals who are the agents of Eisenhower and the employees and agents of [Anthem and] Keenan."

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 the 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 that the fax was sent on Anthem's behalf, and included private information about the patient that an individual would not have possessed if he or she were not an agent of Anthem. The letter did not advise Hospital that Patient X's plan excluded coverage for services provided to treat injuries sustained when a plan participant was driving with a blood alcohol level over the legal limit, nor did the case manager inform Hospital of this fact over the telephone.

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...