Filed 7/6/18 Hackert v. Sutter Medical Foundation CA3

NOT TO BE PUBLISHED

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

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Plaintiff John B. Hackert, a medical doctor, sued Sutter Medical Foundation and related entities to be reimbursed for services he provided as an assistant surgeon. Sutter, however, had not authorized his services and plaintiff provided those services after he terminated his contract with Sutter and after Sutter informed him it would not pay for unauthorized services. Plaintiff alleged that state law governing managed health care, federal Medicare law, and unfair competition law (as it may apply to a breach of his prior contract with Sutter) entitled him to injunctive relief compelling Sutter to pay for the unauthorized services.

The trial court sustained defendants’ demurrer without leave to amend and entered a judgment of dismissal. We reverse, but only to allow plaintiff to plead a common law cause of action for breach of his prior contract. All of his current causes of action fail to state a claim upon which relief may be granted.

We note that defendants are Sutter Medical Foundation, Sutter Medical Group, Sutter Independent Physicians, Sutter Health Sacramento Sierra Region, Sutter Health Plan dba Sutter Health Plus, and Sutter Health. For ease of reference, we refer to the defendants individually and collectively as Sutter.

Facts and Proceedings

The sufficiency of a complaint is a question of law we review do novo. We accept as true all properly pleaded allegations. (Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 837-838.)

In 2011, plaintiff entered into a contract with Sutter to perform surgical assistant services. He terminated the contract in 2014, believing Sutter was underpaying claims for his services. When he ended the contract, he expressed his intention to continue to bill Sutter for services he would render on a noncontracted basis.

Sutter informed plaintiff in writing that any services he provided in the future would require Sutter’s authorization. Sutter also told him it would not pay for unauthorized services that he might render in the future.

Despite these warnings, plaintiff submitted claims for unauthorized services he performed at the request of other surgeons after plaintiff had terminated his contract. Sutter denied the majority of these claims.

Plaintiff filed this action. In his second amended complaint, he sought injunctive relief ordering Sutter to pay his unauthorized claims pursuant to (1) section 1300.71 of title 28 of the California Code of Regulations (section 1300.71), a regulation prescribing how provider claims against health plans are to be reimbursed under state law; (2) federal Medicare regulations directing how provider claims are to be reimbursed by health plans that provide certain Medicare coverage; and (3) the state Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) based on a breach of his prior contract. Plaintiff also sought a declaration that Sutter’s refusal to pay his claims was unlawful.

The trial court sustained Sutter’s demurrer without leave to amend. It held the state and federal regulations did not require Sutter to pay plaintiff for his unauthorized claims. It ruled his claim under the Unfair Competition Law was moot because he terminated his prior contract, failed to allege a fraudulent practice, and lacked standing under federal law to enforce the terms of an employer-sponsored health plan. The trial court also held plaintiff was not entitled to declaratory relief because all of his substantive claims failed as a matter of law.

Plaintiff appeals from the judgment of dismissal. He contends the trial court erred in each of its rulings. He also contends the trial court abused its discretion when it sustained the demurrer without granting him leave to allege a quantum meruit claim.

We disagree with each of plaintiff’s contentions.

Discussion

I

Section 1300.71

Plaintiff contends the trial court erred when it determined he could not state a claim for injunctive relief under section 1300.71. He asserts the regulation required Sutter to compensate him for nonemergency services he rendered, even though Sutter did not authorize his services, because nothing in the regulation or its related statutes prohibits Sutter from paying for services it did not authorize. Simply stating the argument exposes its fallacy.

The Knox-Keene Health Care Service Plan Act of 1975 (the Act) and its related regulations govern health care service plans. (Health & Saf. Code, § 1340 et seq.)

The Act defines a “ ‘health care service plan’ ” as “[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees.” (Health & Saf. Code, § 1345, subd. (f)(1).) We use the terms “health care service plan,” “health plan,” and “plan” interchangeably.

The Act requires health plans to reimburse claims for payment made by health care providers and to provide a dispute resolution mechanism to resolve challenged claims. (Health & Saf. Code, §§ 1367, subd. (h), 1371.)

The Act does not compel a health plan to pay for provider services it does not authorize except in one instance relevant here. It requires a health plan to pay providers for emergency services they render to enrollees “until the care results in stabilization of the enrollee,” even if the providers are not contracted with the health plan and the health plan does not authorize the services. (Health & Saf. Code, § 1371.4, subd. (b).) “As long as federal or state law requires that emergency services and care be provided without first questioning the patient’s ability to pay, a health care service plan shall not require a provider to obtain authorization prior to the provision of emergency services and care necessary to stabilize the enrollee’s emergency medical condition.” (Health & Saf. Code, § 1371.4, subd. (b).)

Section 1300.71 sets forth the amount a health plan must pay providers on their claims. Subdivision (a)(3) of section 1300.71 reads in its entirety:

“ ‘Reimbursement of a Claim’ means:

“(A) For contracted providers with a written contract, including in-network point-of-service (POS) and preferred provider organizations (PPO): the agreed upon contract rate;

“(B) For contracted providers without a written contract and non-contracted providers, except those providing services described in paragraph (C) below: the payment of the reasonable and customary value for the health care services rendered based upon statistically credible information that is updated at least annually and takes into consideration: (i) the provider’s training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) other aspects of the economics of the medical provider’s practice that are relevant; and (vi) any unusual circumstances in the case; and

“(C) For non-emergency services provided by non-contracted providers to PPO and POS enrollees: the amount set forth in the enrollee’s Evidence of Coverage.” (§ 1300.7l, subd. (a)(3).

Thus, the amount a health plan must pay depends on whether the provider has a contract with the health plan and whether the provider rendered emergency services. If the provider has a contract with the health plan, the provider receives “the agreed upon contract rate.” (§ 1300.71, subd. (a)(3)(A).) If the provider does not have a contract with the plan, the provider receives “the reasonable and customary value” for the services rendered, unless the noncontracted provider renders nonemergency services. (§ 1300.71, subd. (a)(3)(B).) The noncontracted provider who renders nonemergency services is entitled to “the amount set forth in the enrollee’s Evidence of Coverage” established by the health plan. (§ 1300.71, subd. (a)(3)(C).)

Although he did not have a contract with Sutter and did not provide emergency services, plaintiff contends the plain language of section 1300.71, subdivision (a)(3)(B) “mandates” he be compensated the “reasonable and customary value” of his services regardless of Sutter’s decision not to authorize his work. He argues he is entitled to this amount because section 1300.71 establishes what plans must pay noncontracted providers, and because there is nothing in section 1300.71 or the Act and its other regulations that conditions payment on the health plan authorizing the noncontracted provider’s services. He asserts it is the primary surgeon who must be authorized by Sutter, and the primary surgeon can retain plaintiff to assist on a surgery without being in violation of his or her contract with Sutter.

Each of plaintiff’s assertions is incorrect. If section 1300.71 applied here, its plain language would mandate plaintiff be compensated only in the amount set forth in Sutter’s evidence of coverage, not the reasonable and customary value. That is because plaintiff rendered nonemergency services without having a contract with Sutter. (§ 1300.71, subd. (a)(3)(C).)

But section 1300.71 does not apply here, and it does not obligate Sutter to pay plaintiff anything. The Act expressly authorizes Sutter to condition payments to providers who render nonemergency services on obtaining Sutter’s authorization. Under the Act, a health plan “may require prior authorization as a prerequisite for payment for necessary medical care following stabilization of an emergency medical condition.” (Health & Saf. Code, § 1371.4, subd. (c).) Sutter exercised its authority to condition payment on plaintiff receiving its authorization, and nothing in section 1300.71 superseded Sutter’s statutory right to do so. The regulation establishes what Sutter owes to authorized providers, contracted and noncontracted, and to noncontracted providers who render emergency services. It does not compel Sutter to reimburse an unauthorized provider of nonemergency services.

As plaintiff acknowledges, the “authorization process is ordinarily an obligation of contract, not law.” Here, there is no contract that requires Sutter to pay plaintiff for his services. And the only law plaintiff cites that requires health plans to pay providers for unauthorized services imposes that duty when the provider renders emergency services. (Health & Saf. Code, § 1371.4, subd. (b).) Plaintiff did not render emergency services.

Plaintiff’s argument that Sutter is compelled to pay him because no law required Sutter to condition payment on its authorization is illogical. That the law did not require Sutter to condition payment on its authorization did not prohibit Sutter from doing so. As already stated, the Act expressly authorized Sutter to condition payment for nonemergency services on authorization.

Moreover, if the Legislature had intended to require health plans to pay for unauthorized nonemergency services, it would have expressly said so, as it did for emergency services. Its clear statement on emergency services and its silence on all other services indicate it did not intend to require plans to pay for unauthorized nonemergency services. “The expression of some things in a statute necessarily means the exclusion of other things not expressed. [Citation.]” (Gikas v. Zolin (1993) 6 Cal.4th 841, 852.) The issue is whether, in the absence of a contract, the Act required Sutter to pay plaintiff for his unauthorized nonemergency services. It did not.

Plaintiff’s assertion that authorization was required only from the primary surgeon also fails. He directs us to nothing in the Act or its regulations that empowers a contracted provider to authorize on behalf of the health plan a noncontracted provider to render nonemergency services. Indeed, in his complaint, plaintiff implies Sutter surgeons understand this point, as they are not requesting his services because Sutter has not authorized them.

Finally, plaintiff cites to an unpublished federal district court opinion to support his argument that section 1300.71 requires payment of the “reasonable and customary amount” for unauthorized, noncontracted nonemergency services. (See Bernstein v. Health Net Life Insurance Company (S.D.Cal., Nov. 29, 2012, Civ. No. 12-cv-00717 AJB (JMA)) 2012 WL 5989348 (Bernstein).) Neither published nor unpublished federal district court opinions are binding precedent on this court. (Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419, 1432, fn. 6.) Nor is the case persuasive. It refers to section 1300.71 only to assert that a health plan’s duty under the regulation to pay a reasonable and customary amount is owed to the out-of-network provider, not the enrollee. (Bernstein, supra, at p. 3.) The opinion says nothing about section 1300.71 obligating a health plan to pay a noncontracted provider for unauthorized nonemergency services. Sutter’s request to take judicial notice of the docket and notice of dismissal filed in Bernstein is denied as moot.

Because section 1300.71 did not obligate Sutter to pay plaintiff for his nonauthorized services, the trial court correctly sustained Sutter’s demurrer to plaintiff’s claim for relief under this regulation.

II

Medicare Regulations

Plaintiff contends the trial court erred when it determined he could not state a claim for injunctive relief under certain Medicare regulations. He asserts the regulations require Sutter to pay for his unauthorized services because they establish the amount Sutter must pay to noncontracted providers. As with the Act, nothing in the Medicare regulations requires Sutter to pay noncontracted providers for unauthorized services except in the case of emergency care.

The regulations at issue concern a Medicare plan known as Medicare Advantage. “Medicare has several component parts: Medicare Part A is hospital insurance, covering inpatient hospital services and post-hospital nursing facility care, and is generally paid on a flat-fee basis; Medicare Part B is medical insurance, covering the costs of physician services and outpatient care, also generally paid on a fee-for-service basis; Medicare Advantage (formerly known as Medicare + Choice [and also known as Part C]) is a plan offered by private companies that contract with Medicare to provide Part A and B benefits, for which Medicare pays a fixed amount per patient per month for care.” (U.S. ex rel. Osheroff v. HealthSpring, Inc. (M.D.Tenn. 2013) 938 F.Supp.2d 724, 726, fn. 2.)

A health plan that offers a Medicare Advantage plan may provide benefits to enrollees “directly or through arrangements, or by paying for the benefits.” (42 C.F.R. § 422.100(a) (2018).) The plan is obligated to maintain “a network of appropriate providers that is supported by written agreements” to provide the benefits. (42 C.F.R. § 422.112(a)(1)(i) (2018).) The plan “may select the providers” to provide benefits to its enrollees so long as they meet certain qualifications. (42 U.S.C. § 1395w-22(d)(1).) If the network providers are unable to meet an enrollee’s need for specialty care, the plan “arranges for specialty care outside of the plan provider network.” (42 C.F.R. § 422.112(a)(3) (2018).)

As with the Act, an exception to the rule authorizing the health plan to select or arrange for providers exists concerning emergency services. A plan offering a Medicare Advantage plan must provide coverage for emergency services “without regard to prior authorization or the emergency care provider’s contractual relationship with the [plan].” (42 U.S.C. § 1395w-22(d)(1)(E).)

Also as with the Act, a health plan offering a Medicare Advantage plan pays noncontracted providers differently based on whether they rendered emergency services. When a noncontracted provider renders emergency and urgently needed services, the plan “must make timely and reasonable payments” to the provider. (42 C.F.R. § 422.100(b)(1)(i), (ii) (2018).) However, when a noncontracted provider renders nonemergency services such as specialty services, the plan must pay “an amount the provider would have received under original Medicare.” (42 C.F.R. § 422.100(b)(2) (2018).) The noncontracting provider must accept that amount as payment in full. (42 C.F.R. § 422.214(a)(1) (2018); 42 U.S.C. § 1395cc(a)(1)(O).)

Plaintiff essentially contends that because these statutes and regulations establish what a health plan must pay a noncontracted provider, they also require a plan to compensate a noncontracted provider who provides unauthorized nonemergency services. They do not.

Initially, we hold plaintiff cannot sue to enforce the Medicare Advantage statutes and regulations. “Like substantive federal law itself, private rights of action to enforce federal law must be created by Congress. [Citation.]” (Alexander v. Sandoval (2001) 532 U.S. 275, 286 [149 L.Ed.2d 517, 528].) No right of action exists here. Plaintiff contends 42 Code of Federal Regulations part 422.214(c) grants him a right of action. It does not. The regulation simply deems a noncontracted provider that seeks reimbursement to be viewed as seeking payment in the amount the provider would have received under original Medicare. It does not provide plaintiff a private right to enforce that or any other part of the Medicare Advantage laws in a court action.

Even if plaintiff had a private right of action, his claim would fail to state a cause of action as a matter of law. Plaintiff argues the parties’ obligations under 42 Code of Federal Regulations part 422.214 to pay and accept as full payment “ ‘an amount the provider would have received under original Medicare’ ” must be interpreted to mean the health plan must pay noncontracted providers for unauthorized nonemergency services. Otherwise, the only alternative interpretation of the regulation’s language is that the provider must collect payments from the enrollee, which is prohibited by Medicare regulations. Plaintiff reaches his interpretation—an incorrect interpretation—only by assuming the regulation requires the health plan to pay for unauthorized nonemergency services. Nothing in the regulation imposes that requirement.

The Medicare Advantage statutes and regulations do not require health plans to pay for unauthorized nonemergency services. Those laws obligate the plan to “select” and “maintain” a network of providers and to “arrange” for providers outside the plan’s network to provide specialty services when needed. (42 U.S.C. § 1395w-22(d)(1); 42 C.F.R. §§ 422.112(a)(1), (3) (2018).) The language indicates the plan authorizes the providers both in and outside its network who will provide services to the plan’s enrollees. Nothing in these laws requires a plan to pay for unauthorized services except with regard to emergency services. As with the Legislature when it adopted the Act, Congress’s stated intention to restrict a health plan’s contracting power in a limited circumstance indicates Congress did not intend to apply the same restriction in other circumstances. (See Loughrin v. United States (2014) 573 U.S. ___, ___ [134 S.Ct. 2384, 2390; 189 L.Ed.2d 411, 421].)

The Medicare Advantage regulations clearly define where the provision of emergency services ends and the provision of subsequent services requiring plan authorization begins. While authorization is not needed for emergency and urgently needed services, it is needed when maintenance care and post-stabilization care related to an emergency medical condition begin. For those services, the health plan must pay the noncontracting provider only when the provider requests authorization and the plan either grants the request, or the plan does not respond to the request within one hour, cannot be contacted, or it and the treating physician cannot agree on the enrollee’s care. (42 C.F.R. §§ 422.100(b)(iii), 422.113(c)(1), (2) (2018).) The health plan’s financial responsibility for post-stabilization care “it has not pre-approved” ends when a plan physician assumes responsibility for the enrollee’s care, the plan and the treating physician agree on the enrollee’s care, or the enrollee is discharged. (42 C.F.R. § 422.113(c)(3) (2018).)

These regulations indicate payment for services rendered by a noncontracted provider are contingent on the plan authorizing the service except for emergency services or where Congress or Medicare might otherwise specify. Plaintiff directs us to no statute, regulation, or judicial opinion that requires a plan to pay a noncontracted provider for unauthorized nonemergency services.

Plaintiff mistakenly relies on St. Charles Parish Hospital Service Dist. No. 1 v. Ochsner Health Plan, Inc. (La.Ct.App. 2004) 874 So.2d 885 (St. Charles Parish Hospital) to assert a plan must pay a noncontracted provider for unauthorized nonemergency services. Authorization was not an issue in the case. There, a plan demanded a noncontracted provider to remit overpayments he received for outpatient services he had rendered to the plan’s enrollees. The state appellate court ordered summary judgment in the plan’s favor, holding 42 Code of Federal Regulations part 422.214 required a noncontracted provider to accept as full payment the amount it would have received under original Medicare. (St. Charles Parish Hospital, supra, 874 So.2d at p. 889.) Unlike here, the plan in that case was not challenging its obligation to pay the provider the amount required under the regulation. The plan did not contend it had not authorized the services, unlike the case before us. It simply sought a refund of the amounts it had overpaid the provider. The Louisiana court thus did not consider our issue. “It is axiomatic that cases are not authority for propositions not considered. [Citations.]” (People v. Ault (2004) 33 Cal.4th 1250, 1268, fn. 10.)

Plaintiff’s other citations to federal authorities offer him no support, as they, too, did not concern a plan’s alleged obligation under Medicare Advantage law to pay a noncontracted provider for unauthorized nonemergency services. (See New York City Health & Hospitals Corp. v. WellCare of New York, Inc. (S.D.N.Y. 2011) 801 F.Supp.2d 126 [noncontracted provider of emergency services had no private right of action to sue plan for payment based on alleging the plan’s failure to pay as required by statute was a breach of the Medicare Advantage contract between the plan and Medicare]; Canandaigua Emergency Squad, Inc. v. Rochester Area HMO, Inc. (W.D.N.Y. 2011) 780 F.Supp.2d 313 [removal to federal court improper; noncontracted ambulance companies’ suit against health plan that withheld payment for services to recoup prior overpayments did not arise under Medicare Act]; Allina Health Services v. Sebelius (D.D.C. 2010) 756 F.Supp.2d 61 [denial of motion to enjoin Secretary of Health and Human Services from implementing a new formula for calculating certain Medicare payment adjustments for hospitals that serve a disproportionate number of low-income patients].)

Plaintiff also pleaded he is entitled to payment because his services qualified as specialty care by a noncontracted provider that a contracted Sutter surgeon requested. The allegation is irrelevant. The Medicare Advantage regulation states it is the plan that arranges for specialty care outside of its network of providers, not a plan surgeon. (42 C.F.R. § 422.112(a)(3) (2018).)

Similar to the Act, the Medicare Advantage statutes and regulations, by distinguishing between unauthorized emergency services that must be paid and all other services, demonstrate the health plan is not required to pay a noncontracting provider for unauthorized nonemergency services.

III

Unfair Competition Law

Plaintiff contends the trial court erred when it concluded he could not state a claim for relief under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) because the court sat “in law alone and not [in] equity.” He sought equitable relief to receive payment of his noncontracted services based on Sutter’s alleged breach of his prior contract, and he asserts the court should have exercised its equitable power under the Unfair Competition Law to restore the status quo.

Plaintiff correctly states the court sat in law alone. It did not err in doing so because it was ruling only on Sutter’s demurrer, a legal issue. A court does not sit in equity when it rules on a demurrer. It cannot exercise its equitable powers under the Unfair Competition Law if plaintiff cannot allege an unfair competition claim.

A demurrer tests the sufficiency of the complaint as a matter of law, and it raises only questions of law. (Code Civ. Proc., § 589, subd. (a).) “[I]n passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action, it is wholly beyond the scope of the inquiry to ascertain whether the facts stated are true or untrue. That is always the ultimate question to be determined by the evidence upon a trial of the questions of fact. Obviously, the complaint, when appropriately challenged, whether for want of sufficient facts or for an insufficient or inartificial statement of the facts, must stand or fall by its own force.” (Colm v. Francis (1916) 30 Cal.App. 742, 752.) The court did not err when it did not exercise its equitable powers under the Unfair Competition Law when it sustained Sutter’s demurrer.

The court also did not err when it determined plaintiff failed to state a claim under the Unfair Competition Law. That law provides a private right of action against “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof. Code, §§ 17200, 17203.) It prohibits practices that are either “unlawful,” “unfair,” or “fraudulent.” (Progressive West Ins. Co. v. Yolo County Superior Court (2005) 135 Cal.App.4th 263, 283.)

While the law’s scope is broad, its remedies are limited. Private plaintiffs may seek only injunctive relief and restitution. (Bus. & Prof. Code, § 17203.) They “may not receive damages, much less treble damages, or attorney fees.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179 (Cel-Tech), italics omitted.) And, in order to obtain injunctive relief, plaintiffs must show there is a threat the wrongful activity will continue. No past events may be enjoined. (Davis v. Farmers Ins. Exchange (2016) 245 Cal.App.4th 1302, 1326-1327.)

Plaintiff rightly asserts a trial court, sitting as a court of equity when acting under the Unfair Competition Law, has the power to restore the status quo ante. (Korea Supply Co. v. Lockeed Martin Corp. (2003) 29 Cal.4th 1134, 1149 (Korea Supply).) His prayer for relief, however, does not ask the court to restore the status quo. It asks the court to enjoin Sutter to pay for his now out-of-network unauthorized services either “at reasonable and customary value,” or to order Sutter to reinstate “and honor” the prior contract plaintiff terminated and pay for the noncontracted services according to the contractual rate.

Neither of these remedies is available under the Unfair Competition Law. Plaintiff cannot obtain injunctive relief because he terminated the contract he now seeks to enforce. There is no threat Sutter will breach that contract in the future. He also cannot obtain an order compelling Sutter to pay for his noncontracted unauthorized services because both of his alternate requests for payment go beyond restitution. They seek payment for services he did not render under the contract he claims Sutter breached in violation of the Unfair Competition Law. An order for restitution under the Unfair Competition Law is limited to compelling the defendant to return money or property obtained through an unfair business practice—in this case, the breach of the prior contract—to those persons from whom the property was taken, including money in which the plaintiff had a vested interest. (Korea Supply, supra, 29 Cal.4th at pp. 1144-1145, 1149.) Sutter did not obtain money or property from plaintiff’s rendition of noncontracted services by breaching the prior contract.

Plaintiff’s assumption—“that the court’s inherent equitable powers are unrestricted in [an Unfair Competition Law action]—is fundamentally erroneous.” (Alch v. Superior Court (2004) 122 Cal.App.4th 339, 404.) “A court cannot, under the equitable powers of [the Unfair Competition Law], award whatever form of monetary relief it believes might deter unfair practices.” (Korea Supply, supra, 29 Cal.4th at p. 1148.)

Although plaintiff cannot obtain his prayed for relief, we look to determine whether he can obtain any relief under the Unfair Competition Law based on Sutter’s alleged breach of the prior contract. “[T]he test of the adequacy of a complaint is whether it alleges sufficient facts to support a particular cause of action.” (Smith v. Wells Fargo Bank, N.A (2005) 135 Cal.App.4th 1463, 1485, original italics.)

Plaintiff alleges Sutter committed unlawful, unfair, and fraudulent conduct when it breached his prior contract by underpaying approximately half of his claims for services rendered to enrollees in a Sutter health plan known as SutterSelect. “ ‘[A] breach of contract may . . . form the predicate for [Business and Professions Code s]ection 17200 claims, provided it also constitutes conduct that is “unlawful, or unfair, or fraudulent.” ’ [Citations.]” (Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 645 (Puentes), original italics & italics added.) Plaintiff, however, has not pleaded anything more than a common law breach of contract.

First, plaintiff does not adequately allege the breach was unlawful for purposes of Business and Professions Code section 17200. A breach of contract is not itself an unlawful act for purposes of the Unfair Competition Law. (Puentes, supra, 160 Cal.App.4th at p. 645.) “ ‘Contractual duties are voluntarily undertaken by the parties to the contract, not imposed by state [or federal] law.’ ” (Smith v. Wells Fargo Bank, N.A., supra, 135 Cal.App.4th at p. 1484, quoting Gibson v. World Savings & Loan Assn. (2002) 103 Cal.App.4th 1291, 1302.) Plaintiff must look beyond the mere breach.

By defining unfair competition to include any “ ‘unlawful . . . business act or practice,’ ” the Unfair Competition Law “permits violations of other laws to be treated as unfair competition that is independently actionable.” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) “[A] violation of another law is a predicate for stating a cause of action under the [Unfair Competition Law’s] unlawful prong.” (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554.)

Plaintiff claims Sutter’s breach is actionable under Business and Professions Code section 17200 because the breach violated Civil Code section 3523. That statute, one of the “maxims of jurisprudence,” states: “He who takes the benefit must bear the burden.” Plaintiff asserts he benefited Sutter by performing services for SutterSelect plan members. But Civil Code section 3523 does not make Sutter’s breach unlawful. That statute “does not create substantive rights. ‘[This] wholesome maxim of jurisprudence . . . can obviously have no application to any but legal wrongs or those wrongs for which the law authorizes or sanctions redress.’ [Citations.]” (County of San Luis Obispo v. Abalone Alliance (1986) 178 Cal.App.3d 848, 865.) As just stated, a breach of contract is not a legal wrong.

Second, plaintiff cannot allege the breach was fraudulent for purposes of Business and Professions Code section 17200. “ ‘Fraudulent,’ as used in the statute, does not refer to the common law tort of fraud but only requires a showing members of the public ‘ “are likely to be deceived.” ’ (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267.)” (Saunders v. Superior Court, supra, 27 Cal.App.4th at p. 839.) Plaintiff cannot allege Sutter’s breach of his contract is likely to deceive the public. He can allege only that he was defrauded in the breach.

Third, plaintiff has not alleged the breach was unfair for purposes of Business and Professions Code section 17200. A common law breach of contract in an isolated transaction, which is all plaintiff has alleged, is not an “unfair” business act under the Unfair Competition Law. “[R]eliance on general common law principles to support a cause of action for unfair competition is unavailing.” (Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, 1072, disapproved on another ground in Zhang v. Superior Court (2013) 57 Cal.4th 364, 382.)

Virtually any breach of contract could be considered “unfair,” as the term is commonly understood. But there is no indication the Legislature intended to provide injunctive and restorative relief under the Unfair Competition Law for every breach of contract. Indeed, an action under the Unfair Competition Law “is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) At a minimum, plaintiff must plead more than a breach of contract.

In cases not involving competitors or consumers, courts have found a breach of contract or a contract clause to be an “unfair” act in limited circumstances. They found unfairness sufficiently pleaded if the complaint alleged facts showing the contract was unconscionable or contained a forfeiture provision that allowed an employer to frustrate the employee’s legitimate expectations and contractual rights. (Zanze v. Snelling Services, LLC (9th Cir. 2011) 412 Fed.Appx. 994, 996-997; McCollum v. XCare.net, Inc. (N.D.Cal. 2002) 212 F.Supp.2d 1142, 1154.) One court held that “ ‘a systematic breach of certain types of contracts (e.g., breaches of standard consumer or producer contracts involved in a class action) can constitute an unfair business practice’ ” under the Unfair Competition Law. (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 489-490.) But the parties have directed us to no authority, and we have found none, that declares a common law breach of contract between two parties contracting at arm’s length constitutes an “unfair” business act or practice under Business and Professions Code section 17200.

We recognize that substantial authority defines an “unfair” act under Business and Professions Code section 17200 in cases brought by competitors, and substantial, conflicting authority defines an “unfair” act in cases brought by consumers. In the case of competitors, the word “unfair” means “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.” (Cel-Tech, supra, 20 Cal.4th at p. 187.) This definition obviously does not apply here.

In consumer cases, the definition of “unfair” is not settled. Some courts, including this one, determine whether a business practice is “unfair” in a consumer action by weighing “ ‘ “ ‘the utility of the defendant’s conduct against the gravity of the harm to the alleged victim.’ ” ’ ” (Progressive West Ins. Co. v. Yolo County Superior Court, supra, 135 Cal.App.4th at p. 285, quoting Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969-970.) Other courts have modified the Cel-Tech definition and, applying it in consumer actions, will find the business act “unfair” if the claim is tethered to specific constitutional, statutory, or regulatory provisions. (See Belton v. Comcast Cable Holdings, LLC (2007) 151 Cal.App.4th 1224, 1239-1240; Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 853-854.) Still other courts define unfairness under the Federal Trade Commission Act: “ ‘(1) The consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided.’ ” (Davis v. Ford Motor Credit Co. (2009) 179 Cal.App.4th 581, 597-598; see 15 U.S.C. § 45(n).)

Sutter argues we should apply the modified Cel-Tech definition. Plaintiff does not address the issue. Neither party argues why any of these definitions should apply in a case between two noncompeting parties bargaining at arm’s length in a nonconsumer context. Given the state of the pleadings, we need not address the issue here.

“An order sustaining a demurrer without leave to amend will constitute an abuse of discretion if there is any reasonable possibility that the defect can be cured by an amendment. This rule is liberally applied to permit further amendment not only where the defect is one of form but also where it is one of substance, provided the pleader did not have ‘ “a fair prior opportunity to correct the substantive defect.” ’ [Citations.]

“On the other hand, there is nothing in the general rule of liberal allowance of pleading amendment which ‘requires an appellate court to hold that the trial judge has abused his discretion if on appeal the plaintiffs can suggest no legal theory or state of facts which they wish to add by way of amendment.’ [Citation.] The burden is on the plaintiffs to demonstrate that the trial court abused its discretion and to show in what manner the pleadings can be amended and how such amendments will change the legal effect of their pleadings. [Citations.]” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1387-1388, italics omitted.) Here, on plaintiff’s third complaint, he has not made this showing.

Having reached this conclusion, we recognize a “complaint is adequate if its factual allegations are sufficient to support a cause of action on any available legal theory (whether specifically pleaded or not).” (Smith v. Wells Fargo Bank, N.A., supra, 135 Cal.App.4th at p. 1485.) Plaintiff’s allegations support a cause of action for breach of his prior contract. While his other legal theories are now precluded, he should be granted leave to amend his complaint, if he chooses, to plead a common law cause of action for breach of contract in order to recover any damages incurred from Sutter’s alleged breach of his prior contract. It should be clear by now, however, that those damages do not include payment for the unauthorized nonemergency services he rendered after he terminated the contract.

Finally, Sutter contends, and the trial court found, plaintiff lacked standing to bring this cause of action because under the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.), which governs the SutterSelect plan, a provider who is not contracted to provide services to SutterSelect enrollees “cannot bring claims for benefits on [his] own behalf. [He] must do so derivatively, relying on [his] patients’ assignments of their benefits claims.” (Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc. (9th Cir. 2014) 770 F.3d 1282, 1289.) This ERISA rule does not apply here because plaintiff is not suing to recover benefits promised to enrollees under the SutterSelect plan. He is suing on an implied-in-law provider agreement independent of Sutter’s obligations to its enrollees. Such actions against ERISA welfare plans for breach of provider agreements do not fall within the scope of ERISA. (See Marin General Hospital v. Modesto & Empire Traction Co. (9th Cir. 2009) 581 F.3d 941, 947-948 [provider’s suit against plan to recover payment based on plan’s oral agreement with provider not subject to ERISA]; Blue Cross v. Anesthesia Care Associates Medical Group, Inc. (9th Cir. 1999) 187 F.3d 1045, 1054 [providers’ suit for breach of provider agreement not subject to ERISA]; John Muir Health v. Cement Masons Health & Welfare Trust Fund (N.D.Cal 2014) 69 F.Supp.3d 1010, 1015-1021 [provider’s quasi-contract claim against plan for reimbursement for services rendered to enrollees is not preempted by ERISA].)

IV

Declaratory Relief

Plaintiff sought a declaration that Sutter’s refusal to pay for his unauthorized services was unlawful under the laws and regulations discussed above. The court correctly sustained the demurrer against this claim because it arose from allegations we have concluded do not obligate Sutter to pay plaintiff as a matter of law. “A general demurrer to a declaratory relief cause of action is proper when the plaintiff does not allege facts sufficient to state the derivative claim. [Citations.]” (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 54.)

V

Quantum Meruit

Plaintiff contends the trial court should have granted him leave to plead a cause of action in quantum meruit. His pleaded facts, however, foreclosed the court from granting him leave.

“ ‘Quantum meruit refers to the well-established principle that “the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered.” [Citation.] To recover in quantum meruit, a party need not prove the existence of a contract [citations], but it must show the circumstances were such that “the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made.” ’ [Citation.]” (Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore (2008) 162 Cal.App.4th 1331, 1344, italics added.)

Plaintiff pleaded Sutter had no understanding or expectation whatsoever of compensating him for his unauthorized services. He terminated his contract, and Sutter informed him in writing it would not pay for any unauthorized services.

Thus, to plead quantum meruit in an amended complaint, plaintiff would have to plead facts that directly contradict his current complaint. He cannot do this. “[A] plaintiff may not discard factual allegations of a prior complaint, or avoid them by contradictory averments, in a superseding, amended pleading.” (California Dental Assn. v. California Dental Hygienists’ Assn. (1990) 222 Cal.App.3d 49, 53, fn. 1.)

The trial court thus did not err when it denied him leave to amend and allege a claim in quantum meruit.

Disposition

The judgment of dismissal is reversed and the matter remanded with directions to sustain the demurrer with leave to amend solely to allow plaintiff to allege a common law cause of action for breach of his prior contract with Sutter. Each party shall bear its own costs on appeal. (Cal. Rules of Court, rule 8.278(a).)

HULL , Acting P. J.

We concur:

ROBIE , J.

BUTZ , J.