Filed 7/13/26 Melamed v. Cal. Physicians’ Service CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
HOOMAN MELAMED, M.D. et B336782
al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. 22STCV01382)
v.
CALIFORNIA PHYSICIANS’
SERVICE, BLUE SHIELD OF
CALIFORNIA et al.,
Defendants and
Respondents.
APPEAL from a judgment and orders of the Superior Court
of Los Angeles County, Upinder Kalra, Judge. Reversed and
remanded with directions.
Barta Law, Theresa J. Barta; Arkin Law Firm and
Sharon J. Arkin, for Plaintiffs and Appellants.
Manatt, Phelps & Phillips, Gregory N. Pimstone and
Joanna S. McCallum, for Defendants and Respondents.
Hooman Melamed, an orthopedic spine surgeon, sued
Blue Shield of California (Blue Shield) for allegedly retaliating
against him for patient advocacy in violation of Business and
Professions Code section 20561 under the Unfair Competition
Law (UCL) (§ 17200 et seq.) and for tortious interference with
prospective economic advantage. Blue Shield demurred. The
trial court sustained the demurrer without leave to amend and
dismissed the action. Because the trial court erred in its
determination that Melamed did not, and could not, properly
plead proximate cause and duty, we reverse and remand.
FACTUAL AND PROCEDURAL BACKGROUND
Melamed’s complaint alleged that he is a physician and
orthopedic spine surgeon practicing in California. California
Physicians’ Service is a corporation doing business as Blue Shield
of California. At all relevant times, Melamed did not have an
employment agreement or a participating provider contract with
Blue Shield. When he treated patients that were enrolled in
Blue Shield, Blue Shield was obligated under California Code of
Regulations, title 28, section 1300.71, subdivisions (a)(3)(B)
and (C), to pay him like any other out-of-network, non-contracted
provider.2
1 Unspecified statutory references are to the Business and
Professions Code.
2 Blue Shield is a health plan regulated under the Knox-
Keene Health Care Service Plan Act of 1975 (Knox-Keene Act).
(Health & Saf. Code, § 1340 et seq.)
2
A. The Alleged Retaliation
Melamed alleged that he regularly advocated on behalf of
his patients for Blue Shield to approve and authorize medically
appropriate health care, including specialized spinal surgeries.
Melamed alleged that in response to his ongoing patient
advocacy, Blue Shield initiated a retaliatory campaign against
him. This alleged retaliation included subjecting his out-of-
network billing claims to heightened administrative scrutiny,
denying authorizations for procedures, delaying reimbursements,
and wrongfully denying claims.
B. The First and Second Amended Complaint
In January 2022 Melamed filed a complaint alleging
five causes of action: (1) unlawful, fraudulent, and unfair
business practices; (2) retaliation in violation of section 2056;3
(3) intentional interference with prospective economic advantage;
(4) negligent interference with prospective economic advantage;
and (5) willful violation of reimbursement laws. After meeting
and conferring with Blue Shield, Melamed amended his
complaint. Blue Shield demurred to the amended complaint, and
3 Section 2056 states the public policy that “a physician and
surgeon be encouraged to advocate for medically appropriate
health care for his or her patients.” (§ 2056, subd. (b).)
“[T]erminat[ing] an employment or other contractual relationship
with, or otherwise penaliz[ing], a physician and surgeon
principally for advocating for medically appropriate health
care … violates the public policy of this state. No person shall
terminate, retaliate against, or otherwise penalize a physician
and surgeon for that advocacy.” (§ 2056, subd. (c).)
3
Melamed dismissed the fifth cause of action. In May 2023 the
trial court overruled the demurrer as to count 1, sustained the
demurrer as to count 2 without leave to amend, and sustained
the demurrer as to counts 3 and 4 with leave to amend.
In June 2023 Melamed filed his Second Amended
Complaint (SAC), asserting three causes of action against
Blue Shield. The first cause of action was for unlawful,
fraudulent, and unfair business practices based on retaliation in
violation of section 2056, denying payment of claims on the false
bases that the services were “not medically necessary,”
“investigative,” or “not emergency services” in violation of
California Code of Regulations, title 28, section 1300.71, and
failing to make specific disclosures and making false claims of
overpayment and seeking reimbursement. The second cause of
action was for intentional interference with prospective economic
advantage based on violations of section 2056; section 17200;
California Code of Regulations, title 28, section 1300.71,
subsections (a)(3)(B), (a)(3)(C), (a)(8), (b)(5), (d)(1), (d)(3) and (k);
California Code of Regulations, title 28, section 1300.71.38; and
Health & Safety Code section 1367, subdivision (h)(2); and Civil
Code section 1710. The third cause of action was for negligent
interference with prospective economic advantage based on a
duty of care arising from section 2056 or a special relationship
with foreseeable harm to Melamed from Blue Shield’s retaliation
and violations of the same code sections. The SAC included
reference to an alleged communication in which a “Blue Shield
Medical Director” admitted a pre-authorization should have been
granted without a peer-to-peer review and documents that
Melamed alleged showed Blue Shield’s delay or denial of claims
based on false claims of not having information.
4
Blue Shield demurred, raising four arguments: one on the
unfair competition cause of action, and three on the tortious
interference causes of action. On the UCL cause of action,
Blue Shield argued Melamed was no longer seeking restitution or
an injunction, so that cause of action failed for lack of a remedy.
On the tortious interference causes of action, Blue Shield argued
that they fail “because they depend on the legally untenable
proposition that a health plan enforcing the terms and
requirements of its member contracts has an obligation to protect
the economic interests of a non-contracted, non-emergency
provider” and “the Court of Appeal has never recognized an
interference tort (or any other tort) by a non-contracted provider
based on a health plan’s procedures, processes or decisions in
adjudicating benefits potentially due under its member
agreements.” In addition, the tortious interference claims failed
because Melamed did not correct what the court had previously
found to be conclusory allegations of “actual disruption” of his
patient relationships. Also, Melamed was unable to allege facts
supporting a duty of care for the negligent interference claim:
section 2056 provided no direct claim, and policy considerations
prevented a “special relationship” even if the harm were
foreseeable.
Melamed opposed. Melamed argued that the demurrer to
the UCL cause of action was previously overruled. Melamed also
argued that his tortious interference causes of action are long-
established torts, which the court previously found properly
pleaded except for two elements, which had now been cured by
amendment: the element of an actual disruption (for both
intentional and negligent interference), and the element of duty
for the negligent interference claim.
5
After an initial hearing, the court granted leave for
supplemental briefing on three issues: (1) does the legislative
history indicate that section 2056 applied outside of an
employment or contractual context, (2) does the “or otherwise
penalize” language in section 2056 suggest that the legislature
contemplated non-employment or non-contractual retaliation as a
basis for a cause of action, and (3) has Melamed shown “but for”
causation to support his tortious interference claims, despite his
allegation in paragraph 11 of the SAC? Paragraph 11 of the SAC
states: “Plaintiffs are informed and believe that it is (and [at] all
relevant times was) Defendant Blue Shield’s business practice to
delay, deny, down-code [footnote omitted] and improperly pay
claims presented by OON [out of network] physicians and
providers as retaliation and punishment against them (including
Plaintiff) for refusing to contract with Blue Shield as an in-
network physician or provider, all because of Blue Shield’s focus
on increasing its profits.”
Blue Shield argued that the legislative history indicated
that section 2056 did not apply outside of the employment or
contractual context and that the “or otherwise penalize” language
did not create a cause of action broader than wrongful
termination. Blue Shield argued further that Melamed’s
allegation Blue Shield treats all out-of-network providers the
same as it treats him precludes his ability to show “but for”
causation for retaliation. Melamed argued that section 2056
created a private cause of action that applied in this case, even
without an employment or contractual relationship between the
parties. Melamed argued further that his tortious interference
claims were properly pleaded. Concerning paragraph 11,
6
Melamed argued that it was an appropriate, alternative
allegation.
C. The Trial Court’s Ruling
In January 2024 the trial court sustained Blue Shield’s
demurrer to the SAC without leave to amend. The trial court
concluded that section 2056 does not afford a private right of
action and that its protections are tethered to the existence of an
employment or contractual relationship, which Melamed lacked.
The trial court also sustained the demurrer to the tortious
interference claims, finding that paragraph 11 of the SAC—which
alleged Blue Shield treated all out-of-network providers the same
regardless of any advocacy—defeated “but for” causation of
Blue Shield’s alleged retaliation for advocacy. As to the negligent
interference claim, the trial court sustained the demurrer on the
additional basis that Melamed failed to allege a cognizable duty
of care, as his sole basis for duty—section 2056—does not apply
to non-contracted providers. The trial court subsequently entered
a judgment of dismissal in favor of Blue Shield. Melamed
appealed.
DISCUSSION
Melamed’s appeal focuses on his tortious interference
causes of action.4 He argues the trial court erred in sustaining
4 Although the parties briefed the issues relating to
Melamed’s first cause of action (that Blue Shield engaged in
unfair business practices because it retaliated against him for
advocating for his patients), Melamed abandoned the argument
7
the demurrer to his claims for intentional interference with
prospective economic advantage because he appropriately
pleaded causation. He also argues that he properly pleaded
negligent interference with prospective economic advantage
because he was not required to allege a duty sufficient to state a
negligence claim, section 2056 provides an independent
actionable wrong or at least a duty, and he properly pleaded
causation.
Blue Shield responds that the trial court properly sustained
the demurrer because Melamed failed to allege proximate
causation. In addition, Blue Shield argues the trial court’s
judgment can be affirmed on the alternative grounds that to
allow Melamed’s claims in this case would be an unprecedented
expansion of a health plan’s tort liability to out-of-network
providers, that Melamed failed to allege a duty to support
negligent interference with prospective economic advantage, and
that he also failed to adequately allege actual disruption.
A. Standard of Review
We review de novo a trial court’s order sustaining a
demurrer, exercising our independent judgment to determine
whether the complaint states a cause of action under any valid
legal theory. (McCall v. PacifiCare of California, Inc. (2001)
25 Cal.4th 412, 415.) “ ‘ “We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions
or conclusions of fact or law.” ’ ” (Zelig v. County of Los Angeles
regarding the first cause of action in his reply brief and confirmed
that at oral argument.
8
(2002) 27 Cal.4th 1112, 1126, quoting Blank v. Kirwan (1985)
39 Cal.3d 311, 318.)
B. Intentional Interference with Prospective Economic
Advantage
“Intentional interference with prospective economic
advantage has five elements: (1) the existence, between the
plaintiff and some third party, of an economic relationship that
contains the probability of future economic benefit to the
plaintiff; (2) the defendant’s knowledge of the relationship;
(3) intentionally wrongful acts designed to disrupt the
relationship; (4) actual disruption of the relationship; and
(5) economic harm proximately caused by the defendant’s action.”
(Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc.
(2017) 2 Cal.5th 505, 512.) “To establish a claim for interference
with prospective economic advantage, … a plaintiff must plead
that the defendant engaged in an independently wrongful act.”
(Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th
1134, 1158; see Della Penna v. Toyota Motor Sales, U.S.A., Inc.
(1995) 11 Cal.4th 376, 393.) “An act is not independently
wrongful merely because defendant acted with an improper
motive.… The tort of intentional interference with prospective
economic advantage is not intended to punish individuals or
commercial entities for their choice of commercial relationships
or their pursuit of commercial objectives, unless their
interference amounts to independently actionable conduct.”
(Korea Supply Co., at pp. 1158-1159.) “ ‘[A]n act is independently
wrongful if it is unlawful, that is, if it is proscribed by some
constitutional, statutory, regulatory, common law, or other
determinable legal standard.’ ” (Ixchel Pharma, LLC v. Biogen,
9
Inc. (2020) 9 Cal.5th 1130, 1142.) The arguments on the
intentional interference cause of action focus on proximate cause
and actual disruption.
1. Proximate Cause
Melamed argues that the trial court erred in finding that
paragraph 11 of the SAC—which alleged Blue Shield treated all
out-of-network providers the same regardless of any patient
advocacy—defeated “but for” causation because the allegation
was consistent with Melamed’s allegation that Blue Shield was
retaliating against him. To the extent they could be seen as
inconsistent, Melamed could properly make alternative
arguments at the pleading stage. Also, Melamed states that in
addition to retaliation under section 2056, he alleged violations of
“other statutes and regulations” and “those statutory obligations
have nothing to do with section 2056.”
“One of the concepts included in the term proximate cause
is cause in fact, also referred to as actual cause.” (Mitchell v.
Gonzales (1991) 54 Cal.3d 1041, 1049.) “ ‘There are two widely
recognized tests for establishing cause in fact. The “but for” or
“sine qua non” rule … asks whether the injury would not have
occurred but for the defendant’s conduct. The other test … asks
whether the defendant’s conduct was a substantial factor in
bringing about the injury.’ ” (Ibid.) The Supreme Court
ultimately disapproved of the “but for” formulation, concluding
that the “substantial factor” language was more intelligible and
easily applied. (Id. at pp. 1053-1054.) “ ‘A cause of injury,
damage, loss or harm is something that is a substantial factor in
bringing about an injury, damage, loss or harm.’ ” (Franklin v.
Dynamic Details, Inc. (2004) 116 Cal.App.4th 375, 391
10
[describing causation for a tortious interference with prospective
economic advantage cause of action].)
While it is possible to show causation with “multiple forces
operating at the same time and independently, each of which
would have been sufficient by itself to bring about the harm”
(Viner v. Sweet (2003) 30 Cal.4th 1232, 1240 [noting various
labels, including “ ‘multiple sufficient causes’ ” or “ ‘concurrent
independent causes’ ”]; see Barton v. Owen (1977) 71 Cal.App.3d
484, 503-504), here the allegations are not two independent
causes but rather two possible motives5 for Blue Shield’s alleged
wrongful acts—violations of section 2056; Civil Code,
section 1710; California Code of Regulations, title 28,
section 1300.71, subdivisions (a)(3)(B), (a)(3)(C), (a)(8), (b)(5),
(d)(1), (d)(3), and (k);6 Health & Safety Code, section 1367(h)(2);
and California Code of Regulations, title 28, section 1300.71.38.
For example, Melamed alleged Blue Shield made false
statements and representations that some requested services
were “not medically necessary” or “investigative,” which caused
existing patients to not continue receiving services from Melamed
and resulted in Melamed not receiving expected income from
5 Blue Shield’s alleged motive of retaliation for advocacy or
for being out-of-network may be relevant to whether it
intentionally did the alleged wrongful acts, and Blue Shield did
not argue that Melamed did not sufficiently allege intention.
6 It is unclear whether some of these subdivisions can be
violated and thus be wrongful conduct. For example,
subdivisions (a)(3)(B), (a)(3)(C), and (a)(8) appear to be definitions
of various terms. However, Blue Shield’s demurrer “did not
challenge” the sufficiency of “Blue Shield’s alleged wrongful
conduct.”
11
treating those patients. Other allegations include violation of
California Code of Regulations, title 28, section 1300.71,
subdivision (d)(1) (failure to provide an accurate and clear
written explanation of the specific reasons for denying, adjusting,
or contesting a claim, within the specified timeframes) and
California Code of Regulations, title 28, section 1300.71.38
(failure to establish and maintain a dispute resolution
mechanism). We interpret, as we must, Melamed’s factual
allegations as true for the purposes of this demurrer. (See
Blank v. Kirwan, supra, 39 Cal.3d at p. 318; Venice Town
Council v. City of L.A. (1996) 47 Cal.App.4th 1547, 1557 [“For
purposes of this appeal we accept as true the properly pled
factual allegations of the complaint.”].) To the extent Blue Shield
made false statements that certain procedures were not
medically necessary and would not be covered as part of a pre-
authorization process, it is a substantial factor in causing
Melamed’s existing patients to discontinue his services, resulting
in economic harm to him.
Blue Shield does not dispute that Melamed sufficiently
alleged wrongful conduct, stating “[a] plan’s acts in retaliation for
patient advocacy violate section 2056 and are ‘independently
wrongful.’ ” Instead, Blue Shield argues that the law allows it to
treat out of network providers differently: “But Blue Shield’s
purported different treatment of non-contracted providers’
claims, with a ‘focus on increasing its profits’ ... is not wrongful;
rather, this is ‘lawful competitive behavior.’ ” “Blue Shield’s
alleged ‘retaliation’ by delaying or denying claims because
Melamed was non-contracted is lawful, not independently
wrongful, even if it allegedly resulted in disruption of Melamed’s
economic advantage.” Blue Shield argues that health plans may
12
“ ‘deliberately discourage[] members from going out of network by
paying lower reimbursement rates and holding the member
responsible for the unpaid balance,’ ” quoting Orthopedic
Specialists of Southern California v. Public Employees’
Retirement System (2014) 228 Cal.App.4th 644, 648 (Orthopedic
Specialists).
While a health plan “itself [may] determine what is an
appropriate amount to pay an out-of-network provider for
nonemergency services” (Orthopedic Specialists, supra,
228 Cal.App.4th at p. 648) and has other advantages under
California’s managed health care statutory scheme, its statutory
powers are not unlimited. Tortious interference with prospective
economic advantage may impose liability where an entity
engages in independently wrongful conduct, “wrongful ‘by some
measure beyond the fact of the interference itself.’ ” (Della Penna
v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th 376 at
p. 393.) Where a health plan violates statutory, regulatory, or
other determinable legal standards as alleged by Melamed, it
may be liable.
Blue Shield argues that two of Melamed’s contentions in
the complaint are mutually exclusive: first, that Blue Shield
wrongfully retaliated against him for advocating for medically
necessary care for his patients; and second, that Blue Shield
retaliated and punished all out-of-network providers for refusing
to contract with it. The specific allegation is not inconsistent
with the general allegation. But in any event, to the extent that
Blue Shield has engaged in independently wrongful conduct, e.g.,
falsely claiming a procedure is not “medically necessary” when it
is, the two motives do not render Melamed’s allegation of
causation defective.
13
Blue Shield argues Kasparian v. County of Los Angeles
(1995) 38 Cal.App.4th 242, 271 supports the trial court’s
sustaining of the demurrer. In Kasparian, however, the court
reviewed a jury verdict for substantial evidence. While it did
state the issue of causation using “but for” language (ibid. [“As a
matter of law, there is a threshold causation requirement in
order to establish the tort of intentional interference with
prospective economic advantage. What is required is ‘proof that
it is reasonably probable that the lost economic advantage would
have been realized but for the defendant’s interference.’ ”]),
Kasparian involved a failure of proof presented to a jury, not an
arguable conflict in allegations at the pleading stage. Kasparian
does not advance the argument.
Blue Shield argues further that paragraph 11 acts as a
judicial admission. The requirements for establishing a judicial
admission are not present here. “A judicial admission is a party’s
unequivocal concession of the truth of a matter.” (Gelfo v.
Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 48.) A judicial
admission is “ ‘a waiver of proof of a fact by conceding its truth.’ ”
(Valerio v. Andrew Youngquist Construction (2002)
103 Cal.App.4th 1264, 1271 [“ ‘When allegations in a complaint
are admitted by the answer (a) no evidence need be offered in
their support; (b) evidence is not admissible to prove their
untruth; (c) no finding thereon is necessary; (d) a finding contrary
thereto is error.”].) “An unclear or equivocal statement does not
create a binding judicial admission.” (Stroud v. Tunzi (2008)
160 Cal.App.4th 377, 385, citing Gelfo v. Lockheed Martin Corp.,
at p. 48.) In addition, “California law permits the pleading of
inconsistent factual theories where facts are not positively stated
but based on information and belief.” (Koenig v. Centralia
14
Limited Investors (2025) 112 Cal.App.5th 1174, 1189, fn. 12,
citing Adams v. Paul (1995) 11 Cal.4th 583, 593; see Mendoza v.
Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1402.) Here,
Melamed’s SAC clearly alleges that Blue Shield has retaliated
against him for patient advocacy, and it is unclear what
paragraph 11, stated on information and belief, adds to it. It
could mean that Blue Shield is retaliating against all out-of-
network providers. It could also mean that Blue Shield is
retaliating against Melamed because of his advocacy and his out-
of-network status.
Furthermore, paragraph 11 is an alternative general
contention. “ ‘In evaluating a demurrer, we assume the truth of
all material facts properly pleaded in the complaint … but no
such credit is given to pleaded contentions or legal conclusions.
[Citations.] Specific factual allegations modify and limit
inconsistent general statements.’ ” (Alfaro v. Community
Housing Improvement System & Planning Assn., Inc. (2009)
171 Cal.App.4th 1356, 1371, quoting B & P Development Corp. v.
City of Saratoga (1986) 185 Cal.App.3d 949, 952-953.) Melamed’s
more specific allegations that Blue Shield retaliated against him
for patient advocacy are properly read to limit the general
statement.
Moreover, even if these allegations are read as
contradictory, Melamed’s SAC is not verified, and the rule
against pleading contradictory facts does not apply.
(The Travelers Indemnity Co. of Connecticut v. Navigators
Specialty Ins. Co. (2021) 70 Cal.App.5th 341, 360, fn. 15
[“Travelers’ third amended complaint was not verified, and thus
the rule cited by Navigators prohibiting the pleading of
contradictory or antagonistic facts does not apply.”].) “[M]odern
15
rules of pleading generally permit plaintiffs to ‘set forth
alternative theories in varied and inconsistent counts.’ ” (Klein v.
Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1388.)
Melamed has alleged Blue Shield acted in violation of
various statutes and regulations in delaying and denying
medically necessary procedures, which caused his existing
patients to not continue receiving treatments and procedures
under his care. This sufficiently alleged proximate cause in this
case.
2. Actual Disruption
The trial court sustained Blue Shield’s demurrer to the
tortious interference causes of action in the FAC because they did
“not indicate how [Blue Shield’s conduct] disrupted or what was
disrupted other than treating patients.” On the SAC, the trial
court shifted its rationale for sustaining the demurrer to a failure
to sufficiently allege proximate cause. Blue Shield argues that
the failure to plead actual disruption was not corrected in the
SAC and the judgment can be affirmed on this alternative basis.
Melamed argues its amendments were sufficient and accordingly
the court did not state that the SAC also failed to sufficiently
plead actual disruption.
“If the trial court’s ruling on a motion for judgment on the
pleadings is correct upon any theory of law applicable to the case,
we will affirm it, even if we may disagree with the trial court’s
rationale.” (Stevenson Real Estate Services, Inc. v. CB
Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th
1215, 1220, citing Schabarum v. California Legislature (1998)
60 Cal.App.4th 1205, 1216.)
16
The FAC only stated the conclusion that Blue Shield
“interfered with, and disrupted, [his] economic relationships” and
“ability to treat his existing patients.” In contrast, the SAC
added the specifics that Blue Shield’s actions, including false
statements that services (which included tests, procedures,
treatments, and surgeries) “were ‘not medically necessary’ or
‘investigative’, thus causing the patients to not continue with
receiving the services from [Melamed], thus resulting in [him] not
receiving expected income that [he] would have received from the
patients for medical services.” Melamed alleged the actual
disruption was his existing patients not continuing to receive
tests, procedures, treatments, and surgeries from him. This is a
sufficient allegation of actual disruption for this case.
C. Negligent Interference with Prospective Economic
Advantage
“ ‘The tort of negligent interference with prospective
economic advantage is established where a plaintiff demonstrates
that (1) an economic relationship existed between the plaintiff
and a third party which contained a reasonably probable future
economic benefit or advantage to plaintiff; (2) the defendant knew
of the existence of the relationship and was aware or should have
been aware that if it did not act with due care its actions would
interfere with this relationship and cause plaintiff to lose in
whole or in part the probable future economic benefit or
advantage of the relationship; (3) the defendant was negligent;
and (4) such negligence caused damage to plaintiff in that the
relationship was actually interfered with or disrupted and
plaintiff lost in whole or in part the economic benefits or
advantage reasonably expected from the relationship.’ ”
17
(Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1078, quoting
North American Chemical Co. v. Superior Court (1997)
59 Cal.App.4th 764, 786.)
Intentional and negligent interference with prospective
economic advantage include the same requirements of proximate
cause and actual disruption. Neither side argues that the
analysis of proximate cause for negligent interference differs from
that for intentional interference, so our determination that
Melamed properly pleaded causation for intentional interference
also applies to negligent interference. Similarly, both sides argue
the element of actual disruption as to both varieties of tortious
interference without differentiation, so our determination that
Melamed properly pleaded actual disruption for intentional
interference also applies to negligent interference.
In addition, the trial court determined “the conclusionary
statement ‘foreseeability of harm’ does not plead facts sufficient
to establish a new tort duty” and concluded that Melamed failed
to “sufficiently allege any basis for a duty that would allow for a
negligence cause of action.” Melamed argues that “at the very
least, section 2056 imposes a duty of care on health care plans
not to retaliate against providers.”
1. Duty of care
“To state a cause of action for negligence, a plaintiff must
establish the defendant owed a legal duty of care.” (Brown v.
USA Taekwondo (2021) 11 Cal.5th 204, 209 (Brown).) “Liability
for negligent conduct may only be imposed where there is a duty
of care owed by the defendant to the plaintiff or to a class of
which the plaintiff is a member.” (J’Aire Corp. v. Gregory (1979)
24 Cal.3d 799, 803.) “A duty of care may arise through statute or
18
by contract. Alternatively, a duty may be premised upon the
general character of the activity in which the defendant engaged,
the relationship between the parties or even the interdependent
nature of human society.” (Ibid.) “Whether a duty is owed is
simply a shorthand way of phrasing what is ‘ “the essential
question—whether the plaintiff’s interests are entitled to legal
protection against the defendant’s conduct.” ’ ” (Ibid.)
“Generally speaking, all persons have a duty to take
reasonable care in their activities to avoid causing injury, though
particular policy considerations may weigh in favor of limiting
that duty in certain circumstances.” (Brown, supra, 11 Cal.5th at
p. 209.) Civil Code section 1714 states the general rule:
“Everyone is responsible, not only for the result of his or her
willful acts, but also for an injury occasioned to another by his or
her want of ordinary care or skill in the management of his or her
property or person.” (Civ. Code, § 1714, subd. (a).) “In other
words, ‘each person has a duty to use ordinary care and “is liable
for injuries caused by his failure to exercise reasonable care in
the circumstances.” ’ ” (Cabral v. Ralphs Grocery Co. (2011)
51 Cal.4th 764, 771 (Cabral); accord Brown, at pp. 213-214
[explaining the general rule that everyone is responsible for an
injury caused by his or her want of ordinary care but not to
control the conduct of another “ ‘derives from the common law’s
distinction between misfeasance and nonfeasance, and its
reluctance to impose liability for the latter’ ”].) “However, ‘one
owes no duty to control the conduct of another, nor to warn those
endangered by such conduct.’ ” (Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 619; accord,
Delgado v. Trax Bar & Grill (2005) 36 Cal.4th 224, 235 [“as a
general matter, there is no duty to act to protect others from the
19
conduct of third parties”].) Here, Melamed has alleged that
Blue Shield’s actions to retaliate against him by violating
portions of the Knox-Keene Act caused his patients to cease using
his services. The issue is not Blue Shield’s duty to protect but
rather its duty to use ordinary care to avoid causing injury to
him.
The general analysis of a tort duty is a two-step inquiry.
First, the court must determine whether there exists an
affirmative duty. Second, if so, the court must consult the factors
described in Biakanja v. Irving (1958) 49 Cal.2d 647, 650
(Biakanja) and Rowland v. Christian (1968) 69 Cal.2d 108, 113
(Rowland) to determine whether relevant policy considerations
limit that duty. (See Brown, supra, 11 Cal.5th at p. 209
[applying the Rowland factors in the non-business context of a
duty to protect from other’s abuse]; Centinela Freeman
Emergency Medical Associates v. Health Net of California, Inc.
(2016) 1 Cal.5th 994, 1013-1014 [applying Biakanja factors in the
business context of a health care plan’s duty of care in delegating
financial responsibility].) In Biakanja and Rowland, the
Supreme Court “identified several considerations that, when
balanced together, may justify a departure from the fundamental
principle embodied in Civil Code section 1714.” (Cabral, supra,
51 Cal.4th at p. 771.) “ ‘[I]n the absence of a statutory provision
establishing an exception to the general rule of Civil Code section
1714, courts should create one only where “clearly supported by
public policy.” ’ ” (Kesner v. Superior Court (2016) 1 Cal.5th 1132,
1143.)
Blue Shield argues that Melamed cannot allege a duty for
negligent interference with prospective economic advantage.
Although it does not dispute that a “plan’s acts in retaliation for
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patient advocacy violate section 2056 and are ‘independently
wrongful,’ ” Blue Shield argues that “section 2056 prohibits
intentional acts” and that “[i]t makes no sense that a statute
imposing an obligation not to take certain intentional actions can
be the source of a general negligence duty of care.” Section 2056
addresses retaliation, which indicates an intentional action, and
this is more consistent with the intentional interference cause of
action. But Melamed also alleges violations of various statutes
and regulations, and these are more straightforward bases for
negligent interference with prospective economic advantage.
Furthermore, Melamed alleges that Blue Shield’s actions,
not inaction, were the cause of his economic harm. Melamed
argues that Blue Shield’s retaliatory actions are violations of the
statutory requirements of the Knox-Keene Act. The general duty
of taking ordinary care in the conduct of one’s activities is the
focus. Melamed’s SAC alleging Blue Shield’s actions in violation
of statute (e.g., delaying and denying appropriate medical
treatments) that caused him economic harm sufficiently alleged a
duty for negligent interference with prospective economic
advantage.7
The trial court did not proceed to the second step and
perform a Biakanja/Rowland analysis. Neither party cited these
7 Given the general duty to use ordinary care in the
management of one’s own property or person, alleging a special
relationship is not required here. (See Brown, supra, 11 Cal.5th
at pp. 214-215 [explaining that although “[g]enerally ‘ “one owes
no duty to control the conduct of another,” ’ ” and “a person may
have an affirmative duty to protect the victim of another’s harm
if that person is in what the law calls a ‘special relationship’ with
either the victim or the person who created the harm”].)
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cases or addressed their factors to argue that a categorical
exception to that general rule should be made exempting health
plans from potential liability to out-of-network physicians for
failure to abide by the requirements of section 2056; California
Code of Regulations, title 28, sections 1300.71 and 1300.71.38;
Health & Safety Code section 1367; and Civil Code section 1710.8
Accordingly, we need not address the issue further.
8 Blue Shield moves to strike Melamed’s argument and
references to Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc., supra, 1 Cal.5th 994 arguing that
he failed to address the issue in his opening brief. Melamed
notes that issue was litigated extensively before the trial court,
that he addressed the duty issue in his opening brief, and that
Blue Shield cited Centinela in its brief. The parties have
adequately briefed the issue, and we deny the motion to strike.
In his reply brief, Melamed requests that this court take
judicial notice of several pages of Blue Shield’s purported
financial information from internet sources. We deny the request
for judicial notice. (See Meridian Financial Services, Inc. v. Phan
(2021) 67 Cal.App.5th 657, 687, fn. 10 [“[a]n appellate court ‘may
decline to take judicial notice of matters not relevant to
dispositive issues on appeal’ ”]; Brosterhous v. State Bar (1996)
12 Cal.4th 315, 325-326 [“appellate court may properly decline to
take judicial notice under Evidence Code sections 452 and 459 of
a matter which should have been presented to the trial court for
its consideration in the first instance”].)
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DISPOSITION
We reverse the judgment sustaining the demurrer on the
tortious interference causes of action and remand. The trial court
is directed to vacate its order and enter a new one overruling the
demurrer on the second and third causes of action for tortious
interference with prospective economic advantage by
Blue Shield’s alleged retaliation against Melamed for advocating
for medically appropriate treatment and delay and denial of
appropriate claims for services in violation of the identified
statutes and regulations. Blue Shield’s motion to strike and
Melamed’s request for judicial notice are denied. Melamed is
entitled to his costs on appeal.
GIZA, J.*
We concur:
SEGAL, J., Acting P. J.
FEUER, J.
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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