Tenet 1500
Pablo v. Hotel Employees and Restaurant
Employees Intl. Union Wel. Fund
Filed 1/8/13
Tenet 1500 San Pablo v. Hotel Employees and Restaurant
Employees Intl. Union Wel. Fund CA2/2
OFFICIAL REPORTS
California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
TENET 1500 SAN
PABLO, INC.,
Plaintiff and Appellant,
v.
HOTEL
EMPLOYEES AND RESTAURANT EMPLOYEES INTERNATIONAL UNION WELFARE FUND,
Defendant and Respondent.
B237523
(Los Angeles County
Super. Ct. No.
BC438672)
APPEAL
from a judgment of the Superior Court of
County. Ronald M.
Sohigian, Judge. Affirmed.
Helton
Law Group, Carrie McLain and Jack A. Janov for Plaintiff and Appellant.
Seyfarth
Shaw, F. Scott Page, James M. Harris and Daniel Hargis for Defendant and
Respondent.
* *
* * * *
Tenet 1500 San Pablo, Inc. (the
Hospital)
title="">[1] sued Hotel Employees and
Restaurant Employees International Union Welfare Fund (the Fund)
provided to a patient.
the Fund and the Hospital appeals. We
find no disputed issue of material fact and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The
Fund is a multiemployer benefit plan under the Labor Management Relations Act
(29 U.S.C. § 186(c)(5)) and is administered in accordance with the Employee
Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.) (ERISA). The Fund is an “employee welfare benefit
plan†as defined in ERISA, and provides health and welfare benefits to eligible
employees and their dependents of contributing employers.
The
patient at issue here was a beneficiary of the Fund through his spouse. On June 16, 2008, he
was transferred from a hospital in Las Vegas by air
ambulance to the Hospital with an open abdominal wound and fistulas. On admission, he assigned his benefits rights
from the Fund to the Hospital. He
remained at the Hospital for three months from June 16 through September 16, 2008, when he was transferred back to the hospital in Las Vegas at the
Fund’s request.
For
the first two months of the patient’s hospitalization, the Hospital believed
the patient was covered only by his own insurance through TriWest Healthcare
Alliance, a nonparty to this case. On August 27, 2008, the patient’s spouse informed the Hospital he was also covered by
the Fund. On that day, the Hospital
contacted the Fund’s third-party administrator, American Benefit Plan
Administrators, Inc. (ABPA), to verify that the patient was covered by the
Fund. ABPA was responsible for verifying
eligibility and coverage of benefits for Fund participants and
beneficiaries. ABPA verified the
patient’s eligibility for benefits and provided automated and live disclaimers
that its verification was not a guarantee of payment. It is undisputed that the Fund did not verify
the patient’s eligibility.
The
Hospital also contacted Encompass Health Management Systems for authorization
of treatment on the same day. Encompass
is a third-party entity that provides utilization review services for the Fund. Utilization review involves the determination
of medical necessity for specific treatment.
A determination of medical necessity is not a guarantee of payment or an
authorization for payment. Encompass
also provided disclaimers that its authorization for treatment was not a guarantee
of payment.
After
the patient was discharged from the Hospital, the Hospital sent the Fund a bill
for $1,742,687.57 for services rendered to the patient. The Fund asked consultant Jack London for
assistance in negotiating the bill. London’s company,
London Medical Management, Inc., had a “Consulting Agreement†with the Fund to
provide patient advocacy services and negotiate rates for services
provided. The Consulting Agreement
expressly states: “The parties are not,
and shall not be construed to be, in a relationship of employer and employee,
principal and agent, partnership, or joint venture.â€
On
October 10,
2008, London and the
Hospital executed a document entitled “Letter of Agreement†(LOA), which stated
that the Fund would pay the Hospital the reduced amount of $1,002,800 for the
patient’s treatment within seven to 10 business days. The LOA does not indicate that London signed on
behalf of the Fund, and the evidence shows that no one from the Fund signed the
LOA or knew of its existence or contents until after it had been signed by London. Upon learning of the LOA, the Fund disclaimed
any purported obligation under the LOA, and informed the Hospital that London had no
authority to bind the Fund. The Fund
denied payment for lack of preauthorization and the Hospital submitted a formal
appeal to the Fund. The Fund reviewed
the matter and paid the Hospital $15,000, the maximum allowable benefit under
the plan for a noncontracting provider.
The Hospital promptly cashed the check.
In
May 2010, the Hospital sued the Fund alleging six causes of action. The Fund removed the case to federal court on
the ground of ERISA preemption. In
October 2010, the federal court granted the Hospital’s motion for remand.
In
December 2010, the Hospital filed an amended complaint against the Fund
alleging eight causes of action for (1) breach of implied contract, (2)
negligent misrepresentation, (3) quantum meruit, (4) accounts stated, (5)
breach of the implied covenant of good faith and fair dealing, (6) breach of
written contract, (7) negligent misrepresentation, and (8) breach of the
implied covenant of good faith and fair dealing. The first five claims (the “predischargeâ€
claims) are based on the verification of coverage and authorization of
treatment, and assert that the Fund owes the full amount of $1,742,687.57,
despite the patient’s other insurer having already paid approximately
$460,000. The final three claims (the
“postdischarge†claims) are based on the LOA and assert that the Fund owes
$1,002,800 under the LOA.
The
Fund moved for summary judgment on two grounds—ERISA preemption and the
Hospital’s failure to establish a disputed issue of material fact as to each of
its causes of action. The Hospital
opposed the motion.
appeal followed.
DISCUSSION
Standard of Review.
We review a grant of summary judgment de novo, considering “‘all
of the evidence set forth in the [supporting and opposition] papers, except
that to which objections have been made and sustained by the court, and all
[uncontradicted] inferences reasonably deducible from the evidence.’†(Artiglio
v. Corning Inc. (1998) 18 Cal.4th 604, 612.) “In independently reviewing a motion for
summary judgment, we apply the same three-step analysis used by the superior
court. We identify the issues framed by
the pleadings, determine whether the moving party has negated the opponent’s
claims, and determine whether the opposition has demonstrated the existence of
a triable, material factual issue.†(
Cal.App.4th 256, 261.) If there is no
triable issue of material fact, “we affirm the summary judgment if it is
correct on any legal ground applicable to this case, whether that ground was
the legal theory adopted by the trial court or not, and whether it was raised
by defendant in the trial court or first addressed on appeal.†(Jordan
v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1071.)
The general rule is that summary judgment is appropriate where
“all the papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment as a matter
of law. . . .†(Code Civ.
Proc., § 437c, subd. (c).) A
defendant “moving for summary judgment bears an initial burden of production to
make a prima facie showing of the nonexistence of any triable issue of material
fact.†(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) The moving defendant may meet this burden
either by showing that one or more elements of a cause of action cannot be
established or by showing that there is a complete defense thereto. (Code
Civ. Proc., § 437c, subd. (o)(2); Aguilar
v. Atlantic Richfield Co., supra, at p. 850.) “‘[A]ll that the defendant need do is to show
that the plaintiff cannot establish at least one element of the cause of action
. . . [;] the defendant need not himself conclusively negate any
such element . . . .’
[Citation.]†(
Cal.App.4th 871, 894.) Once the moving
party’s burden is met, the burden shifts to the plaintiff to demonstrate the
existence of a triable issue of material fact.
(
Cal.App.4th at p. 261.) The plaintiff
must produce “‘substantial’â€
responsive evidence sufficient to establish a triable issue of fact. (Leek
v. Cooper (2011) 194 Cal.App.4th 399, 417.)
“[R]esponsive evidence that gives rise to no more than mere speculation
cannot be regarded as substantial, and is insufficient to establish a triable
issue of material fact.†(
Cal.App.4th 151, 163.) “‘“When
opposition to a motion for summary judgment is based on inferences, those
inferences must be reasonably deducible from the evidence, and not such as are
derived from speculation, conjecture, imagination, or guesswork.â€â€™ [Citation.]â€
(Mills v. U.S. Bank, supra, at
p. 894.)
II.
ERISA Preemption.
In its motion
for summary judgment, the Fund argued that all of the Hospital’s claims were
preempted by ERISA because they “relate to†an employee benefit plan under
title 29 United States Code section 1144(a).
The Hospital argued that there was no preemption under the different
standard of “complete†preemption in title 29 United States Code
section 1132(a). While the federal court
remanded the case finding there was no complete preemption, the trial court
here determined that the five predischarge claims were preempted because they
relate to an employee benefit plan governed by ERISA.
trial court’s ruling intended to encompass the three postdischarge claims as
well, because the court noted that its preemption ruling “incorporates the
point that there is no separate contract in our case.†But we need not decide whether the Hospital’s
claims are preempted by ERISA because even if not preempted, the Hospital has
not met its burden of creating a triable issue of material fact as to any of
its causes of action.
Predischarge Causes of Action.
Initially,
we address whether the Hospital has abandoned certain of its causes of action
or has forfeited challenges to the judgment on those claims. As noted, the Fund’s amended complaint
alleged five predischarge claims based on actions that took place while the
patient was still hospitalized—namely, the verification of coverage and the
authorization of treatment for medical necessity. In opposing summary judgment, the Hospital
repeatedly took the position that the only dispute at issue involved the Fund’s
alleged breach of the LOA, which is the basis for the postdischarge
claims. The Fund argued in its reply
brief that the Hospital had therefore abandoned the five predischarge
claims. While the trial court found this
to be a plausible interpretation of the opposition, it did not base its ruling
exclusively on the finding of abandonment.
We
practice differently on appeal. “[A]n
appellant’s failure to discuss a theory of liability on appeal constitutes
abandonment of that theory.†(
of Los Angeles (1993) 17 Cal.App.4th 432, 444; Walker v. Sonora Regional Medical Center (2012) 202 Cal.App.4th
948, 957, fn. 6.) “Although our review
of a summary judgment is de novo, it is limited to issues which have been
adequately raised and supported in [the appellant’s] brief. [Citations.]
Issues not raised in an appellant’s brief are deemed waived or
abandoned. [Citation.]†(Reyes
v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.) Our de novo review “does not obligate us to
cull the record for the benefit of the appellant in order to attempt to uncover
the requisite triable issues. As with an
appeal from any judgment, it is the appellant’s responsibility to affirmatively
demonstrate error and, therefore, to point out the triable issues the appellant
claims are present by citation to the record and any supporting authority. In other words, review is limited to issues
which have been adequately raised and briefed.â€
(Lewis v. County of Sacramento
(2001) 93 Cal.App.4th 107, 116.)
Because
the Hospital does not present any argument addressing the trial court’s summary
judgment with respect to the third cause of action for quantum meruit, fourth
cause of action for accounts stated, and fifth and eighth causes of action for
breach of the implied covenant of good faith and fair dealing, we do not
address the merits of these causes of action and deem any challenge to the
ruling with respect to these claims as forfeited.
A.
The Hospital
alleged that the Fund entered into an implied contract to pay the charges
billed by the Hospital for the care and treatment of the patient because the
Hospital received verification of coverage and authorization for treatment.
“An implied
contract is one, the existence and terms of which are manifested by
conduct.†(Civ. Code, § 1621.) “It is essential to the existence of a
contract that there should be: [¶] 1. Parties capable of contracting; [¶] 2.
Their consent; [¶] 3. A lawful object; and, [¶] 4.
A sufficient cause or consideration.â€
(Civ. Code, § 1550.) The heart of
an implied contract is an intent to promise.
(Zenith Ins. Co. v. O’Connor
(2007) 148 Cal.App.4th 998, 1010.) “If
there is no evidence establishing a manifestation of assent to the ‘same thing’
by both parties, then there is no mutual consent to contract and no contract
formation.†(Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793,
811 [citing Civ. Code, §§ 1550, 1565 & 1580].)
It
is undisputed that coverage was verified by ABPA and authorization was given by
Encompass. The Fund presented uncontroverted
evidence that neither of these third parties was authorized to enter into
contracts on behalf of the Fund. The
declaration of the Fund’s director of healthcare delivery established that at
no time did either ABPA or Encompass have any authority or ability to enter
into contracts or make any binding promises on behalf of the Fund. ABPA’s customer service manager also
confirmed that ABPA had no authority to enter into contracts on behalf of the
Fund. These declarations also explained
that the disclaimers provided by ABPA and Encompass that verifications and
authorizations are not guarantees of payment are standard practice and custom
in the healthcare industry, and that healthcare providers understand that such
verifications and authorizations do not guarantee payment of medical claims.
The
Fund also submitted the deposition
testimony of the Hospital’s person most knowledgeable (PMK), who repeatedly
testified that verification of coverage and authorization of services was not a
guarantee of payment of claims, that it was standard practice in the healthcare
industry that insurance companies and employee welfare benefit plans deny
payment after giving authorization, and that the Fund never told the Hospital
that it would pay for the patient’s treatment.
In opposing
summary judgment, the Hospital agreed in its separate statement that “neither
the Fund nor Encompass made any guarantee or agreement that any payment would
be made to [the Hospital] for the treatment it provided†(fact No. 26). The Hospital purported to dispute fact No. 22
that “neither the Fund nor ABPA made any guarantee or agreement that any
payment would be made to [the Hospital] for the treatment it provided,†despite
its own deposition testimony. But the
Hospital relied entirely on the undisputed facts that coverage was verified by
ABPA and authorization was provided by Encompass. It therefore failed to meet its burden of
providing “substantial†responsive evidence necessary to create a triable issue
of material fact on the existence of an implied contract to pay. (Guz v.
Bechtel National, Inc. (2000) 24 Cal.4th 317, 337 [“where the undisputed
facts negate the existence or the breach of the [implied] contract claimed,
summary judgment is properâ€].)
The Fund alleged
that the verification and authorization it received amounted to a promise to
pay, that the promise was false when made, and that the Hospital reasonably
relied upon the promise to its detriment.
The elements of
a claim for negligent misrepresentation are “(1) the misrepresentation of a
past or existing material fact, (2) without reasonable grounds for believing it
to be true, (3) with intent to induce another’s reliance on the fact
misrepresented, (4) justifiable reliance on the misrepresentation, and (5)
resulting damages.†(
Partners, LLC (2007) 158 Cal.App.4th 226, 243; Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216
Cal.App.3d 388, 402.) The Fund argues
that the Hospital’s negligent misrepresentation cause of action fails as a
matter of law because the promise to pay involves future conduct rather than a
past or existing material fact. (See
Ins. Co. (C.D.Cal. 2007) 520 F.Supp.2d 1184, 1195 [finding that under
California law representation concerning future conduct cannot form the basis
of a negligent misrepresentation claim].)
The Hospital did
not refute this argument either below or in its opening appellate brief. In its reply brief, the Hospital cites
Life Ins. Co. (C.D.Cal. 2000) 118 F.Supp.2d 1002, in which the court found
that the insurer’s verification of coverage concerned a “present or existing
fact.†(Id. at p. 1011.) We do not
consider authority provided for the first time in a reply brief. (Medill
v. Westport Ins. Corp. (2006) 143
Cal.App.4th 819, 836, fn. 3.) But even
if we did, it is undisputed that the Fund
did not provide verification or authorization to the Hospital.
Moreover, the
Hospital cannot establish the necessary element of justifiable reliance. The Hospital began treating the patient more
than two months before it learned that he might be covered by the Fund. The Hospital’s PMK testified that the
Hospital would have treated the patient even if the Hospital had not received
verification or authorization, regardless of whether the Hospital thought it
was going to receive any payment for the treatment.
IV. Postdischarge Causes of Action.
Breach of
Written Contract
The Hospital
based its sixth cause of action for breach of written contract on the LOA. It is undisputed that the Fund is not a
signatory to the LOA. Jack London’s
signature on the LOA appears above the designation of “PatientPAL
Advocate.†The Hospital’s claim depends
on whether London was an agent of the Fund with authority to bind the Fund.
The Fund
presented uncontroverted evidence that London was not its agent. London himself testified at his deposition
that he was not an agent of the Fund:
“[COUNSEL] Q. You’re agreeing with the Fund that you didn’t stand
in the shoes of principal and agent with the Fund, right? [LONDON] A. Correct. [COUNSEL] Q. You were not its agent,
right? [LONDON] A. Correct.†London also testified as follows: “[COUNSEL] Q. As consultant to the Fund, you
agree with me that you, in that role, don’t have the authority to commit the
Fund to pay millions of dollars however you deem fit, correct? [LONDON] A. Correct. [COUNSEL] Q. And there’s no writing that you
can identify, is there, that gives you any authority, general authority like
that, correct? [LONDON] A.
Correct.†The Consulting Agreement
between the Fund and London’s company corroborates this testimony, stating that
the “parties are not, and shall not be construed to be, in a relationship of
. . . principal and agent.â€
But even if
London were considered the Fund’s agent as the Hospital asserts, the
distinction between an agent’s authority to negotiate for the principal and an
agent’s authority to bind the principal is well recognized. (See, e.g., Toth v. Metropolitan Life Ins. Co. (1932) 123 Cal.App. 185, 192 [“A
mere soliciting agent or other intermediary operating between the insured and
the insurer has authority only to initiate contracts, but not to consummate
them, and cannot bind his principal by anything he may say or do during the
preliminary negotiationsâ€]; Ernst v.
Searle (1933) 218 Cal. 233, 239–240 [agent with authority to negotiate a
property exchange had no authority to convey the property];
773 [“An intention to give such an agent additional authority, such as to bind
the owner to convey the property, must be clearly and definitely statedâ€];
282, 285 [“Agency to negotiate a sale or purchase of real property does not
authorize the agent to bind his principal by contractâ€]; Rest.3d Agency, §
1.01, com. c [“Agents who lack authority to bind their principals to contracts
nevertheless often have authority to negotiate or to transmit or receive
information on their behalfâ€].)
The Fund
submitted the declaration of its president, who executed the consulting
agreement on behalf of the Fund, that London was not authorized to enter into
or consummate any agreement on behalf of the Fund. Rather, London and his company’s roles “with
respect to negotiation services involving healthcare providers, were to explore
what deals might be possible with the provider, or solicit an offer from the
healthcare provider, that he could bring back to the Fund for its
consideration.†The Fund’s president
explained that only the Fund had authority to approve a proposed deal or to
accept an offer from a healthcare provider.
The authority to sign documents on the Fund’s behalf is regulated by the
Fund’s written Trust Agreement and is strictly limited to the trustees and
certain designated Fund officers and executives.
The Hospital’s
PMK also admitted that the Hospital had no evidence that London had authority
to bind the Fund and that the Hospital’s contemporaneous records of discussions
with London showed only that he had authority to negotiate payment. The Hospital’s records also showed that after
the Fund became aware that London had signed the LOA, the Fund informed the
Hospital that London did not have authority to authorize payment.
In opposition,
the Hospital bore the burden of creating a triable issue of fact as to the
existence and scope of an agency. (
Employment Relations Bd. (1991) 227 Cal.App.3d 767, 780.) “‘“The law indulges in no presumption that an
agency exists but instead presumes that a person is acting for himself and not
as agent for another.â€â€™â€ (
“[P]ersons dealing with an assumed agent are bound at their peril to
ascertain the extent of the agent’s authority.â€
(Lindsay-Field v. Friendly
(1995) 36 Cal.App.4th 1728, 1734.)
In attempting to
create a triable issue as to agency in the separate statement, the Hospital
relied on the following evidence: The
verification of benefits, the LOA, the consulting agreement, e-mails produced
by the Fund, London’s deposition testimony, and the declaration of the
Hospital’s director of managed care who negotiated the LOA. But none of this evidence creates a triable
issue. Indeed, in one of the e-mails
presented by the Hospital from London to the Fund, dated after the LOA was
signed, London asked the Fund, “Let me know how you will respond to [the
Hospital].†In another e-mail the Fund
informed the Hospital that London “does not have the authority to commit the
funds of the Fund.â€
The Hospital’s
reliance on London’s testimony is also unavailing. The Hospital cites to London’s testimony that
“We would secure—and negotiate, it’s not on the first signature by all means. It’s the art of negotiating, so back and
forth until an agreed upon reimbursement has been achieved. Once that has occurred, we then seek a signed
agreement that says they will agree to this discount, and we will secure it
based on our relationship with our client.â€
But this testimony is consistent with the testimony of the Fund’s
president that London’s role in negotiating with healthcare providers was to
explore what deals might be possible or solicit an offer that could be brought
back to the Fund for its consideration. Just
prior to this testimony, London also testified as follows: “[COUNSEL] Q. Do you have signature authority
for the Fund to disburse its resources however you decide to disburse them? [LONDON] A. . . . I don’t pay
claims. [COUNSEL] Q. Right. [LONDON] A. I negotiate claims. We are requested to secure a signed letter of
agreement so that our negotiated fees are nondisputable. So our role is to negotiate a claim. [COUNSEL] Q. When you say ‘our negotiated
fees,’ I’m not sure what you’re—who is ‘our’ in there? [LONDON] A. London Medical Management
. . . is the negotiator, and we are negotiating with a given
facility provider, [a] hospital.â€
The declaration
of the Hospital’s employee who negotiated the LOA states, “Jack London
represented that he was authorized to enter into the Letter of Agreement on
behalf of [the Fund].†The trial court
found this statement lacked foundation and was inadmissible against the Fund,
noting that statements of an alleged agent regarding the nature and scope of
his authority are not admissible against the principal. (See Hilyar
v. Union Ice Co. (1955) 45 Cal.2d 30, 42 [“‘It is axiomatic that agency
cannot be established by the declarations of the agent not under oath or in the
presence of the principal’â€]; Warfield v.
Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443, 448 [“‘an
agency cannot be created by the conduct of the agent alone; rather,
create the agency’â€], citing Flores v.
Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 587–588.)
Having failed to
establish that London was an actual agent with authority to bind the Fund, the
Hospital argues there is a triable issue of fact as to whether London had
ostensible authority. Ostensible
authority focuses on the state of mind of the affected third parties. “Ostensible authority is such as a principal,
intentionally or by want of ordinary care, causes or allows a third person to
believe the agent to possess.†(Civ.
Code, § 2317.) “Ostensible authority is
not established by the statements and representations of the agent; rather, it
is created only by the acts or declarations of the principal.†(House
v. State (1981) 119 Cal.App.3d 861, 875.)
“Ostensible authority must be based on the acts or declarations of the
principal and not solely upon the agent’s conduct.†(Taylor
v. Roseville Toyota, Inc. (2006) 138 Cal.App.4th 994, 1005.)
What London may
have told the Hospital regarding his authority is irrelevant. Without some action by the Fund, there can be
no ostensible agency. Here, the Hospital
agreed in its separate statement that “[d]uring the time relevant to this suit,
the Fund never represented to [the Hospital] or anyone else that London was
authorized to enter into the LOA or any other contract on behalf of the
Fund.†The Hospital therefore failed to
create a triable issue of material fact as to ostensible agency.
Finally, the
Hospital has failed to create a triable issue on the theory of ratification,
raised for the first time on appeal.
Ratification requires the principal’s unequivocal assent to the
unauthorized act. (Gates v. Bank of America (1953) 120 Cal.App.2d 571, 576; Civ. Code,
§ 2307.) It is undisputed that the Fund
disclaimed the LOA after learning of its existence.
The
summary judgment is affirmed. The Fund
is entitled to recover its costs on appeal.
NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS.
_____________________, J.
DOI TODD
We
concur:
____________________________,
P. J.
BOREN
____________________________,
J.
CHAVEZ
Inc., which owned and operated USC University Hospital, where services were
rendered.
known as UNITE HERE Health and is also informally known as the Culinary Health
Fund.
