South Coast Emergency Med Group Inc et al vs UnitedHealthCare Benefits Plan of CA et al

Case Number

24CV01706

Case Type

Hearing Date / Time

Fri, 10/04/2024 - 10:00

Nature of Proceedings

CMC; Demurrers and Motion to Strike; Pro Hac Vice Application

Tentative Ruling

(1)       For the reasons and to the extent set forth herein, the demurrers of defendants UnitedHealthcare Benefits Plan, Cigna Healthcare of California, Inc., and Aetna Health of California, Inc., to the first amended complaint of plaintiffs South Coast Emergency Medical Group, Inc., dba Emergency Medical Group of Santa Barbara and Mountain View Emergency Physicians Medical Group, Inc., are sustained as follows: As to the first cause of action (Knox-Keene Act), without leave to amend; as to each cause of action and to the complaint as a whole on the grounds of misjoinder, with leave to amend; and, to the fourth (book account), fifth (Unfair Competition Law), and seventh (economic duress) causes of action, with leave to amend. Plaintiffs shall file and serve their second amended complaint on or before November 4, 2024.

(2)       For the reasons set forth herein, the motion of Aetna Health of California, Inc., to strike portions of the first amended complaint is denied.

(3)       The application of Emily Riff to appear as counsel in this action pro hac vice is granted.

Background:

As alleged in plaintiffs’ first amended complaint (FAC):

Plaintiff South Coast Emergency Physicians Medical Group, Inc., dba Emergency Medical Group of Santa Barbara (South Coast), through its physicians, nurse practitioners, and physician assistants, provide emergency medical services in the emergency rooms of Santa Barbara, Goleta Valley, and Santa Ynez Cottage Hospitals. (FAC, ¶¶ 1, 14.) Plaintiff Mountain View Emergency Physicians Medical Group, Inc., (Mountain View), through its physicians, nurse practitioners, and physician assistants, provides emergency medical services in the emergency rooms of San Antonio Regional Hospital in Upland. (FAC, ¶¶ 2, 14.)

Defendants UnitedHealthcare Benefits Plan of California (United), Aetna Health of California, Inc., (Aetna), and Cigna Healthcare of California, Inc., (Cigna) are licensed by the California Department of Managed Healthcare (DMHC) under the Knox-Keene Health Care Services Plan Act (Health & Saf. Code, § 1340 et seq., the Knox-Keene Act) to arrange for the provision of health care services, and to enter into agreements with physicians and health care delivery systems to provide such services to their respective members. (FAC, ¶ 3.) Defendants have numerous members who live and work in or visit areas serviced by plaintiffs, which members have in the past received, and in the future will receive, emergency medical service from plaintiffs. (Ibid.)

Plaintiffs have ethical and statutory duties to treat everyone who comes to their emergency rooms without regard to ability to pay or insurance coverage. (FAC, ¶¶ 14-16; Health & Saf. Code, § 1317.) The claims subject to this action are all for emergency medical service rendered to defendants’ members for which plaintiffs have not been paid the reasonable and customary value or not paid at all. (FAC, ¶ 16.) Since January 1, 2022, plaintiffs have been barred by federal law from billing patients other than for copays, deductibles, and coinsurance amounts. (FAC, ¶ 17.)

Defendants have not contracted with South Coast for their members’ emergency services provided by South Coast. (FAC, ¶ 7.) Defendants arbitrarily underpay or refuse to pay South Coast the reasonable and customary value of emergency services provided to defendants’ members. (FAC, ¶ 8.)

Defendant United has not contracted with Mountain View for its members’ emergency services provided by Mountain View. (FAC, ¶ 9.) United arbitrarily underpays or refuses to pay Mountain View the reasonable and customary value of emergency services provided to United’s members. (FAC, ¶ 10.) Mountain View’s claims in this action are against United, and expressly not against Aetna or Cigna. (Ibid.)

On March 25, 2024, plaintiff South Coast filed its original complaint in this action.

On April 12, 2024, without any response to the original complaint having been filed, plaintiffs filed their FAC asserting seven causes of action: (1) statutory violations of the Knox-Keene Act; (2) quantum meruit; (3) indebitatus assumpsit; (4) open book account; (5) unfair business practices; (6) interference with economic relations; and (7) economic duress.

On June 11, 2024, Aetna, Cigna, and United filed their respective demurrers to the FAC. Aetna concurrently filed its motion to strike. All demurrers and the motion to strike are opposed by plaintiffs.

On September 30, 2024, the court entered its order shortening time and setting the hearing on the application of Emily Riff to appear as counsel in this action pro hac vice for this hearing date.

Analysis:

(1)       Demurrers

“ ‘The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also ‘give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’ ” (Zhang v. Superior Court (2013) 57 Cal.4th 364, 370, internal quotation marks and citations omitted.)

Each of the demurrers assert the same challenges to the FAC, namely, that each cause of action is not sufficiently alleged and is uncertain, and that the defendants are misjoined.

            (A)       Knox-Keene Act

Plaintiffs’ first cause of action is for violation of the Knox-Keene Act. Defendants each argue that no private right of action exists under the Knox-Keene Act. “[T]he Knox–Keene Act expressly authorizes the DMHC to enforce the statute and does not include a parallel authorization for suits by private individuals ….” (Blue Cross of California, Inc. v. Superior Court (2009) 180 Cal.App.4th 1237, 1250.)

In opposition to the defendants’ respective demurrers on this point, plaintiffs state: “Current California law does not recognize a private cause of action for a violation of the Act. However, Plaintiffs believe the law should be extended to provide for such a statutory cause of action.” (Opposition to Aetna Demurrer, at p. 13; accord, Opposition to Cigna Demurrer, at p. 11; Opposition to United Demurrer, at p. 13.)

The court accepts this concession as to the merits of the demurrer with respect to authority binding on this court. The demurrer to the first cause of action will be sustained without leave to amend.

            (C)       Implied Contract Claims

Plaintiffs’ second cause of action is for the common count of quantum meruit. Plaintiffs allege that they performed emergency medical services for defendants’ members, that defendants knew these services were being provided, and that defendants knew that they must pay their reasonable value, but failed to do so. (FAC, ¶¶ 38, 39.)

Defendants argue that plaintiffs have not stated a cause of action for quantum meruit because defendants allege no oral statement or conduct of each respective defendant requesting services, and plaintiffs allege no benefit to each respective defendant.

“ ‘The theory of quasi-contractual recovery is that one party has accepted and retained a benefit with full appreciation of the facts, under circumstances making it inequitable for him to retain the benefit without payment of its reasonable value.’ [Citations.]” (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248.)

Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 (Bell) is instructive. In Bell, the plaintiff was a board-certified emergency room physician who was obligated to treat all emergency room patients without regard to whether they were insured or able to pay, and who had not contracted with the defendant health care service plan or otherwise agreed to accept the fees the defendant plan paid to its contracting providers. (Id. at pp. 213-214.) Under the Knox-Keene Act, the defendant plan was required to reimburse the plaintiff for those emergency services, but, notwithstanding the statutory requirement, the plaintiff alleged that the defendant plan had a practice of paying non-participating emergency care providers arbitrary amount that were substantially below the cost, value, and common range of fees for the services the providers render. (Id. at p. 214.) The plaintiff filed a class action complaint against the defendant plan seeking remedies under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq., the UCL) or alternatively for the reasonable values of services rendered under quantum meruit. (Ibid.) The trial court sustained the defendant’s demurrer without leave to amend on the grounds that the DMHC had exclusive power to enforce the Knox-Keene Act and so the plaintiff had no standing to bring an action either under the Knox-Keene Act directly or under the UCL, and that the plaintiff had no right under quantum meruit or otherwise to recover specific amounts for emergency room services rendered to the defendant plan’s members. (Id. at pp. 214-215.)

On appeal in Bell, the court held: “Although the Department of Managed Health Care has jurisdiction over the subject matter of section 1371.4 (as well as the rest of the Knox–Keene Act), its jurisdiction is not exclusive and there is nothing in section 1371.4 or in the Act generally to preclude a private action under the UCL or at common law on a quantum meruit theory. [Citations.]” (Bell, supra, 131 Cal.App.4th at pp. 216–217.) “We reject [the defendant plan’s] contention that [the plaintiff] has no implied-in-law right to recover for the reasonable value of his services. ‘He who takes the benefit must bear the burden’ (Civ. Code, § 3521), and he who has ‘performed the duty of another by supplying a third person with necessaries, although acting without the other’s knowledge or consent, is entitled to restitution from the other therefore if [¶] (a) he acted unofficiously and with intent to charge therefor, and [¶] (b) the things or services supplied were immediately necessary to prevent serious bodily harm to or suffering by such person.’ [Citation.] [The plaintiff’s] quantum meruit claim is sufficient for pleading purposes and thus is not subject to demurrer.” (Id. at p. 221.)

The California Supreme Court discussed Bell in Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497 (Prospect). The Prospect court explained the issue of that case: “In an emergency, an HMO member goes to the nearest hospital emergency room for treatment. The emergency room doctors at that hospital may or may not have previously contracted with the HMO to provide care to its members. In that situation, the doctors are statutorily required to provide emergency care without regard to the patient’s ability to pay.” (Id. at p. 501.) “When no preexisting contract exists, the doctors sometimes submit a bill to the HMO that they consider reasonable for the services rendered but that the HMO considers unreasonably high; conversely, the HMO sometimes makes a payment that it considers reasonable for the services rendered but that the doctors consider unreasonably low.” (Id. at pp. 501-502.) “But the question of how to resolve disputes between the doctors and the HMO over the amount due for emergency care is not before us in this case. The issue here is narrow, although quite important for emergency room doctors, HMO’s, and their members: When the HMO submits a payment lower than the amount billed, can the emergency room doctors directly bill the patient for the difference between the bill submitted and the payment received—i.e., engage in the practice called ‘balance billing’?” (Id. at p. 502.) The Prospect court “conclude[d] that billing disputes over emergency medical care must be resolved solely between the emergency room doctors, who are entitled to a reasonable payment for their services, and the HMO, which is obligated to make that payment. A patient who is a member of an HMO may not be injected into the dispute. Emergency room doctors may not bill the patient for the disputed amount.” (Ibid.)

The Prospect court reasoned: “Because emergency room doctors prevailed in Bell [citation], and won the right to resolve their disputes directly with HMO’s, no reason exists to permit balance billing.” (Prospect, supra, 45 Cal.4th at p. 508.) This approval of Bell’s resolution was repeated more recently in County of Santa Clara v. Superior Court (2023) 14 Cal.5th 1034 (County of Santa Clara):

“Hospitals and other medical providers are required by law to provide emergency medical services without regard to the patient’s insurance status or ability to pay. [Citations.] If the patient is enrolled in a health care service plan, by statute the plan must reimburse the medical provider for providing such emergency care under the Knox-Keene Health Care Service Plan Act of 1975. [Citations.] If the plan does not have a contract with the medical provider addressing the reimbursement rate, the plan must pay the provider the ‘reasonable and customary value’ of the emergency care provided. [Citation.] If the plan fails to pay the reasonable and customary value of such services, the medical provider may sue the plan directly for reimbursement under a quantum meruit theory. [(Prospect, supra, 45 Cal.4th at p. 506; Bell, supra, 131 Cal.App.4th at pp. 216–217.)]” (County of Santa Clara, supra, 14 Cal.5th at pp. 1037–1038.)

The quantum meruit claim of the plaintiffs here is essentially the same as the quantum meruit claim approved in Bell. The general demurrer to the quantum meruit claim will therefore be overruled on this ground.

“ ‘A common count is not a specific cause of action ...; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness ....’ [Citation.]” (Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 690.) “A pleading which is sufficient as a common count is not generally subject to general demurrer or to special demurrer on the ground of uncertainty.” (Moya v. Northrup (1970) 10 Cal.App.3d 276, 279.) The pleading here is at least as specific as that approved in Bell. The demurrer will be overruled on this ground.

Plaintiffs’ third cause of action is for indebitatus assumpsit.

“At early common law, contracts, as we know them, were difficult to enforce in the King’s or Queen’s courts of England. While contracts under seal were enforced in actions commenced by the writ of covenant and debts were collectible under the writ of debt, damages for breach of informal contracts [i.e., contracts not under seal] was not an available remedy except in local, merchants’ and ecclesiastical courts.... As the demand for the enforcement of such promises in the Royal courts arose, a remedy was invented to meet it. This remedy was afforded by the writ of assumpsit[.] ... Trial was by jury. [¶] In the course of time, this writ was applied to the enforcement of promises actually made, whether express or implied in fact from conduct other than words, and also to the enforcement of obligations ... described as quasi contracts.... Thereafter, for some centuries in our legal history, promises were enforced by the use of the common law writ of assumpsit, this word having the literal meaning “he promised.” ’ [Citation.] Assumpsit “was available for the collection of debts, whether for reasonable value (quantum meruit for services, quantum valebant for goods) or for a sum certain. Under this writ, it was permissible to use a simplified form of pleading, the “common counts,” which are still in use in many jurisdictions that have abandoned other elements of common law pleading.’ [Citation.] California has long permitted the pleading of common counts despite their divergence from the norms of code pleading.” (Jogani v. Superior Court (2008) 165 Cal.App.4th 901, 905–906.)

Because a common count for quantum meruit is a special case of an action in assumpsit, the two causes of action are, for purposes of pleading, the same. Because redundancy is not a basis for demurrer (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890; McDonell v. American Trust Co. (1955) 130 Cal.App.2d 296, 303), the demurrer to this cause of action will be overruled on this ground.

Plaintiffs’ fourth cause of action is for an open book account.

“The term ‘book account’ means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner. A “book account” does not include consumer debt.” (Code Civ. Proc., § 337a, subd. (a).)

“ ‘A “book account” is “a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith ....” ’ [Citation.] The creditor must keep these records in the regular course of its business and ‘in a reasonably permanent form,’ such as a book or card file. [Citation.] ‘A book account is “open” where a balance remains due on the account.’ [Citation.]” (Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 690–691.)

The FAC alleges only that plaintiffs have maintained an account of the amounts owed by the defendants. (FAC, ¶ 46.) Unlike a claim for quantum meruit as approved in Bell, the nature of the debtor and creditor relationship alleged as between the plaintiffs and the defendants does not appear to be the sort for which a book account claim is proper. (See Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 752.) In any case, the FAC does not allege that the account maintained constitutes a “book account” within the meaning of Code of Civil Procedure section 337a, subdivision (a). The demurrer will be sustained on this ground.

            (D)       UCL Claim

Plaintiffs’ fifth cause of action is for violation of the UCL. Defendants argue that this action fails because plaintiffs have an adequate remedy at law and because, more generally, plaintiffs have failed to allege conduct subject to the UCL with requisite specificity.

“As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code, § 17200.)

“The UCL’s scope is broad. By defining unfair competition to include any ‘unlawful ... business act or practice’ (§ 17200, italics added), the UCL 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]lthough the Knox–Keene Act expressly authorizes the DMHC to enforce the statute and does not include a parallel authorization for suits by private individuals, private individuals can bring suit under the UCL for violations of the Knox–Keene Act.” (Blue Cross of California, Inc. v. Superior Court, supra, 180 Cal.App.4th at p. 1250.)

Defendants cite a number of cases for the proposition that this court may sustain these demurrers to the UCL action on the basis that plaintiffs have an adequate remedy at law. Defendants largely cite federal district court cases. However, “[t]he federal cases since the adoption of the federal rules are not helpful on the pleading questions in an action brought in a state court in California, because federal cases use ‘notice pleading,’ whereas California uses ‘fact pleading.’ ” (Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 250.) California cases do not include as an element of pleading a UCL case the absence of an adequate remedy at law.

Cigna, for example, cites Wilkison v. Wiederkehr (2002) 101 Cal.App.4th 822 (Wilkison) for the proposition that “[c]ourts routinely dismiss UCL causes of action where a plaintiff fails to plead the inadequacy of legal remedies. (Cigna Demurrer, at p. 17.) Wilkison involves the availability of quasi-specific performance after the affected property was sold where a grandson had an adequate remedy at law in a claim against his grandmother’s estate for breach of a contract to make a will. (Wilkison, supra, at p. 825.) Wilkison does not address UCL actions at all.

United, for example, argues: “Plaintiffs seek restitution and injunctive relief under the UCL. (FAC ¶¶ 63–63.) But when a plaintiff has an adequate remedy at law equitable relief is not available. (Sepanossian v. Nat’l Ready Mix Co., Inc. (2023) 97 Cal.App.5th 192, 207–08.) This follows from the ‘general principle of equity that equitable relief … will not be given when the plaintiff’s remedies at law are adequate.’ (Collins v. eMachines, Inc. (2011) 202 Cal.App.4th 249, 259.) Here, Plaintiff seeks monetary damages for the conduct that underlies its UCL claim, which demonstrate that it has adequate remedies at law. That Plaintiff’s non-UCL claims may (and should) fail is irrelevant. (Moss v. Infinity Ins. Co. (N.D. Cal. July 14, 2016) 197 F. Supp. 3d 1191, 1203.).” (United Demurrer, at p. 20, fn. 5.)

The citation of Sepanossian v. National Ready Mix Company, Inc. (2023) 97 Cal.App.5th 192 (Sepanossian) is curious. In Sepanossian, the plaintiff, individually and as class representative, filed a class action against the defendant asserting that the defendant charged its customers an “energy” fee and an “environmental” fee “wholly untethered to any actual cost for ‘energy’ or ‘environmental’ issues” that the defendant instead “recognize[s] as profit.” (Id. at p. 196.) The plaintiff’s complaint alleged alleges causes of action for (1) violation of the UCL under the fraudulent and unfair business practices prongs; (2) breach of contract; and (3) “unjust enrichment.” (Ibid.) The Sepanossian court first determined that the plaintiff had stated a UCL cause of action under both the fraudulent and unfair prongs of the UCL. (Id. at pp. 201-206.) The Sepanossian court then found that the plaintiff had not stated a cause of action for “unjust enrichment” “ ‘[b]ecause we have found that [Sepanossian’s] remedies at law are adequate’ (i.e., his count alleged under the UCL)” and so “a separate claim for restitution is unnecessary.” (Id. at p. 207.) So, contrary to United’s argument here, the Sepanossian court found that the UCL cause of action was itself the adequate remedy at law.

“Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Bus. & Prof. Code, § 17205.) While “equitable considerations may enter into the court’s disposition of a UCL action” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 179), “[i]t is well established that a complaint may plead different theories on which relief is sought with legal propriety.” (Crogan v. Metz (1956) 47 Cal.2d 398, 403.)

Here, plaintiffs plead the UCL action as an alternative to a quantum meruit claim, both of which have been expressly permitted as alternative theories under very similar circumstances in Bell, supra, 131 Cal.App.4th at pages 214 and 223. The demurrer to this cause of action will be overruled on this ground.

United argues that plaintiffs do not have standing to bring the UCL claim because the UCL “is not available to resolve private commercial disputes between sophisticated entities.” (United Demurrer, at pp. 20-22.) United cites Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115 (Linear) for this proposition. (United Demurrer, at p. 20.) In Linear, the plaintiff alleged that three equipment manufacturers had sold it equipment that was the source of a patent infringement claim against the plaintiff by a third party. (Linear, supra, 152 Cal.App.4th at p. 120.) The trial court sustained demurrers of the three defendants, finding insufficient facts to state a cause of action for fraud or unfair competition and lack of subject matter jurisdiction on the causes of action for breach of contract, implied equitable indemnity, breach of statutory warranty, and breach of the covenant of good faith and fair dealing. (Ibid.) The Linear court concluded that the trial court properly dismissed the UCL claim. (Id. at p. 135.)

The Linear court first noted that the plaintiff did not allege that any defendant made a representation that was incomplete or misleading, nor did the plaintiff assert concealment of material facts known or accessible only to defendants. (Linear, supra, 152 Cal.App.4th at p. 132.) As a result, the Linear court determined that the plaintiff did not state a cause of action for fraud. (Id. at pp. 132-133.) The court then identified the plaintiff’s UCL claim as premised on the “fraudulent” and “unfair” prongs of the UCL. (Id. at p. 133.)

“When an unfair-competition claim is based on an alleged fraudulent business practice—that is, a practice likely to deceive a reasonable consumer—‘a plaintiff need not plead the exact language of every deceptive statement; it is sufficient for [the] plaintiff to describe a scheme to mislead customers, and allege that each misrepresentation to each customer conforms to that scheme.’ [Citation.] The allegation ‘may be based on representations to the public which are untrue, and “ ‘also those which may be accurate on some level, but will nonetheless tend to mislead or deceive.... A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under’ ” the UCL.’ [Citation.] ‘Unfairness’ under section 17200 has been described as violating established public policy or ‘is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.’ [Citations; fn.] Another division of the same appellate district, on the other hand, has defined ‘unfairness’ by a three-part test: ‘(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.’ [Citation.] Whether a practice is deceptive, fraudulent, or unfair is generally a question of fact which requires ‘consideration and weighing of evidence from both sides’ and which usually cannot be made on demurrer. [Citations.]” (Linear, supra, 152 Cal.App.4th at pp. 134–135.)

The Linear court then went on to state: “In this case, however, the superior court properly dismissed this cause of action on demurrer for reasons independent of the evidence that may be presented. The UCL was enacted ‘to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.’ [Citations.] Here, the alleged victims are neither competitors nor powerless, unwary consumers, but Linear and other corporate customers in Silicon Valley, ‘each of which presumably has the resources to seek damages or other relief ... should it choose to do so.’ (Rosenbluth International, Inc. v. Superior Court (2002) 101 Cal.App.4th 1073, 1078.) And the source of the fraudulent and unfair practices is the misrepresentation made in purchase orders between respondent sellers and Linear, in which each seller warranted that no infringement claim would result from Linear’s use of that seller’s equipment. Thus, contrary to Linear’s representation, the harm it suffered did result from contracts specifically with the plaintiff. The other alleged victims likewise are sophisticated corporate customers who have entered or will enter their own contracts with respondents, although neither these victims nor the contracts are identified in the complaint. In these circumstances, where a UCL action is based on contracts not involving either the public in general or individual consumers who are parties to the contract, a corporate plaintiff may not rely on the UCL for the relief it seeks. [Citation.] ‘By purporting to act as their self-appointed representative and asserting claims on their behalf in a UCL action, [Linear] could in fact deprive [respondents’] alleged victims of the individual opportunity to seek remedies far more extensive than those available under the UCL.’ [Citation.] Thus, to the extent that Linear purports to represent other customers, permitting its UCL claim would raise ‘ “serious fundamental due process considerations.” ’ [Citation.] The Rosenbluth court did not limit its holding to allegations of fraudulent conduct. Accordingly, notwithstanding the wide range of conduct that can be deemed ‘unfair’ within the meaning of section 17200, the reasoning of Rosenbluth is equally fitting in cases involving allegations of unfairness under the UCL. The superior court properly sustained respondents’ demurrers to the claim of unfair competition for failure to state a viable cause of action.” (Linear, supra, 152 Cal.App.4th at p. 135, parallel citation omitted.)

As quoted above, Linear limited its reasoning “to the extent that Linear purports to represent other customers.” This is clear from Linear’s invocation of the reasoning in Rosenbluth. Rosenbluth’s discussion was limited to a discussion of representative actions: “ ‘[B]ecause a UCL action is one in equity, in any case in which a defendant can demonstrate a potential for harm or show that the action is not one brought by a competent plaintiff for the benefit of injured parties, the court may decline to entertain the action as a representative suit.’ [Citation.] In the present case, Rosenbluth has demonstrated by undisputed evidence that those on behalf of whom Serrano purports to bring the action are not members of the ‘general public.’ Accordingly, Rosenbluth is entitled to summary judgment as a matter of law.” (Rosenbluth Internat., Inc. v. Superior Court, supra, 101 Cal.App.4th at p. 1079.)

Linear is thus distinguishable on two significant bases. First, Linear does not address the unlawful prong of the UCL, which plaintiffs identify as the applicable prong with the Knox-Keene Act as the predicate. Second, the plaintiffs’ claims are not representative, i.e., brought by plaintiffs on behalf of non-parties, but are claims specific to their own losses from defendants’ respective alleged unlawful conduct. “Actions for relief pursuant to this chapter shall be prosecuted … by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204; see also Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 42–43 [investor entities in real estate acquired by tax sale, who are commercial consumers of sophisticated financial products and not competitors of any defendant, may assert UCL action asserting conspiracy in restraint of trade against title insurance companies].) As discussed above, claims of this type are specifically authorized under Bell. The demurrers will be overruled on this ground.

Defendants also argue that the general allegations of this cause of action are insufficient. “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.) The FAC alleges a general practice of the defendants, but, insofar as the UCL claim is dependent upon specific violations of the Knox-Keene Act (e.g., FAC, ¶ 49), reasonable specificity requires at least a concrete example of a violation where each defendant has suffered an injury (pseudonyms for patients being sufficient). (See Khoury, supra, at p. 619 [demurrer sustained where complaint fails to describe with reasonable particularity the facts supporting violation].) The demurrers will be sustained on this ground with leave to amend.

            (E)       Interference with Economic Relations

Plaintiffs’ sixth cause of action is for interference with economic relations. This cause of action is asserted only against defendant United. Plaintiffs identify that this cause of action is for intentional interference with prospective economic advantage. (Opposition to United Demurrer, at p. 17.) “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 (Roy Allan).)

United argues that plaintiffs have not pleaded the element of an economic relationship with the probability of future economic benefit, but alleged only speculative potential customers. Plaintiffs assert two types of interference: the failure of United to provide the amount of copays, deductible, or coinsurance amounts (member charges) under the specific terms of their benefit agreements with United that plaintiffs are legally permitted to charge to those members; and, the failure of United to pay any amount for level 5 emergency services. (FAC, ¶¶ 26, 27, 65, 68.)

With respect to the failure of United to pay any amount, the allegations are insufficient to state a claim for interference. To the extent that this claim is intended to apply to existing patients to whom medical services have been rendered, there are insufficient allegations of interference with this group of people because plaintiffs have alleged an obligation to provide service regardless of payment and the absence of any obligation on the part of the patient to make payments other than the member charges (discussed below). United does not disrupt the plaintiff-patient economic relationship by failing to pay United’s required amounts. To the extent that this claim is intended to apply to new patients, that claim is too attenuated:

“In Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507 (Westside Center), the Court of Appeal interpreted our holdings in [Youst v. Longo (1987) 43 Cal.3d 64] and [Blank v. Kirwan (1985) 39 Cal.3d 311] to require proof that the defendant had disrupted a particular relationship with a known third party. There, the plaintiff purchased a shopping center containing several small stores. An ‘anchor’ building in the center was separately owned and leased to Safeway. Safeway vacated the premises, but executed an option to renew its lease for five years. Business at the rest of the center suffered while the anchor premises stood vacant, and the plaintiff ultimately sold its property interest at a claimed loss of more than $2 million. [Citation.] The plaintiff sued Safeway for tortious interference with prospective economic advantage, alleging that Safeway interfered, not with a particular sale, but with the relationship between the plaintiff and the class of all potential buyers for the property, thereby reducing its market value. [Citation.] The Court of Appeal upheld the trial court’s dismissal of the claim. It reasoned that an ‘ “interference with the market” ’ or ‘ “lost opportunity” ’ claim [citation] was unduly speculative: ‘It assumes what normally must be proved, i.e., that it is reasonably probable the plaintiff would have received the expected benefit had it not been for the defendant’s interference.’ [Citation.] Emphasizing the requirement of an existing relationship, the court held that the tort ‘protects the expectation that the relationship eventually will yield the desired benefit, not necessarily the more speculative expectation that a potentially beneficial relationship will eventually arise.’ [Citation.] The court concluded that the plaintiff’s theory ‘fails to provide any factual basis upon which to determine whether the plaintiff was likely to have actually received the expected benefit. Without an existing relationship with an identifiable buyer, [plaintiff]’s expectation of a future sale was “at most a hope for an economic relationship and a desire for future benefit.” ’ [Citation.]” (Roy Allan, supra, 2 Cal.5th at p. 516, fn. omitted.)

However, as to interference by failing to provide necessary and legally required information for plaintiffs to bill the member charges to the patients, plaintiffs sufficiently allege interference with that existing plaintiff-patient economic relationship by making it impossible or unreasonably difficult for plaintiffs to charge those patients amounts permissible by law.

“[A] demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.” (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047.) Because part of this claim is sufficiently alleged, United’s demurrer to the sixth cause of action will therefore be overruled on this ground.

            (F)       Duress

Plaintiffs’ seventh cause of action is entitled “economic duress.” Defendants argue that “economic duress” is a defense and not a cause of action. Plaintiffs’ FAC cites in this cause of action to Rich & Whillock, Inc. v. Ashton Development, Inc. (1984) 157 Cal.App.3d 1154 (Rich). (FAC, ¶ 74.)

In Rich, the plaintiff entered into a contract with the defendants for grading and excavating. (Rich, supra, 157 Cal.App.3d at p. 1156.) During performance of the contract, rock was encountered that required blasting, which was outside the scope of the contract. (Ibid.) The defendants agreed to the extra cost of the blasting, even though the extra cost was expressly only estimated at the time. (Ibid.) After the work was done, the plaintiffs submitted a final bill for $72,286.45. (Ibid.) The plaintiff told the defendants that the plaintiff would go broke if not paid because it was a new company. (Id. at pp. 1156-1157.) Although the defendants expressed no complaints about the work or the invoices, the defendants said that they would pay $50,000 or nothing and that the plaintiff could sue if not satisfied by the compromise. (Id. at p. 1157.) The plaintiff signed settlement and release agreements for the $50,000, and subsequently filed suit for the unpaid balance due. (Ibid.) The defendants asserted the settlement as a defense; the trial court found that the settlement and release agreements were signed under duress and unenforceable. (Ibid.) Judgment was rendered in favor of the plaintiff for the balance and the defendants appealed. (Id. at pp. 1155-1156.)

The Rich court affirmed. (Rich, supra, 157 Cal.App.3d at p. 1161.) The court first noted the basic principles:

“California courts have recognized the economic duress doctrine in private sector cases for at least 50 years. [Citation; fn.] The doctrine is equitably based [citation] and represents ‘but an expansion by courts of equity of the old common-law doctrine of duress.’ [Citation.] As it has evolved to the present day, the economic duress doctrine is not limited by early statutory and judicial expressions requiring an unlawful act in the nature of a tort or a crime. [Citations.] Instead, the doctrine now may come into play upon the doing of a wrongful act which is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the perpetrator’s pressure. [Citations.] The assertion of a claim known to be false or a bad faith threat to breach a contract or to withhold a payment may constitute a wrongful act for purposes of the economic duress doctrine. [Citations.] Further, a reasonably prudent person subject to such an act may have no reasonable alternative but to succumb when the only other alternative is bankruptcy or financial ruin.” (Rich, supra, 157 Cal.App.3d at pp. 1158–1159.)

The Rich court then concluded that the defendants’ bad faith breach and plaintiff’s economic circumstances constituted duress to render releases unenforceable. (Rich, supra, 157 Cal.App.3d at pp. 1160–1161.) As defendants here correctly note, this application of the doctrine of economic duress was purely defensive in that it rendered a contract unenforceable. The Rich plaintiff sought and obtained a judgment based upon breach of its underlying contract. The Rich plaintiff neither sought nor obtained any damages in tort for defendants’ coercive tactics. Rich thus does not support a claim in tort based upon economic duress. (See also Tarpy v. County of San Diego (2003) 110 Cal.App.4th 267, 277 [“the law recognizes the concept of economic duress as a basis for vitiating a coerced party’s consent to an agreement”].)

At the same time, however, Rich does not support the opposite claim, namely, that there is no recovery in tort possible for economic duress. In opposition to the demurrer, plaintiffs cite a different case to support their claim in tort, CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631 (CrossTalk).

In CrossTalk, the plaintiffs approached the defendant about forming an outside company to contract with CBS to supply video promotional spots. (CrossTalk, supra, 65 Cal.App.4th at p. 636.) After agreeing in principle but while a contract was being negotiated, the defendant demanded the plaintiffs pay the defendant $500 per month to “help him out.” (Ibid.) The plaintiffs were greatly distress and believed that they had no reasonable alternative but to accede to the demand in order to secure the contract with CBS. (Id. at p. 637.) The plaintiffs perceived that the monthly payment was necessary to maintain the contract. (Id. at pp. 637-638.) The defendant then demanded that the monthly payments increase to $1,000, which plaintiffs explained was unaffordable. (Id. at p. 638.) After being told that the plaintiff could not pay the increased demands, the defendant made the plaintiff’s performance under the contract difficult. (Ibid.) The defendant then claimed that there were a number of problems with the plaintiffs’ performance. (Ibid.) The plaintiffs told CBS about the defendant’s demands. (Ibid.) CBS then both terminated the defendant and the plaintiffs’ contract on the basis of the “admitted wrongdoing.” (Id. at pp. 638-639.)

The plaintiffs in CrossTalk filed suit asserting three legal theories: economic duress, and intentional and negligent infliction of emotional distress. (CrossTalk, supra, 65 Cal.App.4th at p. 639.) The defendant demurred to each cause of action on the grounds of the affirmative defense of unclean hands. (Ibid.) The trial court sustained the demurrer on the theory that the alleged conduct constituted commercial bribery under Penal Code section 641.3 and therefore established the defense of unclean hands. (Ibid.)

On appeal in CrossTalk, the court applied the test to establish unclean hands set forth in Blain v. Doctor’s Co. (1990) 222 Cal.App.3d 1048 (Blain) that “whether there is a bar depends upon the analogous case law, the nature of the misconduct, and the relationship of the misconduct to the claimed injuries.” [Citation.]” (CrossTalk, supra, 65 Cal.App.4th at p. 641.)

“Blain does not compel the conclusion that plaintiffs are barred from suing for the allegedly extortionate actions of defendant. The first prong of the ‘Blain test’ is analogous case law. Defendant has cited no authority finding unclean hands generally to be a defense to claims for extortion or ‘economic duress’ in other factual circumstances, or generally to be a defense to claims for intentional or negligent infliction of emotional distress. Defendant’s authorities merely confirm that application of the unclean hands doctrine depends upon the circumstances of the case, the nature of the claims asserted, and comparison of the parties’ conduct—factual inquiries. ‘[I]t is not every wrongful act nor even every fraud which prevents a [plaintiff] from obtaining relief.’ [Citation.]” (CrossTalk, supra, 65 Cal.App.4th at p. 642.)

“The doctrine of ‘economic duress’ can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract. [Citation.] The party subjected to the coercive act, and having no reasonable alternative, can then plead ‘economic duress’ to avoid the contract. The instant case directly concerns not economic duress, but instead an allegation of extortion. Plaintiffs, however, used the term ‘economic duress’ in their complaint, and the parties have consequently briefed the subject extensively. The economic duress cases do appear to be the type of ‘analogous case law’ referenced in the first prong of the Blain test, and the treatment of the ‘reasonable alternative’ issue in the economic duress cases is instructive.” (CrossTalk, supra, 65 Cal.App.4th at p. 644.)

“When a party pleads economic duress, that party must have had no ‘reasonable alternative’ to the action it now seeks to avoid (generally, agreeing to a contract). If a reasonable alternative was available, and there hence was no compelling necessity to submit to the coercive demands, economic duress cannot be established. Whether the party asserting economic duress had a reasonable alternative is determined by examining whether a reasonably prudent person would follow the alternative course, or whether a reasonably prudent person might submit.” (CrossTalk, supra, 65 Cal.App.4th at p. 644.)

“Defendant argues there is no cause of action for ‘economic duress.’ It appears, however, that the Supreme Court has noted a general ‘right ... to be free from acts constituting duress’ (Leeper v. Beltrami (1959) 53 Cal.2d 195, 202 [(Leeper)]) and the propriety of a ‘cause of action for wrongful acts in the nature of duress....’ (Id. at pp. 203–205.) Such duress may consist of threats to business or property interests. (Id. at p. 203.) The ‘wrongful act’ must be sufficiently coercive to cause a reasonably prudent person to be faced with no reasonable alternative but to ‘succumb.’ Examples of such ‘wrongful acts’ include the assertion of a claim known to be false, a bad faith threat to breach a contract or a threat to withhold a payment.” (CrossTalk, supra, 65 Cal.App.4th at p. 645, parallel citations omitted.)

“In Rich & Whillock, a ‘start up’ corporation sued on a contract and was required to argue the economic duress doctrine to avoid being barred from recovery by a release it had signed in order to obtain a reduced payment under the contract. Although there was no ‘affirmative’ claim pleaded for ‘economic duress,’ the court’s discussion of the basis for the doctrine provides support for the proposition that claims such as ‘economic duress’ can be asserted offensively. ‘The underlying concern of the economic duress doctrine is the enforcement in the marketplace of certain minimal standards of business ethics.... They include equitable notions of fairness and propriety which preclude the wrongful exploitation of business exigencies to obtain disproportionate exchanges of value.... The economic duress doctrine serves as a last resort to correct these aberrations when conventional alternatives and remedies are unavailing.’ [Citation.]” (CrossTalk, supra, 65 Cal.App.4th at p. 645.)

The above discussion demonstrates that economic duress can, under appropriate circumstances, be a basis for a claim for recovery. CrossTalk’s citation to Leeper, supra, is instructive: “The theory of recovery is not clear. But whether it be considered a suit for restitution to recover money paid under duress [citation], or an action for money had and received sounding in tort [citation], or, simply an action for money damages for the tortious conduct of the defendants resulting in injury to the plaintiffs, the basic nature of the wrongdoing of these defendants is duress.” (Leeper, supra, 53 Cal.2d at p. 207.) “However denominated (e.g., extortion, menace, duress), our Supreme Court has recognized a cause of action for the recovery of money obtained by the wrongful threat of criminal or civil prosecution. [Citations.] It is essentially a cause of action for moneys obtained by duress, a form of fraud.” (Fuhrman v. California Satellite Systems (1986) 179 Cal.App.3d 408, 426, disapproved on other grounds in Silberg v. Anderson (1990) 50 Cal.3d 205, 219.)

Plaintiffs’ allegations, however, do not match this theory. “All defendants are refusing to pay the reasonable value of services rendered. Defendant United is also refusing to pay Plaintiffs any amount at all for level 5 services admittedly rendered to its members. Defendants are doing this to force Plaintiffs to comply with their unreasonable demands. Plaintiffs have refused to comply and as a proximate result have not been paid the reasonable value of its services. Additionally, Plaintiffs have not been paid by Defendant United for thousands of level 5 as previously alleged. This is an ongoing problem as Plaintiffs continue to treat Defendants’ members who come to the emergency room and Defendants continue to refuse to pay Plaintiffs promptly and properly.” (FAC, ¶ 81.)

As quoted above, plaintiffs allege that defendants are refusing to pay in order to force plaintiffs to comply with their unreasonable demands, but the plaintiffs have refused to comply. Plaintiffs are not alleging that they have been forced by economic duress to accept less than the amounts to which they are entitled and are now seeking to avoid the consequence of such acceptance, as, for example, the Rich plaintiff in seeking to obtain the full amount owed notwithstanding settlement and release agreements ostensibly limiting the amount owed. In other words, plaintiffs allege that defendants’ duress has been unsuccessful in causing damage to plaintiffs and that plaintiffs are simply owed the full amount to which they are entitled under the Knox-Keene Act. That claim for recovery is already asserted under a number of legal theories as discussed above. The demurrer to this cause of action will be sustained.

            (G)       ERISA Preemption

Aetna separately argues that South Coast’s claims are preempted by federal law under the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.) or under the Federal Employee Health Benefits Act (FEHBA) (5 U.S.C. § 8901 et seq.). Aetna’s argument in this regard is limited “to the extent any of the unidentified reimbursement claims involve patients who are members of self-funded ERISA health plans” and “to the extent any of the claims at issue involve patients who were enrolled in plans governed by FEHBA.” (Aetna Demurrer, at pp. 15, 17.)

To whatever extent such arguments may have merit (and the court expresses no opinion on this issue), the underlying predicates to these arguments do not appear on the face of the complaint and the demurrers do not address the entirety of a cause of action. The demurrer will therefore be overruled as to these issues. (See Kong v. City of Hawaiian Gardens Redevelopment Agency, supra, 108 Cal.App.4th at p. 1047.)

            (H)      Misjoinder of Parties

Defendants further demur to the entirety of the FAC on the grounds of misjoinder of the parties.

“The party against whom a complaint … has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: [¶] … [¶] (d) There is a defect or misjoinder of parties.” (Code Civ. Proc., § 430.10, subd. (d).)

Each of the defendants assert that the reimbursement claims that form the basis for plaintiffs’ action against each defendant are distinct transactions and must be evaluated separately from transactions involving plaintiffs’ claims against each other defendant.

The general rules of joinder of defendants are set forth in Code of Civil Procedure section 379:

“(a)      All persons may be joined in one action as defendants if there is asserted against them:

            “(1)      Any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or

            “(2)      A claim, right, or interest adverse to them in the property or controversy which is the subject of the action.

“(b)      It is not necessary that each defendant be interested as to every cause of action or as to all relief prayed for. Judgment may be given against one or more defendants according to their respective liabilities.

“(c)      Where the plaintiff is in doubt as to the person from whom he or she is entitled to redress, he or she may join two or more defendants, with the intent that the question as to which, if any, of the defendants is liable, and to what extent, may be determined between the parties.”

Plaintiffs argue that the “same transaction, occurrence, or series of transactions or occurrences” rule is satisfied here, citing Petersen v. Bank of America Corp. (2014) 232 Cal.App.4th 238 (Petersen) as dispositive.

In Petersen, 965 individually named plaintiffs, each alleged to be a borrower of defendant lender, filed a complaint against the lender alleging various breaches of duties owed to plaintiffs for loans the plaintiffs alleged the defendant knew were unaffordable. (Petersen, supra, 232 Cal.App.4th at pp. 240-242.) The defendant demurred to the complaint asserting a misjoinder of plaintiffs. (Id. at p. 240.) The trial court sustained the demurrer, dismissing all but one of the plaintiffs. (Id. at p. 242.) On appeal the Petersen court reversed. (Ibid.)

The rules of joinder for plaintiffs are set forth in Code of Civil Procedure section 378:

“(a)      All persons may join in one action as plaintiffs if:

            “(1)      They assert any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or

            “(2)      They have a claim, right, or interest adverse to the defendant in the property or controversy which is the subject of the action.

“(b)      It is not necessary that each plaintiff be interested as to every cause of action or as to all relief prayed for. Judgment may be given for one or more of the plaintiffs according to their respective right to relief.”

“In this case, the key words on which that choice turns are ‘same ... series of transactions.’ As far back as the late 1920’s, in the immediate wake of the 1927 amendment of section 378, our Supreme Court noted that the permissive joinder statute reflected the Legislature’s desire that joinder be liberally construed so as to prevent the diseconomy of a ‘multiplicity’ of cases. Said the court in Joerger v. Pacific Gas & Electric Co. [(1929) 207 Cal. 8, 19]: ‘One of the objects of the reformed or code procedure is to simplify the pleadings and conduct of actions, and to permit the settlement of all matters of controversy between parties in one action, so far as may be practicable.... To permit a joinder where possible makes manifestly for the expeditious disposition of litigation without working hardship to any party defendant, and for this reason statutes relating to joinder should be liberally construed, unless expressly forbidden, to the end that a multiplicity of suits may be prevented.’ ” (Petersen, supra, 232 Cal.App.4th at p. 249.)

The Petersen court noted a number of cases in which multiple plaintiffs were permitted to join their claims in one action. In Anaya v. Superior Court (1984) 160 Cal.App.3d 228 (Anaya), the court “allowed the joinder of 200 plaintiffs on the basis that exposure to a harmful chemical involved ‘the same series of transactions’ even though the plaintiffs were exposed at different times and in different ways.” (Petersen, supra, 232 Cal.App.4th at p. 250.) “But the Anaya court pointed out that the key question was the existence of ‘common questions of law and fact,’ and not whether, as the defendants had emphasized, there were ‘differences in the evidence to be presented and in the legal theories to be used by the various plaintiffs.’ The ‘point’ of section 378, said the court, is to allow joinder where ‘ “any question of law or fact common to all plaintiffs will arise.” ’ And Anaya thought ‘any’ means ‘any.’ ” (Ibid.)

In State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093 (State Farm), abrogated on other grounds in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 184-185, “joinder was allowed in Northridge earthquake litigation because there was an allegedly fraudulent ‘systematic’ practice of deceiving policyholders. State Farm allowed the joinder of 165 Northridge earthquake claimants who asserted that they were the victims of a clever insurance policy switch: Their earthquake endorsements to all risk policies had been replaced with a separate earthquake policy not tethered to the all risk policy, resulting in lower total coverage. [Citation.] Significantly for our purposes, the plaintiffs in State Farm further alleged that after the earthquake they suffered ‘some 15 different types of “improper claims handling processes” ’ which were ‘ “ systematically, methodically and generally” ’ implemented by the insurer. [Citation.]” (Petersen, supra, 232 Cal.App.4th at pp. 250-251.)

In Adams v. Albany (1954) 124 Cal.App.2d 639, “joinder of no less than 40 sets of home buyers (recent war veterans) was held proper. Even though the defendant argued its allegedly fraudulent scheme involved torts that took place at different times and places, and even though the evidence as to one house would have no probative value as to any other house, the appellate court invoked the ‘series of transactions’ language from section 378 and said it was enough that defendant was alleged to have engaged in a conspiracy to defraud the veterans by selling them substandard housing. As here, Adams is a case where the alleged ‘business plan’ of the defendant was common to multiple defendants, even if their specific damages might vary.” (Petersen, supra, 232 Cal.App.4th at pp. 251–252.)

The Petersen court identified that the plaintiffs alleged a common plan of the defendant lender. (Petersen, supra, 232 Cal.App.4th at p. 252.) The Petersen court did, however, emphasize that the Petersen case involved essentially only one lender, distinguishing its allegations from federal cases finding misjoinder where there were genuinely multiple defendants. (Ibid.) Thus, the Petersen court concluded that there was no misjoinder of plaintiffs. (Id. at pp. 252-253.)

Defendants distinguish Petersen because Petersen involved only one defendant and the lack of allegations here of any interrelatedness between claims against each defendant. Defendants point to Moe v. Anderson (2012) 207 Cal.App.4th 826 (Moe), also discussed in Petersen.

As stated in Petersen: “In Moe, two patients alleged they were victims of separate sexual assaults allegedly committed by a physician. To be sure, joinder was not appropriate as to the physician, since the assaults involved ‘separate and distinct’ events ‘during separate and distinct time periods.’ [Citation.] But the claims against the medical group for which the physician worked was a different story. Joinder was appropriate as to the single employer since the same basic issue of negligent supervision and hiring was common to both (otherwise disparate) plaintiffs, and would involve the same evidence against a single defendant. The court said: ‘Thus, as was the case in Anaya, plaintiffs have asserted a right to relief arising out of the same series of transactions. So too are there common issues of law or fact. The same evidence with respect to Healthworks’s hiring and supervision of Anderson will need to be adduced in separate lawsuits if joinder is not allowed.’ [Citation.] Needless to say, in the case before us there is much in the way of common evidence and theories of liability and much of the same evidence will have to be repeatedly produced if joinder is not allowed. Indeed, we shudder to think of the duplication of effort if even a dozen of the 800 or so plaintiffs who have brought this appeal have individual trials on liability issues.” (Petersen, supra, 232 Cal.App.4th at p. 251.)

The statutory language of section 379, subdivision (a)(1) requires two elements: that asserted against them is a “right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences” and that there is a “question of law or fact common to all” the defendants. As now alleged, there is no sufficient allegation of joint or several liability among the defendants. There is a generic allegation of mutual agency (FAC, ¶ 5), but this conclusory allegation is insufficient by itself to assert joint or several liability. Moreover, in opposition to these demurrers, plaintiffs do not argue any joint or vicarious liability of one defendant based on the conduct of another. In other words, to the extent that the court ultimately finds that one or more claims for payment by South Coast from United, for example, is meritorious, the judgment based upon that payment would run solely against United and not against any other defendant. Joinder of defendants under section 379 therefore depends upon the alternative that the right to relief is “in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences.”

Plaintiffs do not allege liability of two or more defendants to arise from the same transaction. Plaintiffs allege that they provide emergency medical services to specific patients, each of whom is a person covered at the time by an insurance plan of one defendant. There are no allegations that any specific patient was covered by insurance plans of more than one defendant. There are therefore no common transactions or occurrences as among the defendants. Plaintiffs’ appeal to Petersen is based upon the argument that the alleged failure to pay as required under the Knox-Keene Act constitutes a common series of transactions or occurrences.

As discussed above, the joinder statute is to be construed liberally towards its purposes of ending a multiplicity of suits and efficient administration of justice. Maintaining this litigation, as now pleaded, as a single action fails to meet this purpose. The common feature alleged is that each defendant is engaging in essentially the same conduct of either not paying or offering to pay at an unreasonably low rate for the services rendered by the plaintiffs to particular patients. The FAC is reasonably construed to allege that each defendant is making that payment determination itself based upon its own considerations. Each defendant’s payment practice will have to be discovered separately. There is no commonality shown which would make a joint trial as to all three defendants efficient, and, as currently pleaded, such a joint trial would be more likely to cause confusion and inefficiencies in order to keep the claims asserted, and defended against, each defendant separate from one another.

For these reasons, the defendants are misjoined and the demurrers will be sustained on that ground.

            (I)        Leave to Amend

For the reasons discussed above, the first cause of action will be sustained without leave to amend. As to all other causes of action for which the court sustains a general demurrer, and as to the complaint as a whole to which the court sustains the demurrer on the grounds of misjoinder, the court will grant leave to amend. As to the issue of misjoinder, the court notes that, unless plaintiffs intend to amend to add allegations to support the joinder of defendants, the procedurally appropriate amendment would be to drop two defendants from this action and to file separate actions asserting the claims against each of those two defendants. In any event, the causes of action for which the court finds the allegations insufficient would need to be separately addressed by amendment as well.

(2)       Aetna Motion to Strike

Aetna has concurrently filed a motion to strike paragraph 82 from the text of the FAC and paragraph 6 of the prayer for relief for punitive damages. The court notes that punitive damages are also sought in paragraph 71 of the FAC, which is not subject to this motion to strike and is within the sixth cause of action for interference with economic relations to which the court will overrule the general demurrer. Consequently, paragraph 6 of the prayer for relief is not irrelevant or improper matter that may be stricken from the FAC. (See Code Civ. Proc, §§ 435, 436, 431, subds. (b)(3), (c).) The motion will be denied as to paragraph 6 of the prayer.

Paragraph 82 is within the seventh cause of action for economic duress. As discussed above, the court will sustain the general demurrer to that cause of action. The motion to strike paragraph 82 will be denied as moot.

(3)       Pro Hac Vice Application

The application of Emily Riff to appear in this action as counsel pro hac vice for United complies with the requirements of California Rules of Court, rule 9.40, and is otherwise proper. The application will be granted.