P. ex rel. Elliott v. Kaiser Foundation Health Plan ( 2024 )

Filed 9/30/24; certified for publication 10/22/24 (order attached)
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE ex rel. MARA W. D081262
ELLIOTT, as San Diego City Attorney,
etc.,
Plaintiff and Appellant, (Super. Ct. No. 37-2021-
00027298-CU-BT-CTL)
v.
KAISER FOUNDATION HEALTH
PLAN, INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County,
Gregory W. Pollack, Judge. Reversed and remanded with directions.
Mara W. Elliott, City Attorney, Mark Ankcorn, Chief Deputy City
Attorney, Kevin B. King, Deputy City Attorney; Bradley Bernstein Sands,
Erin Bernstein and Gina Elliott for Plaintiff and Appellant.
Rob Bonta, Attorney General, Renu R. George, Assistant Attorney
General, David A. Jones and Sean McGuire, Deputy Attorneys General, for
the State as Amicus Curiae on behalf of Plaintiff and Appellant.
Sheppard, Mullin, Richter & Hampton, John T. Brooks, Moe
Keshavarzi, Samuel D. Duimovich and Matthew G. Halgren for Defendant
and Respondent.
Manatt, Phelps & Phillips, Gregory N. Pimstone, Joanna S. McCallum
and Marina Shvarts for California Association of Health Plans as Amicus
Curiae on behalf of Defendant and Respondent.
Rob Bonta, Attorney General, Renu R. George, Assistant Attorney
General, Karli Eisenberg, Ari J. Dybnis and Martine N. D’Agostino, Deputy
Attorneys General, for Department of Managed Health Care as Amicus
Curiae.
The plaintiff, the People of the State of California, acting by and
through Mara W. Elliott, the San Diego City Attorney (People), appeal a
judgment entered in favor of the defendant, Kaiser Foundation Health Plan,
Inc. (Kaiser), in their action against Kaiser alleging violations of the unfair
competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and false
advertising law (FAL) (id., § 17500 et seq.) based on, among other things,
inaccuracies in Kaiser’s health plan provider directories (PD or PDs). In
particular, the People alleged that Kaiser failed to maintain and update
accurate PDs for its health plans, as required by Health and Safety Code 1
section 1367.27. The trial court granted Kaiser’s motion for summary
judgment after exercising its discretion to abstain from adjudicating the
action.
We conclude that the trial court abused its discretion by applying the
doctrine of judicial abstention. Accordingly, we reverse the judgment and
remand the matter with directions to the court.
1 All further statutory references are to the Health and Safety Code
unless otherwise specified.
2
FACTUAL AND PROCEDURAL BACKGROUND
In 2021, the People filed a complaint against Kaiser. The complaint
alleged that Kaiser sells and provides health insurance to individuals in
California. Citing section 1367.27, the complaint further alleged that health
insurance companies are required to publish, maintain, and update accurate
PDs, setting forth information regarding a health plan’s providers (e.g.,
location, contact information, specialty, etc.). It acknowledged that the
California Department of Managed Health Care (DMHC), California
Department of Health Care Services (DHCS), and California Department of
Insurance (DOI) regulate health insurance in California.
The complaint alleged that Kaiser had failed to maintain and update
accurate PDs for its health plans and had not corrected inaccurate PD data
after learning of the inaccuracies through its annual timely access surveys.
It also alleged that Kaiser had failed to prominently display its contact
information so that consumers and providers could report PD inaccuracies. It
further alleged that Kaiser’s failure to provide accurate PDs was unlawful
and harmed both consumers and its competitors.
The complaint alleged two causes of action: (1) a UCL claim; and (2) an
FAL claim. The UCL cause of action incorporated the complaint’s preceding
allegations and specifically alleged that Kaiser had engaged in unlawful,
unfair, and fraudulent business practices by violating California and federal
law and employing business practices likely to deceive the public.
Specifically, it alleged that Kaiser had violated the following state and
federal laws and regulations:
“a. Affordable Care Act guarantees of access to ‘an
up-to-date, accurate, and complete [PD].’ (45 C.F.R.
§ 156.230(b)(2).)
3
“b. The Federal Mental Health Parity and Addiction
Equity Act . . . . (45 C.F.R. § 146.136(c)(4)(i).)
“c. California statutory requirements that [Affordable Care
Act] plan [PDs] be accurate. ( . . . § 1367.27.)
“d. California statutory requirements related to the
reporting of data related to [PD] accuracy. ( . . . § 1367.27.)
“e. California statutory requirements related to prominent
on-line contact information for consumers to report [PD]
errors. ( . . . § 1367.27.)
“f. California statutory requirements related to the
searchability of network providers on-line. ( . . . § 1367.27.)
“g. California statutory requirements and regulations
related to the reporting of timely access and physician data.
( . . . §§ 1367.03, 1367.035.)
“h. Federal regulations requiring Medicaid [PDs] be
accurate and regularly updated. (42 C.F.R. § 438.10(h).)
“i. False [a]dvertising of products and services. (Cal. Bus.
& Prof. Code[,] § 17500.)
“j. [Kaiser’s] conduct is also unlawful because it constitutes
a tort of fraudulent inducement to contract.”
The FAL cause of action incorporated the complaint’s preceding
allegations and specifically alleged that Kaiser violated the FAL (i.e., Bus. &
Prof. Code, § 17500) “by publicly disseminating false and misleading [PDs]
through which [it] hope[d] to obtain customers.”
The complaint sought the following relief: (1) civil penalties pursuant
to Business and Professions Code sections 17206, 17206.1, subdivision (a)(1),
and 17536; (2) restitution; and (3) provisional and final remedies against
Kaiser, including, without limitation, “an injunction prohibiting [Kaiser] from
continuing [its] unlawful, unfair, and fraudulent activities, and discontinue
[its] false and misleading advertising.”
4
Kaiser filed a motion for summary judgment. In support of its motion,
Kaiser argued that there were no triable issues of material fact and it was
entitled to judgment as a matter of law because the trial court should abstain
from adjudicating the action. It submitted a separate statement of
undisputed material facts, along with various declarations and exhibits and a
request for judicial notice, in support of its motion.
In their opposition papers, the People argued that the court should not
abstain from adjudicating their action because, among other things, Kaiser’s
violations of section 1367.27 and other statutes provide predicates for their
UCL cause of action and the UCL contemplates co-enforcement by the People
and administrative agencies. In reply, Kaiser reasserted its original
arguments in support of its motion.
The trial court, after hearing arguments of counsel, issued a minute
order granting Kaiser’s motion for summary judgment based solely on the
exercise of its discretion to abstain from adjudicating the People’s action. The
court entered a judgment in favor of Kaiser. The People timely filed a notice
of appeal challenging the judgment.
The Attorney General for the State of California has filed an amicus
curiae brief in support of the People. The DMHC has filed an amicus curiae
brief in support of neither party, and the California Association of Health
Plans has filed an amicus curiae brief in support of Kaiser.2 The People and
Kaiser have filed answers to the amicus curiae briefs.3
2 The People filed a request for judicial notice of an amicus curiae brief
filed by the DMHC in another case (i.e., in Futterman v. Kaiser Foundation
Health Plan, Inc. (A155946), filed on February 25, 2020). Kaiser opposed
their request. We issued an order stating that we would consider the People’s
request for judicial notice concurrently with the appeal. Because the DMHC
has filed an amicus curiae brief in this case, its amicus curiae brief filed in
5
DISCUSSION
Before discussing the trial court’s judicial abstention ruling, we begin
with an overview of the relevant statutes and regulatory agencies charged
with their enforcement.
I
The Knox-Keene Act and Section 1367.27 Generally
“In 1975, the Legislature enacted the Knox-Keene Act, which provides
the legal framework for the regulation of California’s individual and group
health care [service] plans . . . .” (Rea v. Blue Shield of California (2014)
226 Cal.App.4th 1209, 1215; see also § 1340 et seq.) Effective
January 1, 2016, the Legislature enacted section 1367.27, which requires
health care service plans to, among other things, maintain and update
accurate PDs. (Stats. 2015, Reg. Sess. 2014–2015, ch. 649, § 2.)
Section 1367.27, subdivision (a) provides: “[A] health care service plan
shall publish and maintain a [PD] with information on contracting providers
that deliver health care services to the plan’s enrollees, including those that
accept new patients. A [PD] shall not list or include information on a
Futterman is unnecessary and therefore we deny the People’s request to take
judicial notice of that brief. The reply in support will not be considered.
3 The People filed a notice of related cases in the trial court, stating that
they had filed similar actions against Molina Healthcare of California
(Molina) (case No. 37-2021-00027295-CU-BT-CTL) and Health Net LLC,
et al. (Health Net) (case No. 37-2021-00027383-CU-BT-CTL). All three cases
were assigned to the same trial judge, who then granted the defendants’
motions for summary judgment on the same ground of judicial abstention.
The People have filed notices of appeal also challenging the judgments
entered in favor of Molina and Health Net. We issued an order granting the
parties’ unopposed motion for the appeals in the instant case (D081262) and
the People’s related cases against Molina (D081138) and Health Net
(D081192) to be heard by the same panel.
6
provider that is not currently under contract with the plan.” Health plans
must make online PDs available on their websites to the public, potential
enrollees, enrollees, and providers. (Id., subd. (c)(1).) Health plans must also
allow those parties to request printed copies of their PDs. (Id., subd. (d)(1).)
Health plans must update their printed PDs at least quarterly, or more
frequently, if required by federal law. (Id., subd. (d)(2).)
Section 1367.27, subdivision (e)(1) provides:
“The plan shall update the online [PD], at least weekly, or
more frequently, if required by federal law, when informed
of and upon confirmation by the plan of any of the
following:
“(A) A contracting provider is no longer accepting new
patients for that product, or an individual provider within a
provider group is no longer accepting new patients.
“(B) A provider is no longer under contract for a particular
plan product.
“(C) A provider’s practice location or other information
required under subdivision (h) or (i) has changed.
“(D) Upon completion of the investigation described in
subdivision (o), a change is necessary based on an enrollee
complaint that a provider was not accepting new patients,
was otherwise not available, or whose contact information
was listed incorrectly.
“(E) Any other information that affects the content or
accuracy of the [PD].”
Similarly, section 1367.27, subdivision (e)(2) provides that a plan shall delete
a provider from its PD on confirmation that: “(A) A provider has retired or
otherwise ceased to practice[;] [¶] (B) A provider or provider group is no
longer under contract with the plan for any reason[; or] [¶] (C) The
contracting provider group has informed the plan that the provider is no
longer associated with the provider group and is no longer under contract
7
with the plan.” Section 1367.27 also requires that PDs “include both an
email address and a telephone number for members of the public and
providers to notify the plan if the [PD] information appears to be inaccurate.
This information shall be disclosed prominently in the [PD] and on the plan’s
Internet Web site.” (Id., subd. (f).) Section 1367.27, subdivision (j)(1)
provides: “The contract between the plan and a provider shall include a
requirement that the provider inform the plan within five business days
when either of the following occurs: [¶] (A) The provider is not accepting new
patients[; or] [¶] (B) If the provider had previously not accepted new patients,
the provider is currently accepting new patients.”
Importantly, section 1367.27, subdivision (l)(1) provides: “A plan shall
take appropriate steps to ensure the accuracy of the information concerning
each provider listed in the plan’s [PD] in accordance with this section, and
shall, at least annually, review and update the entire [PD] for each product
offered.” Section 1367.27, subdivision (o)(1) provides: “Whenever a health
care service plan receives a report indicating that information listed in its
[PD] is inaccurate, the plan shall promptly investigate the reported
inaccuracy and, no later than 30 business days following receipt of the report,
either verify the accuracy of the information or update the information in its
[PD], as applicable.” Furthermore, “[i]f changes to a plan’s [PD] are required
as a result of the plan’s investigation, the changes to the online [PD] shall be
made no later than the next scheduled weekly update, or the update
immediately following that update, or sooner if required by federal law or
regulations. For printed [PDs], the change shall be made no later than the
next required update, or sooner if required by federal law or regulations.”
(Id., subd. (o)(2)(C).)
8
Section 1367.27 requires the DMHC to “develop uniform [PD]
standards to permit consistency,” and after those PD standards are
developed, “a plan shall use the standards developed by [the DMHC] for each
product offered by the plan.” (§ 1367.27, subd. (k)(1), (3).) Section 1367.27
also requires health plans to “establish policies and procedures with regard to
the regular updating of its [PDs], including the weekly, quarterly, and annual
updates required pursuant to this section, or more frequently, if required by
federal law or guidance.” (Id., subd. (m).) The plan shall annually submit to
the DMHC its policies and procedures regarding regular updating of its PDs
for approval by the DMHC. (Id., subd. (m)(1).) In particular, “[t]he plan shall
establish and maintain a process for enrollees, potential enrollees, other
providers, and the public to identify and report possible inaccurate,
incomplete, or misleading information currently listed in the plan’s [PD].
This process shall, at a minimum, include a telephone number and a
dedicated email address at which the plan will accept these reports, as well
as a hyperlink on the plan’s [PD] Internet Web site linking to a form where
the information can be reported directly to the plan through its Internet Web
site.” (Id., subd. (m)(3).) Section 1367.27, subdivision (p)(1) authorizes a
health plan to “delay payment or reimbursement owed to a provider or
provider group . . . if the provider or provider group fails to respond to the
plan’s attempts to verify the provider’s or provider group’s information as
required by subdivision (l).”
II
Authority of Regulatory Agencies
The DMHC. Section 1341, subdivision (a) provides that the DMHC
“has charge of the execution of the laws of this state relating to health care
service plans and the health care service plan business including, but not
9
limited to, those laws directing the [DMHC] to ensure that health care
service plans provide enrollees with access to quality health care services and
protect and promote the interests of enrollees.” The director of the DMHC is
“responsible for the performance of all duties, the exercise of all powers and
jurisdiction, and the assumption and discharge of all responsibilities vested
by law in the [DMHC].” (Id., subd. (c).) The director may “exempt from this
chapter [i.e., Health and Safety Code chapter 2.2 regarding health care
service plans] any class of persons or plan contracts if the director finds the
action to be in the public interest and not detrimental to the protection of
subscribers, enrollees, or persons regulated under this chapter . . . .” (§ 1343,
subd. (b).) Section 1344, subdivision (a) provides: “The director [of the
DMHC] may from time to time adopt, amend, and rescind any rules, forms,
and orders that are necessary to carry out the provisions of this chapter . . . .
The director may waive any requirement of any rule or form in situations
where in the director’s discretion that requirement is not necessary in the
public interest or for the protection of the public, subscribers, enrollees, or
persons or plans subject to this chapter. . . .” Furthermore, “[n]o provision of
this chapter imposing any liability applies to any act done or omitted in good
faith in conformity with any rule, form, order, or written interpretative
opinion of the director, or any opinion of the Attorney General . . . .” (Id.,
subd. (d).)
The director of the DMHC has the power to, among other things,
“[a]ssist, advise, and cooperate with federal, state, and local agencies and
officials to protect and promote the interests of plans, subscribers, enrollees,
and the public.” (§ 1346, subd. (a)(3).) The director of the DMHC has a wide
range of enforcement powers, including the suspension or revocation of a
health plan’s license (§ 1386, subd. (a)), assessment of administrative and
10
civil penalties (§§ 1386, subd. (a), 1387, subd. (a)(1) [civil penalty up to
$25,000 per violation to be recovered in civil action], 1393.5, subd. (a) [civil
penalty up to $5,000 to be recovered in civil action]), issuance of cease and
desist orders (§ 1391, subd. (a)(1)), and bringing (or requesting the Attorney
General to bring) an action in superior court for injunctive or other equitable
relief, such as restitution (§ 1392, subd. (a)(1)). (See also Hambrick v.
Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124,
147–148 (Hambrick).) Those remedies are not the exclusive remedies
available to the DMHC’s director. (§ 1394.) In particular, as one court noted,
the director of the “DMHC specifically has the authority to prevent unfair
competition and false advertising,” citing the director’s power to discipline
plans that have “ ‘engaged in any conduct that constitutes fraud or dishonest
dealing or unfair competition, as defined by [s]ection 17200 of the Business
and Professions Code.’ ” (Hambrick, at pp. 158–159, citing § 1386, subd.
(b)(7).)
Other regulatory agencies. In addition to the DMHC’s authority to
regulate managed health care service plans including Medi-Cal plans (i.e.,
California’s Medicaid plans), the DHCS has authority to regulate Medi-Cal
plans through its contractual relationships with those plans. The DOI has
authority to regulate health care services plans that are not licensed by the
DMHC.
III
The UCL and FAL Generally
The UCL prohibits “unfair competition,” which means “any unlawful,
unfair or fraudulent business act or practice and unfair, deceptive, untrue or
misleading advertising.” (Bus. & Prof. Code, § 17200.) In prohibiting
“ ‘unlawful’ ” business acts or practices, “the UCL ‘ “borrows” ’ rules set out in
11
other laws and makes violations of those rules independently actionable.”
(Zhang v. Superior Court (2013) 57 Cal.4th 364, 370 (Zhang).) “Virtually any
law—federal, state or local—can serve as a predicate for a [Business and
Professions Code] section 17200 action.” (State Farm Fire & Casualty Co. v.
Superior Court (1998) 45 Cal.App.4th 1093, 1102–1103.) In addition to
business practices that are unlawful, “a practice may violate the UCL even if
it is not prohibited by another statute. Unfair and fraudulent business
practices are alternate grounds for relief.” (Zhang, at p. 370.)
The FAL prohibits “the dissemination in any advertising media of any
‘statement’ . . . ‘which is untrue or misleading, and which is known, or which
by the exercise of reasonable care should be known, to be untrue or
misleading.’ ” (Committee on Children’s Television, Inc. v. General Foods
Corp. (1983) 35 Cal.3d 197, 210, quoting Bus. & Prof. Code, § 17500.) “False
advertising under the FAL [also] constitutes a fraudulent business practice
under the UCL.” (Hambrick, supra, 238 Cal.App.4th at p. 154, citing Zhang,
supra, 57 Cal.4th at p. 370.)
“The UCL and FAL provide for only equitable relief, specifically
injunctive relief and restitution.” (Hambrick, supra, 238 Cal.App.4th at
p. 155, citing Bus. & Prof. Code, §§ 17203, 17535.) In Zhang, the Supreme
Court stated:
“We have made it clear that ‘an action under the UCL “is
not an all-purpose substitute for a tort or contract action.”
[Citation.] Instead, the act provides an equitable means
through which both public prosecutors and private
individuals can bring suit to prevent unfair business
practices and restore money or property to victims of these
practices. As we have said, the “overarching legislative
concern [was] to provide a streamlined procedure for the
prevention of ongoing or threatened acts of unfair
competition.” [Citation.] Because of this objective, the
remedies provided are limited.’ [Citation.] Accordingly,
12
while UCL remedies are ‘cumulative . . . to the remedies or
penalties available under all other laws of this state’
[citation], they are narrow in scope.” (Zhang, supra,
57 Cal.4th at p. 371.)
In addition to injunctive and other equitable relief, such as restitution, that
may be sought under Business and Professions Code section 17203, the UCL
authorizes public prosecutors to request civil penalties. (Abbott Laboratories
v. Superior Court of Orange County (2020) 9 Cal.5th 642, 652 (Abbott
Laboratories).) Business and Professions Code section 17206, subdivision (a)
provides: “Any person who engages, has engaged, or proposes to engage in
unfair competition shall be liable for a civil penalty not to exceed [$2,500] for
each violation, which shall be assessed and recovered in a civil action brought
in the name of the people of the State of California by the Attorney General,
by any district attorney, . . . [or] by any city attorney of a city having a
population in excess of 750,000 . . . in any court of competent jurisdiction.”
IV
The Trial Court Abused Its Discretion by Abstaining from
Adjudicating the People’s UCL and FAL Causes of Action
The People contend that the trial court abused its discretion by
applying the doctrine of judicial abstention and declining to adjudicate their
UCL and FAL causes of action. We agree.
A
Under the doctrine of judicial abstention, a trial court has discretion to
abstain from adjudicating an action if: (1) “ ‘ “granting the requested relief
would require a trial court to assume the functions of an administrative
agency, or to interfere with the functions of an administrative agency” ’ ”;
(2) the action “ ‘ “involves determining complex economic policy, which is best
handled by the Legislature or an administrative agency” ’ ”; or
(3) “ ‘ “granting injunctive relief would be unnecessarily burdensome for the
13
trial court to monitor and enforce given the availability of more effective
means of redress.” ’ ” (Hambrick, supra, 238 Cal.App.4th at pp. 147–148,
quoting Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th
471, 496 (Arce); Blue Cross of California, Inc. v. Superior Court (2009)
180 Cal.App.4th 138, 157 (Blue Cross).) Also, judicial abstention may
generally be appropriate only if there is an alternative means of resolving the
issues raised in the action. (Hambrick, at p. 148; Klein v. Chevron U.S.A.,
Inc. (2012) 202 Cal.App.4th 1342, 1369 (Klein).)
B
In its minute order granting Kaiser’s motion for summary judgment,
the court described the parties’ arguments on the issue of judicial abstention,
stating:
“[Kaiser] contends that [judicial abstention] is warranted
because adjudicating [the People’s] claims would require
the Court to assume the role of a regulator and substitute
its policy judgments for those of the Legislature and the
[DMHC]. In response to [Kaiser’s] contention that [s]ection
1367.27 is a process statute, the [People] replied that [they
are] merely enforcing the clear mandates set forth in the
statute. At oral argument, the [People] specifically
disclaimed [their] desire to pursue 100 percent accuracy
and stated that [their] suit was targeting year over year
inaccuracies and [Kaiser’s] failure to correct them.”
On the question of whether it should abstain from adjudicating the
People’s action, the court stated: “The statute at issue here is . . . section
1367.27,” and described certain subdivisions within that statute (most of
which we have discussed in Section I above). The court summarized the
DMHC’s regulatory authority under section 1367.27, stating: “The DMHC
discharges its duty to implement section 1367.27 by: issuing All Plan Letters
and other interpretive guidance, annually reviewing and approving each
plan’s proposed compliance procedures, conducting site-surveys and
14
inspections to audit compliance, taking enforcement actions, and
promulgating regulations.” It noted that under section 1344, subdivision (d),
“health plans are immunized from liability for ‘any act done or omitted in
good faith conformity with any rule, form, order or written interpretive
opinion of the director . . . .’ [Citation.]”
After discussing Hambrick and Blue Cross, which as stated above, set
forth the factors that a trial court should consider in exercising its discretion
whether to abstain from adjudicating an action, the court explained its
reasons for abstaining from deciding the People’s claim that Kaiser acted
unlawfully under the UCL by violating section 1367.27. The court explained:
“The legislative history for [section 1367.27] indicates that
the Legislature opted not to impose an accuracy
requirement. [Citation.] It instead chose ‘to lay[ ] out the
steps a health plan must take to ensure an accurate and
up-to-date [PD].’ [Citation.] Given the process steps
outlined in [s]ection 1367.27[, subdivisions] (j)(1), (m)(3),
and (p), it is clear the statute does not require real-time
provider updates and allows plans to make annual (or
semi-annual) inquiries of providers about any updates that
need to be made. In addition, the DMHC allows health
plans to deviate from [s]ection 1367.27’s requirements . . . .
Given the above, the Court finds the [People’s]
interpretation of the statute to be overly simplistic,
inaccurate and would require the Court to disregard policy
judgments that have already been made by the Legislature
and the DMHC.”
After explaining its reasons for abstaining from deciding the People’s
UCL claim based the “unlawful” prong of Kaiser’s alleged violation of section
1367.27, the court then stated: “It is also for the above noted reasons that the
Court finds that it should abstain from every other basis for liability asserted
by the [People] under the UCL and FAL.”
15
The court rejected the People’s argument that it should not abstain
from adjudicating their action because they were seeking remedies that were
not available to the DMHC, such as restitution and civil penalties available
under the UCL and FAL. The court noted that the UCL’s and FAL’s
equitable remedies were subject to a trial court’s broad discretion, whereas
“[t]he DMHC, on the other hand, can order restitution, cease and desist
orders, fines and administrative penalties, revoke or suspend a plan’s license,
and/or bring an action in superior [court] or request that the Attorney
General to [sic] obtain injunctive relief and other equitable relief. [Citation.]”
The court stated: “Notably, an aggrieved party is free to bring an action for
breach of contract and other tort remedies. In addition, [Kaiser] also pointed
out that the DMHC may require a health plan to provide coverage to an
enrollee where he or she obtained services from a provider that was not in-
network due to materially inaccurate, misleading or incomplete information
contained in a [PD]. [Citation.]” Accordingly, the court concluded that the
People’s argument against judicial abstention because of remedies that are
unavailable to the DMHC to be “unpersuasive.”4
C
In general, in reviewing an order granting a motion for summary
judgment, “[w]e review the entire record, ‘considering all the evidence set
forth in the moving and opposition papers except that to which objections
4 In its order, the court also granted the parties’ requests for judicial
notice, which included Kaiser’s request for judicial notice of certain
documents related to the legislative history of section 1367.27. Unlike the
court’s order granting the motion for summary judgment in the People’s
related case against Molina, its order in this case did not mention, much less
discuss, the primary jurisdiction doctrine that Molina had alternatively
raised in support of its motion, presumably because Kaiser’s motion for
summary judgment did not assert that alternative ground in support of its
motion.
16
have been made and sustained.’ [Citation.] Evidence presented in opposition
to summary judgment is liberally construed, with any doubts about the
evidence resolved in favor of the party opposing the motion. [Citation.] [¶]
Summary judgment is appropriate only ‘where no triable issue of material
fact exists and the moving party is entitled to judgment as a matter of law.’
[Citation.] A defendant seeking summary judgment must show that the
plaintiff cannot establish at least one element of the cause of action.
[Citation.]” (Regents of University of California v. Superior Court (2018)
4 Cal.5th 607, 618; see also Code Civ. Proc., § 437c, subd. (c).) In sum, “[i]f a
party moving for summary judgment in any action . . . would prevail at trial
without submission of any issue of material fact to a trier of fact for
determination, then he should prevail on summary judgment.” (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 855.)
Nevertheless, as the parties acknowledge, in the context of an order
dismissing an action based on a trial court’s exercise of its discretion to
abstain from adjudicating an action, we apply the abuse of discretion
standard of review. (Hambrick, supra, 238 Cal.App.4th at p. 146; Arce,
supra, 181 Cal.App.4th at p. 482; Alvarado v. Selma Convalescent Hospital
(2007) 153 Cal.App.4th 1292, 1297 (Alvarado).) “A trial court abuses its
discretion when its decision exceeds the bounds of reason by being arbitrary,
capricious or patently absurd in light of the circumstances. [Citations.]”
(Hambrick, at p. 147.) “ ‘Unless there has been a clear miscarriage of justice,
a reviewing court will not substitute its opinion for that of the trial court so
as to avoid divesting the trial court of its discretionary power. [Citation.]’ ”
(Ibid.) However, if a trial court exercised its discretion to abstain from
adjudicating an action based on its mistaken view of the applicable principles
of law, the court erred regarding the scope of its discretion and therefore
17
abused its discretion. (Ibid.; Acosta v. Brown (2013) 213 Cal.App.4th 234,
258 (Acosta).) “ ‘ “Action that transgresses the confines of the applicable
principles of law is outside the scope of discretion and we call such action an
‘abuse’ of discretion.” ’ ” (Williams v. Superior Court (2017) 3 Cal.5th 531,
540.) Alternatively stated, “when a trial court’s decision rests on an error of
law, that decision is an abuse of discretion.” (People v. Superior Court
(Humberto S.) (2008) 43 Cal.4th 737, 746 (Humberto S.).) On appeal, the
burden is on the appellant to establish an abuse of discretion. (Acosta, at
p. 244.)
D
UCL unlawful prong based on section 1367.27. The People contend
that the trial court abused its discretion by applying the doctrine of judicial
abstention and declining to adjudicate the “unlawful” prong of their UCL
cause of action. In particular, the People argue the court should not have
abstained from adjudicating their UCL claim based on their complaint’s
allegations that Kaiser violated section 1367.27’s PD accuracy requirements.
As we explain below, we conclude that section 1367.27 sets forth certain clear
requirements for PD accuracy, allowing a trial court to perform its ordinary
judicial functions in adjudicating a UCL claim based on allegations that a
health plan violated those requirements. Because the trial court here erred
in construing section 1367.27 and did not correctly apply the standards for
judicial abstention, the court abused its discretion by abstaining from
deciding the “unlawful” prong of the People’s UCL cause of action and
granting Kaiser’s motion for summary judgment.
We begin with the trial court’s conclusion that “the Legislature opted
not to impose an accuracy requirement” in section 1367.27. As discussed
above, section 1367.27, subdivision (a) provides in part: “A [PD] shall not list
18
or include information on a provider that is not currently under contract with
the plan.” That prohibition is a clear directive that a health plan must delete
from its PD any provider that is not currently under contract with it.
Furthermore, section 1367.27, subdivision (e)(1) provides that a health plan
must “update” its online PD at least weekly “when informed of and upon
confirmation by the plan” that: “(A) [a] contracting provider is no longer
accepting new patients . . . [;] [¶] (B) [a] provider is no longer under contract
for a particular plan product[;] [¶] (C) [a] provider’s practice location or other
information . . . has changed[;] [¶] (D) [u]pon completion of the investigation
described in subdivision (o), a change is necessary based on an enrollee
complaint that a provider was not accepting new patients, was otherwise not
available, or whose contact information was listed incorrectly[; or] [¶] (E)
[a]ny other information that affects the content or accuracy of the [PD].”
Section 1367.27, subdivision (e)(2) provides that a plan shall also “delete” a
provider from its PD on confirmation that: “(A) [a] provider has retired or
otherwise ceased to practice[;] [¶] (B) [a] provider or provider group is no
longer under contract with the plan for any reason[; or] [¶] (C) [t]he
contracting provider group has informed the plan that the provider is no
longer associated with the provider group and is no longer under contract
with the plan.” Section 1367.27, subdivision (l)(1) requires a health plan to
review its PD at least annually “to ensure the accuracy of the information
concerning each provider listed in the [PD]” and “shall, at least annually,
review and update the entire [PD] for each product offered.” Also, section
1367.27, subdivision (o)(1) requires a health plan to investigate reports of PD
inaccuracies, providing: “Whenever a health care service plan receives a
report indicating that information listed in its [PD] is inaccurate, the plan
shall promptly investigate the reported inaccuracy and, no later than 30
19
business days following receipt of the report, either verify the accuracy of the
information or update the information in its [PD], as applicable.”
Construing the above statutory provisions together, we conclude, as the
People argue, that section 1367.27 sets forth clear mandates governing the
accuracy of PDs. Given these statutory mandates, we further conclude that a
trial court has the authority and ability, in the exercise of its ordinary
judicial function, to adjudicate a UCL claim based on alleged violations of
section 1367.27. As in Blue Cross, the People here are “asking the court to
perform an ordinary judicial function, namely, to grant relief under the UCL
and the FAL for business practices that are made unlawful by statute.” (Blue
Cross, supra, 180 Cal.App.4th at pp. 157–158 [trial court did not err by
overruling demurrer and exercising its discretion not to abstain from
adjudicating UCL and FAL causes of action based on alleged violations of
statutes prohibiting postclaims underwriting].) The trial court here “is, in
the main, merely being called upon to enforce those statutory prohibitions.”
(Id. at p. 158.)
“[A]bstention is not appropriate where resolution of the issues involves
solely the judicial function of resolving questions of law based on facts before
the court.” (Hambrick, supra, 238 Cal.App.4th at p. 152.) In this case, the
People’s complaint requests that the trial court simply apply section
1367.27’s clear requirements for PD accuracy to the facts alleged and proven
at trial, which the People argue will show Kaiser’s violation of its statutory
obligations regarding PD accuracy and thus the “unlawful” prong of their
UCL cause of action. Therefore, their complaint merely requests that the
trial court “perform an ordinary judicial function.” (Blue Cross, supra,
180 Cal.App.4th at p. 157.) Abstention is not appropriate in these
circumstances. (Hambrick, at p. 152.)
20
In its order granting Kaiser’s motion for summary judgment, the trial
court focused on other provisions of section 1367.27 in support of its view that
the statutory scheme is merely one of establishing a “process” for PD updates
and not mandating PD accuracy. Citing section 1367.27, subdivisions (j)(1),
(m)(3), and (p), the court stated that those “process steps” make it “clear the
statute does not require real-time provider updates and allows plans to make
annual (or semi-annual) inquiries of providers about any updates that need
to be made.” The court also cited section 1343, subdivision (b), which
authorizes the DMHC to allow health plans to deviate from section 1367.27’s
requirements if such deviation is in the public interest.
But the presence of the statutory process requirements does not negate
the statute’s other substantive accuracy requirements, on which the People’s
claims are based. Moreover, no one has suggested that the DMHC has
authorized Kaiser to depart from these accuracy requirements, so enforcing
them against Kaiser could not interfere with any judgment made by the
DMHC. Thus, the trial court’s focus on these other provisions of the statute
do not support its abstention ruling.
Because we agree with the People that the statute contains accuracy as
well as process requirements, we disagree with the trial court’s conclusion
that the People’s contrary interpretation is “overly simplistic, inaccurate and
would require the Court to disregard policy judgments that have already
been made by the Legislature and the DMHC.” The People are merely
seeking to enforce the accuracy requirements of the statute as written.
Accordingly, the trial court abused its discretion by basing its judicial
abstention ruling on a mistaken view of the law regarding the purported
absence of PD accuracy requirements in the statute. Moreover, even if the
trial court’s interpretation of the statute were correct, this would only go to
21
the merits of the People’s claims, rather than any of the three factors for
judicial abstention.
Three factors for judicial abstention. The People also argue that none
of the three factors for abstention, as described above, support the application
of the doctrine of judicial abstention to preclude the trial court’s adjudication
of their UCL cause of action based on Kaiser’s alleged violations of section
1367.27. We agree.
First factor. First, and most importantly, the People argue that their
authority to enforce section 1367.27’s PD accuracy requirements through a
UCL cause of action is complementary to the DMHC’s regulatory authority
over PD accuracy and that their requested relief would not require the trial
court to assume, or interfere with, the functions of the DMHC. (Hambrick,
supra, 238 Cal.App.4th at pp. 147–148; Arce, supra, 181 Cal.App.4th at
p. 496; Blue Cross, supra, 180 Cal.App.4th at p. 158.) The UCL provides
remedies that are cumulative to other remedies provided by law. (Zhang,
supra, 57 Cal.4th at p. 371.) Therefore, as the People argue, the UCL
contemplates that there will, in general, be complementary enforcement
under other statutes. (Ibid.) The UCL “provides an equitable means through
which both public prosecutors and private individuals can bring suit to
prevent unfair business practices and restore money or property to victims of
these practices” and while its “remedies are ‘cumulative . . . to the remedies
or penalties available under all other laws of this state’ [citation], they are
narrow in scope.” (Ibid.) The UCL provides for injunctive and other
equitable relief and, in addition, authorizes public prosecutors to request civil
penalties. (Abbott Laboratories, supra, 9 Cal.5th at p. 652.)
Contrary to Kaiser’s assertion, there is nothing in the language of
section 1367.27 indicating that the Legislature intended the DMHC to have
22
exclusive authority to enforce section 1367.27’s PD accuracy requirements.
As discussed above, the DMHC has general regulatory authority over health
plans under section 1341, subdivision (a). The DMHC also has specific
regulatory authority to develop uniform standards for PDs (§ 1367.27,
subd. (k)) and approve the policies and procedures submitted annually by
health plans for the regular updating of their PDs (§ 1367.27, subd. (m)(1)).
However, none of those regulatory powers support a reasonable inference
that only the DMHC may enforce section 1367.27’s clear requirements for PD
accuracy. Therefore, we conclude that the People have the authority to
enforce section 1367.27’s PD accuracy requirements through a UCL cause of
action and that enforcement authority is complementary to the DMHC’s
regulatory authority over PDs and their accuracy.
We further conclude, as the People argue, that their enforcement of
section 1367.27’s PD accuracy requirements will not assume, or interfere
with, the regulatory functions of the DMHC. Kaiser does not cite, and we are
unaware of, any relief requested in, or other action taken in prosecuting, the
People’s UCL cause of action that “inevitably would lead to conflicting rulings
that would interfere with or undermine the regulatory authority of” the
DMHC. (People ex rel. Orloff v. Pacific Bell (2003) 31 Cal.4th 1132, 1138
(Orloff).) And here, as in Orloff, the regulatory authority (i.e., the DMHC)
has filed an amicus curiae brief in support of the People’s concurrent and
complementary enforcement of section 1367.27’s accuracy requirements by
means of a UCL cause of action. In its amicus brief, the DMHC does not
assert that the People’s action would interfere with the performance of the
DMHC’s regulatory duties regarding PD accuracy. (Cf. Orloff, at p. 1138;
TruConnect Communications, Inc. v. Maximus, Inc. (2023) 91 Cal.App.5th
497, 511–512, 514 [judicial abstention as to plaintiff’s UCL and tort causes of
23
action was not appropriate where there was mere possibility of, or potential
for, conflict with regulatory agency’s decision or enforcement action].)
Though not dispositive, we give considerable weight to the DMHC’s
position regarding section 1367.27 and its regulatory enforcement authority.
In Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 (Bell), a
judicial abstention case in which the DMHC also filed an amicus brief
supporting private enforcement under the UCL, the court stated: “The
construction of a statute by the executive department [i.e., the DMHC]
charged with its administration is entitled to great weight and substantial
deference.” (Id. at p. 217, fn. 8; see also In re Karla C. (2003) 113 Cal.App.4th
166, 175 (Karla C.) [construction of statute by officials charged with its
administration must be given great weight]; Harrott v. County of Kings
(2001) 25 Cal.4th 1138, 1154–1155 (Harrott) [same]; cf. Geier v. American
Honda Motor Co., Inc. (2000) 529 U.S. 861, 883–884 [in federal preemption
case, court placed “some weight” on amicus brief filed by regulatory agency
interpreting its own regulation and concluding that plaintiff’s defective
design action would interfere with its regulatory authority over vehicle seat
belt requirements].) “[T]he mere possibility of, or potential for, conflict with
the [DMHC] is, in general, insufficient in itself to establish that” the People’s
UCL cause of action for Kaiser’s alleged violation of section 1367.27 is
precluded by the DMHC’s regulatory authority over health plans’ PDs and
their accuracy. (Orloff, supra, 31 Cal.4th at p. 1138.)
Here, as noted above, the DMHC’s amicus curiae brief does not assert
that the People’s UCL cause of action would interfere with the performance of
its duties and instead argues it would complement its regulatory efforts
regarding PD accuracy. In particular, regarding the Knox-Keene Act, which
includes section 1367.27, the DMHC states: “The People and DMHC
24
maintain concurrent jurisdiction to enforce the [Knox-Keene] Act. As a
textual matter, nothing in the [Knox-Keene] Act states that DMHC’s
administrative processes provide the exclusive remedy for all potential
violations of the [Knox-Keene] Act.” The DMHC further states: “DMHC’s
enforcement authority of the [Knox-Keene] Act, as a general matter, and with
respect to section 1367.27 specifically, is not exclusive according to the
[Knox-Keene] Act or case law interpreting it.”
Giving weight to the DMHC’s interpretation of section 1367.27 and its
own enforcement authority, we conclude that the People have concurrent, or
complementary, authority to enforce section 1367.27’s PD accuracy
requirements by means of a UCL cause of action based on violations of those
statutory provisions. Furthermore, in its amicus brief, the DMHC states that
it “does not independently review [PDs] for inaccuracies,” and again, in so
doing, does not assert that the People’s UCL and FAL causes of action based
on PD inaccuracies would assume, or interfere with, its regulatory functions.
Therefore, we infer that the DMHC does not interpret section 1367.27’s
provisions as providing it with the sole enforcement authority over PD
accuracy or that the People’s instant action would assume, or interfere with,
its regulatory authority over PD accuracy.5 Accordingly, based on our
5 We also note that the Attorney General for the State of California filed
an amicus curiae brief in support of the People’s appeal. In its brief, the
Attorney General argues, among other things, that the DMHC and public
prosecutors (e.g., the People in this case), serve different functions under, and
have different roles and remedies in enforcing, section 1367.27 and other
statutory provisions and their enforcement roles and remedies are
complementary and do not conflict. In particular, the Attorney General
argues: “Regulation by DMHC does not immunize a health plan from
liability under the UCL and FAL.” It further argues: “Notably, [s]ection
1367.27 itself does not foreclose dual enforcement . . . and is not purely
regulatory in nature. The statute simply requires that [PDs] be accurate—
25
consideration of section 1367.27’s provisions, relevant case law, and the
DMHC’s and Attorney General’s amicus curiae briefs, we conclude that the
first factor for the application of the doctrine of judicial abstention does not
rationally support the trial court’s decision to abstain from adjudicating the
People’s UCL cause of action based on Kaiser’s alleged violation of section
1367.27’s PD accuracy requirements. 6
Second factor. Regarding the second factor, the People argue that
adjudication of their UCL cause of action based on Kaiser’s alleged violation
of section 1367.27’s PD accuracy requirements would not require the
determination by the trial court of complex economic policy, which would be
best handled by the Legislature or the DMHC. (Hambrick, supra,
maintaining inaccurate [PDs], then, is an unlawful business act under the
UCL.” Therefore, the Attorney General argues that the trial court abused its
discretion by abstaining from adjudicating the People’s UCL and FAL causes
of action. Although the Attorney General is not the regulatory agency that
enforces section 1367.27’s requirements, its position is consistent with the
DMHC’s and we find it to be persuasive in determining whether the People’s
UCL cause of action would assume, or interfere with, the regulatory
authority of the DMHC. (Cf. Bell, supra, 131 Cal.App.4th at p. 217, fn. 8;
Harrott, supra, 25 Cal.4th at pp. 1154–1155; Karla C., supra, 113
Cal.App.4th at p. 175.)
6 Although Kaiser cites cases, including Hambrick, Alvarado, and Desert
Healthcare Dist. v. PacifiCare FHP, Inc. (2001) 94 Cal.App.4th 781 (Desert
Healthcare), which affirmed trial court orders abstaining from adjudicating
UCL and FAL causes of action, the underlying factual allegations and
relevant statutes in those cases are inapposite to those in this case and
therefore do not persuade us to reach a contrary conclusion. (Hambrick,
supra, 238 Cal.App.4th at pp. 149, 152 [abstaining from adjudicating what
level of risk assumed by medical group under capitation agreement would
make it a health care service plan]; Alvarado, supra, 153 Cal.App.4th at
pp. 1295, 1304–1306 [abstaining from adjudicating alleged violations of
complex nursing hour requirements for skilled nursing and intermediate care
facilities]; Desert Healthcare, at p. 796 [abstaining from adjudicating
appropriate levels of capitation].)
26
238 Cal.App.4th at pp. 147–148; Arce, supra, 181 Cal.App.4th at p. 496; Blue
Cross, supra, 180 Cal.App.4th at p. 1258.) In support of their argument, the
People cite Blue Cross, in which the court stated: “[T]he city attorney’s suit
does not call upon the court to determine complex economic policy. The
Legislature has already made the relevant policy determinations by defining
and outlawing postclaims underwriting. The court is, in the main, merely
being called upon to enforce those statutory provisions.” (Blue Cross, at
p. 1259.) The People also cite Arce, in which the court stated: “[T]he
Legislature already has made the relevant policy determinations in
mandating that health care plans provide coverage for the medically
necessary treatment of autism under the same terms and conditions applied
to other medical conditions.” (Arce, supra, 181 Cal.App.4th at p. 501.)
Similar to the conclusions in Blue Cross and Arce, we conclude that the
Legislature here has already made its determinations involving complex
economic policy, as well as general policy, by enacting section 1367.27’s clear
requirements for PD accuracy. (Cf. Blue Cross, supra, 180 Cal.App.4th at
p. 1259.) Therefore, in simply adjudicating the People’s UCL cause of action
based on Kaiser’s alleged violation of those clear statutory requirements, the
court would not be making any economic or other policy determinations. It
would merely be enforcing the policy judgments already made by the
Legislature. Accordingly, this factor also does not rationally support the trial
court’s decision to abstain.
Third factor. Regarding the third factor, the People argue that the
relief they request in their complaint, which includes certain injunctive relief,
would not be unnecessarily burdensome for the trial court to monitor and
that there is no other means of redress that would be more effective.
(Hambrick, supra, 238 Cal.App.4th at pp. 147–148; Arce, supra,27
181 Cal.App.4th at p. 496; Blue Cross, supra, 180 Cal.App.4th at p. 1258.) In
their UCL cause of action, the People request the following relief: (1) civil
penalties pursuant to Business and Professions Code sections 17206,
subdivision (a) and 17206.1, subdivision (a)(1); (2) restitution; and
(3) provisional and final remedies against Kaiser, including, without
limitation, “an injunction prohibiting [Kaiser] from continuing [its] unlawful,
unfair, and fraudulent activities.”
In Blue Cross, the court stated: “There is no indication in the city
attorney’s complaint that it is asking for the court to monitor anyone or
anything. The city attorney is asking for an injunction. If the trial court
issues an injunction, then defendants will be expected to comply with it, but
that does not impose on the court any active role in monitoring compliance.”
(Blue Cross, supra, 180 Cal.App.4th at p. 1259.) As in Blue Cross, we
conclude here that the People’s request for injunctive relief on their UCL
cause of action simply requests an injunction and, in so doing, does not
request any ongoing monitoring of Kaiser’s future conduct. (Ibid.; cf. Arce,
supra, 181 Cal.App.4th at p. 500 [abstention not warranted where no
indication that requested injunctive or declaratory relief would require
long-term monitoring or would otherwise be unnecessarily burdensome for
trial court].)
In issuing injunctive relief in its equitable discretion, the trial court
would have the ability to fashion an injunction that, for example, simply
prohibits future violations by Kaiser of section 1367.27’s PD accuracy
requirements, which could be identified by reference to specific subdivisions
of section 1367.27. The People would then be in a position to file a future
enforcement action if they believe Kaiser violated that injunction. In that
scenario, no ongoing monitoring by the court would be required and thus no
28
unnecessary burden would be imposed on the court to conduct ongoing
monitoring of its injunction. (Cf. Blue Cross, supra, 180 Cal.App.4th at
p. 1259.) Furthermore, as in Blue Cross, the People’s complaint does not seek
only injunctive relief, but also seeks civil penalties and restitution. (Cf. ibid.)
Therefore, Kaiser could not show the trial court should have abstained from
adjudicating the People’s UCL cause of action in its entirety, because the
third factor concerns only the possible burdens imposed on a trial court to
monitor an injunction. (Ibid.)
Finally, we are unpersuaded by Kaiser’s assertion that the DMHC has
more effective means than the People have (i.e., remedies available to the
People pursuant to the UCL) for redress of any violations by Kaiser of section
1367.27’s PD accuracy requirements. Although, as the DMHC notes in its
amicus curiae brief, the DMHC possesses a range of remedies for
enforcement of section 1367.27’s provisions, which are similar to those
available to the People pursuant to a UCL cause of action, Kaiser does not
show that the DMHC’s remedies are more effective in remedying its alleged
violations of section 1367.27’s PD accuracy requirements than the remedies
the People seek in their UCL cause of action. Also, contrary to Kaiser’s
apparent assertion, we conclude that the unique remedies available to the
People and the trial court under the UCL for Kaiser’s alleged violations of
section 1367.27’s PD accuracy requirements, which are unavailable to the
DMHC in the performance of its regulatory authority under section 1367.27
(and the Knox-Keene Act in general), weigh against the application of judicial
abstention in this case. (Hambrick, supra, 238 Cal.App.4th at p. 148; Klein,
supra, 202 Cal.App.4th at p. 1369.) In particular, as the People argue, the
UCL would allow them to seek remedies for those enrollees and employers
who were harmed by their reliance on Kaiser’s alleged PD inaccuracies.
29
Kaiser does not cite, nor are we aware of, any express provision in section
1367.27 or elsewhere in the Knox-Keene Act granting the DMHC the
authority to seek such remedies for broad classes of enrollees and employers.
Because the trial court’s order omitted any substantive analysis of each
of the three factors that courts generally must consider in exercising their
discretion to abstain from adjudicating an action, and because it relied on an
incorrect interpretation of the statute, we conclude that the court did not
apply the correct principles of law, and therefore abused its discretion, by
deciding to abstain from adjudicating the People’s UCL cause of action based
on Kaiser’s alleged violations of section 1367.27’s PD accuracy requirements.
(Hambrick, supra, 238 Cal.App.4th at p. 147; Acosta, supra, 213 Cal.App.4th
at p. 258; Humberto S., supra, 43 Cal.4th at p. 746.) For the reasons we have
discussed, we further conclude that, in the circumstances of the instant
action, it would exceed the bounds of reason for a court to abstain from
adjudicating the People’s UCL cause of action based on Kaiser’s alleged
violations of section 1367.27’s PD accuracy requirements. Accordingly, we
reverse the trial court’s order and conclude that on remand the court may not
abstain from adjudicating the People’s UCL cause of action based on these
alleged violations. (Cf. Arce, supra, 181 Cal.App.4th at pp. 500– 502 [trial
court abused its discretion by abstaining from adjudicating UCL cause of
action based on alleged Mental Health Parity Act violations because that
statute imposed mandatory obligations on health plans and was not purely a
regulatory statute and the matters were not within exclusive jurisdiction of
the DMHC and did not require court to evaluate complex issues of economic
policy].)
30
E
UCL unlawful prong based on other predicate statutes. The People
contend that the trial court also abused its discretion by abstaining from
adjudicating their UCL cause of action based on Kaiser’s alleged violations of
statutes other than section 1367.27 (i.e., other predicate statutes). As
discussed above, the People’s complaint alleged, among other things, that
Kaiser published inaccurate PDs and, in so doing, violated certain state and
federal statutes and regulations other than section 1367.27, including:
(1) the Affordable Care Act; (2) the Federal Mental Health Parity and
Addiction Equity Act; (3) sections 1367.03 and 1367.035 regarding reporting
of timely access and physician data; and (4) federal Medicare regulations
requiring PD accuracy.7 The People argue that the trial court abused its
discretion by failing to properly consider each of those predicate statutes and
regulations before abstaining from adjudicating the unlawful prong of their
UCL cause of action. Instead, they argue the court wrongly relied solely on
Kaiser’s alleged violations of section 1367.27 in deciding whether it should
abstain from adjudicating all of Kaiser’s alleged violations of state and
federal statutes and regulations underlying the unlawful prong of their UCL
cause of action.8
7 The People’s complaint also alleged that Kaiser failed to comply with
section 1367.27, subdivision (f)’s requirement that it prominently disclose in
its PDs and on its internet website both an email address and a telephone
number for members of the public and providers to notify it if the information
in its PDs appears to be inaccurate.
8 We reject Kaiser’s argument that the People waived or forfeited this
contention because they did not adequately raise it below in opposition to
Kaiser’s motion for summary judgment. In particular, we note that it was
Kaiser’s burden to show there was no triable issue of material fact and that it
was entitled to judgment and therefore Kaiser also had the burden to show
31
In its order, the trial court substantively discussed only section 1367.27
in accepting Kaiser’s argument that the court should abstain from
adjudicating the People’s action against it. For example, the court stated:
“The statute at issue here is . . . section 1367.27,” and then described certain
subdivisions of section 1367.27. As discussed above, the court then rejected
the People’s interpretation of section 1367.27 as overly simplistic and
inaccurate and stated that adjudication of that issue would disregard policy
judgments already made by the Legislature. The court then found that for
those very same reasons (i.e., “for the above noted reasons”), it would also
abstain from adjudicating all other grounds for the People’s UCL and FAL
causes of action (e.g., other statutory and regulatory predicates for the
unlawful prong of their UCL cause of action).
As we concluded above, the court abused its discretion in abstaining
from adjudicating the People’s section 1367.27 predicate for the unlawful
prong of their UCL cause of action. Because the court relied solely on this
same faulty reasoning in abstaining from adjudicating the other predicates
for the unlawful prong, we conclude that the court’s abstention ruling as to
those other UCL predicates cannot stand for the reasons we have discussed.
that the trial court should abstain from adjudicating each of the causes of
action alleged against it. It was not the People’s burden to show that the
court should not abstain from adjudicating their causes of action. To the
extent Kaiser argues that the People waived their contention by failing to
raise their “new theory” in their opposition to its motion for summary
judgment, Kaiser incorrectly describes the predicates expressly alleged in the
People’s complaint as “new.” As the People note, they expressly raised and
discussed the issue of the other predicate statutes and regulations in their
opposition to Kaiser’s motion for summary judgment. Therefore, we conclude
the People preserved that contention for appeal and did not waive or forfeit
it. (Cf. Summers v. Superior Court (2018) 24 Cal.App.5th 138, 143 [single
sentence in trial court brief was sufficient to preserve issue for appeal].)
32
Accordingly, we reverse the trial court’s abstention ruling as to those
alternate UCL theories as well.
F
UCL unfair and fraudulent prongs. The People contend that the trial
court also abused its discretion by abstaining from adjudicating the unfair
and fraudulent prongs that they separately alleged as grounds for their UCL
cause of action. As noted above, the People’s complaint alleged, among other
things, that Kaiser’s practices were unfair and fraudulent within the
meaning of the UCL (e.g., misleading and/or fraudulent advertising
regarding providers listed in its PDs). (Bus. & Prof. Code, § 17200.) As
demonstrated in Section IV(E) above, the trial court substantively discussed
only section 1367.27 in accepting Kaiser’s argument that the court should
abstain from adjudicating the People’s action against it. The court then, in a
conclusory manner, applied its faulty reasoning for abstaining from
adjudicating the UCL unlawful prong based on section 1367.27 to the other
UCL prongs and abstained from adjudicating those UCL prongs as well.
Once again, however, because the premise of the court’s reasoning to abstain
from adjudicating the unfair and fraudulent prongs of the People’s UCL
cause of action was faulty as discussed above, its reliance on that faulty
premise was an abuse of its discretion. Accordingly, we reverse the trial
court’s abstention ruling as to these UCL theories as well.
G
FAL cause of action. For the same reasons discussed in Section IV(E)
and (F), the People contend that the trial court also abused its discretion by
abstaining from adjudicating their FAL cause of action. Their FAL cause of
action incorporated the complaint’s preceding allegations and specifically
alleged that Kaiser violated the FAL by publicly disseminating false and
33
misleading PDs through which it hoped to obtain customers. Because the
trial court incorporated the same erroneous reasons for abstaining from the
FAL cause of action as it gave for abstaining from the UCL cause of action,
we reverse its abstention ruling as to the FAL cause of action as well.
H
Conclusion. Because we conclude that the trial court abused its
discretion by abstaining from adjudicating each of the three prongs of the
People’s UCL cause of action and their FAL cause of action, we must reverse
the order granting Kaiser’s motion for summary judgment and the judgment
entered in Kaiser’s favor.
DISPOSITION
The judgment is reversed and the matter is remanded with directions
that the trial court vacate its order granting Kaiser’s motion for summary
judgment and issue a new order denying its motion for summary judgment.
The People shall recover their costs on appeal.
BUCHANAN, Acting P. J.
WE CONCUR:
KELETY, J.
CASTILLO, J.
34
Filed 10/22/24
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE ex rel. MARA W. D081262
ELLIOTT, as San Diego City Attorney,
etc.,
Plaintiff and Appellant, (Super. Ct. No. 37-2021-
00027298-CU-BT-CTL)
v.
ORDER CERTIFYING
KAISER FOUNDATION HEALTH OPINION FOR PUBLICATION
PLAN, INC.,
Defendant and Respondent.
THE COURT:
The opinion in this case filed September 30, 2024, was not certified for
publication. It appearing the opinion meets the standards for publication specified in
California Rules of Court, rule 8.1105(c), the requests filed October 18, 2024, and
October 21, 2024, pursuant to rule 8.1120(a) for publication are GRANTED.
IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words “Not to Be Published in the Official Reports”
appearing on page one of said opinion be deleted and the opinion herein be published in
the Official Reports.
BUCHANAN, Acting P. J.
Copies to: All parties
2