Cal. Medical Assn. v. Aetna Health of Cal. Inc.

Filed 4/28/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
CALIFORNIA MEDICAL B304217
ASSOCIATION,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC487412)
v.
AETNA HEALTH OF
CALIFORNIA INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Elihu M. Berle, Judge. Affirmed.
Whatley Kallas, Alan M. Mansfield, Edith M. Kallas and
Deborah J. Winegard for Plaintiff and Appellant.
Spertus, Landes & Umhofer, Matthew Umhofer, Elizabeth
Mitchell; Williams & Connolly, Enu Mainigi, Craig Singer, Grant
Geyerman and Benjamin Hazelwood for Defendant and
Respondent.
**********
Defendant and respondent Aetna Healthcare of California,
Inc. (Aetna), doing business as Aetna U.S. Healthcare Inc. and
Aetna Health of California, Inc., provides health insurance to its
subscribers through a network of physicians who are contracted
to provide services for discounted rates. Subscribers may receive
services from these in-network physicians, or from out-of-network
physicians at a higher share of the cost. Aetna implemented a
policy to restrict or eliminate patient referrals by its in-network
physicians to out-of-network physicians. Plaintiff and appellant
California Medical Association (CMA) and others sued Aetna,
seeking among other claims, an injunction for alleged violations
of the Unfair Competition Law (UCL; Bus. & Prof. Code,
§ 17200). The trial court granted Aetna’s motion for summary
judgment, finding CMA lacked standing under the UCL because
it was not directly injured by Aetna’s policy.
California courts have permitted associations like CMA to
bring a nonclass representative action on behalf of their members
and others under Code of Civil Procedure section 382 where such
an action is justified by considerations of necessity, convenience,
and justice. (See, e.g., Raven’s Cove Townhomes, Inc. v. Knuppe
Development Co. (1981) 114 Cal.App.3d 783, 793–796, and cases
cited therein.) None of the cases recognizing representational
standing under section 382 involve UCL claims.
The law recognizing an association’s standing to bring a
nonclass representative action developed many years before the
electorate passed Proposition 64 in 2004, which changed the
requirements for standing to bring a UCL claim. Proposition 64
amended the UCL to limit standing to bring a private
enforcement action only to one “ ‘who has suffered injury in fact
and has lost money or property as a result of the unfair
competition.’ ” (Amalgamated Transit Union, Local 1756, AFL-
2
CIO v. Superior Court (2009) 46 Cal.4th 993, 1000 (Amalgamated
Transit); see also Bus. & Prof. Code, § 17204.)
This appeal presents two issues. First, we must decide if
the body of law permitting an association to bring a nonclass
representative action bestows standing upon CMA to seek an
injunction against Aetna under the UCL, whether or not CMA
individually suffered injury in fact and lost money or property.
We find the answer to that question is “no.” Next, we must
decide whether CMA’s evidence that it diverted substantial
resources to assist its physician members who were injured by
Aetna’s policy created a material disputed fact as to whether
CMA itself suffered injury in fact and lost money or property. We
find the answer to that question also is “no” and affirm the trial
court’s grant of summary judgment on that basis.
BACKGROUND
An in-network physician commenced this action as a class
action against Aetna in 2012. The complaint was amended in
2013 to add more plaintiffs, including individual physicians, their
medical practices, and medical associations, including CMA. The
putative class action alleged breach of contract, tort claims,
violation of the UCL, and other claims. No motion for class
certification was ever filed. After several years of litigation and
mediation, the parties stipulated to dismiss the class claims and
to dismiss all plaintiffs except CMA, which would proceed as the
only plaintiff with a single cause of action against Aetna for
injunctive relief under the UCL.
The operative fifth amended complaint alleged Aetna’s
insurance plans were marketed to physicians and subscribers as
permitting subscribers to use out-of-network providers and
facilities without limitation, albeit at a higher share of the cost.
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But the agreements between Aetna and its member physicians
required the physicians to use in-network providers to the “fullest
extent possible, consistent with sound medical judgment.” Aetna
sent letters to member physicians threatening that “[u]se of [out-
of-network] facilities may be considered non-compliance with
your physician agreement in which you agree to use contracted,
participating network facilities.” Aetna also told its member
physicians that continued referrals to out-of-network providers
would result in publication of a warning to subscribers about out-
of-network costs on the physician’s “DocFind” profile on Aetna’s
website.
CMA alleged Aetna unlawfully interfered with its member
physicians’ exercise of their independent medical judgment and
treatment of patients in violation of various California statutes,
including Business and Professions Code sections 510 and 2056,
Insurance Code section 10133, and Health and Safety Code
section 1367, and other statutes.
Regarding standing, the complaint alleged CMA “is a non-
profit, incorporated professional organization that represents
over 37,000 physicians throughout the state of California,” and
CMA “supports its members and carries out its mission through
legislative, legal, regulatory, economic, and social advocacy.”
CMA alleged it was “forced to expend significant time and
resources including but not limited to investigation and review of
[Aetna’s] wrongdoing, discussion and strategizing within their
Executive Committee and Board of Director Meetings, and
devoting time responding to physician inquiries about [Aetna’s]
wrongdoing.”
Aetna, relying on Amalgamated Transit, moved for
summary judgment, or in the alternative, summary adjudication,
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contending there was no material dispute that CMA lacked
standing to bring a UCL claim because it was not directly
harmed by Aetna’s alleged wrongdoing. Aetna provided evidence
that its challenged policy did not apply to CMA, which had no
contract with Aetna, and CMA primarily claimed injury to its
physician members for loss of patients and revenue. Aetna
argued CMA’s claim that it diverted resources to address Aetna’s
policy was insufficient to establish that CMA sustained direct
injury and loss of money.
In opposition, CMA provided the declaration of Francisco
Silva, its general counsel and senior vice president of legal,
policy, and economic services, who testified that “preventing
conduct that interferes with the physician-patient relationship” is
part of CMA’s core mission. He testified CMA has been
“especially active in advocacy and education on issues involving
heath insurance companies’ interference with the sound medical
judgment of physicians providing care to their enrollees.”
Mr. Silva explained in 2010, CMA heard about Aetna
terminating or threatening to terminate its physician members
from its network for referring patients to out-of-network
providers. CMA “diverted . . . staff time from other CMA projects
and duties that would otherwise have been devoted to serving our
membership to investigate Aetna’s business practice . . . .” CMA’s
investigation determined that Aetna’s conduct interfered with its
members’ exercise of their sound medical judgment, and therefore
Aetna’s conduct was frustrating CMA’s purpose of protecting
physicians and the public. The investigation was not undertaken
for the purpose of bringing a lawsuit, but to advise CMA’s
members and the public about how to deal with Aetna’s threats.
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Mr. Silva estimated that CMA diverted 200 to 250 hours of staff
time addressing Aetna’s conduct.
The trial court granted the motion and entered judgment
for Aetna, finding Amalgamated Transit controlled on the issue of
standing to bring UCL claims and CMA had not shown direct
injury or loss of money or property. This timely appeal followed.
DISCUSSION
1. Standard of Review
“[T]he party moving for summary judgment bears the
burden of persuasion that there is no triable issue of material fact
and that he is entitled to judgment as a matter of law.” (Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).)
“Once the [movant] has met that burden, the burden shifts to the
[other party] to show that a triable issue of one or more material
facts exists as to [that] cause of action . . . .” (Code Civ. Proc.,
§ 437c, subd. (p)(2); Aguilar, at p. 850.) The party opposing
summary judgment “shall not rely upon the allegations or denials
of its pleadings to show that a triable issue of material fact exists
but, instead, shall set forth the specific facts showing that a
triable issue of material fact exists . . . .” (§ 437c, subd. (p)(2).)
A triable issue of material fact exists where “the evidence would
allow a reasonable trier of fact to find the underlying fact in favor
of the party opposing the motion in accordance with the
applicable standard of proof.” (Aguilar, at p. 850.)
Our Supreme Court has made clear that the purpose of the
1992 and 1993 amendments to the summary judgment statute
was “ ‘to liberalize the granting of [summary judgment]
motions.’ ” (Perry v. Bakewell Hawthorne, LLC (2017) 2 Cal.5th
536, 542; Aguilar, supra, 25 Cal.4th at p. 854.) It is no longer
called a “disfavored” remedy. (Perry, at p. 542.) “Summary
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judgment is now seen as a ‘particularly suitable means to test the
sufficiency’ of the plaintiff’s or defendant’s case.” (Ibid.) On
appeal, “we take the facts from the record that was before the
trial court . . . . ‘ “We review the trial court’s decision de novo,
considering all the evidence set forth in the moving and opposing
papers except that to which objections were made and
sustained.” ’ ” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th
1028, 1037, citation omitted.)
2. An Association Must Sustain Direct Economic Injury
to Itself and Not Just Its Members to Bring a UCL
Claim.
The UCL prohibits “any unlawful, unfair or fraudulent
business act or practice . . . .” (Bus. & Prof. Code, § 17200.) In
2004, the California electorate amended the UCL to provide that
private enforcement actions may be brought only by one who has
suffered direct economic injury. (Amalgamated Transit, supra,46 Cal.4th at p. 1000; see also Bus. & Prof. Code, § 17204
[“Actions for relief pursuant to this chapter shall be prosecuted
exclusively . . . by a person who has suffered injury in fact and
has lost money or property as a result of the unfair
competition.”].) This standing requirement replaced the former
standing provision which allowed a UCL claim to be brought “ ‘by
any person acting for the interests of itself, its members or the
general public.’ ” (Amalgamated Transit, at p. 1000.)
In Amalgamated Transit, a union plaintiff sought to assert
UCL claims against defendant employers. The union conceded it
had not suffered direct injury under the UCL and claimed
standing as the assignor of the claims of employees and former
employees. The Supreme Court held that “[t]o allow a noninjured
assignee of an unfair competition claim to stand in the shoes of
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the original, injured claimant would confer standing on the
assignee in direct violation of the express statutory requirement
in the unfair competition law, as amended by the voters’
enactment of Proposition 64, that a private action under that law
be brought exclusively by a ‘person who has suffered injury in fact
and has lost money or property as a result of the unfair
competition.’ ” (Amalgamated Transit, supra, 46 Cal.4th at
p. 1002.) The court concluded that “all unfair competition law
actions seeking relief on behalf of others . . . must be brought as
class actions.” (Id. at p. 1005.)
Two years after deciding Amalgamated Transit, the
Supreme Court again held that, to have standing to bring a claim
under the UCL after the 2004 amendments, a plaintiff must be
able to show he personally sustained economic harm and that he
lost money or property caused by the defendant’s misconduct.
(Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 317
(Kwikset) [“Proposition 64 should be read in light of its apparent
purposes, i.e., to eliminate standing for those who have not
engaged in any business dealings with would-be defendants . . . ,
while preserving for actual victims of deception and other acts of
unfair competition the ability to sue and enjoin such
practices. . . .”].) The plaintiff in Kwikset was a consumer who
bought a Kwikset lockset that was misrepresented as “Made in
U.S.A.” He would not have bought the lockset but for the
misrepresentation. (Id. at p. 319.) The Supreme Court found
“plaintiffs who can truthfully allege they were deceived by a
product’s label into spending money to purchase the product, and
would not have purchased it otherwise, have ‘lost money or
property’ within the meaning of Proposition 64 and have standing
to sue.” (Id. at p. 317.)
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We find the decisions in Amalgamated Transit and Kwikset
require an association such as CMA to produce evidence that
CMA itself, and not just its members, lost money or property in
order to have standing to sue under the UCL; and the cases
recognizing an association may have standing to assert its
members’ non-UCL claims do not apply here. (See, e.g., Raven’s
Cove Townhomes, Inc. v. Knuppe Development Co., supra,
114 Cal.App.3d at pp. 793–796; Kwikset, supra, 51 Cal.4th at
pp. 317–319.)
3. Evidence That an Association Diverted Resources to
Investigate Its Members’ Claims of Injury and
Advocate for Their Interests Is Not Enough to Show
Standing Under the UCL.
This brings us to the question whether CMA produced
evidence of direct economic injury to CMA itself. CMA argues we
should rely upon Animal Legal Defense Fund v. LT Napa
Partners LLC (2015) 234 Cal.App.4th 1270 (ALDF) to find
diversion of its resources is a sufficient injury to confer standing
under the UCL. In its analysis, the ALDF court discussed
Kwikset at length, concluding the plaintiff had standing because,
like the plaintiff in Kwikset, the plaintiff in ALDF spent
resources it would not have spent but for defendants’ illegal
conduct. (ALDF, at pp. 1283–1284.)
Plaintiff in ALDF was an organization that advocated for a
ban on the sale of foie gras and engaged in a campaign to inform
legislators and the public that producing foie gras involves
animal cruelty because birds are forcibly overfed. The plaintiff
sued to enjoin defendants under the UCL for selling foie gras in
their restaurant in violation of the ban on its sale. (ALDF, supra,
234 Cal.App.4th at p. 1275.) Defendants filed a special motion to
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strike under Code of Civil Procedure section 425.16, arguing the
lawsuit arose from protected activity, and that the plaintiff could
not demonstrate a probability of prevailing on the merits because
it lacked standing under the UCL. (ALDF, at p. 1278.)
To show it had standing, the plaintiff produced evidence
that it diverted significant organizational resources to combat the
defendants’ continuing illegal sales of foie gras. The plaintiff had
lobbied in support of the ban and after it became law. The
plaintiff paid a private investigator to dine at the restaurant
where he was served foie gras three times after the ban became
law. The plaintiff spent significant staff time and resources over
the course of three months to share its investigation findings
with local law enforcement authorities and try to persuade them
to enforce the ban. The plaintiff itself was harmed by having to
spend money that would have been unnecessary to spend if the
defendants had not violated the ban. (ALDF, supra,
234 Cal.App.4th at pp. 1279–1282; id. at p. 1282 [“Plaintiff, thus,
has presented evidence of a genuine and long-standing interest in
the effective enforcement of the [statutory ban on foie gras] and in
exposing those who violate it. Plaintiff’s evidence provides a
basis to conclude that defendants’ alleged violations of the statute
tended to frustrate plaintiff’s advocacy for an effective ban on the
sale of foie gras in California, and tended to impede plaintiff’s
ability to shift its focus on advocacy efforts in, for example, other
states and at the federal level.”].)
CMA says the declaration of Mr. Silva and other evidence it
produced show the same type of injury that ALDF held was
sufficient to show a likelihood of success in proving the plaintiff
had standing under the UCL, and Aetna did not object to any of
CMA’s evidence.
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We find ALDF is distinguishable and does not apply here.
The key factual and procedural distinction is the plaintiff in
ALDF did not bring a representative action, as CMA did in this
case. ALDF was not advocating on behalf of or providing services
to help its members deal with their loss of money or property.
The ALDF opinion does not even say whether ALDF had
members or who they might be. (ALDF, supra, 234 Cal.App.4th
at pp. 1279–1280.) We can guess if ALDF has members, they
support ALDF’s mission to prevent animal cruelty. The mission
and very purpose for being of the plaintiff in ALDF—to prevent
animal cruelty—were directly injured by the defendants’
violation of the ban on sales of foie gras. (Id. at pp. 1282–1283.)
Unlike the facts in ALDF, the evidence here was that CMA
was founded to advocate on behalf of its physician members. The
staff time spent here in response to Aetna’s termination and
threats to terminate physicians was typical of the support CMA
provides its members in furtherance of CMA’s mission. If we
were to apply ALDF to this case, then any organization acting
consistently with its mission to help its members through
legislative, legal and regulatory advocacy could claim standing
based on its efforts to address its members’ injuries. The 2004
amendments to the UCL eliminated such representational
standing. (Amalgamated Transit, supra, 46 Cal.4th at p. 1005.)
We now turn to the key legal distinction between ALDF
and this case. The court in ALDF did not distinguish
Amalgamated Transit or explain how its decision was either
consistent with, or created an exception to, or extended the
rationale and holding of Amalgamated Transit, which, like this
case, was a representative action seeking to rectify injury to its
aggrieved members. The likely reason for this is because ALDF
did not bring a representative action on behalf of aggrieved
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members like the union in Amalgamated Transit, or CMA in this
case. Unlike the union in Amalgamated Transit, CMA does not
acknowledge that only its members, and not CMA itself, suffered
actual injury, but we have rejected CMA’s position. Just like the
union in Amalgamated Transit, CMA brought this representative
action to rectify injury to its aggrieved physician members. Like
the trial court below, we see no way to square the opinion in
ALDF with the on-point Supreme Court decision in Amalgamated
Transit.
CMA also relies on McGill v. Citibank, N.A. (2017)
2 Cal.5th 945, which held a private person or association may
seek injunctive relief for the benefit of the general public, so long
as the plaintiff has standing. (Id. at p. 259 [“We conclude that
these provisions do not preclude a private individual who has
‘suffered injury in fact and has lost money or property as a result
of’ a violation of the UCL or the false advertising law (Bus. &
Prof. Code, §§ 17204, 17535)—and who therefore has standing to
file a private action—from requesting public injunctive relief in
connection with that action.”].) Assuming without deciding CMA
seeks to benefit the general public, and not just its members,
McGill is of no use to CMA because it did not suffer injury in fact
or lose money or property as a result of the UCL violations it
alleges here.
As explained at the outset, it is unnecessary to address and
discuss the other California cases CMA cites (e.g., Raven’s Cove
Townhomes, Inc. v. Knuppe Development Co., supra,
114 Cal.App.3d at pp. 793–796, and cases cited therein), holding
an association may maintain a representative, nonclass action on
behalf of its members, because none of those cases involved
claims under the UCL or another statute that expressly limited
the right to sue to those persons who suffered direct injury in fact
and lost money or property.
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4. The Federal Authorities CMA Cites Are Neither
Binding on This Court Nor Instructive.
We recognize that in amending the UCL in 2004, the
drafters and electorate intended to incorporate federal
requirements for standing. “[Proposition 64] declares: ‘It is the
intent of the California voters in enacting this act to prohibit
private attorneys from filing lawsuits for unfair competition
where they have no client who has been injured in fact under the
standing requirements of the United States Constitution.’ ”
(Kwikset, supra, 51 Cal.4th at p. 322.) However, Kwikset also
acknowledged that UCL standing requirements are far more
stringent than the federal standing requirements. “ ‘Whereas a
federal plaintiff’s “injury in fact” may be intangible and need not
involve lost money or property, Proposition 64, in effect, added a
requirement that a UCL plaintiff’s “injury in fact” specifically
involve “lost money or property.” ’ ” (Kwikset, at p. 324.) We do
not find the federal authorities CMA cites are instructive in
deciding the issue of an association’s standing to bring a
representative action under the UCL.
Most of the federal authorities cited in CMA’s briefs discuss
organizational or associational standing to bring non-UCL
claims. (See, e.g., Fair Housing Council v. Roommate.com, LLC
(9th Cir. 2012) 666 F.3d 1216, 1219 [addressing an organization’s
standing to seek relief under California Fair Employment and
Housing Act]; Fair Housing of Marin v. Combs (9th Cir. 2002)
285 F.3d 899, 902–905 [analyzing standing in the context of fair
housing claims]; El Rescate Legal Services, Inc. v. Executive Office
of Immigration Review (9th Cir. 1991) 959 F.2d 742, 748
[addressing standing to assert claims for violations of
immigration law].) None of these cases is helpful as they do not
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consider the stringent requirements for UCL standing after the
Proposition 64 amendments became effective in 2004.
Southern California Housing Rights Center v. Los Feliz
Towers Homeowners Assn. (C.D.Cal. 2005) 426 F.Supp.2d 1061,
does address UCL standing. That case held the Housing Rights
Center had UCL standing after the 2004 amendments because
the center presented “evidence of actual injury based on loss of
financial resources in investigating this claim and diversion of
staff time from other cases to investigate the allegations here.”
(Southern California Housing Rights Center, at p. 1069.) That
case predates Amalgamated Transit and Kwikset by four and
six years, respectively. The case offers little guidance since there
is now current, binding California law that governs UCL
standing to bring a representative action. (People v. Guiton
(1993) 4 Cal.4th 1116, 1126 [federal law is not binding on this
court in its interpretation of state law].)
Because we have found that CMA did not demonstrate a
material factual dispute as to standing, we affirm the judgment
and do not address the parties’ remaining arguments on appeal,
as to whether the judgment may be affirmed on other grounds.
DISPOSITION
The judgment is affirmed. Respondent is awarded its costs
on appeal.
GRIMES, Acting P. J.
WE CONCUR:
STRATTON, J.
WILEY, J.
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