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California Law Update – April 2022

By April 30, 2022October 4th, 2022Law Updates
  1. (Immunity) School district was vicariously liable for injuries sustained by student because district’s threat assessment team’s acts and omissions fell outside the immunity provided for mental examinations. Bowe Cleveland v. Taft Union High School District (No. F0179926 Super. Ct. No. S1500CV279256 California Courts of Appeal Fifth Appellate District Division Eight Filed March 25, 2022)
  2. (Arbitration) When indigent party demonstrates inability to pay for arbitration, trial courts may provide opposing party the choice to pay for indigent party’s arbitration fees or try the case in court. Gerald Aronow v. The Superior Court of San Francisco County (No. A162662 San Francisco County Super. Ct. No. CGC- 19-579853 California Courts of Appeal First Appellate District Division Four Filed March 28, 2022)
  3. (Special Risk Exemption) The special risk exemption did not make employer liable for employee’s negligence since it was employer-caused fatigue, not employer-caused fatigue, that proximately caused employee’s off- duty car crash. Lucy R. Feltham v. Universal Protection Service, LP (No. A161190★ Alameda County Super. Ct. No. RG18892902 California Court of Appeal First Appellate District Division Three Filed March 30, 2022)
  4. (Elder Abuse Act) Plaintiffs’ Elder Abuse Act claims against a hospital were not subject to the Medical Injury Compensation Reform Act’s limitations period nor its limit on noneconomic damages. Samantha B. v. Aurora Vista Del Mar, LLC (-2d Civ. No. B302321 Super. Ct. No 56-2015-00464635-CU-PO-VTA Ventura County California Court of Appeal Second Appellate District Division Six Filed April 5, 2022)
  5. (Administrative Agencies) Like Medicare Parts A & B claims, Medicare Advantage claims must exhaust all administrative remedies before pursuing claims in federal court. Global Rescue Jets, LLC, DBA Jet Rescue v. Kaiser Foundation Health Plan, Inc. (No. 20-56410 D.C. No. 3:19-cv-01737-L-NLS United States Court of Appeals Ninth Circuit Filed 8, 2022)
  6. (Anti-SLAPP) Sanctions may be imposed when clearly meritless anti-SLAPP motions are pursued. Clarity Co. Consulting, LLC v. Larry Gabriel (2d Civil No. B311823 Super. Ct. No. 56-2020-00547889-CU-BC-VTA Ventura County California Courts of Appeal Second Appellate District Division Six Filed April 12, 2022)
  7. (Remedies) Plaintiff’s allegation that she relied on hospital’s failure to disclosure additional emergency room fees and thereafter received treatment at hospital did not sufficiently plead reliance under the Consumer Legal Remedies Act. Kasondra Torres v. Adventist Health System/West (No. F081415 Super. Ct. No. 19C-0056 California Courts of Appeal Fifth Appellate District Filed April 14, 2022)
  8. (Arbitration) Arbitration clause was unconscionable since it was part of an adhesion contract that failed to disclose all arbitration rules and required a unilateral release of all claims. Brandon Nelson v. Dual Diagnosis Treatment Center, Inc. (No. G059565 Super. Ct. No. 30-2019-01087833 California Courts of Appeal Fourth Appellate District Division Three Filed April 19, 2022)
  9. (Insurance) A business interruption policy that covers physical loss and damages does not provide coverage for losses incurred by reason of the COVID-19 pandemic. Musso & Frank Grill Co., Inc v. Mitsui Sumitomo Insurance USA Inc. (No. B310499 Los Angeles County Super. Ct. No. 20STCV16681 California Court of Appeal Second Appellate District Division One Filed April 21, 2022)
  10. (Torts) Independent contractor that operated food sample tables had a special relationship with Costco shoppers that gave rise to a duty to exercise reasonable care irrespective of its contract with Costco. Lilyan Hassaine v. Club Demonstration Services, Inc. (No. D079396 Super. Ct. No. 37-2019-00016440-CU-Po-CTL California Court of Appeal Fourth Appellate District Division One Filed April 22, 2022)
  11. (Punitive Damages) Statutory deadline for leave to include punitive damages in a health care provider negligence claim demanded strict compliance where plaintiffs were aware of facts necessary to move to amend. Divino Plastic Surgery, Inc. v. The Superior Court of San Diego County (No. D079661 San Diego County Super. Ct. No. 37-2019-00058375-CU-MM-CTL California Court of Appeal Fourth Appellate District Division One Filed April 22, 2022)
  12. (Immunity) Under Government Code Section 815, county was immune from noncontracting hospitals’ claims for emergency service reimbursement because the alleged breach was based in tort rather than contract. County of Santa Clara v. The Superior Court of Santa Clara County (Doctors Medical Center of Modesto) (No. H048486 Santa Clara County Super. Ct. No. 19CV349757 California Court of Appeal Sixth Appellate District Filed April 26, 2022)
  13. (Insurance) Under the Knox-Keene Health Care Services Plan Act, hospital could not enforce conditions of admission since they were collecting more payment from the client than was negotiated with insurance company. Dameron Hospital Association v. AAA Northern California, Nevada & Utah Insurance Exchange (No. C086518 Super. Ct. No. STKCVUOCT20110006939 California Court of Appeal Third Appellate District Filed April 26, 2022)

The above referenced court opinions have come to our attention during last month. Please find below a brief summary of these opinions for your consideration.

  1. (Immunity) School district was vicariously liable for injuries sustained by student because district’s threat assessment team’s acts and omissions fell outside the immunity provided for mental examinations. Bowe Cleveland v. Taft Union High School District (No. F0179926 Super. Ct. No. S1500CV279256 California Courts of Appeal Fifth Appellate District Division Eight Filed March 25, 2022)

Defendant school district (District)appealed from a judgment entered after a jury found that the District employees were partially responsible for injuries sustained by the plaintiff when another student shot him in the stomach with a shotgun. The allocation of fault and the jury’s findings as to damages resulted in the judgment holding the District vicariously liable. The District filed a motion for judgment notwithstanding the verdict, which the trial court denied.

The appeals court affirmed the trial court’s ruling and published a part of its opinion relating to the district’s contention that all members of its threat assessment team were immune from liability pursuant to Government Code section 855.6. Per the court, this Government Code section had not been addressed in a published decision. Section 855.6 provides neither a public entity nor its employees are “liable for injury caused by the failure to make a physical or mental examination, or to make an adequate physical or mental examination, of any person for the purpose of determining whether such person has a … mental condition that would constitute a hazard to the health or safety of himself or others.” The appeals court concluded that specific acts and omissions identified by the plaintiff’s expert as being below the standard of care for conducting a threat assessment were properly characterized as administrative and not as a mental examination. Thus, the appeals court found that the negligent acts and omissions fell outside the scope of section 855.6 immunity.

  1. (Arbitration) When indigent party demonstrates inability to pay for arbitration, trial courts may provide opposing party the choice to pay for indigent party’s arbitration fees or try the case in court. Gerald Aronow v. The Superior Court of San Francisco County (No. A162662 San Francisco County Super. Ct. No. CGC- 19-579853 California Courts of Appeal First Appellate District Division Four Filed March 28, 2022)

The appeals court addressed a narrow issue resulting from a trial court’s certification for appellate resolution (Code of Civil Procedure section 166.1). The question posed was “does a trial court that granted defendant’s petition to compel arbitration have jurisdiction to lift the stay of trial court proceedings where a plaintiff demonstrates financial inability to pay the anticipated arbitration costs?“ If so, the appeals court indicated that the trial court may require defendant either to pay plaintiff’s share of arbitration costs or to waive the right to arbitration. The appeals court answered both questions in the affirmative and issued a writ of mandate directing the trial court to allow the petitioner to attempt to demonstrate his inability to pay the arbitrator’s fees and, if necessary, to conduct an evidentiary hearing. If the trial court finds the petitioner is unable to pay the arbitrator’s fee, it would give the respondent the choice of either to pay the petitioner’s share of the arbitrator’s fee or to waive the right to arbitration.

  1. (Special Risk Exemption) The special risk exemption did not make employer liable for employee’s negligence since it was employer-caused fatigue, not employer-caused fatigue, that proximately caused employee’s off- duty car crash. Lucy R. Feltham v. Universal Protection Service, LP (No. A161190★ Alameda County Super. Ct. No. RG18892902 California Court of Appeal First Appellate District Division Three Filed March 30, 2022)

While driving home from her job as a hospital security guard, defendant crossed into oncoming traffic and hit and seriously injured the plaintiff. Plaintiff and her husband filed lawsuit alleging that the negligent driver’s employer was liable for the driver’s negligence. The trial court granted the defendant employer’s motion for summary judgment. It concluded that the defendant employer was entitled to judgment as a matter of law because the employee was not acting within the course and scope of her employment at the time of the accident, and the accident was not a foreseeable consequence of the driver’s employment. In affirming the trial court’s ruling, the appeals court noted that the driver did not use her car for work and was not acting within the scope of her employment when the accident occurred after her shift. Furthermore, the driver worked a regular eight-hour shift before the accident and the employer had every reason to assume that she had received sufficient rest during her time off. Moreover, there was no evidence that employer-caused fatigue was the proximate cause of the accident as alleged by the plaintiff since it was the driver’s inability to sleep during her time off that proximately caused the accident. Thus, use of the special risk exception to the coming and going rule did not apply since her employment would not predicably cause a car accident. The special risk exception coming and going rule requires the plaintiff to establish a causal nexus between an injury and the employee’s job such that employment would predictably create a risk that an employee will commit torts o the type for which liability was sought. In this case, the claim was that the employer allegedly required the driver to work excessive hours to the point of her falling asleep at the wheel in the scope of her employment.

  1. (Elder Abuse Act) Plaintiffs’ Elder Abuse Act claims against a hospital were not subject to the Medical Injury Compensation Reform Act’s limitations period nor its limit on noneconomic damages. Samantha B. v. Aurora Vista Del Mar, LLC (-2d Civ. No. B302321 Super. Ct. No 56-2015-00464635-CU-PO-VTA Ventura County California Court of Appeal Second Appellate District Division Six Filed April 5, 2022)

Plaintiffs were patients at a psychiatric hospital. While there, they suffered sexual abuse by a hospital employee. The plaintiffs filed a suit approximately two years after being discharged. They alleged professional negligence and violation of the Elder Abuse Act, codified under Welfare and Institutions Code Section 15600 et seq. The jury found for the plaintiffs and awarded substantial damages against the psychiatric hospital and other defendants. The Defendants appealed, contending in part, that the plaintiff’s causes of action were time-barred, and their damages were limited under the Medical Injury Compensation Reform Act (MICRA). Under MICRA, a lawsuit for professional liability must be commenced either three years from the date of injury or one year after plaintiff discovers it, whichever occurs first. Also, under MICRA noneconomic damages are limited to $250,000. The plaintiffs contended that the Elder Abuse Act applied, and unlike MICRA, the Elder Abuse Act has a two-year statute of limitations.

The appeals court affirmed in part, it noted since the jury found both professional negligence and reckless neglect, plaintiffs were not limited to MICRA and could use the enhanced remedies provided by the Elder Abuse Act. It also affirmed the trial jury’s decision that a psychiatric hospital can be held responsible for sexual abuse committed by an employed caregiver should their actions be enabled by facility’s “reckless neglect.” The perpetrator had previously been arrested on suspicion of a sexual crime that required registration as a sex offender but had the charge dismissed. The arrest did not show up during the hospital’s initial background check, although the court ruled that hiring a certified nursing assistant rather than an unlicensed worker would have surfaced such a conviction. The jury found that the hospital and its parent organization were negligent in their employment of the perpetrator and that the parent corporation had “committed acts constituting dependent adult abuse and that they acted with recklessness.”

  1. (Administrative Agencies) Like Medicare Parts A & B claims, Medicare Advantage claims must exhaust all administrative remedies before pursuing claims in federal court. Global Rescue Jets, LLC, DBA Jet Rescue v. Kaiser Foundation Health Plan, Inc. (No. 20-56410 D.C. No. 3:19-cv-01737-L-NLS United States Court of Appeals Ninth Circuit Filed 8, 2022)

Plaintiff, an air ambulance service, provided services to two patients who became seriously ill while in Mexico. Both patients were enrolled in Medicare Advantage plans offered by defendant Kaiser Foundation Health Plan, Inc. The plaintiff flew the patients from the hospital in Mexico to a hospital in San Diego and billed Kaiser for those services at usual and customary rates. Kaiser paid only a fraction of the billed amount because in its view the services were covered Medicare and thus subject to payment at the much lower Medicare-approved rates. The plaintiff contended that its services were not covered by Medicare and that, under the terms of Kaiser’s plans, it was entitled to be paid in full.

The plaintiff brought this action against Kaiser to recover the additional sums Kaiser allegedly owed. The court dismissed the action for lack of subject matter jurisdiction on the ground that the plaintiff failed to exhaust its administrative remedies under the Medicare Act. On appeal, plaintiff argued it was not required to exhaust administrative remedies before filing suit and that the exhaustion requirement should have been excused in any event. The appeals court rejected both arguments and accordingly affirmed the district court’s judgment. The appeals court found that the plaintiff should have exhausted its administrative remedies and failed to show any basis for excusing this requirement and therefore, the district court properly dismissed plaintiff’s action for lack of subject matter jurisdiction.

  1. (Anti-SLAPP) Sanctions may be imposed when clearly meritless anti-SLAPP motions are pursued. Clarity Co. Consulting, LLC v. Larry Gabriel (2d Civil No. B311823 Super. Ct. No. 56-2020-00547889-CU-BC-VTA Ventura County California Courts of Appeal Second Appellate District Division Six Filed April 12, 2022)

This appeal illustrates an attorney’s misuse of the anti-SLAPP statute according to this appellate opinion. Respondent entered into a written contract where it agreed to provide services to a start-up health care company. The start-up health care company not paid for the services rendered. The respondent filed a complaint alleging an ordinary breach of contract action and related causes of action against the start-up health care company and other persons associated with the company. Acting in his individual capacity, the defendant appellant, a licensed attorney and general counsel for the start-up health care company filed a special motion to strike the complaint as a strategic lawsuit against public participation (SLAPP). The motion was denied. This appeal arose from the trial court’s orders denying the motion and awarding respondent its attorney fees as a sanction for making a frivolous anti-SLAPP motion. The appellant contended that the trial court erroneously determined that he had failed to satisfy the first step of the anti-SLAPP statute, i.e., he had not made prima facie showing that respondent’s causes of action were based on protected activity. He also claimed that the trial court abused its discretion in awarding attorney fees incurred by respondent in opposing the anti-SLAPP motion. The appeals court affirmed. It also granted the respondent’s motion for sanctions for taking a frivolous appeal. The counsel and appellant were ordered to pay sanctions of over $12,000.00 to the respondent and $8,500 to the clerk of the court. The appeals court found that the causes of action in the matter concerned a private matter and was not connected to a public issue or one of public interest. Because the appeal had no merit, caused delay and incurred more unnecessary attorney fees, the court imposed the above referenced sanctions.

  1. (Remedies) Plaintiff’s allegation that she relied on hospital’s failure to disclosure additional emergency room fees and thereafter received treatment at hospital did not sufficiently plead reliance under the Consumer Legal Remedies Act. Kasondra Torres v. Adventist Health System/West (No. F081415 Super. Ct. No. 19C-0056 California Courts of Appeal Fifth Appellate District Filed April 14, 2022)

Plaintiff sued defendant hospital for violation of the Consumer Legal Remedies Act (Civ. Code, Section 1750 et seq.) (CLRA). She alleged the hospital alleged engaged in a deceptive practice when it did not disclose its intent to charge her a substantial emergency room evaluation and management services fee (EMS Fee). At the time of her care, the hospital had five levels of EMS Fees which ranged from over $700 to $3,000. The fee was added on top of the charges for each individual item of treatment and service provided during the emergency room visit. Plaintiff described the EMS Fee as a “cover charge,” surcharge for overhead, or visitation fee.

The hospital moved for judgment on the pleadings, which the trial court granted. Although plaintiff adequately alleged the hospital failed to disclose facts that were known exclusively by the hospital and were not reasonably accessible to the plaintiff, the appeals court concluded that the plaintiff’s conclusory allegation that she relied on the failure to disclose the EMS Fee and thereafter received treatment at the hospital did not plead the element of reliance with sufficient particularity. The appeals court affirmed the judgment of the trial court. The failure to disclose material facts actionable under the CLRA in certain situations. The concept of materiality is related to issue of causation. A causal link between the deceptive practice and damage to the plaintiff is a necessary element of a CLRA cause of action. A misrepresentation or an omission of fact is material only if the plaintiff relied on it that is, the plaintiff would not have acted as he or she did without the misrepresentation or the omission of fact. The appeals court reasoned that the plaintiffs’ allegation about the importance patients in general would place on information about the hospital’s EMS fee in deciding whether to remain and obtain treatment did not address whether the plaintiff would have behaved differently that is, would have obtained treatment elsewhere.

  1. (Arbitration) Arbitration clause was unconscionable since it was part of an adhesion contract that failed to disclose all arbitration rules and required a unilateral release of all claims. Brandon Nelson v. Dual Diagnosis Treatment Center, Inc. (No. G059565 Super. Ct. No. 30-2019-01087833 California Courts of Appeal Fourth Appellate District Division Three Filed April 19, 2022)

Defendant appealed from a trial court’s denial of its motion to compel arbitration of claims asserted by the plaintiffs related to the death of their son. The plaintiffs alleged the cause of action for wrongful death, and, on behalf of their son, negligence, negligence per se, dependent adult abuse and neglect, negligent misrepresentation, and fraud. According to the complaint, defendant allowed him to go to his room where he committed suicide despite concluding the plaintiff’s son required 24 hour supervision and after admitting him to its residential facility following recent symptoms of psychosis.

The trial court denied the defendant’s motion to compel arbitration on two grounds. First, the court found that the defendant failed to meet its burden to authenticate an electronic signature as the plaintiff’s son on the treatment center enrollment agreement. The alleged agreement contained the arbitration clause on which the defendant relied to compel arbitration. Second, the trial court found that, even assuming the plaintiff’s son signed the agreement, it was procedurally and substantively unconscionable, precluding enforcement against the plaintiff’s son or, derivatively, against his parents. The defendant challenged the trial court’s authentication and unconscionability findings. Defendant also contended that the agreement delegated to an arbitrator-rather than the trial court-threshold questions such as the scope and enforceability of the agreement.

The appeals court affirmed the trial court’s order denying the motion to compel arbitration not reaching the authentication question. It found that the defendant failed to demonstrate error. The trial court found that it had the authority to determine preliminarily issues of arbitrability such as the validity and enforceability of the emollment agreement. The appeals court agreed. The trial court also correctly found the agreement was unconscionable; this finding mooted any question of whether the plaintiff’s son actually signed it or whether his parents would have been bound by it if he did.

  1. (Insurance) A business interruption policy that covers physical loss and damages does not provide coverage for losses incurred by reason of the COVID-19 pandemic. Musso & Frank Grill Co., Inc v. Mitsui Sumitomo Insurance USA Inc. (No. B310499 Los Angeles County Super. Ct. No. 20STCV16681 California Court of Appeal Second Appellate District Division One Filed April 21, 2022)

Plaintiff restaurant had a business interruption insurance policy. Due to COVID-19 and notices from the Governor, the Mayor of Los Angeles, and several public health agencies, the restaurant was ordered to close its restaurant resulting in a loss of all its business. Plaintiff filed a claim with the insurance company which was denied on the grounds that the policy covered only “direct physical loss of or damage to” the property, and expressly excluded coverage for losses resulting from a government order and losses caused by or resulting from a virus. Plaintiff sued the insurance company and in response the insurance company demurred which was sustained without leave to amend. The plaintiff appealed and the appeals court affirmed the finding that the business interruption policy that covered physical loss and physical damages did not provide coverage for losses incurred by reason of the COVID-19 pandemic.

  1. (Torts) Independent contractor that operated food sample tables had a special relationship with Costco shoppers that gave rise to a duty to exercise reasonable care irrespective of its contract with Costco. Lilyan Hassaine v. Club Demonstration Services, Inc. (No. D079396 Super. Ct. No. 37-2019-00016440-CU-Po-CTL California Court of Appeal Fourth Appellate District Division One Filed April 22, 2022)

While shopping at a Costco store, plaintiff slipped and fell on a slippery substance that she believed was liquid soap. Claiming serious injuries from the fall, she sued Costco and defendant, an independent contractor that operated food sample tables within the store. The trial court granted a motion for summary judgment filed by the independent contractor, concluding that the company owed the plaintiff no duty of care. In the court’s view, it was dispositive that the company contract with Costco limited its maintenance obligations to a 12-foot perimeter around each sample table, and that plaintiff’s fall occurred outside that boundary.

The appeals court reversed. It found that the trial court erred in concluding that the independent contractor’s contract with Costco delineated the scope of duty owed to business invitees under general principles of tort law. Businesses have a common law duty of ordinary care to their customers that extends to every area of the store in which they are likely to shop. While the agreement may allocate responsibility and liability as a matter of contract between the parties, it did not limit the scope of the common law duty owed by this independent contractor to the customers. Although the independent contractor protested that this outcome would impose an unreasonable duty covering the entire Costco warehouse, its argument “conflate[d]” the legal question of duty and the factual question of whether that duty was breached. Despite having a duty of ordinary care, the independent contractor would have no liability so long as its conduct was reasonable under the circumstances, which includes the distance between the contractor’s personnel and the hazard.

In short, the appeals court found that the independent contractor demonstration services company owed the plaintiff the usual duty of ordinary care codified in Civil Code section 1714. Breach and causation presented triable factual issues precluding summary judgment on those grounds.

  1. (Punitive Damages) Statutory deadline for leave to include punitive damages in a health care provider negligence claim demanded strict compliance where plaintiffs were aware of facts necessary to move to amend. Divino Plastic Surgery, Inc. v. The Superior Court of San Diego County (No. D079661 San Diego County Super. Ct. No. 37-2019-00058375-CU-MM-CTL California Court of Appeal Fourth Appellate District Division One Filed April 22, 2022)

In this proceeding, a surgeon and his clinic sought a writ of mandamus directing the trial court to vacate its order allowing the survivors of a patient who died from a surgical procedure to amend their complaint to assert a claim for punitive damages. The evidence of the misconduct of the surgeon and the employees of his clinic that the survivors submitted with their motion for leave to amend, if believed by the trier of fact, might well have supported an award of punitive damages. Nevertheless, because the survivors did not move to amend within the time mandated by statute, the appeals court granted the requested relief. Under section 425.13, a plaintiff who wishes to include punitive damages in an action arising out of a health care provider’s professional negligence must move to amend “within two hears after the complaint…is filed or not less than nine months before the date the matter is first set for trial, whichever is earlier.” However, a court can make an appropriate order to avoid injustice and unfairness when a plaintiff by virtue of a quick trial cannot reasonably comply with these time limits. In this case, the plaintiffs waited roughly four months following the nine-month period before the initial trial date was set. The plaintiffs could not show that they were unaware of any facts or evidence necessary to make a proper motion to plead punitive damages. Therefore, even though the conduct of which the defendant was accused would be unethical and immoral, Section 425.13’s deadlines demanded strict compliance. Thus, the appeals court issued a writ directing the trial court to vacate its order to the extent it granted plaintiffs’ motion for leave and amend their complaint.

  1. (Immunity) Under Government Code Section 815, county was immune from noncontracting hospitals’ claims for emergency service reimbursement because the alleged breach was based in tort rather than contract. County of Santa Clara v. The Superior Court of Santa Clara County (Doctors Medical Center of Modesto) (No. H048486 Santa Clara County Super. Ct. No. 19CV349757 California Court of Appeal Sixth Appellate District Filed April 26, 2022)

Plaintiff county operated a health care service plan, licensed under Knox-Keene Health Care Service Plan Act. Hospital and the doctors servicing that hospital provided emergency medical services to members of the county’s health plan and submitted reimbursement claims to the county. The county reimbursed the hospital for only part of the claimed demands. The hospital sued the county for the full amounts of its claims. The complaint alleged a single cause of action for breach of implied-in-fact or implied-in-law contract. The county demurred, asserting it was immune from the hospital’s lawsuit under the Government Claims Act (Gov. Code, section 810 et seq.).

The trial court overruled the demurrer, the county petitioned for writ relief here, and the appeals court issued an order to show cause. Because the county was immune from common law claims under the Government Claims Act and the hospital did not state a claim for breach of an implied-in-fact contract, it issued a writ of mandate instructing the trial court to enter a new order sustaining the demurrer without leave to amend. While the hospital argued that the cause of action was contractual in nature, ultimately it was tort based and thus subject to the Government Claims Act.

  1. (Insurance) Under the Knox-Keene Health Care Services Plan Act, hospital could not enforce conditions of admission since they were collecting more payment from the client than was negotiated with insurance company. Dameron Hospital Association v. AAA Northern California, Nevada & Utah Insurance Exchange (No. C086518 Super. Ct. No. STKCVUOCT20110006939 California Court of Appeal Third Appellate District Filed April 26, 2022)

Plaintiff hospital required patients and their family members to sign Conditions of Admissions (COA) when the hospital provided the patients’ medical care. The COA contained language that assigned the hospital direct payment of uninsured and underinsured motorist benefits and medical payment benefits that would otherwise be payable to those patients under their automobile insurance policies. Here, the plaintiff hospital treated five patients covered by the California State Automobile Association Inter-Insurance Bureau, for injuries following automobile accidents. Those patients had uninsured motorist and/or medical payment benefits coverage as part of their insurance coverage, and plaintiff sought to collect payment for those services from the patients’ benefits at the hospital’s full rate. Instead of paying to the plaintiff hospital the lesser of either all benefits due to the patients under their UM and MP coverage, which were the hospital’s full charges, the insurance company paid portions of those benefits directly to the patients which left balances owing on some of the hospital’s bills. The hospital sued the insurance company to collect the benefits it maintained it was owed under the assignment contained of the Conditions of Admission. The trial court concluded that the hospital could not enforce any of those assignments contained in the COAs and entered judgment in the insurance company’s favor following the insurance company’s successful motion for summary judgment.

The appeals court held that the hospital could not collect payment for emergency services from the UM and MP benefit due to patients that were covered under health insurance policies. It also found that the COA form was a contract of adhesion and that it was not within the reasonable possible expectations of patients that a hospital collects payments for emergency care directly out of their uninsured motorist benefits. Accordingly, the appeals court concluded that the hospital could not maintain causes of action to collect medical payment benefits or uninsured motorist benefits directly from the insurance company.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.