MedLab20230, Inc. v. UHC of California

10. MedLab20230, Inc. v. UHC of California 25-1506621 The general demurrers of defendants UHC of California, dba UnitedHealthcare of California, UnitedHealthcare Benefits Plan of California, Inc., UnitedHealthcare Life Insurance Company, UnitedHealthcare Insurance Company, and UnitedHealthcare Insurance Company of America demur generally to all eight causes of action in the first amended complaint of plaintiff MediLab 2020, Inc., are SUSTAINED with 30 days’ leave to amend.

Defendants’ request for judicial notice is DENIED.

Plaintiff opposes the demurrer and objects to the request for judicial notice filed by defendants with their demurrer.

Through its FAC, plaintiff seeks full reimbursement by defendants for COVID testing it provided to defendants’ members even though it was not within defendants’ network. Plaintiff contends that, despite federal and state legislation and regulations, defendants did not fully pay the claims and eventually enacted policies to pay for the testing at a rate less than required by law. Its first amended complaint (ROA 53) contains causes of action for: (1) violation of Bus. & Prof. Code § 17200; (2) breach of contract implied in fact; (3) breach of contract implied in law (quantum meruit); (4) breach of the covenant of good faith and fair dealing; (5) goods and services rendered; (6) money had and received; (7) open book account; and (8) account stated.

In the last sentence of the eighth cause of action, plaintiff alleges that defendants owe plaintiff “an amount not less than $50,947,362.26, plus penalties and interest.” (FAC, ¶ 142.)

In addition to challenging the sufficiency of the allegations in each of the causes of action, defendants contend that plaintiff’s claims are untimely as not brought within two years of rendering the underlying services. They also contend that the claims are preempted by the Employee Retirement Income Security Act (“ERISA”).

Defendants ask for judicial notice of three documents: (1) a first amended complaint filed in OCSC case no. 2025-01457824 (Exhibit A); (2) a proclamation by the Governor of California dated February 28, 2023 (Exhibit B); and (3) a document issued by the U.S. Department of Health and Human Services stating that the federal public health emergency for COVID expired on May 11, 2023 (Exhibit C). (See ROA 69.) Plaintiff has objected to defendants’ request, contending that defendants submitted Exhibit A to “color this Court’s assessment of MedLab’s credibility in adjudicating [defendants’] demurrer, and that Exhibits B and C are “print-outs from unknown sources” that purportedly identify the dates that the state and federal COVID emergencies were terminated.”

Although the Court may take judicial notice of documents pertinent to issues raised by a demurrer, none of the documents submitted by defendants are particularly relevant. Moreover, Exhibit A is not a court record, i.e., a judgment, statement of decision, or order; it is a pleading filed by third parties in another case.

First cause of action for violation of Bus. & Prof. Code § 17200. This enactment. prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. Aton Center, Inc. v. United Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1247. The UCL covers a wide range of conduct and embraces anything that can properly be called a business practice and at the same time is forbidden by law. Ibid.

Because the UCL is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. Aton Center, Inc. v. United Healthcare Ins. Co., supra, 93 Cal.App.5th at p. 1248. An act can be alleged to violate any or all of the three prongs of the UCL—unlawful, unfair, or fraudulent. Ibid. However, the remedies available for violation of the UCL are limited, i.e., only equitable remedies can be obtained and damages cannot be recovered. Ibid.

Here, plaintiff alleges in the first cause of action that “[d]efendants improperly denied payment, failed to pay, and underpaid claims submitted by [plaintiff] for COVID-19 Testing and Related Services, in violation of the FFCRA, the CARES Act, and SB 510.” (FAC, ¶ 87.) However, it does not allege that these statutes required defendants to pay a specific price for the COVID testing performed by non-network providers like itself. Instead, it alleges that defendants were required to pay both in-network and out-of-network providers amounts that were “reasonable, ad determined in comparison to prevailing market rates for testing items or service in the geographic region where the item or services is rendered.” (FAC, ¶ 28; see also ¶ 84.)

Plaintiff further alleges that, at all times, it “reasonably expected to be compensated for these services rendered to Defendants’ members, pursuant to the pricing guidance stated in federal and state law.” (FAC, ¶ 48.)

Despite these allegations, plaintiff has not shown that defendants violated the state and federal laws cited. In addition, plaintiff purports to seek restitution, but it really seeks damages, as shown by the allegation that “[a]s a result of Defendants’ actions, MedLab has not been compensated and/or has been undercompensated for claims submitted by MedLab to Defendants.” (FAC, ¶ 91.) It also alleges that it “has a vested interest in a quantifiable sum, representing amounts not paid to MedLab for claims submitted to Defendants for FOVID-19 Testing and Related Services provided to Defendants’ members as required by state and federal law.” (FAC, ¶ 92.)

The demurrer to the first cause of action is SUSTAINED with leave to amend.

Second cause of action for breach of contract implied in fact. The vital elements of a cause of action based on contract are mutual assent, which is usually accomplished through the medium of an offer and acceptance, and consideration. Allied Anesthesia Medical Group, Inc. v. Inland Empire Health Plan (2022) 80 Cal.App.5th 794, 808. As to the basic elements, there is no difference between an express and implied contract. Ibid. While an express contract is defined as one, the terms

of which are stated in words, an implied contract is an agreement, the existence and terms of which are manifested by conduct. Ibid.

Both express and implied contracts are identical in that they require a meeting of the minds or an agreement. Allied Anesthesia Medical Group, Inc. v. Inland Empire Health Plan, supra, 280 Cal.App.5th at p. 808. Thus, both the express contract and the contract implied in fact are founded upon an ascertained agreement or, in other words, are consensual in nature, the substantial difference being in the mode of proof by which they are established. Ibid.

A claim for breach of an implied-in-fact contract requires a plaintiff to plead the agreed-upon rate. Allied Anesthesia Medical Group, Inc. v. Inland Empire Health Plan, supra, 280 Cal.App.5th at p. 808. Otherwise, the allegations amount to a claim for quantum meruit in which the plaintiff seeks to recover the shortfall in the amount of reimbursement based on the belief that the rate at which they were paid is below the reasonable and customary value of the services they provided. Ibid.

Here, plaintiff alleges throughout the FAC that it is an “out-of-network” provider of services to defendants’ members. See, e.g., paragraphs 47 and 80. Plaintiff alleges that, as an out-of-network provider of services, it “did not have a specifically negotiated rate with Defendants for COVID-19 Testing and Related Services.” (FAC, ¶ 80.) And the allegations in the second cause of action do not contain any facts showing that the parties agreed on a specific price for reimbursement. In fact, plaintiff alleges that defendants “were aware” that plaintiff expected to be paid “reasonable charges for [its] services within a reasonable time of [plaintiff’s] submissions of such claims to Defendants for such services.” (FAC, ¶ 97.)

The demurrer to the second cause of action is SUSTAINED with leave to amend.

Third cause of action for breach of contract implied in law (quantum merit). This legal theory refers to the well-established principle that the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered. Port Medical Wellness, Inc. v. Connecticut General Life Ins. Co. (2018) 24 Cal.App.5th 153, 180. The requisite elements of quantum meruit are (1) the plaintiff acted pursuant to “an explicit or implicit request for the services” by the defendant, and (2) the services conferred a benefit on the defendant. Ibid.

To recover under a theory of quantum meruit, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant. Nissanoff. v. UnitedHealthcare Ins. Co. (2024) 108 Cal.App.5th Supp.1, 12. The theory of quasi-contractual recovery is that one party has accepted and retained a benefit with full appreciation of the facts, under circumstances making it inequitable for him or her to retain the benefit

without payment of its reasonable value. Ibid. When the services are rendered by the plaintiff to a third person, the courts have required that there be a specific request therefor from the defendant. Ibid.

Defendants contend that this cause of action is defective because plaintiff does not allege that defendants – as opposed to their members – requested the services it provided. They also contend that plaintiff does not allege facts showing that defendants – as opposed to their members – were the direct beneficiaries of the treatment or services.

In fact, plaintiff alleges in the third cause of action that the testing services benefitted both defendants and their members. (FAC, ¶ 109.) Plaintiff then alleges that defendants “impliedly requested the services ... by their continued operation and voluntary assumption of statutory duties, by their processing conduct (including full and partial payment to MedLab), by their communications with MedLab, and by their request for more information from MedLab.” (FAC, ¶ 112.) Plaintiff alleges that defendants’ payment in full of certain COVID claims for testing and services “also constituted an implied request for MedLab to perform such services and to continue performing such services for Defendants’ members and confirmed that Defendants benefited from the services that MedLab performed.” (FAC, ¶ 114.)

These allegations do not show that defendants requested a benefit from plaintiff. Even if testing was a benefit to defendants, the allegations show that any acquiescence to treatment (and payment) on its part came after the fact.

The demurrer to the third cause of action is SUSTAINED with leave to amend.

Fourth cause of action for breach of the covenant of good faith and fair dealing. A breach of the covenant of good faith and fair dealing does not give rise to a cause of action separate from a cause of action for breach of the contract containing the covenant. Smith v. International Brotherhood of Electrical Workers (2003) 109 Cal.App.4th 1637, 1644, fn.

3.

Plaintiff has not sufficiently alleged either an express or implied contract and its cause of action for breach of the implied covenant of good faith and fair dealing therefore fails.

The demurrer to the fourth cause of action is SUSTAINED with leave to amend.

Fifth, sixth, seventh, and eight causes of action for common count claims of goods and services rendered, money had and received, open book account, and account stated, respectively. A common count is not a specific cause of action; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. Avidor v. Sutter’s Place (2013)

212 Cal.App.4th 1439, 1454. Although such an action is one at law, it is governed by principles of equity. Ibid.

A common count alleges in substance that the defendant became indebted to the plaintiff in a certain stated sum, for some consideration such as “money had and received by the defendant for the use of the plaintiff,” or “for goods, wares and merchandise sold and delivered by plaintiff to defendant,” or “for work and labor performed by plaintiff”; and that no part of the sum has been paid. 4 Witkin, Cal. Proc. (6th ed. 2026), Pleading § 565. Although other matters are often included, the cases make it clear that the only essential allegations are (1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment. 4 Witkin, Cal. Proc. (6th ed. 2026), Pleading § 565.

A common count is proper whenever the plaintiff claims a sum of money due, either as an indebtedness in a sum certain, or for the reasonable value of services or goods furnished. It makes no difference that the proof shows the original transaction to be an express contract, a contract implied in fact, or a quasi-contract. 4 Witkin, Cal. Proc. (6th ed. 2026), Pleading § 562.

Defendants contend that the common count causes of action fail because they are duplicative of plaintiff’s implied contract claim and because plaintiff fails to sufficiently allege the necessary elements of the claims.

Here, in the fifth cause of action for goods and services rendered, plaintiff alleges that plaintiff performed the COVID testing and related services under defendants’ implied request. (FAC, ¶ 127.) However, as previously discussed, plaintiff has not alleged facts showing that defendant requested the testing for its services.

In the sixth cause of action for money had and received, plaintiff alleges that defendants “through payments made by their insureds, received money that was intended, in part, to be used for the benefit of and which belonged to [plaintiff] an out-of-network health care provider that provided COVID-19 Testing and Related Services to Defendants’ insureds under the compulsion of urgent and pressing necessity.” (FAC, ¶ 131.) Plaintiff alleges that “[t]he money received by Defendants was not paid to or used for the benefit of [plaintiff] as Defendants’ members understood and intended.” (FAC, ¶ 132.) Plaintiff has not alleged any facts supporting these conclusions.

In the seventh cause of action for open book account, plaintiff alleges that it and defendants had financial transactions with each other involving payment for health care services performed by plaintiff for the benefit of defendants and their insureds. (FAC, ¶ 135.) Plaintiff alleges that it, in the regular course of business, kept an electronic account of the debits and credits involved the financial transactions between the parties. (FAC, ¶ 136.) Again, plaintiff has not alleged any facts supporting these conclusions.

In the eighth cause of action for account stated, plaintiff alleges that defendants owe money from previous financial transactions involving payment for health care services performed by plaintiff for the benefit of defendants and their members. (FAC, ¶ 139.) Plaintiff alleges that defendants, through their words and conduct, agreed that the amount plaintiff claimed to be due from defendants was the correct amount owed for each claim for testing. (FAC, ¶ 141.) Again, these conclusions are not supported by the allegations in the FAC.

The demurrers to the fifth, sixth, seventh, and eighth causes of action are SUSTAINED with leave to amend.

Demurring parties to give notice.

11. Boren v. Manly, Stewart & Finaldi 25-1524761 (Off calendar) 12. Pope v. Hyundai Motor America 25-1471444 Although there are deficiencies in Hyundai Motor America’s [“HMA”] Notice of Motion for Judgment on the Pleadings, the Court construes the Motion to be one for judgment on the pleadings as to each and all causes of action of the Complaint. On that basis, the Motion is DENIED.

Reading the Complaint liberally, as the Court must, plaintiff alleges two types of claims. One type is violations of Civil Code §1793.2 in connection with the alleged breach of contractual warranty obligati ons entered into by HMA. The other type is a claim that plaintiff was fraudulently induced to agree to the purchase her vehicle by fraudulent concealment of facts about its condition. Hereafter, the first type of claim will be called “the contract claims.” The second type will be called “the tort claim.”

With respect to the contract claims, HMA makes two arguments. Th e first is that the claims are barred by the statute of limitations. This argument is unavailing. The statute of limitations is not an element of a cause of action. [Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807) It is an affirmative defense upon which HMA has the burden of proof. [See, CACI 338; CACI 454] In the context of this motion, HMA has the initial burden to identify the applicable SOLs.

Dates alleged in a complaint may show a cause of action is barred by the statute of limitations. [Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 CA4th 990, 995, 90 CR2d 665, 669] However, th e running of the statute of limitations must appear “clearly and affirmatively” from the face of the complaint. It is not enough that the complaint might be time-barred. [Stueve Bros. Farms, LLC v. Berger Kahni (2013) 222 Cal.App. 4th 303, 313] Given the absence of bo th dates alleged in the Complaint and identification of specific statu tes of limitations, the clear and affirmative standard has not been met.

The second argument is that plaintiff has not met the enhanced standard for pleading statutory claims. HMA cites cases standing for the proposition that that allegations that do not meet the enhanced pleading