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San Joaquin General Hospital v. United Healthcare Insurance Co.

United States District Court, E.D. California

March 22, 2017

SAN JOAQUIN GENERAL HOSPITAL, a department of the County of San Joaquin, a political subdivision of the State of California, Plaintiff,
UNITED HEALTHCARE INSURANCE CO., a Connecticut for-profit corporation, Defendant.


         This dispute over insurance payments comes before the court on defendant United Healthcare Insurance Co.'s motion to dismiss. ECF No. 11. Plaintiff San Joaquin General Hospital opposes. The court held a hearing on December 2, 2016, at which Jennifer Jiao appeared for plaintiff, and Edward Stumpp appeared for defendant.

         For the reasons stated below, the court DENIES defendant's motion.

         I. BACKGROUND

         On January 1, 2014, San Joaquin General Hospital (“the Hospital”) began treating patients who had health plans with United Healthcare Insurance Co. (“United Insurance”). Compl. ¶ 7, ECF No. 1-1. At some point in time not specified by the complaint, in response to an inquest by the Hospital, United Insurance informed the Hospital that patients covered by United Insurance's plans were eligible for treatment at the Hospital. Id. ¶ 8. At all relevant times, United Insurance authorized the medical services rendered by the hospital, id. ¶ 11, verified the existence of the patients' eligibility for benefits, id., and held itself out as being responsible for paying for the services provided by the Hospital, id. ¶ 9. The Hospital subsequently submitted to United Insurance bills for its services, which United Insurance has refused to pay in full. Id. ¶¶ 13-15. As a result, the Hospital has suffered damages in excess of $3.7 million. Id. ¶ 15.

         On July 5, 2016, the Hospital filed a complaint for damages in the Superior Court of California, County of San Joaquin, claiming: (1) breach of implied in fact contract; (2) quantum meruit; and (3) breach of oral contract. See Id. On August 11, 2016, United Insurance removed the case to this court. ECF No. 1. On September 20, United Insurance filed the pending motion to dismiss, alleging the Hospital failed to allege elements essential to all three claims. See Def.'s Mot. to Dismiss (“MTD”), ECF No. 11. The Hospital opposes United Insurance's motion, Pl.'s Opp'n, ECF No. 16, and United Insurance has replied, Def.'s Reply, ECF No. 18.


         A party may move to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The motion may be granted only if the complaint lacks a “cognizable legal theory” or if its factual allegations do not support a cognizable legal theory. Hartmann v. Cal. Dep't of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013). The court assumes these factual allegations are true and draws reasonable inferences from them. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         A complaint need contain only a “short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), not “detailed factual allegations, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). But this rule demands more than unadorned accusations; “sufficient factual matter” must make the claim at least plausible. Iqbal, 556 U.S. at 678. In the same vein, conclusory or formulaic recitations of a cause's elements do not alone suffice. Id. (quoting Twombly, 550 U.S. at 555). Evaluation under Rule 12(b)(6) is a context-specific task drawing on “judicial experience and common sense.” Id. at 679.

         In ruling on a motion to dismiss, the court is not limited by the plaintiff's allegations if the complaint, as here, is accompanied by attached documents. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Such documents become a part of the complaint and may be considered in considering the defendant's motion to dismiss. Id.


         A. Claims for Breach of Oral and Implied-in-Fact Contract

         Under California law, “the elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). United Insurance challenges only the first element, whether there exists an enforceable contract. See Def.'s MTD at 4.

         A contract is “an agreement to do or not to do a certain thing, ” and a contract can only exist if the parties are capable of contracting, they manifest objective consent, the contract has a lawful object, and there is sufficient consideration. Cal. Civ. Code §§ 1549-1550. There is no general requirement that the contract be written, and oral contracts are enforceable. See Cal. Civ. Code § 1622; Simmons v. Ghaderi, 49 Cal.Rptr.3d 342, 348 (Cal.Ct.App. 2006), rev'd on other grounds, 44 Cal.4th 570 (2008); Engleman v. Gen. Acc., Fire & Life Assur. Corp., 250 F.2d 202, 204 (9th Cir. 1957). An implied-in-fact contract also is enforceable, and “differs from an express contract only in that the promise is not expressed in language but implied from the promisor's conduct.” Rokos v. Peck, 182 Cal.App.3d 604, 614 (1986) (quoting Stanley v. Columbia Broad. Sys., 35 Cal. 2d 653, 674 (1950)).

         United Insurance contends the parties did not form a valid contract, either oral or implied-in-fact, because they never agreed on the price of the Hospital's services. Def.'s MTD at 4. Without facts alleging a meeting of the minds on the material issue of price, United Insurance posits, the Hospital has insufficiently pled mutual consent, an essential element in contract formation. Id. at 4-6. Mutual consent “cannot exist unless the parties ‘agree upon the ...

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