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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARTHA GARCIA,

Plaintiff-Appellant,

v.

PACIFICARE OF CALIFORNIA, INC.;

UHC OF CALIFORNIA, DBA

UnitedHealthcare of California,

Defendants-Appellees.

No. 13-55468

D.C. No.

8:12-cv-02022-

JVS-RNB

OPINION

Appeal from the United States District Court

for the Central District of California

James V. Selna, District Judge, Presiding

Argued and Submitted

October 7, 2013—Pasadena, California

Filed May 8, 2014

Before: Stephen Reinhardt, Andrew J. Kleinfeld,

and Morgan Christen, Circuit Judges.

Opinion by Judge Christen

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2 GARCIA V. PACIFICARE OF CALIFORNIA

SUMMARY*

Health Insurance

Affirming the district court’s summary judgment in an

action under the Employment Retirement Income Security

Act, the panel held that an insurance company’s categorical

exclusion of myoelectric prosthetics from a health insurance

plan did not violate California Health & Safety Code

§ 1367.18.

COUNSEL

Jeffrey Isaac Ehrlich (argued), The Ehrlich Law Firm,

Encino, California, for Plaintiff-Appellant.

Ethan P. Schulman (argued), Crowell & Moring, LLP, San

Francisco, California; Jennifer S. Romano, Crowell &

Moring, LLP, Los Angeles, California, for DefendantsAppellees.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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GARCIA V. PACIFICARE OF CALIFORNIA 3

OPINION

CHRISTEN, Circuit Judge:

This case involves a single issue: does an insurance

company’s categorical exclusion of myoelectric prosthetics

from a health insurance plan violate California Health &

Safety Code § 1367.18? We have jurisdiction under

28 U.S.C. § 1291 and hold that such an exclusion does not

violate this statute.

I. BACKGROUND

In 1989, eleven-year-old Martha Garcia (“Garcia”)

contracted spinal meningitis, which necessitated the

amputation of her hands at the wrists and her legs below the

knees. From 1990 to 1996 she used body-powered/cable and

harness upper-extremity prostheses. When she was a senior

in high school she was fitted for myoelectric upper-extremity

prostheses.1 The myoelectric prostheses “allowed [her] to

live independently, obtain a college degree, and to work full

time.”

Since 2006, Garcia has worked for the Regional Center of

Orange County (“Regional Center”). When she began work

at the Regional Center, she was included on her father’s Blue

Cross health insurance policy that covered myoelectric

1 A myoelectric prosthesis “uses electromyography signals or potentials

from voluntarily contracted muscles within a person’s residual limb via

the surface of the skin to control the movements of the prosthesis, such as

. . . wrist supination/pronation or hand opening/closing of the fingers.” In

contrast, the more common “body-powered prosthesis” has “a hook at the

end of the arm that the wearer operates by moving the muscles of the

residual limb.”

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4 GARCIA V. PACIFICARE OF CALIFORNIA

prostheses. The Regional Center provided health care

coverage through PacifiCare,2 which she selected because it

allowed her to receive treatment from the same doctors and

prosthetic specialists she had been seeing under her father’s

Blue Cross policy.

In 2009, Garcia’s myoelectric prostheses began to fail, so

her physician submitted a replacement request to Memorial

Healthcare (“Memorial”), the independent practice

association under contract with PacifiCare for Regional

Center employees. Memorial denied the physician’s request

because “myoelectronic prosthetics are not a benefit covered

under [Garcia’s] health plan.” Garcia appealed the decision

to PacifiCare, which upheld the denial of coverage “on the

basis of a specific benefit exclusion” per Garcia’s Evidence

of Coverage document, which states that “myoelectric . . .

prosthetics are not covered.” PacifiCare does not dispute that

Garcia’s physician-prescribed myoelectric devices are

medically necessary.

In January 2010, Garcia filed a grievance with the

California Department of Managed Health Care (“DMHC”). 

DMHC determined that it “did not find a violation of the

California health plan law regarding this issue.” In

November 2012, Garcia brought this action in the Central

District of California under the Employee Retirement Income

SecurityAct of 1974 (“ERISA”), 29 U.S.C. §§ 1132(a)(1)(B),

1132(a)(3), alleging that PacifiCare’s benefit exclusion was

contrary to California Health & Safety Code § 1367.18.3In

 

2

 PacifiCare subsequently changed its name to UnitedHealthcare.

 

3

 PacifiCare does not dispute that Garcia’s plan is an ERISA plan.

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GARCIA V. PACIFICARE OF CALIFORNIA 5

March 2013, the district court granted summary judgment for

PacifiCare.

II. STANDARD OF REVIEW

We review de novo a district court’s order granting

summary judgment and its interpretation of state law. Nolan

v. Heald College, 551 F.3d 1148, 1153 (9th Cir. 2009);

Matter of McLinn, 739 F.2d 1395, 1397 (9th Cir. 1984) (en

banc).

III. DISCUSSION

A. Statutory Text

California Health & Safety Code § 1367.18 was enacted

in 1985 and amended in 1991 and 2006.4 The original statute

read:

Every health care service plan, except a

specialized health care service plan, that

covers hospital, medical, or surgical expenses

on a group basis shall offer coverage for

orthotic and prosthetic devices and services

under the terms and conditions that may be

agreed upon between the group subscriber and

the plan. Every plan shall communicate the

availability of that coverage to all group

contractholders and to all prospective group

contractholders with whom they are

negotiating.

4 Section 1367.18 is a provision of the Knox-Keene Health Care Service

Plan Act. Cal. Health & Safety Code §§ 1340–1399.835.

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6 GARCIA V. PACIFICARE OF CALIFORNIA

In 1991, the following language was added:

Any coverage for prosthetic devices shall

include original and replacement devices, as

prescribed by a physician. Any coverage for

orthotic devices shall provide for coverage

when the device, including original and

replacement devices, is prescribed by a

physician, or is ordered by a licensed health

care provider acting within the scope of his or

her license. Every plan shall have the right to

conduct a utilization review to determine

medical necessity prior to authorizing these

services.

In 2006, the statute was again amended, with the existing

language being designated as subpart (a) and the following

language being designated as subpart (b):5

Notwithstanding subdivision (a), on and after

July 1, 2007, the amount of the benefit for

orthotic and prosthetic devices and services

shall be no less than the annual and lifetime

benefit maximums applicable to the basic

health care services required to be provided

under Section 1367. If the contract does not

include any annual or lifetime benefit

maximums applicable to basic health care

services, the amount of the benefit for orthotic

and prosthetic devices and services shall not

5 The amendment also added language to part (a) allowing surgeons and

podiatrists to prescribe prosthetics and orthotics. That language is not

relevant here.

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GARCIA V. PACIFICARE OF CALIFORNIA 7

be subject to an annual or lifetime maximum

benefit level. Any copayment, coinsurance,

deductible, and maximum out-of-pocket

amount applied to the benefit for orthotic and

prosthetic devices and services shall be no

more than the most common amounts applied

to the basic health care services required to be

provided under Section 1367.

B. Application

PacifiCare denied Garcia’s claim based solely on an

express exclusion in its policy; it did not contest the medical

necessity of myoelectric prosthetic devices for Garcia’s

medical condition. Garcia agrees the plan expressly excludes

coverage for myoelectric prosthetic devices, but she argues

that § 1367.18(a) requires plans to cover any prosthetic

device if it is medically necessary and prescribed by a

physician.

In answering a question of California law, this court

“predict[s] how the highest [California] court would decide

the issue.” Credit Suisse First Boston Corp. v. Grunwald,

400 F.3d 1119, 1126 (9th Cir. 2005) (internal quotation marks

and citations omitted). The question presented here is one of

pure statutory interpretation, so this court “look[s] to

California principles of statutory construction.” Id. When

interpreting a statutory provision, California courts look first

to the text of the statute, “giving to the language its usual,

ordinary import and according significance, if possible, to

every word, phrase and sentence in pursuance of the

legislative purpose.” State Farm Mut. Auto. Ins. Co. v.

Garamendi, 88 P.3d 71, 78 (Cal. 2004) (internal quotation

marks and citations omitted). Language that permits “more

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8 GARCIA V. PACIFICARE OF CALIFORNIA

than one reasonable interpretation allows [courts] to consider

other aids, such as the statute’s purpose, legislative history,

and public policy.” Cortez v. Abich, 246 P.3d 603, 607 (Cal.

2011) (internal quotation marks and citation omitted).

The parties agree that, as enacted in 1985, the original

version of the statute only required plans to offer coverage for

prosthetic devices; the statute afforded complete discretion to

the plans to negotiate the “terms and conditions” of

prosthetics coverage.6 Thus, if the 1985 version of the statute

were still in effect, there would be no question about the

correctness of PacifiCare’s position: plans would be obliged

to offer coverage for prosthetic devices, but the type of

prosthetic devices offered would be negotiable as a “term or

condition” to be agreed upon by the parties.

Section 1367.18 has been amended twice since it was

adopted, and those amendments are the focus of the parties’

briefing. The 2006 amendment limited the ability of plans to

cap the amount of benefits for prosthetic devices; it did not

address the scope of coverage, i.e., the type or types of

devices that plans must offer, or cover. Accordingly, the

2006 amendment is not dispositive of Garcia’s argument,

which hinges instead on the extent to which the 1991

amendment changed the plan’s discretion to negotiate the

types of prosthetics it will cover as a “term and condition” of

coverage.

 

6

 Garcia’s brief concedes: “Initially, the statute simply required HMOs

to offer prosthetics coverage to group subscribers (i.e. employers), under

terms and conditions that the plan and employer agreed upon. The

original version ofthe statute therefore afforded plans complete discretion

about the contents of the prosthetics coverage they offered.”

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GARCIA V. PACIFICARE OF CALIFORNIA 9

PacifiCare argues that § 1367.18 has always

required—and continues to require—that prosthetic coverage

must be offered on terms and conditions mutually agreed

upon, and that the 1991 amendment only requires that

whatever coverage is offered must extend to both original and

replacement devices. Garcia views the 1991 amendment

much more expansively. She argues that the 1991

amendment transformed the statute from a “mandate to offer”

into a “mandate to cover.”7 Far from the unfettered discretion

permitted by the original “terms and conditions” language,

Garcia’s reading of the 1991 amendment prevents plans from

adopting “terms and conditions” that defeat what she

interprets to be the California legislature’s 1991 decision to

mandate that medically necessary prosthetics, prescribed by

physicians, must be covered. Specifically, Garcia argues that

the 1991 amendment requires the provision of all original and

replacement prosthetic devices prescribed by a physician that

are “medically necessary.”

There is some basis for both interpretations of the statute,

but for several reasons we ultimately agree with PacifiCare. 

To begin, Garcia’s interpretation of the 1991 amendment

requires coverage for all prosthetic devices prescribed by a

physician (subject to a review for necessity), and, as

7 Yeager v. Blue Cross of California, 96 Cal. Rptr. 3d 723, 727–28 (Cal.

Ct. App. 2009), describes the difference between mandate to offer and

mandate to cover statutes. The difference is illustrated by comparing

§ 1367.18 (“Every . . . plan . . . shall offer coverage for orthotic and

prosthetic devices and services under terms and conditions that may be

agreed upon between the group subscriber and the plan”) with § 1374.72

(“Every . . . plan . . . shall provide coverage for the diagnosis and

medically necessary treatment of severe mental illnesses . . . under the

same terms and conditions as specified in subdivision (c)”) (emphases

added).

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10 GARCIA V. PACIFICARE OF CALIFORNIA

PacifiCare notes, the 1991 amendment does not include the

word “all.” See Yeager, 96 Cal. Rptr. 3d at 727 (“We may

not make a silent statute speak by inserting language the

Legislature did not put in the legislation.”). Building on the

admittedly untethered discretion the 1985 statute allowed for

negotiating “terms and conditions” of coverage to be offered,

the 1991 amendment merely states that “[a]ny coverage for

prosthetic devices shall include original and replacement

devices, as prescribed by a physician,” subject to a utilization

review to determine medical necessity. Garcia’s concession

that the original 1985 statutory language allowed plans to

define the scope of coverage they would offer—that is, the

type of prosthetic devices they would cover—among the

“terms and conditions” to be agreed upon by the parties,

seriously undermines her interpretation of the 1991

amendment.

The 1991 amendment must be viewed in the context of

the original statute because the legislature did not replace the

1985 language; it retained the original statutory language and

added a new provision to it. For this reason, the parties’

agreement that the original statute only required plans to offer

coverage for prosthetics on mutually agreeable terms—an

interpretation with which we agree—informs the meaning to

be given to the amendment. Read in conjunction with the

original 1985 language, the 1991 amendment only requires

that, whatever type or types of prosthetic devices a plan offers

to cover, the coverage must extend to original and

replacement devices. The 1991 amendment requiring that

plans covering a particular type of prosthetic device must

cover original and replacement devices of the same type, as

long as they are prescribed and deemed medically necessary,

cannot be equated to a mandate that a particular type of

device must be covered if it is prescribed and medically

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GARCIA V. PACIFICARE OF CALIFORNIA 11

necessary. The plain terms of the 1991 amendment do not

prohibit a plan from limiting the scope of coverage as a

negotiable term or condition of the plan, except that, after the

1991 amendment, plans are clearly prohibited from adopting

“terms and conditions” that exclude replacement devices.

A second problem with Garcia’s interpretation is that

§ 1367.18(a) retains language stating that plans “shall offer

coverage” for prosthetic devices under terms and conditions

that may be agreed upon by the group subscriber and the plan. 

If the legislature intended the 1991 amendment to transform

the statute from a “mandate to offer” into a “mandate to

cover,” as Garcia suggests, we can see no reason for retaining

the original “mandate to offer” language from the 1985

version of the statute. The legislature’s decision to retain the

requirement that plans “shall offer coverage” subject to

mutually agreeable terms and conditions is consistent with

PacifiCare’s view that the 1991 amendment is limited to

requiring that, whatever prosthetics coverage is offered by a

plan, it must include original and replacement devices.

Garcia argues that her interpretation of the statute is

supported by Harlick v. Blue Shield of California, 686 F.3d

699 (9th Cir. 2012), but we do not find support for her

position there. Harlick involved the denial of a claim for

residential treatment for anorexia nervosa. After concluding

that the plan excluded this type of care, our court considered

whether California’s Mental Health Parity Act nevertheless

requires that plans within the scope of the Act must provide

all “medically necessary treatment” for “severe mental

illnesses.” We concluded that it does. The Parity Act was

enacted to require plans that provide hospital, medical, or

surgical coverage to also provide coverage for the diagnosis

and treatment of severe mental illnesses under the same terms

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12 GARCIA V. PACIFICARE OF CALIFORNIA

and conditions applied to other medical conditions. Id. at

710–11. As summarized in Harlick, the pertinent part of the

Parity Act specifies that plans within its scope “shall provide

coverage for . . . medically necessary treatment of severe

mental illnesses,” including anorexia nervosa. Id. at 711. 

Our court explained that the statute contains “only one

limitation on the basic mandate that coverage be provided for

‘medically necessary treatment of severe mental illnesses’:

such coverage must be provided ‘under the same terms and

conditions applied to other medical conditions as specified in

subdivision (c)’” of the statute. Id. (emphasis added). The

parties in Harlick agreed that the phrase “terms and

conditions” in the Parity Act refers to monetary conditions,

such as copayments and deductibles. Id. Thus, given the

language and structure of the Parity Act, our court ruled that

plans within its scope are required to cover all medically

necessary treatment for severe mental illnesses, including

anorexia nervosa, and that plans are permitted to apply the

same financial conditions—such as deductibles and lifetime

benefits—that they apply to coverage for physical illnesses. 

Id. at 712.

Garcia argues that Harlick supports her position because

the Parity Act was deemed to require coverage for all

medically necessary treatment, even though the Parity Act

does not include the word “all.” But Garcia overlooks that

the Parity Act mandates coverage, not just offers to cover. 

She also overlooks our court’s observation that the only

limitation on the Parity Act’s basic mandate for coverage is

that it be offered on the same monetary conditions that apply

to other types of coverage. Id. at 711.

Finally, Garcia overlooks our court’s observation in

Harlick that the Knox–Keene Act and the Parity Act “operate

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GARCIA V. PACIFICARE OF CALIFORNIA 13

in fundamentally different ways.” Id. at 716. “Because the

Parity Act applies to severe mental illnesses, some of which

are life threatening, it makes sense that the Act requires

insurers to cover all medically necessarytreatments. It makes

equal sense that the Knox–Keene Act, which applies to the

full range of physical illnesses, does not require insurers to

cover all medically necessary treatments.” Id. We do not

doubt that the most advanced prosthetics are capable of

greatly improving a user’s quality of life, but they cost more

than other options. The California legislature knows how to

mandate insurance coverage when it chooses. See Yeager,

96 Cal. Rptr. 3d at 727. Consistent with the distinction

explained in Harlick, in § 1367.18 the legislature left the

choice between lower costs and better prosthetics to the plan

and its subscriber.

Though the district court found § 1367.18 to be

unambiguous, it considered some of the pertinent legislative

history and found that it supported PacifiCare’s interpretation

of the statute. We agree. The statute’s original sponsor,

Assemblyman Bill Filante, M.D., also offered the 1991

amendment. He made clear that the 1991 amendment was

intended to require coverage for replacement devices. In his

floor remarks introducing the bill and in a letter to the

governor, he wrote:

Approximately 7 years ago I introduced

legislation which required insurers to offer

optional coverage for orthotic and prosthetic

devices. Subsequently, many insurers have

included this coverage as an option. 

Unfortunately, some insurers have begun to

unfairly limit this coverage to only one device

per policy. This bill would allow these

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14 GARCIA V. PACIFICARE OF CALIFORNIA

devices to be replaced when medically

necessary.

(Emphasis added). A Senate Rules Committee analysis of the

1991 amendment described it similarly: “This bill requires

health care service plans . . . to also include original and

replacement devices when prescribed by a physician. . . .

Current law requires health care service plans . . . to offer

coverage for orthotic and prosthetic devices and services

under mutually agreed terms and conditions. . . . Many times,

coverage is limited to one device.” Other legislative history,

such as a report prepared for the Assembly Committee on

Insurance and a report prepared for the Assembly’s third

reading of the bill, also supports this view of the

amendment’s purpose.

Garcia argues that the district court’s interpretation of the

statute defeats the legislative purpose by excluding

myoelectric devices through the “terms and conditions”

clause. But as previously explained, the legislature did not

express an intent to mandate coverage. Further, though this

case does not require that we define the limits of how a policy

could fairly be restricted by the inclusion of restrictions

within its “terms and conditions,” PacifiCare’s counsel

conceded at oral argument that restrictive “terms and

conditions” would have to be reasonable, and from this we

understand that, at a minimum, there is no dispute that such

terms could not permissibly render coverage illusory. The

record before us does not support a finding that the prosthetic

coverage offered by PacifiCare was unreasonably restricted.

Because we agree with PacifiCare’s interpretation of the

plain language of § 1367.18, we need not reach PacifiCare’s

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GARCIA V. PACIFICARE OF CALIFORNIA 15

argument that we should defer to the DHMC’s interpretation

of the statute.

IV. CONCLUSION

For the forgoing reasons, we AFFIRM the district court’s

order granting summary judgment for PacifiCare. We also

DENY AS MOOT Garcia’s motion to certify to the

California Supreme Court the question whether California

Health & SafetyCode § 1367.18 requires PacifiCare to cover

Garcia’s myoelectric prostheses.

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