Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-04226/USCOURTS-cand-4_14-cv-04226-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOHN MUIR HEALTH,

Plaintiff,

v.

GLOBAL EXCEL MANAGEMENT,

Defendant.

___________________________________/

No. C-14-04226 DMR

ORDER RE DEFENDANT’S MOTION

TO STRIKE [DOCKET NO. 28]

Before the court is Defendant Global Excel Management, Inc.’s motion to strike certain

allegations and prayers from Plaintiff John Muir Health’s amended complaint. [Docket No. 28.] 

The court held a hearing on February 26, 2015. For the reasons set forth below, Defendant’s motion

is granted in part and denied in part. 

I. BACKGROUND

Plaintiff is a California non-profit corporation that provides medical care to patients. 

[Docket No. 24 (Am. Compl.) ¶ 1.] Defendant is a Canadian for-profit corporation with its principal

place of business in Quebec, Canada. (Am. Compl. ¶ 2.) Defendant arranges for the provision of

health care services to its enrollees and/or pays for or reimburses part or all of the cost for those

services. (Am. Compl. ¶ 2.) 

Plaintiff alleges the following facts. On July 18, 2012, Plaintiff provided medical treatment

to an individual with the initials L.T. (Am. Compl. ¶ 12, Ex. A.) Between March 19, 2013 and

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April 1, 2013, Plaintiff provided medical treatment to an individual with the initials P.C. (Am.

Compl. ¶ 12, Ex. A.) Both patients were enrolled in a health plan sponsored, administered, and/or

financed by Defendant. (Am. Compl. ¶ 8.) At all relevant times, Plaintiff and Defendant did not

have a written agreement regarding reimbursement rates for medical care which Plaintiff would

provide to patients who were members of Defendant’s health plan. (Am. Compl. ¶ 9.) Plaintiff

contacted Defendant by telephone to ascertain whether Defendant or its principal was responsible

for the costs associated with L.T. and P.C.’s medical treatment. (Am. Compl. ¶ 10.) In response,

Defendant’s agent provided Plaintiff with the relevant insurance verification and insurance coverage

eligibility information for the two patients. (Am. Compl. ¶ 10.) At all relevant times, Defendant

held itself out to be the responsible payor for services provided to L.T. and P.C. (Am. Compl. ¶ 11.) 

Plaintiff billed $58,525.00 for the treatment of L.T. and $551,652.02 for the treatment of

P.C., for a total bill of $610,177.02. (Am. Compl. ¶¶ 14-15, Ex. A.) To date, Defendant has paid

only $149,966.12 for the medical services provided to both patients, despite Plaintiff’s demands for

the remaining $459,985.90. (Am. Compl. ¶¶ 17-18.)

Plaintiff filed this lawsuit with the Superior Court of California on July 15, 2014. [Docket

No. 4 (Notice of Removal) ¶1.] Defendant removed the case to federal court on the basis of

diversity jurisdiction on September 19, 2014. (Notice of Removal ¶ 6.)

Plaintiff’s original complaint brought two causes of action against Defendant: (1) quantum

meruit and (2) violation of California Health and Safety Code section 1371.4(b), which requires

health care service plans to reimburse providers for any emergency services and care provided to

stabilize their enrollees. See Cal. Health & Safety Code § 1371.4(b). In its quantum meruit claim,

Plaintiff sought the balance of its billed charges for the treatment of both L.T. and P.C., (Compl. ¶¶

23-26), but its section 1371.4 claim related only to Defendant’s alleged $43,654.24 debt for the

emergency medical care provided to L.T, as P.C. apparently did not require emergency care services. 

(Compl. ¶¶ 12, 27-34, Ex. A.) 

On September 25, 2014, Defendant moved to dismiss Plaintiff’s second cause of action under

Federal Rule of Civil Procedure 12(b)(6), arguing that section 1371.4 does not provide a private

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right of action. [Docket No. 9 (Def.’s Mot. to Dismiss) at 2.] The court dismissed the section

1371.4 claim, with leave to amend. [Docket No. 20 (Order on Mot. to Dismiss) at 8-10.] 

Plaintiff filed an amended complaint on December 5, 2014. Plaintiff’s first claim remains

unchanged, but its second cause of action now states a claim under California’s Unfair Competition

Law (“UCL”) (Cal. Bus. & Prof. Code § 17200 et seq.) premised on Defendant’s alleged violation of

section 1371.4(b). (Am. Compl. ¶¶ 28-29.) This claim also now makes reference to “Patients,”

(Am. Compl. ¶¶ 28-29, 31), and requests the total amount that Defendant allegedly owes for both

L.T. and P.C., $459,985.90, instead of the $43,654.24 balance of billed emergency medical care

charges for L.T. alone. (Compare Am. Compl. Prayer ¶ 3, with Compl. Prayer ¶ 3.) 

Defendant now moves to strike certain allegations and prayers related to the UCL claim from

Plaintiff’s amended complaint. 

II. LEGAL STANDARDS

Pursuant to Federal Rule of Civil Procedure 12(f), upon motion or sua sponte, a court may

strike “from any pleading any insufficient defense or any redundant, immaterial, impertinent, or

scandalous matter.” The function of a 12(f) motion to strike is to avoid the expenditure of time and

money that must arise from litigating spurious issues by dispensing with those issues prior to trial. 

Fantasy, Inc., 984 F.2d at 1527 (quotation marks and citation omitted). Rule 12(f) motions should

not be granted unless it is clear that the matter to be stricken could have no possible bearing on the

subject matter of the litigation. Rosales v. Citibank, 133 F. Supp. 2d 1177, 1180 (N.D. Cal. 2001);

Colaprico v. Sun Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). 

A decision to strike material from the pleadings is vested to the sound discretion of the trial

court. Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). However, Rule 12(f) does not

authorize a district court to strike a claim for relief on the grounds that such relief is precluded as a

matter of law. See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 976 (9th Cir. 2010). To the

extent that a party’s Rule 12(f) motion is “really an attempt to have certain portions of [their

opponent’s] complaint dismissed or to obtain summary judgment . . . as to those portions of the

suit,” that action is “better suited for a Rule 12(b)(6) motion or a Rule 56 motion.” Id. at 974. 

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Where a motion is in substance a Rule 12(b)(6) motion, but is incorrectly denominated as a

Rule 12(f) motion, a court may convert the improperly designated Rule 12(f) motion into a Rule

12(b)(6) motion. See Consumer Solutions REO, LLC v. Hillery, 658 F. Supp. 2d 1002, 1021 (N.D.

Cal. 2009) (quotation marks and citations omitted). 

III. DISCUSSION 

Defendant’s objections to the amended complaint can be roughly divided into three

categories. First, Defendant moves to strike all references in the amended complaint that could be

construed as a request for damages under the UCL, since the UCL only provides for the recovery of

restitution, and not damages. Second, Defendant seeks to strike all implied references to patient P.C.

from Plaintiff’s UCL cause of action. Third, Defendant seeks to strike the actual amount of relief

that Plaintiff requests in its UCL claim, arguing that it constitutes damages rather than restitution,

and is thus unavailable under the UCL. 

A. References to Damages 

Section 17203, which describes the remedies available under the UCL states that: “Any

person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in

any court of competent jurisdiction. The court may make such orders or judgments . . . as may be

necessary to restore to any person in interest any money or property, real or personal, which may

have been acquired by means of such unfair competition.” Cal. Bus. & Prof. Code § 17203. Private

plaintiffs suing under this section cannot claim damages. See Cortez v. Purolator Air Filtration

Prods. Co., 23 Cal. 4th 163, 173 (2000) (citations omitted). 

Accordingly, Defendant seeks to strike all references to “damages” from Plaintiff’s UCL

claim. These include: 1) the parenthetical subheading to Plaintiff’s second cause of action, which

reads, “For Monetary Damages and/or Permanent Injunctive Relief Under Cal. Bus. & Prof. Code §

17200 et seq.”; 2) Paragraph 31 of Plaintiff’s amended complaint, which alleges that it has been

“specifically damaged to its detriment in the principal amount of $459,985.90” as a result of

Defendant’s “refusal to pay the reasonable value of services provided to the Patients”; and 3)

Plaintiff’s request for “specific relief in a sum to be proven at trial, but not less than $459,985.90,” in

the third paragraph of its prayer for relief. (Am. Compl. ¶¶ 6, 31, Prayer ¶ 3 (emphasis added).) 

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 The court discusses Defendant’s objections to this sum in the next section.

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Plaintiff concedes that damages are not available under the UCL. Plaintiff suggests that

nothing in its amended complaint should be interpreted as a request for damages under the UCL, but

acknowledges that its wording could have been clearer. In light of the parties’ agreement that

Plaintiff cannot seek damages under the UCL, and Plaintiff’s acknowledgment of poor word choice,

the court grants Defendant’s motion, and orders that the ambiguous references to damages be

stricken from Plaintiff’s amended complaint.

B. Addition of Costs Related to Patient P.C. to Plaintiff’s UCL Claim 

Defendant also seeks to strike all references to patient P.C. from Plaintiff’s UCL cause of

action. These include the use of the plural word “Patients” in paragraphs 28 through 31 of the

amended complaint, and reference to the sum of $459,985.901

 in paragraphs 28 and 31, as well as

paragraph 3 of the prayer for relief. Defendant notes that Plaintiff’s original request for relief under

the now-stricken direct cause of action under Cal. Health & Safety Code § 1371.4(b) was limited to

the balance of billed charges for L.T.’s emergency care. (See Compl. ¶¶ 28-34; Compl. Prayer ¶ 3.) 

By contrast, the word “Patients” impliedly refers to both L.T. and P.C., and the sum $459,985.90

represents the amount allegedly owed for the care of both individuals, even though P.C. did not

receive emergency medical services. (See Am. Compl., Ex. A.) Defendant argues that these

changes should be stricken as impermissible amendments of Plaintiff’s complaint.

Plaintiff concedes that the patient P.C. “did not receive emergency care,” and that all

pluralizations of the word “Patient” in its second cause of action were “what amounts to a typo.” 

(Pl.’s Opp’n 11-12.) Health and Safety Code section 1371.4, the law upon which Plaintiff’s UCL

claim is based, only obligates health care service plans to reimburse providers for emergency

services and care given to stabilize their enrollees. See Cal. Health & Safety Code § 1371.4(b). 

Since it is undisputed that patient P.C. did not receive such care, the court finds that any implied or

express references to that individual—including all pluralizations of the word “Patient”—are

immaterial to Plaintiff’s second cause of action. Consequently, the court orders that all such

references be stricken from Plaintiff’s amended complaint.

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C. Plaintiff’s Specific Monetary Request for Relief in Its UCL Claim 

Finally, Defendant seeks to strike the specific amount of money—$459,985.90—sought in

Plaintiff’s UCL claim. In so doing, Defendant is essentially attempting to use Rule 12(f) to strike a

claim for relief as a matter of law. See Whittlestone, 618 F.3d at 974. This is not a proper use of

that rule. Id. Such a request is “better suited for a Rule 12(b)(6) motion or a Rule 56 motion.” Id. 

However, “where a motion is in substance a Rule 12(b)(6) motion, but is incorrectly denominated as

a Rule 12(f) motion, a court may convert the improperly designated Rule 12(f) motion into a Rule

12(b)(6) motion.” Consumer Solutions, 658 F. Supp. 2d at 1021 (quotation marks and citations

omitted). The court does so here. 

Defendant makes two arguments in support of striking Plaintiff’s amended request for relief. 

First, Defendant argues this new sum—which represents “a tenfold increase” from the amount

requested in the original complaint—was enlarged without leave of court. (See Def.’s Reply 5.) 

Plaintiff has acknowledged that its inclusion of billed charges related to P.C. in its second

cause of action was done in error. At the hearing, Plaintiff conceded that, therefore, the amount of

relief requested in its UCL claim should be reduced, since the law upon which this claim is based

only obligates health care service plans to reimburse providers for emergency care, (see Cal. Health

& Saf. Code § 1371.4), and it is undisputed that P.C. did not receive such care. (See Pl.’s Opp’n 12.) 

To the extent that the amount of relief requested in Plaintiff’s second cause of action was based on

the balance of patient P.C.’s billed charges, Defendant’s motion to dismiss that amount is granted. 

Plaintiff’s request for restitution under the UCL’s “unlawful” prong should be limited to an amount

contemplated by section 1371.4(b) and its accompanying regulations—that is, to reimbursement for

the “emergency services and care” provided to L.T.

Defendant also claims that Plaintiff’s request for relief should be stricken because it does not

really represent “restitution,” and is consequently unavailable under the UCL. In support of this,

Defendant argues, first, that Plaintiff’s restitution claim is really a damages claim in disguise,

because it has requested the same amount in its quantum meruit claim. 

Defendant cites three cases for the proposition that if a plaintiff requests the same amount of

relief as both “damages” and “restitution,” a court will reject the restitution claim as one for

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 For example, in Sequel Contractors, intervenor plaintiff Orange County filed suit against

defendant, alleging that it had violated California’s False Claims act and engaged in negligent

misrepresentation, breach of contract, negligence, and fraud and deceit. See Sequel Contractors, 402

F. Supp. 2d at 1146. Defendant then filed a UCL counterclaim against Orange County, alleging that the

county’s improper supervision of defendant’s project managers caused it to “incur payroll expenses and

suffer a decline in the value of its business.” Id. at 1146, 1156. The court found that defendant did not

state a cognizable claim for restitution under the UCL, because it did not allege any facts suggesting that

it had an “ownership interest” in property or funds in the county’s possession. Id. at 1156. 

Similarly, in National Rural Telecommunications, the plaintiffs brought a UCL claim against

DirectTV, alleging that the latter had failed to abide by an options contract entered into between

plaintiffs and defendant’s predecessor-in-interest, under which the plaintiffs would have had the option

to offer premium cable services to their subscribers. See Nat’l Rural Telecomm., 319 F. Supp. 2d at

1064-65. The plaintiffs alleged that they had lost profits and subscription revenues as a result of the

defendant’s failure to honor this options contract. Id. at 1080. However, the court found that the

plaintiffs failed to state a valid UCL claim because they were seeking to recover “what they believe[d]

they would have obtained if [defendant] had performed in accordance with [its] agreements,” and thus

had only a contingent expectation interest in this sum. Id. at 1080, 1091.

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damages “under a different name.” See United States v. Sequel Contractors, Inc., 402 F. Supp. 2d

1142, 1156-57 (C.D. Cal. 2005); Nat’l Rural Telecomm. Co-op. v. DIRECTV, Inc., 319 F. Supp. 2d

1059, 1091 (C.D. Cal. 2003); Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134,

1150-51 (2003). However, the fact that a party requested the same amount in both restitution and

damages was not dispositive in any of these cases. Rather, the court in each case found that the

remedy sought was not restitutionary, because it did not constitute the return of monies given, or

funds in which the requesting party had an ownership interest.2

In fact, a plaintiff can state valid claims for the same amount as both damages and restitution. 

See Cortez, 23 Cal. 4th at 174 (2000) (holding that earned but unpaid wages can be recovered as

“damages” in a suit based on breach of contract or fraud, and as “restitution” in a UCL action

premised on a Labor Code violation). Unlike the parties in the cases cited by Defendant, Plaintiff

can state a valid claim that it conferred a benefit directly on Defendant—namely, the stabilizing

emergency care of Defendant's enrolled beneficiary, L.T. Plaintiff can also allege that Defendant

had a legal duty to reimburse it for this benefit under section 1371.4(b), that Defendant failed to do

so, and that Plaintiff is entitled to restitution as a result.

Finally, Defendant argues that the soon-to-be amended amount sought for unpaid but billed

charges for emergency services provided to L.T. is not recoverable as restitution under the UCL

because it exceeds Plaintiff’s “cost of service.” Defendant suggests that Plaintiff has “at best, an

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 Defendant also claims that Korea Supply “emphatically” rejected “disgorgement of a

defendant’s profits as a measure of restitution.” (Def.’s Reply 3 (citing Korea Supply, 29 Cal. 4th at

1148).) This is incorrect. To the extent that disgorgement results in restitution, it is still permissible

under the UCL. Korea Supply, 29 Cal. 4th at 1145. Korea Supply simply rejected “nonrestitutionary”

disgorgement in individual actions under the UCL, and held that an individual may only use this law

to recover “profits unfairly obtained” if those profits “represent monies given to the defendant or

benefits in which the plaintiff has an ownership interest.” Id. at 1148 (emphasis added).

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expectation interest” in anything beyond this amount, (Def.’s Reply 4), and cites Korea Supply for

the proposition that such an interest cannot form the basis of a claim for restitution under the UCL. 

While Korea Supply does hold that a plaintiff cannot recover a “contingent expectancy interest”

under the UCL, that holding is inapplicable here.3

The UCL claim at the center of Korea Supply was brought by KSC, a company that

represented defense industry contractors in their negotiations with the Republic of Korea. Korea

Supply, 29 Cal. 4th at 1141. KSC represented a Canadian company, MacDonald Dettwiler, in its bid

for a contract to build a synthetic aperture radar (SAR) system for the Korean military. Id. Had the

Republic of Korea awarded the contract to MacDonald Dettwiler, KSC would have earned a

commission of over $30 million—15% of the contract price. Id. MacDonald Dettwiler offered

better equipment and a lower price than its competitors, but the government chose to award the

contract to a subsidiary of Lockheed Martin instead, allegedly as a result of bribes and sexual favors

given to key Korean officials by the subsidiary’s representative. Id. at 1141-42. 

After learning of these actions, KSC brought suit against Lockheed Martin, stating claims

under both tort law and the UCL. Id. As part of its unfair competition claim, KSC “sought

disgorgement to it of the profits realized by Lockheed Martin on the sale of the SAR to Korea,” in

the amount of its lost commission. Id. at 1142, 1151. However, the court concluded that whatever

profit Lockheed earned had come from the Republic of Korea, not KSC, and that KSC’s interest in

its lost commission was a mere “attenuated expectancy,” contingent upon MacDonald Dettwiler

winning its bid to construct Korea’s SAR system. Id. at 1149-50. Therefore, the court found that

KSC’s claim was “properly characterized” as one for “nonrestitutionary disgorgement of profits,”

which is not an available remedy under the UCL. Id. at 1150-1152 (“[c]ompensation for a lost

business opportunity is a measure of damages and not restitution to the alleged victims” (citation

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 Other cases cited by Defendant in support of its position that Plaintiff does not have a vested

interest in the balance of its billed charges are similarly distinguishable from the current case. See Nat’l

Rural Telecomm., 319 F. Supp. 2d at 1080, 1091 (plaintiffs could not state a valid restitution claim under

the UCL because they were actually seeking to “recover expectation damages for what they believe[d]

they would have obtained if [defendant] had performed in accordance with [its] agreements.”); Vikco

Ins. Servs., Inc. v. Ohio Indem. Co., 70 Cal. App. 4th 55, 67-68 (1999) (insurance agent whose contract

had been terminated by the insurer could not use the UCL to “recover unrealized commissions and

general compensatory damages it suffered as a result of being given less than 120 days written notice

of termination,”); Madrid v. Perot Sys. Corp., 130 Cal. App. 4th 440, 453-56 (2005) (holding that

plaintiff did not have vested interest in money that defendant received through alleged sale of

confidential information to third parties or in “ill-gotten gain” that defendant energy producers and

suppliers received through their alleged overcharges, where plaintiff did not seek to recover actual

overcharges paid by class members).

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omitted)); see also Nat’l Rural Telecomm., 319 F. Supp. 2d at 1080, 1091 (finding that plaintiffs

could not state valid restitution claim under UCL because they were actually seeking to “recover

expectation damages for what they believe[d] they would have obtained if [defendant] had

performed in accordance with [its] agreements.”).

The plaintiff in Korea Supply was not entitled to restitution under the UCL because it “was

not seeking the return of money or property that was once in its possession,” nor did it have a

“vested interest in the money it [sought] to recover.” Id. at 1149. In contrast, Plaintiff seeks a

“quantifiable” sum allegedly owed to it by Defendant—the balance of its billed charges for medical

care given to members of Defendant’s insurance plan. See Walnut Creek, 54 Cal. 3d at 263 (noting

that restitution encompasses “quantifiable” sums that one party owes another). This amount is more

akin to the earned but unpaid wages of Cortez than the contingent commission of Korea Supply.

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Compare Cortez, 23 Cal. 4th at 177-78 (finding that employees can state a claim for restitution

under the UCL because they have a vested property right in their earned but unpaid wages), with

Korea Supply, 29 Cal. 4th at 1149-50 (finding that plaintiff could not seek restitution for its lost

contingent commission, because it had only an “attenuated expectancy” interest in that amount.)

Defendant may be correct that there is not yet any explicit precedent for “the proposition that

a healthcare provider has a vested interest in its billed amounts,” but it presents no authority (and

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 While “a medical care provider’s billed price for particular services is not necessarily

representative of either the cost of providing those services or their market value,” Howell v. Hamilton

Meats & Provisions, Inc., 52 Cal. 4th 541, 564 (2011), Defendant has failed to show how this fact has

any bearing on what Plaintiff can seek as “reimbursement” under section 1371.4. Hamilton Meats is

particularly inapplicable here, because the providers in that case had negotiated special lower rates with

the insurer—exactly the sort of arrangement that Plaintiff has not made with Defendant. Id. at 563. 

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this court is also unaware of any) for its contention that “reimbursement” under section 1371.4 of the

Knox-Keene act is limited to a provider’s cost of service.5

 (Def.’s Reply 4.) 

 Section 1371.4 was added to the Knox-Keene Act “to ensure that California’s citizens

received proper care and to eliminate incentives for carriers to deny care and reduce payments to

physicians.” California Pac. Reg’l Med. Ctr. v. Global Excel Mgmt., Inc., No. 13-CV-00540 NC,

2013 WL 2436602, at *7 (N.D. Cal. June 4, 2013) (citation omitted). The Department of Managed

Health Care regulations interpreting this section define “reimbursement” of a claim made by noncontract healthcare provider as “payment of the reasonable and customary value for the health care

services rendered based upon statistically credible information that is updated at least annually and

takes into consideration: (i) the provider’s training, qualifications, and length of time in practice; (ii)

the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing

provider rates charged in the general geographic area in which the services were rendered; (v) other

aspects of the economics of the medical provider’s practice that are relevant; and (vi) any unusual

circumstances in the case.” Cal. Code Regs., tit. 28, § 1300.71(a)(3)(B) (emphasis added). In light

of these facts, at least one court has held section 1371.4 requires an insurer to reimburse a reasonable

sum, not “any amount it chooses, no matter how little,” and that reasonableness of a reimbursement

can be determined in court. Bell v. Blue Cross of California, 131 Cal. App. 4th 211, 214, 217-18,

222 (2005).

Applying the factors set forth in the Department of Managed Health Care’s regulations, a

fact-finder could determine that Plaintiff’s full billed amount represents the reasonable and

customary value of the emergency services provided to S.K. For this reason, the court denies

Defendant’s motion to dismiss the amount sought in Plaintiff’s UCL claim on the grounds that it

represents more than Plaintiff’s “cost of service.” 

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IV. CONCLUSION

For the reasons stated above, Defendant’s motion to strike is granted. Defendant’s motion to

dismiss is granted in part and denied in part. The court grants Plaintiff leave to further amend its

complaint in accordance with this order. Any amended complaint shall be filed within fourteen days

of the date of this order.

IT IS SO ORDERED.

Dated: March 25, 2015

 DONNA M. RYU

United States Magistrate Judge

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORN

I

A

IT IS SO ORDERED

Judge Donna M. Ryu

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