Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-01493/USCOURTS-caed-2_16-cv-01493-0/pdf.json

Parties Involved:
Blue Shield of California Life & Health Insurance Company
Defendant
Spine & Neurosurgery Associates
Plaintiff

Document Text:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

SPINE & NEUROSURGERY 

ASSOCIATES, a medical 

corporation,

Plaintiff,

v.

BLUE SHIELD OF CALIFORNIA 

LIFE & HEALTH INSURANCE 

COMPANY, a California 

corporation; and DOES 1 

through 10,

Defendant.

CIV. NO. 2:16-1493 WBS CKD

MEMORANDUM AND ORDER RE: MOTION 

TO DISMISS

----oo0oo----

Plaintiff Spine & Neurosurgery Associates filed this 

case against defendant Blue Shield of California Life & Health 

Insurance Company, seeking reimbursement for medical treatment

provided to a Blue Shield insured. (Compl. ¶ 1 (Docket No. 1).) 

Defendant now moves to dismiss plaintiff’s complaint pursuant to 

Federal Rule of Civil Procedure 12(b)(6). (Def.’s Mot. to 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 1 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Dismiss (“Def.’s Mot.”) (Docket No. 7).)

I. Factual and Procedural History

Plaintiff is a California medical corporation. (Compl. 

¶ 5.) From May 14 through 15, plaintiff provided emergency 

medical treatment and services to Viktor Tkachuk, who was insured 

by defendant. (Id. ¶ 10; Def.’s Mot., Mem. (“Def.’s Mem.”) at 

1.) Plaintiff did not have a contract with defendant to provide 

medical services. (Compl. ¶ 12; Def.’s Mem. at 1-2.) The cost 

of Tkachuk’s treatment amounted to $33,048.00. (Compl. ¶ 11.) 

On or about June 10, 2015, plaintiff submitted a claim 

to defendant for full reimbursement of Tkachuk’s treatment

expenses. (Id. ¶ 13.) To date, defendant has paid $2,400.74 on 

the claim. (Id. ¶ 16.) The parties disagree about whether 

defendant is obligated to pay the remaining amount. (Id. ¶¶ 13-

15.) Their dispute centers on whether defendant is obligated to 

pay more than contracted-provider rates on plaintiff’s claim.

(See id. ¶¶ 12, 14; Def.’s Mem. at 2.)

On December 17, 2015, plaintiff filed a complaint in 

the California Superior Court seeking payment on the remaining 

amount from defendant. (See Def’s Mot., Decl. of Christopher 

Rheinheimer (“Rheinheimer Decl.”) Ex. A, State Ct. Compl. (Docket 

No. 7-3).

1) Plaintiff’s state court complaint alleged violation 

 

1 The court takes judicial notice of the three exhibits 

attached to the Rheinheimer declaration, as each exhibit is a 

document on file with the California Superior Court. See U.S. ex 

rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 

F.2d 244, 248 (9th Cir. 1992) (federal courts “may take notice of 

proceedings in other courts, both within and without the federal 

judicial system, if those proceedings have a direct relation to 

matters at issue.”); see also Bryant v. Carleson, 444 F.2d 353, 

357 (9th Cir. 1971) (taking judicial notice of proceedings and 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 2 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

of California Health and Safety Code and California Insurance 

Code. (Id. at 4-5.) It did not raise other claims. Defendant 

demurred to the state court complaint in its entirety, and the 

state court sustained that demurrer without leave to amend. (Id.

Ex. B, State Ct. Order at 3 (Docket No. 7-4).) Plaintiff also 

voluntarily dismissed the state court action with prejudice. 

(Id. Ex. C, State Ct. Request for Dismissal (Docket No. 7-5); 

Def.’s Mem. at 2.)

On June 30, 2016, plaintiff initiated an action in this 

court seeking reimbursement for the same expenses it sought 

reimbursement for in state court. (Compl. ¶ 11.) This time, 

plaintiff cites the Employee Retirement Income Security Act

(“ERISA”), 29 U.S.C. § 1132(a)(1)(B), as the sole basis for its 

claim. (Id. ¶ 18-21.) Defendant now moves to dismiss 

plaintiff’s complaint on grounds of res judicata, arguing that

the state court judgment bars this action. (Def.’s Mem. at 3.) 

II. Legal Standard

On a motion to dismiss for failure to state a claim 

under Rule 12(b)(6), the court must accept the allegations in the 

pleadings as true and draw all reasonable inferences in favor of 

the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), 

overruled on other grounds by Davis v. Scherer, 468 U.S. 183 

(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a 

motion to dismiss, a plaintiff must plead “only enough facts to 

state a claim to relief that is plausible on its face.” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

 

filings in state courts).

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 3 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

“While a complaint attacked by a Rule 12(b)(6) motion 

to dismiss does not need detailed factual allegations, a 

plaintiff’s obligation to provide the ‘grounds’ of his 

‘entitle[ment] to relief’ requires more than labels and 

conclusions . . . .” Twombly, 550 U.S. at 555 (citation

omitted). “Threadbare recitals of the elements of a cause of 

action, supported by mere conclusory statements, do not suffice,” 

and “the tenet that a court must accept as true all of the 

allegations contained in a complaint is inapplicable to legal 

conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

III. Analysis

“Res judicata, also known as claim preclusion, bars 

litigation in a subsequent action of any claims that were raised 

or could have been raised in the prior action.” W. Radio Servs. 

Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997). “In order 

for res judicata to apply there must be: 1) an identity of 

claims, 2) a final judgment on the merits, and 3) identity or 

privity between parties.” Id. “Congress has specifically 

required all federal courts to give preclusive effect to state–

court judgments whenever the courts of the State from which the 

judgments emerged would do so.” Allen v. McCurry, 449 U.S. 90, 

96 (1980) (citing 28 U.S.C. § 1738).

The parties in this action are identical to those in 

the earlier state court action. (Compare State Ct. Compl., with

Compl.)

As for whether the state court judgment was final and on 

the merits, California courts have held that “a dismissal with 

prejudice is the equivalent of a final judgment on the merits, 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 4 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

barring the entire cause of action.” Boeken v. Philip Morris 

USA, Inc., 48 Cal. 4th 788, 793 (2010). Similarly, “a judgment 

entered after the sustaining of a general demurrer is a judgment 

on the merits, and, to the extent that it adjudicates that the 

facts alleged do not establish a cause of action, it will bar a 

second action on the same facts.” Palomar Mobilehome Park Ass’n 

v. City of San Marcos, 989 F.2d 362, 364 (9th Cir. 1993) (citing 

Crowley v. Modern Faucet Mfg. Co., 44 Cal. 2d 321, 322 (1955)). 

Here, the factual basis for plaintiff’s claim--its 

treatment of Tkachuk and subsequent inability to obtain full 

reimbursement from defendant--is identical to the factual basis 

that supported its state court claims. (Compare State Ct. Compl. 

¶¶ 9-16, with Compl. ¶¶ 10-17.) Plaintiff does not dispute this. 

The state court sustained defendant’s general demurrer on 

plaintiff’s state court claims without leave to amend. (State 

Ct. Order at 3.) Moreover, plaintiff voluntarily dismissed the 

state court action with prejudice. (State Ct. Request for 

Dismissal.) Accordingly, the state court judgment was final and 

on the merits.

Plaintiff disputes whether the state court judgment, 

which only resolved its state law claims, (see State Ct. Order at 

2-3), bars its present action, which is based on federal law. 

According to plaintiff, “after being informed that Mr. Tkachuk’s 

health plan was an ERISA plan, Plaintiff’s counsel realized that 

the State Court could not decide the issue of whether the 

Plaintiff’s [state law] claim was viable” because “ERISA 

preempted state law with regard to Plaintiff’s claims for 

reimbursement.” (Pl.’s Opp’n at 5, 8 (Docket No. 10).) At that 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 5 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

time, “Plaintiff’s counsel, in his professional judgment, made 

the decision not to oppose Defendant’s demurrer” on the belief 

that “the proper forum for Plaintiff’s claims against Defendant 

was [in federal court].” (Id. at 8.) Plaintiff maintains that 

because “the State Court could not have addressed the issues 

presented in Plaintiff’s current Complaint . . . res judicata 

does not bar Plaintiff from litigating such issues in this 

Court.” (Id. at 7.) 

In contrast to plaintiff’s understanding, federal 

preemption of state law does not necessitate federal preemption 

of state court jurisdiction. It is well-established that “that 

nothing in the concept of our federal system prevents state 

courts from enforcing rights created by federal law. Concurrent 

jurisdiction has been a common phenomenon . . . and exclusive 

federal court jurisdiction over cases arising under federal law 

has been the exception rather than the rule.” Charles Dowd Box 

Co. v. Courtney, 368 U.S. 502, 507 (1962). Congress “may confine 

jurisdiction to the federal courts either explicitly or 

implicitly. . . . [T]he presumption of concurrent jurisdiction 

can be rebutted by an explicit statutory directive, by 

unmistakable implication from legislative history, or by a clear 

incompatibility between state-court jurisdiction and federal 

interests.” Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 

478 (1981).

None of the considerations relevant to rebutting the 

presumption of concurrent state-federal jurisdiction are present 

with respect to the statute at issue in plaintiff’s ERISA claim--

29 U.S.C. § 1132(a)(1)(B). Contrarily, the statute expressly 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 6 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

provides for concurrent state-federal jurisdiction: “State courts 

of competent jurisdiction and district courts of the United 

States shall have concurrent jurisdiction of actions under 

paragraphs (1)(B) and (7) of subsection (a) of this section.” 29 

U.S.C. § 1132(e). Accordingly, plaintiff could have raised its

ERISA claim in state court.

“California, as most states, recognizes that the 

doctrine of res judicata will bar not only claims actually 

litigated in a prior proceeding, but also claims that could have 

been litigated.” Palomar Mobilehome Park Ass’n, 989 F.2d at 364 

(citing Busick v. Workmen’s Comp. Appeals Bd., 7 Cal. 3d 967, 975 

(1972) and Jama Const. v. City of Los Angeles, 938 F.2d 1045, 

1047 n.1 (9th Cir. 1991)).

The court has considered the harshness of barring 

plaintiff from litigating its ERISA claim here in light of the 

state court’s dismissal of its related state claims without leave 

to amend. Nevertheless, because plaintiff could have and did not

raise its ERISA claim in state court prior to dismissal, and 

because the state court dismissed plaintiff’s action with 

prejudice and without leave to amend, the court is compelled 

under California law to dismiss plaintiff’s ERISA claim with 

prejudice. See Boeken, 48 Cal. 4th at 793 (“[A] dismissal with 

prejudice is the equivalent of a final judgment on the merits, 

barring the entire cause of action.”); Palomar Mobilehome Park 

Ass’n, 989 F.2d at 364 (“[A] judgment entered after the 

sustaining of a general demurrer is a judgment on the merits . . 

. [and] it will bar a second action on the same facts.”); see 

also Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995) 

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 7 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

(“Futility of amendment can, by itself, justify the denial of a 

motion for leave to amend.”).

The court might be faced with the possibility of a

different conclusion had plaintiff not voluntarily dismissed its 

state court action with prejudice and the state court not 

sustained defendant’s demurrer without leave to amend. But 

because those events occurred, the court’s ruling here is 

compelled under California law.

IT IS THEREFORE ORDERED that defendant’s motion to 

dismiss plaintiff’s complaint be, and the same hereby is, 

GRANTED. Plaintiff’s complaint is DISMISSED WITH PREJUDICE and 

WITHOUT LEAVE TO AMEND.

Dated: October 7, 2016

Case 2:16-cv-01493-WBS-CKD Document 16 Filed 10/07/16 Page 8 of 8