Filed 6/10/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT

CHILDREN’S HOSPITAL CENTRAL CALIFORNIA, Plaintiff and Respondent,

v.
BLUE CROSS OF CALI FORNIA et al., Defendants and Appellants. F065603 (Super. Ct. No. MCV048512)



### OPINION

APPEAL from a judgment of the Superior Court of Madera County. Dale J. Blea, Judge. Reed Smith, Margaret M. Grignon; Wilke Fleury Hoffe lt Gould & Birney, Thomas G. Redmon, Curtis S. Leavitt, Dani el L. Baxter; Kennad ay, Leavitt & Daponde
and Curtis S. Leavitt for De fendants and Appellants. Marion’s Inn, Kennedy P. Richardson an d Mark Palley for California Association
of Health Plans as Amicus Curiae on behalf of Defendants and Appellants.2. Hooper, Lundy & Bookman, Glenn E. Solo mon and Lillie A. Werner for Plaintiff and Respondent. DLA Piper, Stephen L. Goff, Todd M. Noonan; Ja na Dubois for California Hospitals Association as Amicus Curiae on behalf of Plaintiff and Respondent.
-ooOoo- This appeal concerns a dispute betwee n respondent Children’s Hospital Central California (Hospital), and appellants Blue Cross of California and Blue Cross of California Partnership Plan, Inc. (Blue Cr oss), over the reasonable value of the poststabilization emergency medical services provid ed by Hospital to Medi-Cal beneficiaries enrolled in Blue Cross’s Medi-Cal managed care plan. The services at issue were rendered during a 10-month pe riod when Hospital and Blue Cross did not have a written
contract that covered th ose beneficiaries. Blue Cross paid Hospital approximatel y $4.2 million based on the Medi-Cal rates paid by the government. However, Hospital demanded its full billed charges of $10.8 million. The jury found there was an implied-in-fact contra ct between Hospital and Blue Cross and awarded Hospital a pproximately $6.6 million, the difference between the full billed charges and the $4.2 million Blue Cross had already paid. Blue Cross contends the damages award was the result of erroneous discovery and evidence rulings that were pred icated on the trial court’s misconstruction of California Code of Regulations, title 28, section 1300. 71, subdivision (a)(3)(B) (hereafter section 1300.71(a)(3)(B)). This regulation define s “Reimbursement of a Claim” for noncontracted providers as the payment of “t he reasonable and customary value for the health care services rendered.” (§ 1300.71( a)(3)(B).) This value is based on several factors. According to Blue Cross, the tr ial court incorrectly concluded that section 1300.71(a)(3)(B) provided the exclusive sta ndard for determining the reasonable and customary value of the medical se rvices in this action. Blue Cross is correct. Because of this error, the evidence of the reasonable and customary value was improperly limited to3. Hospital’s full billed charges. This error wa s prejudicial. Accordingly, the case will be reversed and remanded for a retrial on damages. BACKGROUND Hospital specializes in providing medical services to children. Approximately 75 percent of Hospital’s patients are in Medi-Cal programs. Hospital has a contract with the California Department of Health Care Servi ces (DHCS), the responsible state agency, to render services to the majority of these Medi -Cal patients in the fee for service Medi-Cal plan. Under this program, Ho spital is paid the average Ca lifornia Medical Assistance Commission (CMAC) rate for th e geographic region for th e services it performs. However, Hospital also serves Medi-Cal patients who are enrolled in a Medi-Cal managed care plan. Unlike the fee for servic e plan, with a managed care plan the DHCS does not pay for services actually rendered. Rather, the DHCS pays a fixed rate per person per month to the health plan, whet her or not services are rendered. ( Lackner v. Department of Health Services (1994) 29 Cal.App.4th 1760, 17 62, fn. 2.) When services are rendered, the health pl an pays the provider.
Blue Cross contracts with the DHCS to provide a Medi-Cal managed care plan. Accordingly, the DHCS pays Blue Cross a negotiated rate per month per beneficiary enrolled in Blue Cross’s plan. In turn, Blue Cross manages that beneficiary’s health care service needs. This management includes ente ring into contracts with various health care providers. Up until July 2007, Hospital and Blue Cr oss had a written contract setting rates for inpatient and outpatient medical services provid ed to Blue Cross Medi-Cal beneficiaries. However, after that contract expired on July 31, 2007, the parties were unable to agree on the contract terms. Eventually, the parties en tered into a new contract effective June 1, 2008. Accordingly, there was a 10-month period during which Hospital and Blue Cross
had no written contract.4. During this off-contract period, Hosp ital was required to provide emergency
services to Blue Cross Medi-Cal beneficiar ies under federal and state law. A hospital with an emergency department must provid e a patient with “an appropriate medical screening examination” and “such treatmen t as may be required to stabilize” any emergency medical condition withou t regard to the patient’s in surance or ability to pay. (42 U.S.C. § 1395dd(a), (b); Health & Saf. C ode, § 1317.) Further, a hospital generally may not transfer or discharge a patient until it has been determined that the emergency medical condition has been stabilized. (42 U. S.C § 1395dd(c) and (e)(3); Health & Saf. Code, §§ 1317.1, subd. (j) and 1317.2.) Blue Cross, as a Medi-Cal managed care organization, had a corresponding obligation to pay for emergency services rende red to the Medi-Cal beneficiaries enrolled in its plan during the off-contract period. (42 U.S.C § 1396u-2(b )(2)(A); Health & Saf. Code, § 1371.4; Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497, 504 ( Prospect ).) This obligation continue d until such time as the
enrollees could be transferred to a contract ed provider or discharged. (Welf. & Inst. Code, § 14454, subd. (a).) Hosp ital, as the provider of thos e emergency services without a contract with Blue Cross, was required to accept as payment in full the amount the DHCS would have paid directly for emerge ncy services under the Medi-Cal fee for service system, i.e., the av erage CMAC rate. (42 U. S.C. § 1396u-2(b)(2)(D.) However, once the treating provider has determined that the emergency medical condition has been stabilized, a Medi-Cal mana ged care organization’s obligation to pay for emergency services ends and the organiza tion “may require prior authorization as a prerequisite for payment for necessary” post- stabilization medical care. (Health & Saf. Code, § 1371.4, subd. (c).) “[I]f the hospital emergency department or emergency physician fails to obtain prior authorizati on,” the managed care organization “may deny reimbursement.” (Cal. Code Regs., tit. 22, § 53855, subd. (a).) But, upon receipt of a request from an out of contract hospital for authorization for post-stabilization medical5. care, the Medi-Cal managed care organizati on must render a decision within 30 minutes, or “the request shall be deemed to be approved.” ( Ibid .) Here, during the off-contract period, 8 96 Blue Cross Medi-Cal beneficiaries received emergency care at Hospital followe d by post-stabilization inpatient medical services. Blue Cross paid Hospital for the emergency medical care at the average CMAC rate as required by statute. Th ese payments are not in dispute. Hospital also submitted claims to Blue Cross for the post-stabilization services provided to the 896 Blue Cross Medi-Cal benefi ciaries. Blue Cross paid those claims at the average CMAC rate of $1,275 per da y. When in Oct ober 2008, the DHCS
established a new CMAC rate of $1,779 per day retroactive to services rendered on or after January 1, 2007, Blue Cross made an additional payment to Hospital covering the difference. In total, Blue Cross paid $4,211 ,958 to Hospital for post-stabilization services provided to Blue Cross Medi-Cal benefi ciaries during the off-contract period. Hospital filed this action in July 2009 se eking additional payments from Blue Cross. Hospital alleged that: it had provi ded emergency and post-stabilization medical
services to Blue Cross Medi-Cal benefici aries during the off-cont ract period; it had timely requested pre-authorization from Blue Cross to provide post- stabilization services to these beneficiaries; and Blue Cross had failed to either appropriately respond or arrange for the patients’ transfer, or had appr oved the requests. Ho spital further alleged that, by its actions, Blue Cross had impliedly agreed to pay the reasonable and customary value for all the post-stabilization services pr ovided to its Medi-Cal beneficiaries. In alleging that it was entitled to the reasonable and customary value for these post-stabilization services, Hospital relied on section 1300.71(a)(3)(B). This regulation provides that, for non-contracted provider s, the reimbursement of a claim means “the payment of the reasonable and customary value for the health care services rendered based upon statistic ally credible info rmation that is updated at least annually and takes into consideration: (i) the provider’s training, qualifications, and length of tim e in practice; (ii) the nature of the6. services provided; (iii) the fees us ually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) ot her aspects of the economics of the medical provider’s practice that ar e relevant; and (vi) any unusual circumstances in the case ....” (§ 1300.71(a)(3)(B).) According to Hospital, this reasonable and customary value is the total amount of the charges it billed Blue Cross. Blue Cross denied Hospital’s allegations. Hospital maintains a uniform schedule of the charges it bills for all procedures, services, and goods provided to patients. Th is schedule is known as a “charge master.” Hospital’s charge masters for 2007 and 2008 included more than 16 ,000 line items. The charge master is filed annually with the State of California and is available to the public. Hospital uses its charge master to create summary and itemized bills for each patient who receives services. The charges ar e the same for every patient. Nevertheless, in 2007 and 2008, le ss than five percent of the payo rs paid Hospital the full billed charges. Hospital updates its charge master a nd increases its prices each year. In determining the percentage price increase for all of the line items, Hospital looks at a variety of global factors, including its overa ll cost structure, financial position, and contracts. Hospital does not examine each line item individually. Rather, Hospital periodically “spot checks” certain items and compares those prices to the prices being charged by peer hospitals. In early discovery, Blue Cross propounde d requests for admissions to Hospital. Blue Cross asked Hospital to admit that, during the off-contract period, every written contract between Hospital and a health insure r or health plan pr ovided that Hospital would accept less than its full billed charge s as payment for post-stabilization services and that Hospital had no written contract th at provided it would receive its full billed charges for such services. Hospital objected to these re quests on the ground that7. contracted rates were irrelevant for the de termination of reasonable and customary value under section 1300.71(a)(3)(B). Thereafter, in a set of special interrogato ries, Blue Cross asked Hospital to provide both the number of patients in 2007 and 2008 receiving post-stabilization care for whom Hospital received its full billed charges as pa yment and the name of any non-contracted Medi-Cal managed care organization that pa id Hospital’s full bille d charges for poststabilization services. Hospital objected to th ese interrogatories on the ground that actual payments were irrelevant to the reasonable and customary value of the post-stabilization
services. Blue Cross moved to compel responses to the above discovery requests. The trial court denied Blue Cross’s motions on the ground that the evidence sought was irrelevant. The court concluded that “‘fees usually ch arged,’” one of the section 1300.71(a)(3)(B) factors, “does not mean payments accepted.” Hospital filed several motions in limin e regarding the scope of the evidence that Blue Cross would be permitted to present at trial on the reasonable value of the poststabilization services rendered to the Medi-Cal beneficiaries. Hospital first sought an order confirming that the “six-factor test” set forth in section 1300.71(a)(3)(B) was the applicable standard for calculating the r easonable and customary value for the poststabilization medical care it provided. Hospital then requested the trial court to preclude Blue Cross from introducing evidence of: th e rates accepted by or paid to Hospital by other payors; the Medi-Cal and Medicare f ee for service rates pa id by the government; and Hospital’s service specific costs. Hospital additionally sought to exclude testimony from Blue Cross’s retained expert, Henr y Miller, on the ground that Miller did not
consider or use the six-factor test in reaching his opinion on the reasonable and customary value of the services at issue. Rather, Miller opin ed that the Medi-Cal fee for service rate in place during the non-contract ed period was the reasonable and customary rate that should be paid by Blue Cross for services provided to its Medi-Cal beneficiaries.8. The trial court granted these motions . The court confirmed that section 1300.71(a)(3)(B) was the exclusive standard for calculating the reasonable and customary rate that Blue Cross had to pay Hospital fo r the post-stabilization services. The court then applied this standard and excluded “any evidence, argument, or comment that the rates accepted or paid by othe r payors are reasonable and cu stomary or otherwise limit what Blue Cross must pay to” Hospital. Si milarly, the court excluded “argument that rates paid by the government are reasonable a nd customary or otherwise limit the amount Blue Cross must pay” Hospital. The c ourt also excluded any evidence of cost
information as a basis to set reasonable and customary charges finding that cost was not part of the six-factor test and that it did no t relate to value. Regarding Miller’s expert testimony, the trial court deferred its ru ling pending an Evidence Code section 402 hearing to determine whether Miller’s opini on was based on the six-factor test. At trial, Hospital supported its damage s claim by presenting the amount of its full billed charges and applying the section 1300.71(a)(3)(B) six-fact or test to those charges. Hospital’s Chief Financial Officer, Michelle Waldron, testified regarding Hospital’s qualifications, training, and experience; the na ture of the services rendered; the charges themselves; the market limitati ons on the yearly increase in charges; and the economics of operating Hospital, noting that the paymen ts for the 75 percent of Hospital’s patients
who are Medi-Cal beneficiaries do not co ver Hospital’s overall costs of providing services to those beneficiaries. Hospital’s expert witness, Michael Heil, testified that, when compared to other comp arable hospitals, Hospital’s ch arges were generally in the midrange or below. Thus, the hospital ar gued its full billed charges represented the reasonable and customary value of the services provided. However, for all hospitals, the billed charges are the highest amounts that are ever received for the services. The jury was instructed on damages ba sed on section 1300.71(a)(3)(B). The jury
was first told:9. “If you find that Blue Cross authorized or is deemed to have authorized Children’s Hospital to provid e post-stabilization care services to the Blue Cross Medi-Cal members at issue, Blue Cross was required to pay Children’s Hospital the reasonable and customary value of those services. That the value might be reflecte d by the bill submitted by Children’s Hospital, or the amount Blue Cross paid, or some amount lesser than, greater than, or in between those amounts.” The jury was then instru cted that, if it found the post-stabilization care was authorized, Blue Cross was required to pay Hospital the “reasonable and customary value for the services rendered” taking into consid eration the section 1300.71(a)(3)(B) factors. However, in accordance with the trial court’s pretrial evidence ru lings, the jury was cautioned that “[r]ates accepted by Children’s Hospital or pa id to Children’s Hospital may not be considered when determining the reasonable and customary value of services provided” and that “[r]ates paid by the governm ent may not be considered in calculating the reasonable and customary value of services that are the subject of this lawsuit.” The jury found that Hospital provide d notice to Blue Cross and received authorization to provide post-stabilization ca re to the 896 patients at issue. The jury further concluded that the parties entered in to an implied-in-fact contract, Blue Cross breached the contract, and Hospital was ha rmed by the breach. The jury awarded Hospital damages of $6,615,502, the amount of Hospital’s full b illed charges less the
amount that Blue Cros s had already paid. Judgment was entered for Hospital in the principal sum of $6,615,502 plus prejudgment interest of $4,138,815.30.
DISCUSSION
1. Section 1300.71(a)(3)(B) does not provide the exclusive standa rd for valuing the post-stabilization services provided by Hospital. a. The Knox-Keene Act. The Blue Cross Medi-Cal plan at issue is a health care service plan. As such, it is governed by the comprehensive system of licensing and regulation known as the Knox-10. Keene Health Care Service Plan Act of 1 975 (Knox-Keene Act). (Health & Saf. Code, § 1340 et seq.; Prospect, supra, 45 Cal.4th at p. 504.) The Knox-Keene Act requires for-profit health care se rvice plans to promptly reimburse emergency health care providers for both emergency medical services and authorized post-stabilization emergency medical services. If the claim is uncontested, the reimbursement must be “as soon as practical , but no later than 30 working days after receipt of the complete claim ....” (Hea lth & Saf. Code, § 1371.35, subd. (a); Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 215 ( Bell ).) The Department of Managed Health Care (DMHC) is charged with the
administration and enforcement of the laws rela ting to health care service plans. (Health & Saf. Code, § 1341.) To carry out its duties, the DMHC is authorized to promulgate regulations. (Health & Saf. Code, § 1344.) b. The DMHC’s adoption of section 1300.71.
Section 1300.71 is titled “Claims Settle ment Practices.” This regulation is authorized by Health and Safety Code sections 1371 and 1371 .35. These statutes impose procedural requirements on clai m processing and subject hea lth care service plans to disciplinary action and penalties for failure to timely comply with those requirements. ( California Medical Assn. v. Aetna U. S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 163.) The DMHC explained in its initial statem ent of reasons thatsection 1300.71 was “necessary to clearly define terms relating to claim settlement and reimbursement, and provide procedures for plans and providers to prevent unreasonable delays in payment of provider claims.” Further, the DMHC wanted to clarify “the meaning of unfair payment practices and the term ‘compl ete and accurate claim.’” As outlined above, sect ion 1300.71(a)(3)(B) define s “‘Reimbursement of a Claim’” for non-contracted providers. Such reimbursement means “the payment of the reasonable and customary value for the health care services rendered.” The reasonable11. and customary value is to be “based upon sta tistically credible information that is updated at least annually” and takes six factors into co nsideration. These factors are: “(i) the provider’s training, qualificati ons, and length of time in prac tice; (ii) the nature of the services provided; (iii) the fees usually ch arged by the provider; (i v) 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.” (§ 1300.71(a)(3)(B).) In defining “reasonable and customary va lue,” the DMHC incorporated language
from Gould v. Workers’ Comp. Appeals Bd. (1992) 4 Cal.App.4th 1059 ( Gould ). In that case, Dr. Gould, a psychiatrist in West Los Angeles, treate d employees who had sustained industrial psychiatric injuries dur ing their employment as police officers. Dr.
Gould submitted bills for his services that ex ceeded the medical fee schedule adopted by the Division of Workers’ Compensation. The Workers’ Compen sation Appeals Board (WCAB) found in favor of th e employer ruling that the official medical fee schedule
should be used “ ‘[i]n the absence of a sh owing of extraordinary factors justifying higher fees.’” ( Gould, supra, 4 Cal.App.4th at p. 1064.) The Court of Appeal annulled the WCAB decisions. The court concluded the WCAB had applied an incorrect burden of proof in deciding whether Dr. Gould was
entitled to fees in excess of the schedu le. The court remanded the matter for a
determination of whether Dr. Gould’s f ees for the psychotherapy sessions were
reasonable. The court stated that, in deciding whether fees in excess of the schedule are reasonable, “the WCAB may consider evidence regarding the medical provider’s training, qualifications, and length of time in practice; the nature of th e services provided; the fees usually charged by the medical provider; th e fees usually charged in the general geographical area in which the services were rendered; other aspects of the economics of the medical provider’s practice that are rele vant; and any unusual circumstances in the case.” ( Gould, supra, 4 Cal.App.4th at p. 1071, ita lics added, fn. omitted.)12. The DMHC solicited public comments four times in connection with the adoption of section 1300.71. In both its responses to the comments and its final statement of reasons, the DMHC emphasized that the defin ition of what constitutes reimbursement of a claim in section 1300.71, subdivision (a)(3) was not intended to alter or change existing
California law. 1 In responding to comments, the DMHC refused to spec ifically set reimbursement amounts. For example, the DMHC rejected suggestions that non- contracted providers should either be reimbursed at 100 percent of their billed charges or be reimbursed based
on Medicare or Medicaid fee schedules. Ra ther, the DMHC explained that California law requires payors to reimburse non-contract ed providers based upon the reasonable and customary value of the services rendered. The DMHC observed that a provider’s usual charges are not determinative of the fair and reasonable value an d that government programs are not designed to reimburse the provider for the fair a nd reasonable value of
the services.
The DMHC further noted that the “re gulations are intended to set forth the
minimum payment criteria to ensu re compliance with the [Knox-Keene] Act’s claims payment and dispute resolutio n standards” (italics added) , and that, to the extent providers wish to pursue other common law or statutory remedies, they may seek redress in the courts. According to the DMHC, this regulation accura tely reflects California law and incorporates the concept of quantum meruit.

1 Blue Cross’s request that this court ta ke judicial notice of the DMHC’s responses to comments for the four comment periods is gr anted. We further grant the requests from Amicus Curiae California Association of H ealth Plans and Amicus Curiae California Hospital Association to judicially notice th e DMHC’s final statement of reasons for adopting section 1300.71. Amicus Curiae California Hospital Associations remaining requests for judicial notice are also granted. Hospital’s request that this court judicially notice four documents pertaining to the me mbership of the California Association of Health Plans is denied as irrelevant.13. In the final statement of reasons for s ection 1300.71, the DMHC explained that the intent was to establish a methodology for dete rmining the reasonable value of health care services by non-contracted providers but th at the criteria specified do not dictate a specific payment rate. Rather, the payor is required to calculate the appropriate reimbursement based on statistically cr edible information that takes the Gould factors into consideration. If a payor fulfills its cl aims payment obligation using these criteria, the DMHC will consider the payor compliant w ith Health and Safety Code sections 1371 and 1371.35, i.e., the reimbursement of the claim will be deemed ti mely. “However, the
definition is not a substitute for traditional fo rums for contract dispute resolution. If a provider disputes the payor’s calculation of the fair and re asonable value of the health care services he has rendered, the provider is free to seek resolution of that dispute in a court of law or through any other available civil remedy.” In sum, in adopting section 1300. 71(a)(3)(B), the DMHC established the
minimum criteria for reimbursement of a clai m, not the exclusive criteria. The DMHC refused to set specific amounts noting that neith er billed charges nor government rates are
determinative of the reasonable value of the medical services. Rather, the DMHC
intended that reasonable value be based on th e concept of quantum meruit and that value disputes be resolved by the courts. In f act, the DMHC has acknowledged that, unlike the courts, it “‘lacks the authority to set speci fic reimbursement rates under theories of quantum meruit and the jurisdiction to enforce a reimbursement determination on both the provider and the health plan.’” ( Bell, supra, 131 Cal.App.4t h at p. 218.) c. The section 1300.71(a)(3 )(B) factors are not the ex clusive measure of value. As recognized by the DMHC, section 1300.71(a)(3)(B)’s directive to pay noncontracted providers the reasonable and custom ary value of their services embodies the concept of quantum meruit. “Quantum meruit re fers to the well-established principle that ‘the law implies a promise to pay for servic es performed under circumstances disclosing that they were not grat uitously rendered.’” ( Huskinson & Brown v. Wolf (2004) 3214. Cal.4th 453, 458.) The measure of recovery in quantum meru it is the reasonable value of the services, provided th ey were of direct benefit to the defendant. ( Palmer v. Gregg (1967) 65 Cal.2d 657, 660.) The burden is on the person making the quantum meruit claim to show the value of the services. ( Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore (2008) 162 Cal.App.4th 1331, 1344.)
The “reasonable value” of the services ha s been described as the “going rate” for the services ( Maglica v. Maglica (1998) 66 Cal.App.4th 442, 446) or the “reasonable market value at the current market prices” ( Punton v. Sapp Bros . Construction Co. (1956) 143 Cal.App.2d 696, 701). Reasonable market value, or fair market value, is the price that “‘a willing buyer would pay to a willi ng seller, neither bei ng under compulsion to buy or sell, and both having full knowl edge of all pertinent facts.’” ( Alameda County
Flood Control & Water Conservation Dist . v. Department of Water Resources (2013) 213 Cal.App.4th 1163, 1174-1175, fn. 9.) In determining value in quantum meruit ca ses, courts accept a wide variety of evidence. For example, the party suing for compensation may testify as to the value of his services or offer expert testimony. Howe ver, such evidence is not required and is not binding on the trier of fact. ( Culver Adjustment Bureau v. Hawkins Constr. Co. (1963) 217 Cal.App.2d 143, 145.) Evidence of valu e can also be shown through agreements to pay and accept a particular price. ( Oliver v. Campbell (1954) 43 Cal.2d 298, 305; Watson v. Wood Dimension, Inc. (1989) 209 Cal.Ap p.3d 1359, 1365 ( Watson ).) “The court may consider the price agreed upon by the parties ‘as a criterion in ascertaining the reasonable value of services performed.’” ( Watson, supra, 209 Cal.App.3d at p. 1365.) Accordingly, in an action for the reasonabl e value of services, a written contract providing for an agreed price is admissible in evidence. ( Parker v. Maier Brewing Co. (1960) 180 Cal.App.2d 630, 635.) Additionall y, evidence of a professional’s customary charges and earnings is relevant and admissibl e to demonstrate the value of the services rendered. ( Citron v. Fields (1938) 30 Cal.App.2d 51, 61.)15. As can be seen from the above examples, the facts and circumstances of the particular case dictate what evidence is releva nt to show the reason able market value of the services at issue, i.e., the price that would be agreed upon by a willing buyer and a willing seller negotiating at arm’s length. Specific criteria might or might not be appropriate for a given set of facts. Thus, while the Gould court set forth a comprehensive set of factors for the situation presented there, those factors are not exclusive or necessarily appropriate in all
cases. In Gould , the service provider, a psychiatrist, was attempting to demonstrate that fees exceeding the worker s’ compensation medical fee schedule were reasonable. In that situation, evidence of the fees Gould usually charged, and presumably was paid, and the fees charged by other providers in the sa me geographical region was relevant to
demonstrate those fees were in fact reasonable for that market. In contrast here, Hospital was required to demonstrate the reasonable value, i.e., market value, of the post-stabilization care it provided. This market value is not ascertainable from Hospital’s fu ll billed charges alone. “[A] medical care provider’s billed price for particular services is not nece ssarily representative of either the cost of providing those services or their market value.” ( Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 54 1, 564.) Rather, the full b illed charges reflect what the provider unilaterally says wh at its services are worth. In a given case, the reasonable and customary amount that the health care se rvice plan has a duty to pay “might be the bill the [medical provider] submits, or the amount the [health care service plan] chooses to pay, or some amount in between.” ( Prospect, supra, 45 Cal.4th at p. 505.) Accordingly, although Hospita l’s full billed charges were relevant to the issue of the reasonable and customary value of the se rvices, they were not determinative. Analogizing this situation to other quantum meruit cases, relevant evidence would include the full range of fees that Hospita l both charges and accepts as payment for similar services. The scope of the rates accept ed by or paid to Hospital by other payors16. indicates the value of the serv ices in the marketplace. From that evidence, along with evidence of any other factors th at are relevant to the situation, the trier of fact can determine the reasonable value of the particular services that were provided, i.e., the price that a willing buyer will pa y and a willing seller will accept in an arm’s length
transaction. Therefore, the trial court erred in rulin g that section 1300.71(a)(3)(B) provided the
exclusive standard for determin ing the reasonable value of th e post-stabilization services. The DMHC neither intended nor had the power to dictate payment rates or change California law on quantum meruit. Rather, as the DMHC explained, in adopting section 1300.71 it was setting the minimum claims pa yment and dispute resolution standards to ensure compliance with th e Knox-Keene Act’s time requirements for claims
reimbursement. Alternatively, Blue Cross argues the tr ial court erred when it narrowly construed section 1300.71(a)(3)(B) to preclude the admi ssion of relevant evidence. By excluding
evidence of the rates a ccepted by or paid to Hospital by other payors as being irrelevant,
the trial court limited the evid ence regarding two of the Gould factors, i.e., the fees usually charged by the provider and the prev ailing provider rates charged in the same general geographic area, to Hospital’s full b illed charges. Accord ing to Blue Cross, “charges” should be interpreted to include the full range of fe es that the provider accepts as payment in full for its servic es. However, there is no need to resolve this issue. While
the Gould factors may provide some guidance in analyzing the reasonable value of the
services rendered in certain ci rcumstances, they are not the exclusive measure of value.
Those factors alone do not dete rmine reasonable value. Rather, under settled quantum meruit principles, relevant evidence of the reasonable/market value of the services provided includes the full range of fees that Hospital both charges and accepts as payment.17. 2. The trial court’s use of an incorrect value standard led to legal errors. a. Discovery rulings.
The trial court denied two motions file d by Blue Cross to compel discovery of Hospital’s agreements with ot hers regarding payments for post-stabilization services.
The trial court ruled that evidence of fees accepted by Hospital for post-stabilization care was irrelevant to determining the reasonabl e value of those services under section 1300.71(a)(3)(B). The scope of permissible discovery is very broad. ( Dodd v. Cruz (2014) 223 Cal.App.4th 933, 939.) “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action ... if the
matter either is itself admissi ble in evidence or appears reas onably calculated to lead to the discovery of admissible evidence.” (Cod e Civ. Proc., § 2017.010.) For discovery purposes, information is relevant if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement. Admissibility is not the test. Rather, it is sufficient if the information sought might reasonably lead to other, admissible evidence. ( Glenfed Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117.) Discovery rulings are generally reviewed for abuse of discretion. Nevertheless, where a discovery motion is denied on releva ncy grounds based on an erroneous analysis of the substantive law governing the case, th e appeal may raise a pure question of law. ( Nadaf-Rahrov v. Neiman Marcus Group, Inc. (2008) 166 Cal.App.4th 952, 970.) As discussed above, evidence regarding the range of fees that Hospital accepts for post-stabilization care is relevant to the reas onable value of those services. The trial court incorrectly concluded otherwise and deni ed discovery on that ground. Thus, the trial court erred in denying Blue Cr oss’s motions to compel discovery. Hospital argues that evidence of its contra ct rates with other health insurance plans
is not discoverable because it would disclose proprietary financial information and trade18. secrets. However, Hospital’s concerns can be handled through appropriate protective orders. (E.g., Code Civ. Proc., §§ 2030.090, 2031 .060, 2033.080.) b. Motions in limine. The trial court granted Hospital’s motions in limine to excl ude evidence of: the rates accepted by or paid to Hospital by othe r payors; the Medi-Cal and Medicare fee for service rates paid by the gove rnment; and Hospital’s service specific costs. The court
concluded this evidence was not admissible under the section 1300.71(a)(3)(B) six-factor

test. A trial court’s ruling on an in limine mo tion is generally reviewed for abuse of discretion. However, review is de novo when the issue is one of law. ( Condon-Johnson & Associates, Inc. v. Sacram ento Municipal Utility Dist. (2007) 149 Cal.App.4th 1384, 1392.) As discussed above, the trial cour t erred when it ruled that section 1300.71(a)(3)(B) provided the exclusive standa rd of value and, based on that ruling, precluded evidence of the various rates Hosp ital charges and accepts as payment. Reasonable value is market value, i.e., what Ho spital normally receives for the services it provides from the relevant co mmunity. Hospital rarely receives payment based on its published charge master rates. Thus, in determining the reasonable value of the poststabilization services, the full range of fees is relevant. The scope of the rates accepted by or paid to Hospital by othe r payors indicates the value of those services in the marketplace. Therefore, the trial court erred in gran ting Hospital’s motion to exclude evidence of the rates accepted by or paid to Hospital by other payors. All rates that are the result of contract or negotiation, including rates paid by government payors, are relevant to the
determination of reasonable value. In othe r words, applying quantum meruit principles, rates are relevant if they reflect a willing buyer and a willing seller negotiating at arm’s length.19. However, under quantum meruit, the co sts of the services provided are not
relevant to a determination of reasonable va lue. Quantum meruit me asures the value of services to the recipient, not the costs to the provider. (See Iraola & CIA., S.A. v. Kimberly-Clark Corp. (11th Cir. 2003) 325 F.3d 1274, 1282.) Accordingly, in the analogous situation of determining the reasonable fee for an attorney’s services, the courts have rejected a “cost-plus” approach finding that basing
the fee on costs is neither a ppropriate nor practical. ( Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 1002-1003.) “Costs—high or low—can be subjective and if deemed relevant to value might reward inefficiency and greed.” ( Serrano v. Unruh (1982) 32 Cal.3d 621, 641.) Similarly here, the reasonable and prac tical way to value the post-stabilization services provided by Hospital is to analyze what is being paid and accepted in the market. Parsing the costs for each serv ice would be impractical. As pointed out by Hospital, a cost-based system “would unde rmine efficiency and reward waste.” Thus, although the
trial court excluded evidence of Hospital’s service specific costs for the wrong reason, the
result was correct. c. Jury instructions. The trial court correctly instructed the jury that Blue Cross was required to pay Hospital the reasonable and customary value of the post-stabilization services and that this value might be reflected by the bill su bmitted by Hospital, or the amount Blue Cross paid, or some amount lesser than, greater th an, or in between those amounts. However,
the trial court also instruct ed the jury that it was to determine this reasonable and customary value based on the six factors en umerated in section 1300.71(a)(3)(B). Contrary to this instruction, section 13 00.71(a)(3)(B) does not provide the exclusive
measure of value. Further, the trial court limited the evidence by instructing the ju ry that it could not consider any evidence of the “ [r]ates accepted by [Hospital] or paid to [Hospital]” or the20. “[r]ates paid by the govern ment.” The jury was also cautioned that, in awarding damages, it must not “speculate or guess.” Accordingly, based on the trial court’s instructions, the only evidence of value the jury could cons ider was Hospital’s full billed charges. This was error. d. Blue Cross’s expert’s testimony. The trial court limited the testimony from Miller, Blue Cross’s expert, to opinions based on the six-factor test. This ruling was also error. As discussed above, the sixfactor test is not exclusive. Accordingly, Miller’s testimon y should not have been limited
in this manner. Contrary to Hospital’s argument, Blue Cr oss did not waive or invite this error
when it failed to request an Evidence Code section 402 he aring. The trial court offered to hold a Evidence Code section 402 hearing to determine whethe r Miller’s opinion was based on the six-factor test. However, the trial court erred as a matter of law on the foundation of its ruling on Mille r’s testimony when it concluded that the six-factor test
was the exclusive measure of value. Blue Cross objected to this foundational ruling. Thus, Blue Cross neither induced the trial court’s error regarding Miller’s testimony nor failed to preserve this issue for appeal. ( Telles Transport, Inc. v. Workers' Comp. Appeals Bd. (2001) 92 Cal.App. 4th 1159, 1167.) 2
3. The trial court’s errors were prejudicial. The trial court’s error in ruling that section 1300.71(a)(3)(B) provided the
exclusive standard for valuin g the reasonable value of the post-stabilization services was

2 Similarly, Blue Cross did not invite e rror when its counsel argued to the jury in closing that the issue was “whether the implie d-in-fact contract was for Blue Cross to pay full billed charges or whether it was to pay the CMAC rate” and that Blue Cross was required to, and did, pay the CMAC rate. Un der the circumstances caused by the trial court’s erroneous rulings, Blue Cross was “‘ “endeavoring to make the best of a bad situation for which [it] was not responsible.”’” ( Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 213.)21. prejudicial. Based on this ruling, discovery was curtailed and relevant and admissible
evidence was excluded. The on ly measure of value before the jury was Ho spital’s full billed charges. The jury should have been permitted to hear and consider evidence on the full range of fees that Hospital both charges and accepts as payment for similar services in determining the reasonable value of the post -stabilization services provided to the Blue
Cross Medi-Cal beneficiaries. It is reasonably probable that a result more favorable to
Blue Cross would have been reached if such evid ence had been admitted. ( People v.
Watson (1956) 46 Cal.2d 818, 836.) Accordingly, Blue Cross is entitled to a new trial on damages. DISPOSITION The judgment is reversed and the ma tter remanded for a new trial on damages, including additional discove ry. Appellants are awarded their costs on appeal.

_____________________ LEVY, Acting P.J. WE CONCUR:

_____________________ KANE, J.

_____________________ FRANSON, J.