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Filed 1/5/22 Dameron Hospital Assn. v. United Services Automobile Assn. CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(San Joaquin)

----

DAMERON HOSPITAL ASSOCIATION,

Plaintiff and Appellant,

v.

UNITED SERVICES AUTOMOBILE 

ASSOCIATION,

Defendant and Respondent.

C087225

(Super. Ct. No. 

STKCVUOCT20110003017)

SUMMARY OF THE APPEAL

Dameron Hospital Association (Dameron) brought an action against United 

Services Automobile Association (USAA) in which Dameron alleged USAA improperly 

ignored and refused to honor an assignment of underinsured motorist (UM) and medical 

payment (MP) benefits to Dameron contained in Conditions of Admission (COAs) signed 

by a patient when Dameron provided the signatory and her daughter emergency and 
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follow-up medical treatment. Though Dameron and the patients’ health insurance 

provider, Health Net HMO (Health Net or HNI), had a contract that specified rates at 

which Health Net would pay for Dameron to treat Health Net members, Dameron wanted 

to recoup higher payments for its services directly from USAA out of UM and MP 

benefits due to the patients. USAA successfully demurred to one of two alleged causes 

of action and, later, successfully brought a motion for summary judgment to dispose of 

the entire suit. The trial court entered judgment for USAA.

On appeal, we affirm the trial court’s orders and judgment on two separate 

grounds. First, any purported assignment of the UM and MP benefits contained in the 

COAs to cover emergency medical services would be void as contrary to public policies 

reflected in laws designed to protect patients with health insurance from unexpected 

financial obligations when receiving emergency medical services, regardless of whether 

the insurer and provider had entered into a contract for services. Second, the COAs 

cannot reasonably be relied upon to entitle Dameron to recoup the payments it seeks from 

the patients’ UM and MP benefits here. Accordingly, we affirm the trial court’s 

judgment.

We note that in this matter both of the patients treated by Dameron had health 

insurance, and we do not consider whether the COAs could have created enforceable 

assignments had either patient not had health insurance. We consider whether a COA 

using similar, but not identical, language may have created an enforceable assignment of 

MP or UM benefits belonging to patients without health insurance in Dameron Hospital 

Association v. AAA Northern California, Nevada & Utah Insurance Exchange (C086518, 

app. pending, argued Dec. 20, 2021).
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FACTS AND HISTORY OF THE PROCEEDINGS

A. Treatment and COAs

In September 2006, Mercedes and her daughter Jana, a minor, were injured in an 

automobile accident and treated at Dameron. 

Dameron presented Mercedes with COA forms for her and Jana, and she signed 

them both. Dameron treated Mercedes’s injuries on at least three other occasions, and, at

each visit, according to Craig Haupt, the Credit and Collection Manager for Dameron, 

she signed a COA. 

Paragraph 1 of the COA form, labeled “CONSENT AND AGREEMENT TO 

MEDICAL AND SURGICAL PROCEDURES,” included this language: “[t]he 

undersigned assigns to the hospital indicated and the physician(s) any insurance benefits 

due the patient or insured because of the hospital and medical services, and authorize[s]

payment directly to them.” 

In paragraph 3, the patient or patient’s representative agreed to “pay the account of 

the hospital in accordance with the regular rates and terms of the hospital.” 

Paragraph 8, labeled “ASSIGNMENT OF INSURANCE BENEFITS,” included 

this language: “[t]he undersigned authorizes, whether he/she signs as agent or as patient, 

direct payment to the hospital and the physicians specifically associated with the patient’s 

medical care, of any insurance benefits otherwise payable to or on behalf of the 

undersigned for this hospitalization or for these outpatient services, outpatient 

observation care, including emergency services if rendered, at a rate not to exceed the 

provider’s regular charges. It is agreed that payment to the hospital, pursuant to this 

authorization, by an insurance company shall discharge said insurance company of any 

and all obligations under a policy to the extent of such payment. It is understood by the 

undersigned that he/she is financially responsible for charges not covered by this 

agreement.” 
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B. Dameron’s Agreement with Health Net

At the time of the accident, Mercedes and Jana had health insurance through

Health Net. Health Net and Dameron had a “Provider Participation Agreement” where 

Dameron would provide specified medical services to Health Net insureds. It included 

language where Health Net would pay and Dameron would accept scheduled rates for 

services “as payment in full.” More specifically, it included the following paragraphs 

regarding Health Net’s compensation to Dameron for services provided to Health Net 

members:

“4.1 Payment Rates. Health Net or Payor shall pay, and Provider shall accept as 

payment in full for Contracted Services the amounts payable by Health Net or Payor as 

set forth in the applicable Addenda, Schedules and Exhibits to this Agreement, less 

Copayments, Coinsurance and Deductibles payable by Beneficiaries in accordance with 

the applicable Benefit Program. [¶] . . . [¶]

“4.5 Collection of Copayments. Provider shall collect all Copayments due from 

Beneficiaries, and shall not waive or fail to pursue collection of Copayments from 

Beneficiaries. Provider shall not charge Beneficiary any fees or Surcharges for 

Contracted Services rendered pursuant to this Agreement (except for authorized 

Copayments, Coinsurance and Deductibles). In addition, Provider shall not collect a 

sales, use or other applicable tax from Beneficiaries for the sale or delivery of Contracted 

Services. . . . 

“4.6 Beneficiary Held Harmless. Provider agrees that in no event, including, but 

not limited to, non-payment by Health Net or a Payor, insolvency of Health Net or a 

Payor, or breach of this Agreement, shall Provider bill, charge, collect a deposit from, 

seek compensation, remuneration, or reimbursement from, or have any recourse against 

Beneficiaries or persons acting on their behalf other than Health Net or a Payor for 

Contracted Services provided pursuant to this Agreement. This provision shall not 
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prohibit collection of Copayments, Coinsurance or Deductibles made in accordance with 

applicable Benefit Program Requirements. Provider further agrees that: a) this provision 

shall survive the termination of this Agreement regardless of the cause giving rise to 

termination and shall be construed to be for the benefit of Beneficiaries; and b) this 

provision supersedes any oral or written contrary agreement now existing or hereafter 

entered into between Provider and Beneficiaries or persons acting of their behalf. [¶] . . . 

[¶] 

“4.9 Third Party Recoveries; Workers Compensation. In the event Provider 

provides Contracted Services to HNI Members for injuries resulting from the acts of third 

parties, or resulting from work related injuries, Provider shall have the right to recover 

from any settlement, award, recovery from any responsible third-party, or responsible 

liability insurer the reasonable and necessary charges for such Contracted Services 

using the procedures for such recovery provided by the Hospital Lien Act, Civ. Code 

section 3045.1 et. seq., and shall have all rights and benefits afforded by that statute. 

Provider shall notify HNI of any such recovery and shall provide HNI with an accounting 

of all such sums recovered. In the event HNI has compensated Provider for such 

Contracted Services and Provider has recovered sums from a third party, Provider agrees 

to pay such recovered sums to HNI up to the amounts that HNI paid to Provider, to the 

extent that HNI has not recovered such amounts from its own third party recovery efforts. 

Provider shall pay these amounts to HNI within sixty (60) days of HNI informing 

Provider of the amounts HNI recovered from its own third party recovery efforts, if any. 

This section 4.7 [sic] does not obligate, nor does it prohibit, either HNI or Provider to 

undertake such third party recovery efforts.” (Italics added.)

C. USAA Policy

The driver of the automobile that struck the automobile Jana and Mercedes were 

in had insurance, but the liability limit for the policy was $25,000. At the time of the 
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accident, Mercedes and Jana were covered by a USAA policy that provided them with 

$50,000 per person UM coverage, and $5,000 per person of MP coverage. The $25,000 

limit for the other driver acted as an offset to Mercedes’s UM limit of $50,000, reducing 

the amount she could recover in UM benefits under her policy to $25,000. Thus, the 

amount of combined MP and UM coverage for which she was potentially eligible was 

$30,000. 

At the request of counsel for Mercedes and Jana, USAA issued a check of $9,000 

to Health Net to satisfy a lien it had. USAA then paid Mercedes the remaining $21,000 

left that was available to her under her UM and MP coverages. USAA paid Jana 

$4,146.50 in benefits from her MP coverage. 

In October 12, 2009, Dameron sent a notice of lien under Civil Code section 

3045.1 demanding $4,146.50 to cover Dameron’s treatment of Jana, in which Dameron 

stated it was entitled to MP or UM benefits payable to or on behalf of Jana. In an 

accompanying cover letter, Dameron also indicated the cost for Mercedes’s medical 

treatment was $51,788.85. In so doing, Dameron was seeking payment at its full, nonnegotiated rates, which were higher payments than it could collect from Health Net under 

its agreement with Health Net. 

D. Procedural History

Dameron filed an action against USAA on February 28, 2011. In the First 

Amended Complaint, under the first cause of action, Dameron sought an injunction 

prohibiting USAA from ignoring the purported assignments of benefits contained in the 

COAs signed by Mercedes when Dameron treated her and her daughter. Dameron 

alleged it was entitled to the requested relief because USAA had engaged in “unfair 

business practices” as defined in the Unfair Business Practices Act (Bus. & Prof. Code, 

§ 17200, et seq.) in refusing to meet Dameron’s demands to make payments under 

assignments of benefits. The second cause of action alleged USAA had violated the 
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assignments of benefits, and thus violated its contract with the insureds, in refusing to 

honor the assignments of benefits and make payments to Dameron. The trial court 

sustained a demurrer to the first cause of action without leave to amend the complaint. 

Dameron and USAA filed cross motions for summary adjudication on the 

remaining cause of action in April 2017. The trial court denied Dameron’s motion; 

granted USAA’s; and, after the parties stipulated to dismiss claims not at issue here, 

entered judgment in USAA’s favor. 

In this appeal, Dameron challenges the trial court’s decision to sustain the 

demurrer on the first cause of action and to find in USAA’s favor in ruling on the crossmotions for summary adjudication on the second cause of action. 

We affirm the trial court’s ruling and judgment.

DISCUSSION

I

Standard of Review

A court must grant a motion for summary judgment when “all the papers 

submitted show that there is no triable issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) 

In moving for summary judgment, defendants have the burden to show that the cause of 

action has no merit because an essential element cannot be established or there is a 

complete defense. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield 

Co. (2001) 25 Cal.4th 826, 850, 861.) 

On appeal, we review the record and the determination of the trial court de novo, 

viewing the evidence in the light most favorable to plaintiffs as the losing parties. (Kahn 

v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003.) We apply de novo 

review to questions of law regarding statutory interpretation. (Earl v. State Personnel Bd.

(2014) 231 Cal.App.4th 459, 462.) “We also independently review contractual 
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agreements, including the question of whether the language used in a contract is 

ambiguous. (American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 

1239, 1245.)” (Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah 

Ins. Exchange (2014) 229 Cal.App.4th 549, 558 (Dameron).) “We are not bound by the 

trial court’s reasons for granting summary judgment because we review the trial court’s 

ruling, and not its rationale. (Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878 

[116 Cal. Rptr. 2d 158].)” (Avidity Partners, LLC v. State of California (2013) 

221 Cal.App.4th 1180, 1192.)

“A demurrer tests the legal sufficiency of factual allegations in a complaint.” 

(Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 42.) The 

standard of review on appeal from a dismissal after an order sustaining a demurrer is well 

established. “[W]e review the order de novo, exercising our independent judgment about 

whether the complaint states a cause of action as a matter of law. [Citations.]” (Lazar v. 

Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) We give the complaint a reasonable 

interpretation, and treat the demurrer as admitting all material facts properly pleaded. 

(Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “We do not, however, assume the truth of 

contentions, deductions, or conclusions of fact or law. [Citation.]” (Moore v. Regents of 

University of California (1990) 51 Cal.3d 120, 125.) Legal questions that arise at the 

pleading stage include the interpretation of a statute or the application of a statutory 

provision to facts assumed to be true for purposes of the demurrer. (Walker v. Allstate 

Indemnity Co. (2000) 77 Cal.App.4th 750, 754.)

II

An Assignment of the Patients’ UM an MP Benefits for Emergency Care Is Contrary to 

Public Policy

“The consideration of a contract must be lawful within the meaning of [Civil 

Code] Section 1667.” (Civ. Code, § 1607.) Under Civil Code section 1667, “[t]hat is not 
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lawful which is [¶] . . . [¶] [c]ontrary to the policy of express law, though not expressly 

prohibited.” Here, we find that assignment of the patients’ UM and MP benefits to pay 

for emergency care would be unlawful within the meaning of Civil Code sections 1607 

and 1667, and, therefore, void given the patients’ Health Net coverage and Health Net’s 

agreement with Dameron. (Civ. Code, § 1608.) 

A. Laws Governing Health Insurance Plan Payment of Medical Care

California Health and Safety Code section 1317, subdivision (a), requires hospitals 

that render emergency services to any person suffering a condition “in which the person 

is in danger of loss of life, or serious injury or illness” upon request. The emergency 

service provider must provide the services regardless of the patient’s, “insurance status, 

economic status, [or] ability to pay for medical services,” and, “without first questioning 

the patient or any other person as to his or her ability to pay therefor.” (Health & Saf. 

Code, § 1317, subs. (b) & (d).) However, “the patient or his or her legally responsible 

relative or guardian shall execute an agreement to pay therefor or otherwise supply 

insurance or credit information promptly after the services are rendered.” (Health & Saf. 

Code, § 1317, subd. (d).)

Under the Knox-Keene Health Care Services Plan Act of 1975 (Health & Saf. 

Code, §§ 1340-1399.864 (Knox-Keene))--which exists, in part “to ensure the best 

possible health care for the public at the lowest possible cost by transferring the financial 

risk of health care from patients to providers” (Health & Saf. Code, § 1342, subd. (d))--

health care service plans, or their contracting medical providers, must “reimburse 

providers for emergency services and care provided to its enrollees, until the care results 

in stabilization of the enrollee . . . [except as not relevant here].” (Health & Saf. Code, 

§ 1371.4, subd. (b).) Also under Knox-Keene, contracts between healthcare service plans 

and health care providers must be in writing, and “shall set forth that in the event the plan 

fails to pay for health care services as set forth in the subscriber contract, the subscriber 
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or enrollee shall not be liable to the provider for any sums owed by the plan.” (Health & 

Saf. Code, § 1379, subd. (a).) When a contract has not been reduced to writing, or if a 

written contract does not have the “required prohibition, the contracting provider shall 

not collect or attempt to collect from the subscriber or enrollee sums owed by the plan.” 

(Health & Saf. Code, § 1379, subd. (b).) 

In Prospect Medical Group, Inc. v. Northridge Emergency Group (2009) 

45 Cal.4th 497, 502 (Prospect) our Supreme Court examined this statutory scheme and 

considered if, when a health care service plan “submits a payment lower than the amount 

billed,” by the emergency room service provider, “can the emergency room doctors 

directly bill the patient for the difference between the bill submitted and the payment 

received—i.e., engage in the practice called ‘balance billing’?” The Court concluded 

that, “billing disputes over emergency medical care must be resolved solely between the 

emergency room doctors, who are entitled to a reasonable payment for their services, and 

the [health care service plan], which is obligated to make that payment. A patient who is 

a member of [a health care service plan] may not be injected into the dispute. Emergency 

room doctors may not bill the patient for the disputed amount.” (Ibid., italics added.)

Hence, it is worth observing, that if there was no assignment of the patients’ UM 

and MP benefits, Dameron could not recoup from the patient the difference between its 

negotiated rates for emergency services under the Health Net agreement and its regular 

rates, or demand the patients pay anything other than their deductible and copayments for 

that care.

B. The Hospital Lien Act

With the Hospital Lien Act (Civil Code, § 3045.1 et seq., HLA), the Legislature 

established one mechanism through which hospitals that provide emergency services can 

recoup costs from an entity other than a patient’s health care service plan. Civil Code 

section 3045.1 states, “[e]very person, partnership, association, corporation, public entity, 
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or other institution or body maintaining a hospital licensed under the laws of this state 

which furnishes emergency and ongoing medical or other services to any person injured 

by reason of an accident or negligent or other wrongful act not covered by” sections not 

applicable here “shall, if the person has a claim against another for damages on account 

of his or her injuries, have a lien upon the damages recovered, or to be recovered, by the 

person, or by his or her heirs or personal representative in case of his or her death to the 

extent of the amount of the reasonable and necessary charges of the hospital and any 

hospital affiliated health facility, . . . in which services are provided for the treatment, 

care, and maintenance of the person in the hospital or health facility affiliated with the 

hospital resulting from that accident or negligent or other wrongful act.” An HLA lien, 

“shall apply whether the damages are recovered, or are to be recovered, by judgment, 

settlement, or compromise.” (Civ. Code, § 3045.2.) The amount a hospital can collect 

under an HLA lien is limited to “so much thereof as can be satisfied out of 50 percent of 

the moneys due under any final judgment.” (Civ. Code., § 3045.4.)

In Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595, 603 (Parnell), 

our Supreme Court considered the legislative history of the HLA and concluded the 

ability of an emergency service provider to collect payment for its services under the 

HLA “requires the existence of an underlying debt owed by the patient to the hospital

. . . , absent such a debt, no lien may attach.” (Parnell, supra, 35 Cal.4th at p. 609.) 

Thus, when an emergency service provider enters into an agreement with a health care 

service plan and agrees to accept a specified amount from the plan as “ ‘payment in 

full,’ ” and then the health care plan provides it with a payment in the amount specified 

under the agreement, the emergency care provider “may not assert a lien under the HLA 

against [the patient’s] recovery from the third party tortfeasor.” (Ibid.) This is so, 

because, under the terms of the agreement, the patient’s “entire debt to the hospital has 

therefore been extinguished.” (Ibid.) 
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However, emergency care providers do not have to choose between the ability to 

contract with health care service plans and the ability to collect higher rates for care using 

the HLA. As this court concluded in Dameron, supra, 229 Cal.App.4th at page 554, if, 

“hospitals wish to preserve their right to recover the difference between usual and 

customary charges and the negotiated rate through a lien under the HLA, they are free to 

contract for this right” when negotiating their contracts with health care service 

providers.

In Dameron we “reject[ed] the contentions . . . that [Health and Safety Code] 

section 1379 insulates,” tortfeasors’ automobile insurers, “from balance billing by 

hospitals. Section 1379 does not mention balance billing, third party tortfeasors, or 

liability insurance companies. Instead, the statute mentions only health care service 

plans, providers of medical care, and patients. The clear import of section 1379 is to 

protect patients with health care service plan coverage from any collection attempts by 

providers of such medical care as emergency room services.” (Id. at p. 563.)

C. Uninsured Motorist Coverage

Uninsured and underinsured motorist policies are governed generally by Insurance 

Code section 11580.2, “which requires automobile liability insurers to offer insurance for 

damages or wrongful death caused by both uninsured and underinsured motorists.” 

(Quintano v. Mercury Casualty Co. (1995) 11 Cal.4th 1049, 1053; see also Ins. Code, 

§ 11580.2, subds. (a)(1) & (p)(7).) As used in Insurance Code section 11580.2, “the term 

‘uninsured motor vehicle’ generally includes ‘underinsured motor vehicle.’ ” (Quintano, 

supra, at p. 1053.) “Underinsured motorist coverage was created to provide additional 

coverage for the insured who is injured by a tortfeasor who has minimal liability 

insurance.” (Ibid.)

Though uninsured and underinsured insurance policies exist to assure persons 

injured in automobile accidents a minimum level of payment when their injuries are the 
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fault of uninsured or underinsured motorists, courts have emphasized the that uninsured 

and underinsured motorist insurance provider is the insurer of patient, not the tortfeasor 

or the tortfeasor’s insurer. (Weston Reid, LLC v. American Insurance Group, Inc. (2009) 

174 Cal.App.4th 940, 948-949 (Weston); Haering v. Topa Ins. Co. (2016) 

244 Cal.App.4th 725, 733) Uninsured and underinsured motorist policies, “ ‘are not 

“third party” coverages. They are strictly “first party” coverages because the insurer’s 

duty is to compensate its own insured for his or her losses, rather than to indemnify 

against liability claims from others.’ ” (Weston, supra, 174 Cal.App.4th at p. 950.)

D. Med-Pay Benefits

“Automobile med-pay insurance provides first party coverage on a no-fault basis 

for relatively low policy limits (generally ranging from $ 5,000 to $ 10,000) at relatively 

low premiums. (Jones v. California Casualty Indem. Exch. (1970) 13 Cal. App. 3d 

Supp. 1, 3 [] [‘There is no fault or liability connected with this provision’]; see Croskey et 

al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 1999) P 6:708, p. 6E-2 

[‘ . . . coverage does not depend on the insured’s liability . . . benefits are payable 

regardless of whether the insured was at fault’].) The coverage is primarily designed to 

provide an additional source of funds for medical expenses for injured automobile 

occupants without all the burdens of a fault-based payment system. (Croskey et al., Cal.

Practice Guide: Insurance Litigation, supra, P 6:1221, p. 6G-4.) There is no statutory 

obligation for med-pay benefits.” (Nager v. Allstate Ins. Co. (2000) 83 Cal.App.4th 284, 

289-290.)

E. An Assignment of the Patients’ UM and MP Benefits for Emergency Care

Would Be Contrary to Law

Here, Dameron is attempting to collect more for emergency medical services than 

the payments it negotiated for with the patients’ health care provider by claiming funds 

that would come from the patients’ first party UM and MP benefits. And, as part of this 
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effort, Dameron interjected Mercedes, by asking her to sign COAs that Dameron argues

gave Dameron permission to obtain those funds. That is, Dameron asked Mercedes to 

give Dameron the authority to secure from her first party benefits something in addition 

to or in lieu of what Health Net would provide for medical services. This effort is 

contrary to the statutory policy of protecting patients, “with health care service plan 

coverage from any collection attempts by providers of such medical care as emergency 

room services.” (Dameron, supra, 229 Cal.App.4th at p. 563.) For the same reason an 

emergency room provider cannot interject a patient into a dispute with a medical 

insurance provider over the reasonableness of its rates by billing the patient for the 

disputed amount (see Prospect, supra, 45 Cal.4th at p. 502), it cannot attempt to avoid 

this prohibition by instead going after UM and MP benefits using a patient assignment. 

Patients with medical insurance coverage expect that coverage will “insulate [them] from 

any monetary obligation for such medical care.” (Whiteside v. Tenet Healthcare 

Corp. (2002) 101 Cal.App.4th 693, 705 (Whiteside).) When a medical care provider 

pursues a patient’s UM and MP benefits to recoup more than what the health insurance 

company would otherwise pay on behalf of the patient, they are reducing funds that are

intended to be available to compensate the patient directly.

We recognize that, in theory, a payment to a provider made under the HLA can 

ultimately diminish funds that go to a patient, and in Dameron we allowed that a medical 

service provider can recoup more than the rates it has agreed to in a contract with a health 

insurer provided that contract with the insurer allows for it. (Dameron, supra, 

229 Cal.App.4th at p. 563.) However, Dameron’s collection efforts here are markedly 

distinguishable. The funds potentially available through the HLA are made available via 

a statutorily established lien which limits the portion of the funds the hospital can collect. 

(See Civ. Code., § 3045.4.) Moreover, the HLA does not rely on assignments made by a 

patient at the hospital. 
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Dameron’s efforts to secure the patients’ UM and MP benefits to pay for 

emergency services through an assignment contained in the COAs is contrary to patient 

protections created by Knox-Keene and statutes related to the provision of emergency 

care as summarized in Prospect and cannot be allowed under the law.

Numerous times throughout its briefs, Dameron argues that Insurance Code 

section 520; Fluor Corp. v. Superior Court (2015) 61 Cal.4th 1175 (Fluor); and, to a 

lesser extent, Henkel Corp. v. Hartford Accident and Indemnity Company (2003) 

29 Cal.4th 934 (Henkel), require USAA to accept the purported assignment of benefits 

contained in the COAs. We disagree. 

Insurance Code section 520 states that, “[a]n agreement not to transfer the claim of 

the insured against the insurer after a loss has happened, is void if made before the loss 

except as . . . [not relevant here].” 

In Henkel, our Supreme Court considered whether a corporate entity that had 

acquired the product line of another corporate entity had “acquired the benefits of the 

insurance policies issued by” an insurer to the original owner of the product line “to 

cover lawsuits based on injuries sustained during the policy period.” The Court reached 

its decision without considering Insurance Code section 520, and concluded “that under 

the circumstances of this case any assignment of benefits does require the consent of the 

insurers.” (Henkel, supra, 29 Cal.4th at p. 938; see Fluor, supra, 61 Cal.4th at p. 1180 

[noting Insurance Code section 520 was not cited in Henkel].) As part of its analysis, the 

Court observed that, “each of the [insurance] policies [at issue] contained clauses 

providing that there could be no ‘[a]ssignment of interest under this policy’ without the 

insurer’s consent endorsed on the policy,” and that, “[s]uch clauses are generally valid 

and enforceable.” (Henkel, supra, 29 Cal.4th at p. 943.)

In Fluor, our Supreme Court revisited its Henkel “determination . . . regarding the 

enforceability of ‘consent-to-assignment’ clauses in third party liability insurance 

policies” in light of Insurance Code section 520 and concluded it “dictates a result 
16

different from that reached in Henkel.” (Fluor, supra, 61 Cal.4th at p. 1180.) 

Accordingly, the Court held that a consent-to-assignment clause that read, “[a]ssignment 

of interest under this policy shall not bind the Company until its consent is endorsed 

hereon,” could not operate to allow a third party liability insurer to refuse “to honor an 

insured’s assignment of the right to invoke defense or indemnification coverage 

regarding” a loss that occurs within the time limits of the policy. (Id. at pp. 1183 & 

1175.)

The issues raised here are distinguishable from the issues contemplated by Henkel, 

Fluor, and Insurance Code section 520. Here, we are not dealing with an insurer who 

refuses to accept the valid assignment of insurance benefits from one corporate entity to 

another. We are also not considering a scenario in which USAA wants to enforce a 

provision in its policies with its insureds wherein it claims it will not honor otherwise 

lawful assignments. We are dealing with an insurer refusing to accept an assignment that 

is, by its very nature, contrary to public policy. Here, Dameron wants to use the 

purported assignment to collect more than it would otherwise be entitled to take from the 

patients under the law, to the possible financial detriment of those patients. “It is 

axiomatic that cases are not authority for propositions not considered.” (People v. Ault

(2004) 33 Cal.4th 1250, 1275, fn. 10.) 

III

The COA Did Not Create the Assignment Dameron Seeks

In addition to the reasons stated above, we find that, under the undisputed facts 

here, COAs signed by Mercedes cannot be enforced to assign to Dameron any of the 

patients’ UM benefits or MP benefits as sought here. 

“The term ‘adhesion contract’ refers to standardized contract forms offered to 

consumers of goods and services on essentially a ‘take it or leave it’ basis without 

affording the consumer a realistic opportunity to bargain and under such conditions that 
17

the consumer cannot obtain the desired product or services except by acquiescing in the 

form contract.” (Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345, 356 

(Wheeler).) “The distinctive feature of a contract of adhesion is that the weaker party has 

no realistic choice as to its terms. [Citations] [¶] A hospital’s standard printed 

‘Conditions of Admission’ form possesses all the characteristics of a contract of 

adhesion. As the court stated in Tunkl v. Regents of University of California [(1963)] 

60 Cal.2d [92], 102: ‘The would-be patient is in no position to reject the proffered 

agreement, to bargain with the hospital, or in lieu of agreement to find another hospital. 

The admission room of a hospital contains no bargaining table where, as in a private 

business transaction, the parties can debate the terms of their contract. As a result, we 

cannot but conclude that the instant agreement manifested the characteristics of the socalled adhesion contract. . . .’ ” (Wheeler, 63 Cal.App.3d at pp. 356-357.) 

With contracts of adhesion, “[e]nforceability depends upon whether the terms of 

which the adherent was unaware are beyond the reasonable expectations of an ordinary 

person or are oppressive or unconscionable. ‘ “In dealing with standardized contracts, 

courts have to determine what the weaker contracting party could legitimately expect by 

way of services according to the enterpriser’s ‘calling’ and to what extent the stronger 

party disappointed reasonable expectations based on the typical life situation.” ’ 

[Citations.]” (Wheeler, supra, 63 Cal.App.3d at pp. 356-357.)

Applying these principles to the COAs, we find the COAs did not create the

enforceable assignment of the patients’ benefits that Dameron argues was made here. 

Though it did not consider this precise issue, the analysis in Whiteside, supra,

101 Cal.App.4th 693 informs our analysis. In Whiteside, the Second District Court of 

Appeal considered whether a hospital breached its admissions agreements with a patient 

and his individual health insurer when, after the individual health insurer paid for the 

patient’s service according to its agreement with the hospital, the hospital accepted an 

additional payment from another insurer with whom the patient held a group health 
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insurance policy. (See id. at pp. 698 & 700.) The court held that both the contracts and 

California law permitted the hospital to collect the additional payment from the group 

insurer. (Id. at p. 698.) In finding the agreement between the patient and the hospital 

allowed for the payment by the group health insurer to the hospital instead of the patient, 

the court considered language very similar to the assignment language at issue here. (Id.

at p. 704.) The court reasoned, “[e]ven viewing the Conditions of Services agreement as 

a contract of adhesion, and subjecting it to close scrutiny, we reach the same result. The 

assignment clause, and the applicable contracts taken as a whole, do not defeat the 

reasonable expectation of insureds who choose to use preferred providers. Such insureds 

benefit substantially when using a preferred provider. Under the Blue Shield policy here, 

if an insured uses a nonpreferred provider, he or she would be obligated to pay the 

difference between the rate Blue Shield specifies it will pay for nonpreferred provider’s 

services and the amount of the hospital’s customary charges; some nonpreferred 

providers’ services are not covered at all; and use of nonpreferred providers substantially 

increases the calendar year deductible. Whiteside’s notion that by having dual coverage 

he could ‘pocket’ the money from his group policy every time he had a claim that was 

covered by his personal insurer is simply not a reasonable expectation. He either ignores 

or misapprehends the provisions of his insurance policies regarding the payment of 

claims. The basic obligation of the medical insurers is to pay the medical providers 

directly for their services and to insulate the insured from any monetary obligation for 

such medical care. Whiteside is entitled to no more than that under the terms of his 

coverage.” (Id. at p. 705, fn. omitted, italics added.)

In contrast to the health insurance benefits at issue in Whiteside, persons with UM

policies expect benefits to be paid directly to them to compensate them for their bodily 

injuries. Likewise, when those persons have health insurance, they expect their personal 

obligation to pay medical service providers will be capped with their deductibles and 

copayments, and that everything else will be covered by their health insurer. Thus, when 
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a patient or its representative assigns, “any insurance benefits due the patient or insured 

because of the hospital and medical services, and authorize payment directly to,” the 

hospital, it is reasonable and likely the patient believes that the health insurance s/he has 

purchased to cover medical services is what the hospital intends to collect as a result of 

the assignment; not that the hospital is going to rely on this language (1) to take from UM 

benefits s/he gets to compensate for a bodily injury; or (2) to demand MP benefits be 

used to pay the hospital above its negotiated rates with the health insurer. 

Similarly, when the patient assigns and authorizes the medical service provider to 

collect payments from “any insurance benefits otherwise payable to or on behalf of the 

undersigned for this hospitalization or for these outpatient services, outpatient 

observation care, including emergency services if rendered, at a rate not to exceed the 

provider’s regular charges,” the patient likely and reasonably would believe it has 

simply agreed that any funds due under its health insurance plan will be directly paid to 

the hospital at the regular rates negotiated between the provider and the health insurance 

plan. It is not reasonable to expect the patient to agree to use its UM and MP coverage--

at a risk of diminishing the amount he or she can collect in benefits--to subsidize higher 

than the negotiated payments to the hospital. 

Under these circumstances, the COAs cannot reasonably be read to contain an 

assignment of the patients’ UM and MP benefits that would allow Dameron to go after 

USAA to collect an additional payment for medical services--emergency or otherwise--

above what Dameron had negotiated as payment for services with Health Net.
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DISPOSITION

We affirm the trial court’s judgment. 

 

HULL, J.

We concur:

 

RAYE, P. J.

 

MAURO, J.