Court Opinion

ID: 4171202
Source: CourtListenerOpinion
Date Created: 2017-05-23 21:06:42.350022+00
Date Added: 2024-06-11T07:47:04.480858
License: Public Domain

Filed 5/23/17
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                          DIVISION ONE

SANJIV GOEL, M.D., INC.,                 B267012

       Plaintiff and Appellant,          (Los Angeles County
                                         Super. Ct. No. BC 543227)
       v.

REGAL MEDICAL GROUP, INC.,

       Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County. Rolf M. Treu, Judge. Affirmed.
     Pick & Boydston and Brian D. Boydston for Plaintiff and
Appellant.
     Doll Amir & Eley, Michael M. Amir and Lloyd Vu for
Defendant and Respondent.
     Manatt, Phelps & Phillips, Gregory N. Pimstone, Joanna S.
McCallum and Jeffrey J. Maurer for California Physicians’
Service dba Blue Shield of California as Amicus Curiae on behalf
of Defendant and Respondent.
            ______________________________________

      Appellant Sanjiv Goel, M.D., Inc.1 appeals from a judgment
following a court trial on his quantum meruit claim for fees for
emergency treatment rendered to four patients as an
interventional cardiologist. The trial court found that the fees
paid by Respondent Regal Medical Group, Inc. (Regal) for this
treatment reflected the reasonable value of the services that Goel
provided.
      The sole issue presented on appeal is whether the trial
court employed the correct legal standard in determining the
reasonable value of Goel’s services. We conclude that the court
did use the correct standard, and we therefore affirm.
                          BACKGROUND
1.    Goel’s Patient Treatments and Billing
      Goel is a board certified interventional cardiologist.
Interventional cardiology is a specialized branch of cardiology
that, as its name suggests, involves procedures to intervene in
preventing cardiovascular problems. Goel has been in private
practice since 1992.
      Goel performed the emergency intervention procedures at
issue in this case on four different patients at Los Robles Hospital
in Thousand Oaks, California (Patients 1–4). The procedures
included diagnosis of cardiac conditions with angiograms,

      1 Appellant is a medical practice owned and operated by
Dr. Sanjiv Goel. Because the legal form of Dr. Goel’s practice is
not at issue here, we refer to appellant simply as “Goel.”

                                 2
removal of blood clots, and placement of stents in cardiac
arteries.
       Patients 1–4 were each covered by a medical plan for which
Regal was responsible. Goel does not have a contract with Regal
for the services he provides. Goel therefore billed Regal for the
procedures he performed on Patients 1–4 using prices that he
unilaterally set. Goel testified that he based his prices on various
factors, including the “value of the service that was given to the
patient”; his “skill set”; his training and experience; and the
personal risk he undertook from exposure to radiation and the
repeated use of heavy lead gowns. His prices were incorporated
into a database of charges, or a “chargemaster,” with standard
rates he charged for each procedure listed by “CPT” code.2 For
procedures that he deemed to involve an “extreme degree of
complexity” he sometimes increased the charges in particular
cases.
       Goel updated his fees periodically. In doing so, he did not
consult with others and did not take any steps to determine what
other cardiologists in Ventura or Los Angeles counties were
charging. He also did not consider what Medicare pays for the
same procedures. Medicare rates are fixed and nonnegotiable.
       Goel terminated all his contracts with insurance companies
in 2010 because he did not want to be “under anyone else’s
thumb.” However, he did have a contract with Medicare to treat

      2 “ ‘CPT’ is the acronym for the American Medical
Association’s ‘Current Procedural Terminology.’ ” (California Ins.
Guarantee Assn. v. Workers’ Comp. Appeals Bd. (2014) 232
Cal.App.4th 543, 550, fn. 5.) Each CPT code identifies a
particular medical procedure. (Ibid.)

                                 3
nonemergency patients. The Medicare rates for the procedures
Goel performed on Patients 1–4 totaled $6,413.36.
       Goel’s bills to Regal identified each procedure separately by
CPT code with a price for each procedure. The amounts that he
received from Regal for each procedure were above the Medicare
rates but were well below what he billed. Goel’s bills for all of the
procedures he performed on Patients 1–4 totaled $275,383.16.
Regal paid $9,660.86.
       Goel filed suit against Regal to collect the difference
between what he billed and what Regal paid.
2.     Trial Proceedings
       The case was tried to the court on April 27 and 28, 2015, on
a single claim for quantum meruit. Goel introduced evidence of
payments that he had accepted from other insurers at or close to
his full billed rates for the same procedures that he performed on
Patients 1–4. This evidence included only those payments that
Goel had accepted and that were not in dispute or in litigation.
       Regal presented expert testimony concerning amounts
billed by other medical providers in Los Angeles and neighboring
counties for the services that Goel provided to Patients 1–4.
Regal’s expert, Dr. Henry Miller, testified that he examined a
database maintained by a company called Fair Health that
“calculates the average charge and range of charges for each CPT
code in each geographic area.” The data in the Fair Health
database included fees charged by the approximately 400
interventional cardiologists in communities in Los Angeles,
Riverside, and San Diego counties for contracted and
noncontracted services. Miller concluded that Goel’s charges
were “exceptionally high” and exceeded the 90th percentile in the

                                 4
Fair Health database, which is the highest percentile that it
records.
       Miller also compared Regal’s payments to Goel for the
services provided to Patients 1–4 with the rates that Medicare
pays for the same services. He concluded that Regal’s payments
for Goel’s services to Patients 1–4 were about 150 percent of the
Medicare rates for those services. He testified that the average
range of rates by private payors in the industry ranged from
135 percent to 140 percent of the Medicare rates.
       The trial court found in favor of Regal. The court issued a
statement of decision concluding that “the amounts paid by
[Regal] reflected the reasonable value of services.” The court
credited the testimony of Miller that the rates Regal paid were
above the national average for the procedures that Goel
performed. The court found that Goel’s rates “were at the highest
and most expensive percentile when compared to his colleagues.”
                           DISCUSSION
       Both parties agree that Goel was entitled to reimbursement
for the emergency medical services that he provided to Patients
1–4. Both parties also agree that, in the absence of any contract
between Goel and Regal, Goel was entitled to receive payment for
the “reasonable and customary” value of his services. The parties
disagree about how to define that standard.
       Goel argues that the decision by the Fifth District Court of
Appeal in Children’s Hospital Central California v. Blue Cross of
California (2014) 226 Cal.App.4th 1260 (Children’s Hospital)
required the trial court to consider only the payments that Goel
accepted from other payors for similar services in determining
the reasonable value of his services. Thus, Goel argues that the
trial court erred in considering evidence of fees paid by Medicare

                                5
and the amounts charged by other medical providers for the same
services in determining the reasonable value of his services.
       Regal agrees that Children’s Hospital describes the
governing standard, but argues that, under that standard, the
trial court here properly considered a range of factors relevant to
quantum meruit claims to determine the market value of Goel’s
services. Regal claims that those factors properly included:
(1) fees charged by other emergency providers for the same
procedures that Goel performed on Patients 1–4, and (2) the rates
that Medicare pays for those procedures.
       We agree with both parties that the court in Children’s
Hospital correctly applied the governing standard. However, we
agree with Regal that Goel has interpreted that standard too
narrowly. Properly interpreted, Children’s Hospital supports the
decision that the trial court made here to consider a variety of
evidence to determine the “reasonable market value” of the
services that Goel provided under quantum meruit principles.
We therefore affirm.
1.     Standard of Review
       The issue that Goel presents is, in essence, a dispute about
the evidence that the trial court considered. Issues concerning
the admissibility of evidence are ordinarily reviewed under the
abuse of discretion standard. However, when the issue is one of
law, a de novo standard applies. (Children’s Hospital, supra, 226
Cal.App.4th at p. 1277.) Here, the issue of what charges and
payments may properly be considered in determining the
reasonable value of a medical provider’s services is one of law.
(Ibid.)3 We therefore employ the de novo standard of review.

      3This legal issue is different from the practical decision
about what legally permissible evidence a trial court might decide

                                6
2.    The Decision in Children’s Hospital
      Like this case, Children’s Hospital involved the proper
standard to apply to a medical provider’s quantum meruit claim
for emergency medical services. The emergency patients in that
case were covered by a Medi-Cal managed health plan (the Plan)
during a period in which the Plan had no contract with the
hospital. In that situation, the law requires a hospital’s
emergency department to provide patients with “ ‘an appropriate
medical screening examination’ and ‘such treatment as may be
required to stabilize’ any emergency medical condition without
regard to the patient’s insurance or ability to pay.” (Children’s
Hospital, supra, 226 Cal.App.4th at p. 1266, quoting 42 U.S.C.
§ 1395dd(a), (b).) Health care providers are entitled to
reimbursement from patients’ health care service plans for the
emergency services that they provide. (Children’s Hospital, at
pp. 1270–1271; Health & Saf. Code, § 1371.4, subd. (b) [“A health

is relevant and helpful to consider in a particular quantum
meruit case. As explained below, consistent with the law on
quantum meruit, the decision in Children’s Hospital leaves
considerable discretion to trial courts to determine what billing
and payment evidence might be relevant to a particular case.
(See Children’s Hospital, supra, 226 Cal.App.4th at p. 1275 [“the
facts and circumstances of the particular case dictate what
evidence is relevant to show the reasonable market value of the
services at issue”].) Such discretionary decisions are reviewed
under the abuse of discretion standard. (Moore v. Mercer (2016)
4 Cal.App.5th 424, 442–444.) Here, Goel argues only that the
trial court erred as a matter of law in considering certain types of
payment evidence in determining the reasonable value of his
services. We therefore review only the legal question whether the
trial court employed the correct standard in deciding what
evidence to consider.

                                 7
care service plan, or its contracting medical providers, shall
reimburse providers for emergency services and care provided to
its enrollees, until the care results in stabilization of the
enrollee”]; Health & Saf. Code, § 1371.35, subd. (a).)
        The Department of Managed Health Care (the Department)
has promulgated regulations concerning the reimbursement of
such claims. (See Children’s Hospital, supra, 226 Cal.App.4th at
p. 1271.) California Code of Regulations, title 28, section
1300.71(a)(3)(B) (hereafter section 1300.71(a)(3)(B)) defines the
“reimbursement” of a claim for noncontracted providers as
payment of “the reasonable and customary value for the health
care services rendered based upon statistically credible
information that is updated at least annually and takes into
consideration: (i) the provider’s training, qualifications, and
length of time in practice; (ii) the nature of the services provided;
(iii) the fees usually charged by the provider; (iv) prevailing
provider rates charged in the general geographic area in which
the services were rendered; (v) other aspects of the economics of
the medical provider’s practice that are relevant; and (vi) any
unusual circumstances in the case.”
        The court in Children’s Hospital noted that this definition
incorporates language from Gould v. Workers’ Comp. Appeals Bd.
(1992) 4 Cal.App.4th 1059 (Gould). (See Children’s Hospital,
supra, 226 Cal.App.4th at p. 1272.)4 After examining the history
of the Department’s adoption of section 1300.71(a)(3)(B), the
court in Children’s Hospital concluded that the Department
intended section 1300.71(a)(3)(B) to incorporate the concept of

      4 The court in Gould identified these factors as a guide for
the trial court in determining the reasonableness of a
psychiatrist’s fees for treatment of police officers.

                                 8
quantum meruit and to preserve existing law that payors should
reimburse noncontracted providers based upon the “reasonable
and customary value” of their services. (Id. at pp. 1272–1273.)
The court found that section 1300.71(a)(3)(B) sets the “minimum
criteria for reimbursement of a claim, not the exclusive criteria.”
(Id. at p. 1273.)
        The issue in Children’s Hospital was whether the trial
court had properly precluded the jury from considering evidence
of amounts that the hospital had actually been paid in the past
for the medical services in question, rather than the
undiscounted charges included in the hospital’s chargemaster
billing schedule. Relying upon the precise language of factor
(iii) in section 1300.71(a)(3)(B), the trial court had limited the
jury’s consideration only to the “fees usually charged by the
provider,” without permitting consideration of the fees that were
actually paid. (§ 1300.71(a)(3)(B)(iii), italics added.) However,
the evidence showed that “in 2007 and 2008, less than 5 percent
of the payors paid Hospital the full billed charges.” (Children’s
Hospital, supra, 226 Cal.App.4th at p. 1268.)
        The appellate court held that the trial court erred in ruling
that section 1300.71(a)(3)(B) provided the exclusive standard for
determining the reasonable value of the hospital’s services.
(Children’s Hospital, supra, 226 Cal.App.4th at p. 1276.) The
court held that “under settled quantum meruit principles,
relevant evidence of the reasonable/market value of the services
provided includes the full range of fees that [the hospital] both
charges and accepts as payment.” (Ibid.) The court explained
that quantum meruit requires a flexible approach: “[T]he facts
and circumstances of the particular case dictate what evidence is
relevant to show the reasonable market value of the services at

                                  9
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.” (Id. at
p. 1275.)
3.     The Trial Court Properly Applied the Legal Standard
       Explained in Children’s Hospital
       Despite the language in Children’s Hospital concerning the
range of evidence that may be considered in determining the
reasonable value of medical services, Goel argues that the court’s
“reasoning and logic” show that just one factor is controlling.
Goel claims that “the average of the payments made to a medical
provider for particular medical services dictates the ‘market
value’ and therefore the ‘reasonable and customary value.’ ” Goel
limits this factor even further, claiming that the payments must
be “accepted,” and not disputed, and must be the result of
negotiations between a willing buyer and a willing seller.
       Goel bases his argument on discussion in Children’s
Hospital in which the court emphasized the significance of the
amounts actually paid to a medical provider rather than the
amounts billed. For example, Goel quotes the court’s statements
that “[r]easonable value is market value, i.e., what [the hospital]
normally receives from the relevant community for the services it
provides” (Children’s Hospital, supra, 226 Cal.App.4th at
p. 1277), and “[t]he scope of the rates accepted by or paid to [the
hospital] by other payors indicates the value of the services in the
marketplace” (id. at p. 1275).
       Applying this allegedly controlling standard, Goel claims
that the trial court here should not have considered evidence of
payments accepted by other medical providers for similar
emergency services or payments made by Medicare for such

                                10
services. Thus, Goel claims that the reasonable value of his
services is determined as a matter of law by rates that he was
previously successful in obtaining from private payors.
       Goel’s argument depends upon finely parsing language in
the Children’s Hospital opinion and applying it to an issue that is
different from the one the court considered. This approach to
interpretation is incorrect. Like all decisions, the opinion in
Children’s Hospital must be understood in the context of the
issue that was presented for decision. “Language used in any
opinion is of course to be understood in the light of the facts and
the issue then before the court, and an opinion is not authority
for a proposition not therein considered.” (Ginns v. Savage (1964)
61 Cal.2d 520, 524, fn. 2.)
       As discussed above, the issue in Children’s Hospital was
whether the trial court improperly limited the jury to considering
only the hospital’s fully billed charges rather than what insurers
actually paid. In light of this focus, the opinion naturally
emphasized the significance of amounts previously accepted by
the medical provider as an indication of market value. However,
the case cannot fairly be read to hold that this factor is the only
determinant of reasonable market value as a matter of law.
       In fact, the court in Children’s Hospital concluded that a
quantum meruit claim for medical services may require
consideration of a “wide variety of evidence” bearing upon the
reasonable value of those services. (Children’s Hospital, supra,
226 Cal.App.4th at p. 1274.) The court held that this evidence is
not limited even by the factors identified in section
1300.71(a)(3)(B), but will depend upon the “facts and
circumstances of the particular case.” (Id. at p. 1275.) Thus, the
holding in Children’s Hospital did not limit the evidence relevant

                                11
to the reasonable value of medical services to any single factor,
but rather confirmed that, consistent with the law on quantum
meruit, any evidence bearing upon the “reasonable market value”
of such services is relevant. (Ibid.)
       Under this flexible standard, the trial court here was not
required to accept Goel’s evidence of fees that he previously
accepted from private payors as the only determinant of market
value. In particular, the trial court could properly consider
Regal’s expert testimony concerning fees charged by other
medical providers for similar emergency services.
       Nothing in Children’s Hospital or the law on quantum
meruit suggests that this evidence was inadmissible. To the
contrary: Section 1300.71(a)(3)(B) itself identifies the “prevailing
provider rates charged in the general geographic area in which
the services were rendered” as a factor to consider. (Section
1300.71, subd. (a)(3)(B)(iv).) Gould—the decision on which the
section 1300.71(a)(3)(B) factors were based—also identified the
“fees usually charged” in the provider’s general geographic area
as a relevant factor. And, as the court noted in Children’s
Hospital, presumably the fees “charged” in the context at issue in
Gould—i.e., hourly fees for psychiatrists—were also the fees that
were actually paid. (See Children’s Hospital, supra, 226
Cal.App.4th at p. 1275.)
       Goel’s interpretation of the Children’s Hospital decision has
somewhat more force in connection with his argument that the
trial court should not have considered Medicare rates for
prestabilization emergency services. Children’s Hospital
concluded that all rates “that are the subject of contract or
negotiation,” including rates paid by government payors, are
relevant to determine the reasonable value of medical services.

                                12
The medical services at issue in Children’s Hospital were for care
provided after emergency patients had been stabilized. For such
care, the hospital was required to seek authorization from the
Medi-Cal provider prior to the treatment. (Children’s Hospital,
supra, 226 Cal.App.4th at pp. 1266–1267.) Goel argues that the
government rates at issue in Children’s Hospital therefore were
the product of agreement, because the hospital had some choice
in whether to treat the poststabilization patients. In contrast,
doctors providing prestabilization emergency services have no
choice in whether to treat Medicare patients and their acceptance
of Medicare rates for such patients does not reflect any
agreement.
       While this was a reasonable argument to present to the fact
finder at trial, the distinction that Goel makes is not a persuasive
reason to adopt an absolute rule precluding the consideration of
Medicare rates in determining the reasonable value of emergency
medical services. The difference between the choice involved in
providing prestabilization and poststabilization emergency
services might affect the weight that a court gives to evidence of
Medicare rates in a particular case. However, that difference
does not mean that Medicare rates are irrelevant to the
reasonable value of prestabilization emergency services as a
matter of law.
       The record here shows why a bright line rule precluding
consideration of Medicare rates for prestabilization emergency
services would be inappropriate under quantum meruit
principles as explained in Children’s Hospital. Regal’s expert,
Miller, explained the components of Medicare rates and testified
that, in recognition of the methodology used to calculate Medicare
rates, it is typical in the health care industry for payors to use

                                13
the Medicare rate in determining the rates that they will pay. He
stated that, in his experience and based upon nationwide
research, “anywhere from 130 to 140 percent of what Medicare
pays is the average for what all health insurers pay.”
        Thus, there was evidence that Medicare rates are relevant
to the market value of emergency services even though a
physician has no choice but to accept those rates when initially
treating particular Medicare patients in an emergency. Miller
confirmed that Regal’s payments to Goel were “consistently 150
percent” of what Medicare pays for the services that Goel
provided. The court relied on Miller’s testimony in finding that
Regal’s payments “exceeded the Medicare payments and were
within the industry averages.”
        Goel’s contention that Medicare rates for emergency
services are not the product of agreement and are therefore
irrelevant to the rates he will accept is also inconsistent with his
own testimony. He testified that he had a contract with Medicare
that he entered into “willingly,” and he acknowledges on appeal
that he “has accepted patients covered by Medicare and Medi-cal
for non-emergency services, and has contracts with Medicare and
Medi-cal for that limited purpose.” Whether or not the Medicare
rates for the nonemergency services that Goel agreed to accept
were the same as the emergency services at issue here, he cannot
claim that Medicare rates are irrelevant to his practice.
        Goel was free to argue at trial that he was obligated to
treat prestabilization emergency Medicare patients, and that the
Medicare rates that he received for such services should be given
little or no weight in determining the reasonable value of those
services. In fact he did so. He also cross-examined Miller about
the difference between a physician’s obligation toward emergency

                                14
patients in various circumstances and the components of
Medicare pricing.
      Medicare rates, like other evidence bearing upon the
determination of a reasonable rate for a particular medical
procedure, might be more or less probative in light of the facts of
the particular case. But that is a decision for the trial court to
make within the scope of its discretion. We decline to hold that
Medicare rates are irrelevant to prestabilization emergency
services as a matter of law. The trial court here had a reasonable
basis in the evidence to conclude that Medicare rates were
relevant to the market rate for the medical services at issue, and
we do not find any legal error in the court’s decision to consider
those rates.

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                           DISPOSITION
       The judgment is affirmed. Regal Medical Group, Inc., is
entitled to its costs on appeal.
       CERTIFIED FOR PUBLICATION.

                                         LUI, J.
We concur:

     CHANEY, Acting P. J.

     JOHNSON, J.

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