Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 1 of 21 Page ID #:856
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`United States District Court
`Central District of California
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`CASE NO. 2:20-cv-01731-ODW (PVCx)
`ORDER GRANTING IN PART AND
`DENYING IN PART MOTION TO
`DISMISS FIRST AMENDED
`COMPLAINT [38]
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`MALIBU BEHAVIORAL HEALTH
`SERVICES INC.,
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`Plaintiff,
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`v.
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`MAGELLAN HEALTHCARE, INC., et
`al.,
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`Defendants.
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`I. INTRODUCTION
`This action arises from a medical insurance payment dispute between a medical
`service provider and an insurer. Plaintiff Malibu Behavioral Health Services, Inc.,
`d/b/a South California Road to Recovery (“Malibu”) brings a First Amended
`Complaint (“FAC”) against Defendant AmeriHealth Insurance Company of New
`Jersey (“AmeriHealth”) and AmeriHealth’s agent, Defendant Magellan Healthcare,
`Inc. (“Magellan”; together with AmeriHealth, “Defendants”), seeking $394,985 for
`unpaid medical services provided to a patient, LK. (See generally FAC, ECF No. 31.)
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 2 of 21 Page ID #:857
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`Now before the Court is AmeriHealth’s Motion to Dismiss the FAC.1 (Mot. to
`Dismiss (“Motion” or “Mot.”), ECF No. 38.) The matter is fully briefed. (See Mot.;
`Opp’n to Mot. (“Opp’n”), ECF No. 41; Reply ISO Mot. (“Reply”), ECF No. 42.) For
`the following reasons, the Motion is GRANTED in part and DENIED in part.2
`II. BACKGROUND
`Malibu provides monitored, residential, detoxification services with medication
`assisted treatment. (FAC ¶ 9.) From June 2, 2016, to December 31, 2016, Malibu
`provided a patient, LK, with “covered treatment . . . for mental health and substance
`use disorder.” (Id. ¶¶ 2, 38.) At the time, LK was insured by AmeriHealth under its
`New Jersey POS Plus policy (the “Policy”), which provides coverage for out-of-
`network services such as those provided to LK by Malibu. (Id. ¶¶ 2, 33; see Decl. of
`Charles Kiehl Cauthorn Ex. A (“Policy”), ECF No. 38-1.)3 And AmeriHealth’s agent,
`“Magellan[,] had exclusive control over benefits decisions, utilization management
`and claims handling related to LK’s treatment at Malibu.” (FAC ¶¶ 12–13.)
`Malibu alleges that on January 6, 2016, prior to admitting LK as a patient, it
`contacted AmeriHealth to conduct a Verification of Benefits (“VOB”) call. (Id. ¶ 39.)
`Malibu alleges that all parties understood the term “usual, customary and reasonable
`rate” (“UCR”) to mean 100% of the fully billed amounts charged by Malibu for its
`services, and that “AmeriHealth’s agent promised and informed Malibu that it would
`be paid for behavioral health services at 90% of UCR (90% of billed charges) until
`
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`1 Magellan filed its Answer to the FAC on May 29, 2020. (Magellan’s Answer, ECF No. 36.)
`2 After carefully considering the papers filed in connection with the Motion, the Court deemed the
`matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15.
`3 “Certain written instruments attached to pleadings may be considered part of the pleading.” United
`States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (citing Fed. R. Civ. P. 10(c)). “Even if a
`document is not attached to a complaint, it may be incorporated by reference into a complaint if the
`plaintiff refers extensively to the document or the document forms the basis of the plaintiff’s claim.”
`Id. “[T]he district court may treat such a document as part of the complaint, and thus may assume
`that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).” Id. Here, the
`Court considers the Policy as incorporated by reference into the FAC because Malibu refers
`extensively to the Policy, and the Policy forms a substantial basis for Malibu’s claims. (See
`generally FAC.)
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 3 of 21 Page ID #:858
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`LK’s out-of-pocket maximum had been met, at which point AmeriHealth would pay
`100% of UCR (100% of billed charges).” (Id. ¶ 39–42.)
`Malibu also alleges it obtained “a series of binding pre-authorizations” from
`Magellan regarding LK’s treatment, which are reflected in a series of written
`confirmation letters (the “Confirmations”) sent to Malibu by Magellan. (Id. ¶¶ 44,
`47–77.) Each Confirmation preauthorized treatment for LK for a given number of
`days, and each Confirmation also included the following disclaimer:
`Please note that this authorization is not a determination of eligibility or a
`guarantee of payment. Coverage and payment are subject to the
`member’s eligibility at the time services are provided, and the benefits,
`limitations, exclusions and other specific terms of the health benefit plan
`at the time services are provided. The member may be responsible for
`charges incurred for unauthorized services or for applicable pre-
`certification penalties. If the member is receiving services from a non-
`participating provider, the member may have significant higher out-of-
`pocket expenses than if services are provided by a participating provider.
`(FAC Ex. D (“Confirmations”), ECF No. 48-4.) Notwithstanding these disclaimers,
`Malibu alleges that it relied upon the written authorizations and “rendered the services
`as specified [in the letters] and timely invoiced AmeriHealth at the rates agreed to
`during the initial VOB call.” (FAC ¶¶ 46, 48–77.)
`Malibu acknowledges it “received payment for covered treatment from
`AmeriHealth for services provided to LK from January 3, 2016 through June 1, 2016.”
`(Id. ¶ 81.) But Malibu claims Defendants refused to pay for the services rendered
`from June 2, 2016 to December 31, 2016, (id. ¶ 80), all while Magellan “continued to
`pre-authorize services for LK performed by Malibu and agreed to pay claims at a
`specific rate,” (id. ¶ 82). Malibu alleges that the unpaid amount still owed by
`AmeriHealth equals $394,985. (Id. ¶ 83.)
`With respect to Defendants’ refusal to pay, Malibu claims that “AmeriHealth
`and/or Magellan’s representatives made numerous, inconsistent statements as to the
`grounds for claim denial” and gave “arbitrary, inconsistent and unclear justifications
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 4 of 21 Page ID #:859
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`for non-payment in response” to timely filed internal appeals. (Id. ¶¶ 85, 86, 88.)
`Malibu alleges that “[u]ltimately, AmeriHealth and/or Magellan informed Malibu and
`LK that, without their knowledge or consent, [Defendants] had unilaterally rescinded
`the [P]olicy at some point in late 2016 or early 2017, despite continuing to accept
`premium payments and representing active coverage.” (Id. ¶ 90.)
`Based on these and other facts, Malibu asserts the following eight claims
`against Defendants: (1) violation of California’s Unfair Competition Law (“UCL”),
`California Business and Professions Code section 17200; (2) breach of written
`contract based on the Confirmations; (3) breach of oral contract; (4) breach of implied
`contract; (5) promissory estoppel; (6) fraudulent inducement; (7) open book account;
`and (8) breach of written contract based on the Policy, as assignee and attorney-in-
`fact. (See id. ¶¶ 93–237.) Malibu asserts the first seven claims on behalf of LK, and it
`asserts the eighth claim in its own name as an assignee and attorney-in-fact. (See
`generally id.)4 AmeriHealth now moves to dismiss all eight claims against it under
`Federal Rule of Civil Procedure (“Rule”) 12(b)(6) for failure to state a claim. (See
`generally Mot.) AmeriHealth alternatively moves to dismiss Malibu’s eighth claim
`under Rule 12(b)(1) on the ground that Malibu lacks standing. (See id. at 10–12).
`III. LEGAL STANDARDS
`Rule 12(b)(6) provides for dismissal of a complaint for lack of a cognizable
`legal theory or insufficient facts pleaded to support an otherwise cognizable legal
`theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To
`survive a dismissal motion, a complaint need only satisfy the minimal notice pleading
`requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v.
`Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to
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`4 Before providing treatment to LK, Malibu obtained an Assignment of Benefits (the “Assignment”)
`authorizing Malibu to collect payments directly from AmeriHealth. (FAC ¶ 3; see FAC Ex. A
`(“Assignment”), ECF No. 48-1.) After treatment services were provided, LK executed a Durable
`Power of Attorney (the “POA”) naming Malibu as her attorney-in-fact for all claims related to the
`recovery of payment for Malibu’s treatment services. (FAC ¶ 3; see FAC Ex. B (“POA”), ECF
`No. 48-2.)
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 5 of 21 Page ID #:860
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`raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly,
`550 U.S. 544, 555 (2007). That is, “a complaint must contain sufficient factual
`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
`Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).
`Rule 12(b)(1) also provides for dismissal of a complaint for lack of subject-
`matter jurisdiction. The Article III case or controversy requirement limits a federal
`court’s subject-matter jurisdiction by requiring, among other things, that plaintiffs
`have standing to bring their claims. Chandler v. State Farm Mut. Auto. Ins. Co., 598
`F.3d 1115, 1121–22 (9th Cir. 2010). “Rule 12(b)(1) jurisdictional attacks can be
`either facial or factual.” White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). When a
`motion to dismiss attacks subject-matter jurisdiction on the face of the complaint, the
`court assumes the factual allegations in the complaint are true and draws all
`reasonable inferences in the plaintiff’s favor. Doe v. Holy See, 557 F.3d 1066, 1073
`(9th Cir. 2009). Moreover, the pleading standards set forth in Twombly and Iqbal
`apply with equal force to Article III standing when it is being challenged on the face
`of the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir.
`2012).
`The determination of whether a complaint satisfies the plausibility standard is a
`“context-specific task that requires the reviewing court to draw on its judicial
`experience and common sense.” Iqbal, 556 U.S. at 679. A court is generally limited
`to the pleadings and must construe all “factual allegations set forth in the
`complaint . . . as true and . . . in the light most favorable” to the plaintiff. Lee v. City
`of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). However, a court need not blindly
`accept conclusory allegations, unwarranted deductions of fact, and unreasonable
`inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
`Where a district court grants a motion to dismiss, it should provide leave to
`amend if the complaint could be saved by amendment. Manzarek v. St. Paul Fire &
`Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008); see also Fed. R. Civ.
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 6 of 21 Page ID #:861
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`P. 15(a)(2) (“The Court should freely give leave when justice so requires.”).
`However, the district court may deny leave to amend based on “undue delay, bad faith
`or dilatory motive on the part of the movant, repeated failure to cure deficiencies by
`amendments previously allowed, undue prejudice to the opposing party by virtue of
`allowance of the amendment, and futility of amendment.” Leadsinger, Inc. v. BMC
`Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) (brackets omitted) (quoting Foman v.
`Davis, 371 U.S. 178, 182 (1962)).
`IV. DISCUSSION
`AmeriHealth moves to dismiss all eight claims; the Court turns to each in the
`order presented in the FAC.
`A. UCL Claim (Claim One)
`Malibu brings its first claim under the UCL seeking: (1) “compensation” in the
`form of “disgorgement of illegal profits and/or ill-gotten financial gains and
`restitutionary damages,” (FAC ¶ 104); and (2) an injunction prohibiting AmeriHealth
`from continuing to misrepresent benefits and wrongfully deny claims, (id. ¶ 105).
`AmeriHealth argues this claim should be dismissed because Malibu fails to establish it
`is entitled to equitable remedies under the UCL, as Malibu fails to plead (1) the
`inadequacy of legal remedies, which is a prerequisite to obtaining any equitable relief
`under the UCL, and (2) continuing misconduct, which is a prerequisite to obtaining
`injunctive relief. (Mot. 20, 20 n.7; see also Reply 12–13.)5 In its Opposition, Malibu
`does not address the issue of continuing misconduct, but it insists legal remedies are
`inadequate here because “[l]egal remedies do not include the redress that injunctive
`relief in the form of claims reprocessing and future injunctive relief is capable of
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`5 AmeriHealth further argues that this claim should be dismissed on grounds that (1) Malibu fails to
`allege a claim under the UCL’s “unfair” prong, as AmeriHealth and Malibu are not competitors, and
`(2) Malibu fails to allege a violation of predicate law to establish a claim under the UCL’s
`“unlawful” prong. (Mot. 20–21.) However, as Malibu fails to establish an entitlement to equitable
`remedies, the Court need not reach these additional arguments and declines to do so.
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 7 of 21 Page ID #:862
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`providing.” (Opp’n 16.) For the following reasons, the Court agrees with
`AmeriHealth.
`First, Malibu fails to plausibly allege it lacks an adequate remedy at law for
`“compensation and damages” outside of the damages it already seeks through its other
`claims. “[T]o state a UCL claim, a plaintiff must plead that legal remedies are
`inadequate.” Cal. Surgical Inst., Inc. v. Aetna Life & Cas. (Bermuda) Ltd., No. SACV
`18-02157-JVS (DFMx), 2019 WL 1581415, at *8 (C.D. Cal. Feb. 6, 2019). This is
`because “[r]emedies under the UCL are limited to restitution and injunctive relief, and
`do not include damages.” Silvercrest Realty, Inc. v. Great Am. E&S Ins. Co.,
`No. SACV 11-01197-CJC (ANx), 2012 WL 13028094, at *2 (C.D. Cal. Apr. 4, 2012)
`(citing Korea Supply Co. v. Lockheed Martin, 29 Cal. 4th 1134, 1146–49 (2003)).
`“[T]he UCL is not an all-purpose substitute for a tort or contract action.” Korea
`Supply, 29 Cal. 4th at 1150 (internal quotation marks omitted). In this case, the FAC
`contains no allegation that legal remedies are inadequate. (See FAC ¶¶ 94–106).
`Moreover, Malibu fails to allege facts establishing a theory of restitution because
`“Malibu is not seeking the return of any money or property it paid or gave to
`AmeriHealth.” (Mot. 20 n.7.) And “nonrestitutionary disgorgement of profits is not
`an available remedy in an individual action under the UCL.” Korea Supply, 29 Cal.
`4th at 1152. Thus, Malibu’s UCL claim fails to the extent Malibu seeks
`“compensation and damages” from AmeriHealth.
`Second, Malibu fails to allege facts showing it is entitled to injunctive relief
`because “[b]oth the FAC and the [O]pposition fail to present a threat of ongoing future
`conduct, as neither asserts facts indicating that the alleged wrongful conduct extended
`beyond the . . . denial of coverage which forms the basis for this suit.” Silvercrest
`Realty, 2012 WL 13028094, at *3; (see generally FAC; Opp’n 16). Indeed,
`“[i]njunctive relief is appropriate only when there is a threat of continuing
`misconduct.” Madrid v. Perot Sys., 130 Cal. App. 4th 440, 463 (2005). “A plaintiff
`may not simply state a claim for relief under [s]ection 17200 by requesting an
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`injunction to prevent a defendant from continuing not to do something.” Silvercrest
`Realty, 2012 WL 13028094, at *3. Here, “[n]o continuing activity by [AmeriHealth]
`is alleged that is sufficient to merit injunctive relief.” Id. Accordingly, Malibu’s
`claim for injunctive relief under the UCL fails as well.
`For these reasons, AmeriHealth’s Motion is GRANTED as to Malibu’s first
`claim. Although it seems unlikely Malibu can rectify these deficiencies, the Court
`cannot say that any amendment would be futile. See Manzarek, 519 F.3d at 1031.
`Thus, Malibu’s first claim is DISMISSED with leave to amend.
`B.
`Breach of Written Contract (Claim Two)
`Malibu’s second claim is for breach of written contract, premised on
`Defendants’ alleged breaches of the written Confirmations. (FAC ¶¶ 107–39.)
`AmeriHealth moves to dismiss this claim on the basis that the Confirmations
`Magellan sent to Malibu cannot constitute contracts because they did not contain
`payment terms, and each Confirmation “specifically advise[d] that it is not a guarantee
`of payment and that payment is subject to a number of conditions.” (Mot. 13–14). In
`its Opposition, Malibu did not respond to AmeriHealth’s claims that its breach of
`written contract claim is deficiently pleaded. (See Opp’n; see also Reply 16 n.2).
`Courts in this district have found that a failure to address an argument in
`opposition to a motion to dismiss constitutes a concession of that argument. See, e.g.,
`ABC Servs. Grp., Inc. v. Health Net of Cal., Inc., No. SACV 19-00243-DOC (DFMx),
`2020 WL 2121372, at *5 (C.D. Cal. May 4, 2020) (citing Johnson v. Macy, 145 F.
`Supp. 3d 907, 918 (C.D. Cal. 2015)). In this instance, the Court finds that, by failing
`to meaningfully respond to AmeriHealth’s argument, Malibu has effectively conceded
`the issue as to whether its breach of written contract claim is adequately pled.
`Pursuant to Local Rules 7-9 and 7-12,6 the Court construes Malibu’s failure to address
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`6 Under the Court’s Local Rules, a non-moving plaintiff must file an opposition brief at least twenty-
`one days prior to the date designated for the hearing of a motion to dismiss a complaint. C.D. Cal.
`L.R. 7-9. And the failure to file any required document—e.g., an opposition—within the deadline
`“may be deemed consent to the granting . . . of the motion.” C.D. Cal. L.R. 7-12.
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`those specific grounds raised in the Motion as consenting to dismissal on those
`grounds. See New Day Worldwide Inc. v. Swift, No. CV 19-09948-AB (SSx),
`2020 WL 6050700, at *2 (C.D. Cal. July 21, 2020).
`Moreover, Malibu appears to expressly concede that the Confirmations do not
`constitute contracts themselves. (See Opp’n 7 (“As the FAC notes, the oral contract
`created on the pre-authorization calls was confirmed by subsequent letters, not created
`by those letters.” (citing FAC ¶¶ 44–77)).) Accordingly, AmeriHealth’s Motion is
`GRANTED as to Malibu’s second claim. Furthermore, the Court finds that any
`further amendment would be futile, as Malibu concedes the Confirmations do not in
`and of themselves constitute written contracts. Thus, Malibu’s second claim for
`breach of written contract is DISMISSED with prejudice insofar as it is premised on
`the Confirmations as written contracts.
`C. Breach of Oral Contract (Claim Three)
`Malibu’s third claim is for breach of oral contract, based on “numerous, and
`lengthy, authorization and utilization review calls” that occurred between Malibu and
`Defendants,
`the details of which are allegedly reflected
`in
`the numerous
`Confirmations. (FAC ¶¶ 152–54.) AmeriHealth moves to dismiss this claim because
`the FAC fails to provide any details or specifics about any calls, except for the initial
`VOB call. (Mot. 14). In opposition, Malibu argues that AmeriHealth “grossly
`mischaracterizes a vital element of Plaintiff’s argument because it neglects the fact
`that Plaintiff’s legal theory is based on prior authorization Calls, which the
`[Confirmations] then confirm . . . .” (Opp’n 7.) Notwithstanding Malibu’s legal
`theory, however, the Court agrees with AmeriHealth.
`“To state a claim for breach of contract under California law, a plaintiff must
`plead: (1) the existence of the contract; (2) plaintiff’s performance or excuse for
`nonperformance of the contract; (3) defendant’s breach of the contract; and (4)
`resulting damages.” First Class Vending, Inc. v. ITC Sys. (USA), Inc., No. CV 12-
`2342-ODW (PLAx), 2012 WL 2458131, at *2 (C.D. Cal. June 26, 2012) (citing
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`Reichert v. Gen. Ins. Co. of Am., 68 Cal. 2d 822, 830 (1968)). “[T]o establish the
`existence of an oral or implied contract, a party must assert facts that show an
`agreement between the parties.” Id. (citing Div. of Lab. L. Enf’t v. Transpacific
`Transp. Co., 69 Cal. App. 3d 268, 275 (1977)). The only distinction between an oral
`and an implied contract is that in the former, the obligations are expressed in words,
`rather than implied from the parties’ conduct. See id.
`Here, Malibu fails to adequately plead the existence of numerous oral
`agreements, even if they were allegedly confirmed by the Confirmations. In the FAC,
`Malibu alleges that “[t]he numerous, and lengthy, authorization and utilization review
`calls set forth above form the basis of the oral contract between the parties,” (FAC
`¶ 152 (emphasis added)), and that “detailed calls and authorizations described above
`constitute the oral representations made between the parties,” (id. ¶ 144 (emphasis
`added)). However, the only details of any phone call mentioned in the FAC “above”
`the allegations cited here relate to a single call—the initial VOB call of January 6,
`2016. (See id. ¶¶ 39–42). If, as Malibu contends, its legal theory is based on
`numerous oral contracts entered into over the course of numerous utilization calls with
`Magellan or AmeriHealth, it must provide notice of those calls, and their content, to
`AmeriHealth. Because Malibu fails to do so in its FAC, AmeriHealth’s Motion is
`GRANTED as to Malibu’s third claim. Because the Court cannot say that any
`amendment would be futile, see Manzarek, 519 F.3d at 1031, Malibu’s third claim is
`DISMISSED with leave to amend.
`D. Breach of Implied Contract (Claim Four)
`Malibu’s fourth claim is for breach of implied contract, based on an alleged
`course of conduct established between the parties throughout the first half of 2016,
`during which AmeriHealth paid Malibu for services provided to LK based on the
`VOB call and preauthorization communications.7 (FAC ¶¶ 171–89.) AmeriHealth
`
`7 Malibu brings its fourth claim in the alternative to its breach of oral contract claim. (See FAC
`¶¶ 173–75.) “There cannot be a valid, express contract and an implied contract, each embracing the
`same subject matter, existing at the same time.” Cal. Surgery Ctr., Inc. v. UnitedHealthcare, Inc.,
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`moves to dismiss this claim on the ground that “communications related to
`verifications of benefits and prior authorizations do not give rise to an implied-in-fact
`contract because there is no mutual assent to contract.” (Mot. 16). Malibu correctly
`argues in response, however, that verification and authorization communications can
`constitute a sufficient predicate for a breach of contract claim, depending on
`circumstances. (Opp’n 8–11.)
`As mentioned above, the only distinction between an oral and an implied
`contract is that in the latter, the obligations are implied from the parties’ conduct,
`rather than expressed in words. First Class Vending, 2012 WL 2458131, at *3. In
`either case, preauthorization or verification calls alone are not enough to create a
`contract because, “within the medical insurance industry, an insurer’s verification is
`not the same as a promise to pay.” Cedars Sinai Med. Ctr. v. Mid-West Nat’l Life Ins.
`Co., 118 F. Supp. 2d 1002, 1008 (C.D. Cal. 2000); see, e.g., Pac. Bay Recovery, Inc.
`v. Cal. Physicians’ Servs., Inc., 12 Cal. App. 5th 200, 216 (2017) (finding no implied
`contract based on preauthorization and statements that provider “would be paid”
`where “there [wa]s no indication in the FAC what exactly [the insurer] agreed to
`pay”). However, where a plaintiff does allege what type of treatment was being
`sought, how long the course of treatment was expected to last, an agreement on a
`specific billing rate pegged to a percentage of the UCR, and that in each follow-up the
`insurer confirmed the payment would be made at the previously agreed-upon rate, the
`allegations are sufficient to plead a plausible claim under Rule 8(a). See Bristol SL
`Holdings, Inc. v. Cigna Health Life Ins. Co., No. SACV-19-00709-AG (ADSx), 2020
`WL 2027955, at *3 (C.D. Cal. Jan. 6, 2020) (finding such allegations sufficient to
`state a plausible claim).
`
`
`No. CV-19-02309-DDP (AFMx), 2020 WL 3869715, at *4 (C.D. Cal. July 9, 2020) (quoting
`Wal-Noon Corp. v. Hill, 45 Cal. App. 3d 605, 613 (1975)). A plaintiff can, however, plead
`inconsistent allegations in the alternative if he has a reasonable belief that each of the theories
`pleaded is legally tenable. See Crowley v. Katleman, 8 Cal. 4th 666, 678, 691 (1994).
`
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 12 of 21 Page ID #:867
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`Here, Malibu has pleaded sufficient facts to sustain an implied contract claim.
`
`Malibu alleges that prior to admitting LK to its treatment facility, it “confirmed with
`agents of AmeriHealth that LK was eligible for applicable behavioral health benefits.”
`(FAC ¶ 39.) Malibu further alleges that January 6, 2016 VOB call, “AmeriHealth’s
`agent promised and informed Malibu that it would be paid for behavioral health
`services at 90% of UCR (90% of billed charges) until LK’s out-of-pocket maximum
`had been met, at which point AmeriHealth would pay 100% of UCR (100% of billed
`charges).” (FAC ¶ 42.) Malibu alleges that it rendered services based on those
`representations, (FAC ¶¶ 48–77, 186), and that, for each of these treatments, the
`specified rate as a percentage of the UCR was incorporated in each subsequent
`authorization, (FAC ¶¶ 131–32). Malibu attaches the Confirmations to its FAC,
`which show, in each case: what additional treatment was authorized, for how long it
`was authorized, and that it was authorized “at the out of network level of benefit.”
`(See Confirmations). Finally, Malibu alleges that the two parties established a course
`of dealing—as evidenced by the fact that AmeriHealth paid Malibu for LK’s treatment
`from January 1, 2016 until June 1, 2016—based on the VOB call and subsequent
`preauthorizations. (FAC ¶¶ 180–85.) These allegations satisfy the notice pleading
`requirements of Rule 8(a) and plausibly establish the existence of implied contracts.
`Accordingly, AmeriHealth’s Motion is DENIED as to Malibu’s fourth claim for
`breach of implied contract.
`E.
`Promissory Estoppel (Claim Five)
` (FAC ¶¶ 190–203.)
`Malibu’s fifth claim is for promissory estoppel.
`AmeriHealth moves to dismiss this claim on the ground that Malibu fails to allege a
`clear and unambiguous promise.8 (Mot. 17–18.) In opposition, Malibu explains it
`“does not base [this claim] on promises made in the insurance contracts, but rather the
`promises made in the verification and authorization communications.” (Opp’n 12
`
`8 AmeriHealth also argues that Malibu fails to show reasonable reliance. (Mot. 18.) However,
`because Malibu fails to plead clear and unambiguous promises upon which a claim for promissory
`estoppel can be based, the Court need not reach this additional argument and declines to do so.
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 13 of 21 Page ID #:868
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`(citing FAC ¶ 158).) Even accepting Malibu’s theory of estoppel, AmeriHealth is
`correct.
`California law requires four elements to establish promissory estoppel: “(1) a
`promise clear and unambiguous in its terms; (2) reliance by the party to whom the
`promise is made; (3) [the] reliance must be both reasonable and foreseeable; and
`(4) the party asserting the estoppel must be injured by his reliance.” Aceves v. U.S.
`Bank, N.A., 192 Cal. App. 4th 218, 225 (2011). An actionable promise must not only
`be “clear and unambiguous in its terms,” but also cannot be based on preliminary
`discussions. Garcia v. World Sav., FSB, 183 Cal. App. 4th 1031, 1044 (2010).
`Here, Malibu alleges Defendants sent numerous Confirmations, each of which
`confirmed authorization of a given scope of treatment and “provided [a] unique
`confirmation number to confirm prior approval of these services.” (FAC ¶¶ 48–77;
`see also Confirmations.) Malibu also alleges in conclusory fashion that it “executed a
`series of binding pre-authorizations” that were performed by Magellan, (FAC ¶ 44),
`and that it “rendered services with explicit authorization from Defendants and with the
`understanding that rates would be paid at the amount agreed to on the initial VOB
`phone call,” (id. ¶ 46). Noticeably absent among these allegations, however, is the
`identification of any clear and unambiguous promise, never mind a great series of
`continuing promises. To be fair, Malibu does allege that “during utilization review
`(UR) calls, [Defendants] promised to pay Malibu a specific percentage of UCR.” (Id.
`¶ 198.) However, the Court need not accept this merely conclusory allegation as true
`absent any supporting factual allegations to satisfy the minimum plausibility standard.
`See Iqbal, 556 U.S. at 67; Sprewell, 266 F.3d at 988. As explained above, Malibu
`fails to allege sufficient details of the supposedly numerous and lengthy utilization
`calls. (See Part IV(C), supra.) Accordingly, the Court finds that Malibu fails to plead
`the clear and unambiguous promises upon which its claim for promissory estoppel is
`supposedly based, and AmeriHealth’s Motion is GRANTED as to Malibu’s fifth
`claim. Because the Court cannot say that any amendment would be futile, see
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`Case 2:20-cv-01731-ODW-PVC Document 57 Filed 12/23/20 Page 14 of 21 Page ID #:869
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`Manzarek, 519 F.3d at 1031, Malibu’s fifth claim is DISMISSED with leave to
`amend.
`F.
`Fraudulent Inducement (Claim Six)
`Malibu’s sixth claim is for fraudulent inducement, based on a theory that
`“AmeriHealth clearly decided it would no longer pay LK’s claims while continuing to
`represent to Malibu [through Magellan] that they would,” (FAC ¶ 211), and
`“AmeriHealth knew that it would not pay Malibu’s invoices despite representations
`that it would do so,” (id. ¶ 212). AmeriHealth moves to dismiss this claim because
`“Malibu fails to plead the cause of action with any particularity,” such as “who, either
`at AmeriHealth or acting on its behalf, made the representations.” (Mot. 19.) Malibu
`counters that its FAC meets the heightened standard of Rule 9(b). (Opp’n 13.) But
`the Court agrees with AmeriHealth.
`are
`inducement
`fraudulent
`of
`In California,
`“[t]he
`elements
`(1) misrepresentation; (2) knowledge of its falsity;