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					Filed 8/6/09 Prospect Med. Group v. Northridge Emer. Med. Group CA2/3
Opinion following remand from Supreme Court
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                DIVISION THREE


PROSPECT MEDICAL GROUP, INC.,                                        B172737
et al.,
                                                                     (Los Angeles County
         Plaintiffs and Appellants,                                  Super. Ct. No. BC300850)

         v.

NORTHRIDGE EMERGENCY
MEDICAL GROUP et al.,

      Defendants and Respondents.
___________________________________

PROSPECT HEALTH SOURCE                                               B172817
MEDICAL GROUP,
                                                                     (Los Angeles County
       Plaintiff and Appellant,                                      Super. Ct. No. SC076909)

       v.

SAINT JOHN’S EMERGENCY
MEDICINE SPECIALISTS, INC., et al.,

      Defendants and Respondents.
      APPEAL from judgments of the Superior Court of Los Angeles County.
Gerald Rosenberg, Judge. Affirmed in part, reversed in part, and remanded.
      Miller & Holguin, Kenneth E. Johnson and Stacey L. Zill for Plaintiffs and
Appellants.


      Fulbright & Jaworski, Carol K. Lucas; Buchalter, Nemer, Fields & Younger,
Carol K. Lucas; and Buchalter Nemer for California Association of Physicians Groups as
Amicus Curiae on behalf of Plaintiffs and Appellants.


      Law Offices of Andrew H. Selesnick and Andrew H. Selesnick for Defendants and
Respondents.


      Catherine I. Hanson and Astrid G. Meghrigian for California Medical Association
as Amicus Curiae on behalf of Defendants and Respondents.


                            ___________________________


      Plaintiffs and appellants, Prospect Medical Group, Inc., Prospect Health Source
Medical Group, Primary Medical Group, Inc., doing business as Sierra Medical Group
(collectively Prospect), appeal judgments in favor of defendants and respondents,
Northridge Emergency Medical Group and Saint John’s Emergency Medicine Specialist,
Inc. (collectively Emergency Physicians), following an order1 sustaining separate
demurrers without leave to amend. In February 2006, we issued an opinion (first
opinion) affirming in part and reversing in part. In January 2009, however, the California
Supreme Court reversed our judgment and remanded the case to this court for further


1       The record does not clearly indicate whether there were separate orders sustaining
the demurrer in Case No. SC076909 and the demurrer in Case No. BC300850, or whether
the trial court entered one order sustaining both demurrers.


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proceedings. (Prospect Medical Group, Inc. v. Northridge Emergency Medical Group
(2009) 45 Cal.4th 497 (Prospect).) We now apply the holding of Prospect and affirm in
part, reverse in part, and remand the case to the trial court for further proceedings.
                                      BACKGROUND
       The facts and procedural history of this case are set forth in detail in the first
opinion and in Prospect. We incorporate by reference the factual and procedural
background section of Prospect. The following is a brief summary of the facts.
       Prospect is a “delegate” of health care service plans (plans) and is statutorily
obligated to pay for emergency medical services provided to patients who have
subscribed to those plans (Prospect members). In general, Prospect members are
provided medical services by health care providers who have a contractual relationship
with Prospect. However, Prospect members may seek emergency medical care from
emergency room physicians who do not have a contract with Prospect. When that occurs,
Prospect must reimburse the “non-contracted” health care providers who provided
services to Prospect members.
       Emergency Physicians are health care providers and are statutorily required to
provide emergency care without regard to an individual’s insurance or ability to pay.
Prospect and Emergency Physicians do not have an express contract. Emergency
Physicians are thus non-contracted providers. In 2002 and 2003, Emergency Physicians
provided emergency room health care services to Prospect members.
       Prospect and Emergency Physicians agree that Prospect was required to pay
Emergency Physicians for their services to Prospect members. The parties, however,
dispute the amount Prospect was required to pay. Prospect contends that it was only
required to pay Emergency Physicians 100 percent of the Medicare allowable rate for
medical procedures. Emergency Physicians contend that Prospect was required to
reimburse them at a higher rate.
       Emergency Physicians engaged in a practice known as balance billing. Under this
practice, Emergency Physicians billed Prospect members the difference between the
charges they claim were reasonable and payments they received from Prospect.

                                               3
                                       DISCUSSION
       1.     The First Cause of Action
       Prospect’s first cause of action was for declaratory relief. Prospect sought a
declaration that Emergency Physicians are only entitled to reasonable compensation and
that Emergency Physicians must accept the Medicare rate as a reasonable rate for the
services rendered. In our first opinion, we held that Prospect is not entitled to such a
declaration and affirmed the trial court’s order sustaining of the demurrers to the first
cause of action. Because the Prospect opinion did not address Prospect’s first cause of
action, our holding in the first opinion regarding the first cause of action stands. We
incorporate our discussion in the first opinion regarding the first cause of action herein.
       2.     Leave to Amend the First Cause of Action
       Our first opinion also addressed whether Prospect has standing to litigate whether
Emergency Physicians sought more than a reasonable amount as reimbursement for the
medical services rendered. We held that Prospect has standing to litigate that matter, and
thus should have been granted leave to amend its first cause of action for declaratory
relief. Because the Prospect opinion did not address the standing issue, our holding in
the first opinion regarding that issue stands. We incorporate our discussion in the first
opinion regarding the standing issue herein.
       3.     The Second Cause of Action
       Prospect’s second cause of action alleged that Emergency Physicians’ practice of
balance billing violated Business and Professions Code section 17200 because it was
unfair, unlawful and/or fraudulent. Specifically, Prospect alleged that balance billing
violated Health and Safety Code section 1379, which is part of the Knox-Keene Health
Care Service Plan Act of 1975, Health and Safety Code section 1340 et seq. (Knox-
Keene).
       The trial court sustained without leave to amend Emergency Physicians’
demurrers to Prospect’s second cause of action on the ground that balance billing did not
violate Knox-Keene or any other statute or regulation. We affirmed the trial court in that
regard and held that Emergency Physicians could engage in such billing. The California

                                               4
Supreme Court, however, held that such billing was prohibited under Knox-Keene.
(Prospect, supra, 45 Cal.4th at p. 502.) The holding of Prospect requires this court to
reverse the trial court’s judgments dismissing Prospect’s second cause of action.
                                     DISPOSITION
       The judgments dismissing Prospect’s first cause of action for declaratory relief are
reversed. On remand, the trial court is directed to enter an order allowing Prospect to
amend the complaints to seek a declaration regarding whether Emergency Physicians
charged more than a reasonable rate for specific medical procedures.
       We affirm the judgments denying Prospect’s claim for declaratory relief to require
Emergency Physicians to charge no more than 100 percent of the Medicare rate as an
across-the-board rate.
       We reverse the judgments dismissing Prospect’s second cause of action for
violations of section 17200 of the Business and Professions Code.
       No costs are awarded.


       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS


                                                 KITCHING, J.

We concur:


              CROSKEY, Acting P. J.



              ALDRICH, J.




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