People v. Kaiser Foundation Health Plan, Inc. (Sept. 30, 2024, D081262) __ Cal.App.5th __, 2024 WL 4351122, ordered published Oct. 22, 2024
The People (acting through the San Diego City Attorney) filed a complaint against Kaiser Foundation Health Plan alleging it violated the unfair competition law (UCL) and false advertising law (FAL) by failing to maintain and update accurate provider directories (PDs) as required by Health and Safety Code section 1367.27. The People sought civil penalties, restitution, and provisional and final remedies against Kaiser, including an injunction prohibiting further unlawful activities. The trial court found that, in enacting section 1367.27, “the Legislature opted not to impose accuracy requirements,” but instead established a procedure for ensuring accurate and up-to-date PDs. The court therefore abstained from adjudicating the People’s claims and granted Kaiser’s motion for summary judgment. The People appealed.
The Court of Appeal reversed, holding that the trial court erred in abstaining. The appellate court explained that section 1367.27 contains clear statutory requirements regarding PD accuracy, in addition to the process requirements cited by the trial court, and that trial courts have authority to adjudicate UCL claims based on alleged violations of these accuracy requirements. Evaluating the factors for judicial abstention, the court found the People’s enforcement action would complement, not assume or interfere with, the regulatory functions of the California Department of Managed Health Care. The court then found that adjudicating the UCL claim did not require the trial court to evaluate and determine complex economic policy best left to the Legislature. The trial court simply had to enforce clear statutory provisions reflecting policy decisions the Legislature had already made. Finally, the court concluded that the requested relief would not unnecessarily burden the trial court since it did not require continuous monitoring, and there was no other effective means of redress. The abstention decision on the FAL cause of action was based on the same faulty premise as the UCL abstention decision, and was therefore reversed as well.
