Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan (November 4, 2021, B304183)
Hospitals billed Kaiser for emergency services provided to Kaiser’s enrollees. Kaiser paid about half of the billed amount after determining that amount was the reasonable value of those services. The hospitals sued and a jury found that Kaiser had paid the hospitals the reasonable value of the emergency services. The hospitals appealed.
The Court of Appeal affirmed, declining to recognize a tort duty requiring health plans to avoid paying less than the “reasonable and customary” value of medical services. The court found no substantial social benefit from recognizing a tort duty since the traditional quantum meruit theory of recovery already provided adequate relief. The court also found that recognizing a tort duty would create a strong incentive for health plans to overcompensate healthcare providers–in conflict with the Knox-Keene Act’s purpose of ensuring low-cost health care.
The court then held that the value of the emergency medical services provided to Kaiser was properly measured by the price that a “hypothetical willing buyer” would pay a “hypothetical willing seller.”
