In County of Santa Clara v. Superior Court (Doctors Medical Center of Modesto), published April 26, 2022, the Sixth District Court of Appeal issued a writ directing a trial court to sustain the petitioner county's demurrer to the real party hospitals' complaint. The county operates a health care plan licensed under the Knox-Keene Health Care Service Plan Act, Health & Safety Code section 1340 et seq. The hospitals provided emergency services to members of the county's healthcare plan. The hospitals submitted claims to the county for over $144,000, the amount the hospital alleges is the reasonable value of the services provided. The county reimbursed the hospital approximately $28,500. The hospitals sued the county for reimbursement. It asserted tort and implied-in-law causes of action. The trial court sustained the demurrer without leave to amend as to the tort causes of action, and granted leave to amend the breach of implied contract cause of action. In the operative complaint, the hospital asserted a single cause of action alleging implied-in-fact and implied-in-law contracts with the county. The trial court overruled the demurrer to the complaint, ruling that the hospitals stated facts sufficient to constitute a cause of action for quantum meruit or implied-in-fact contract.
The appellate court ruled that the trial court erred. The implied-in-law contract/quantum meruit claim is barred by Government Code section 815, which immunizes public entities from liability on common law theories. Case law establishes that section 815 bars quantum meruit actions against public entities. The appellate court rejected the hospitals' argument that the Knox-Keene Act imposed a mandatory duty upon the county that gave rise to a cause of action under Government Code section 815.6. Section 815.6's application requires that the enactment be obligatory, requiring that a particular action be taken or not taken; and that if the public entity or officer is under an obligation to function, that the function itself not involve the exercise of discretion. While Health & Safety Code section 1371.4(b) imposes a duty on the county to reimburse the hospitals, the statute calls for reimbursement of the "reasonable and customary value" of the services performed. The statute therefore gives the county discretion in the amount of reimbursement to pay. The section therefore does not create a purely mandatory duty, and does not authorize the hospitals' implied-in-law contract cause of action. No other statute authorizes the hospitals' action for damages. The complaint also alleges an implied-in-fact contract. Because Government Code section 815 does not affect liability based on contract, it does not preclude an action for breach of an implied-in-fact contract. But the single cause of action is ultimately based on alleged breach of a noncontractual duty--the county's alleged obligation under county ordinances and the Knox-Keene Act to pay for the care and treatment the hospitals rendered. Because the suit is based on alleged breach of statutory duty rather than alleged breach of promise, its nature is tortious and the county is immune from suit under section 815. Because the hospitals failed to show how they could amend the complaint to save the action, they were not entitled to leave to amend.
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