Metropolitan News-Enterprise


Tuesday, July 18, 2023


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CMA May Sue Aetna Under UCL to Enjoin Policy Relating to Patient Referrals—S.C.


By a MetNews Staff Writer


A private organization has standing to sue for injunctive relief under Business & Professions Code §17200 et seq. where it has incurred non-litigation expenses in seeking to thwart business practices that are “unlawful, unfair or fraudulent,” the California Supreme Court said in an opinion filed yesterday.

Under §17204 of that code, an association may sue under the Unfair Competition Law (“UCL”) if it “has suffered injury in fact and has lost money or property as a result of the unfair competition.” That language, the high court held in an opinion by Justice Kelli Evans, confers standing on the California Medical Association (“CMA”) to sue Aetna Health of California Inc., an insurer, to block it from retaliating against physicians who refer patients to out of-network providers.

CMA’s general counsel has reckoned that the association has devoted 200–250 hours of staff time to responding to a practice it deems to interfere with physicians’ exercise of their best medical judgment.

High Court’s Holding

Evans wrote:

“We hold that the UCL’s standing requirements are satisfied when an organization, in furtherance of a bona fide, preexisting mission, incurs costs to respond to perceived unfair competition that threatens that mission, so long as those expenditures are independent of costs incurred in UCL litigation or preparations for such litigation. When an organization has incurred such expenditures, it has ‘suffered injury in fact’ and ‘lost money or property as a result of the unfair competition.’ ”

She continued:

“In this case, which arises on appeal from summary judgment for the defense, the record discloses a triable issue of fact as to whether the plaintiff association expended resources in response to the perceived threat the health insurer’s allegedly unlawful practices posed to plaintiff’s mission of supporting its member physicians and advancing public health. The evidence was also sufficient to create a triable issue of fact as to whether those expenses were incurred independent of this litigation. For these reasons, the trial court erred in granting summary judgment for the defense. We therefore reverse the judgment of the Court of Appeal, which affirmed the grant of summary judgment.”

Grimes’s Opinion

The opinion reverses an April 28, 2021 decision by Div. Eight of the Court of Appeal for this district. The opinion, by Acting Presiding Justice Elizabeth A. Grimes, affirmed a judgment by Los Angeles Superior Court Judge Elihu M. Berle.

 Grimes said that if standing were accorded CMA, “then any organization acting consistently with its mission to help its members through legislative, legal and regulatory advocacy could claim standing based on its efforts to address its members’ injuries.” Alluding to Proposition 64, enacted by voters in 2004, she said the amendments to the UCL that were created “eliminated such representational standing.”

Disagreeing, Evans wrote:

“[W]we conclude that diversion of salaried staff time and other office resources can constitute the loss of ‘money or property’ within the meaning of section 17204.  Every organization, including CMA, has finite resources to devote to its mission.  If the organization uses staff time for a particular project, for example, it must either pull those hours from a different project or augment its staff.  Even if, as here, the personnel involved are paid on a salaried basis rather than by the hour, their time clearly holds economic value to the organization.  When staff are diverted to a new project undertaken in response to an unfair business practice, the organization loses the value of their time, which otherwise would have been used to benefit the organization in other ways.”

Purpose of Proposition

Proposition 64 was intended to end the use of the UCL to scare businesses, in particular small businesses, into paying up to avoid the costs of litigation. The Trevor Law Group had filed about 2,200 such suits.

“CMA is far from the type of disinterested plaintiff Proposition 64 sought to bar from suing under the UCL,” Evans commented, saying that, “in seeking an injunction against practices that caused it to divert its own resources,” the association has not brought a “shakedown lawsuit.”

The case is California Medical Association v. Aetna Health of California, 2023 S.O.S. 2498.


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