The County of Santa Clara’s health insurance plan allows for the County to send their plan members to the Doctors Medical Center of Modesto for medical services. The Center then bills the County for the services performed. The County only partially paid one such bill. The Center sued the County for the remaining balance, arguing a theory of quantum meruit. Quantum meruit is a common law theory under which the law implies a promise to pay for services performed where a contract does not establish the amount due. The County filed a demurrer seeking to dismiss the complaint.
The trial court denied this demurrer. The County then filed a petition for writ of mandate with the Court of Appeal. The Court of Appeal granted the petition and filed a writ of mandate directing the trial court to reverse its order, sustain the demurrer, and dismiss the Center’s lawsuit.
The Court of Appeal decided in favor of the County because of the governmental immunity granted to public entities by the Government Claims Act. Under Government Code Section 815, a public entity is not liable for an injury which arises out of an act or omission of the public entity or a public employee or any other person.
There are exceptions to this immunity. Section 815.6 states that “Where a public entity is under a mandatory duty imposed by a [statute] that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury . . . caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty.” In other words, if a statute imposes a mandatory duty (as opposed to an optional or discretional duty) on the public entity, and the public entity fails to discharge that duty, the public entity may be liable for any resulting injury.
Because the Government Claims Act generally immunizes public entities from common law claims, and a quantum meruit theory is a common law claim, the Court of Appeal held that the County was immune. However, the Center argued the exception noted above applied.
The Center pointed out that a provision of the Health and Safety Code of California directs entities to reimburse hospitals for emergency services and care provided to its enrollees. This is a mandatory duty imposed by a statute, and thus could trigger the 815.6 exception. Under this law, however, the amount of reimbursement is discretionary because the public entity can determine the reasonable value of the services rendered. Because the County did in fact reimburse the Center for some amount, the County fulfilled its mandatory duty and simply exercised its discretion to determine the reasonable value of the services rendered. The Court held that the above exception does not apply and the County was immune.
The Center’s final hope for recovery was predicated upon an implied contract theory. Because the Government Claims Act does not affect liability based on contract, this was a promising avenue for the Center. However, the Court of Appeal found that the Center’s claim of an implied contract was unfounded because its claim truly derived from a breach of a non-contractual duty, that is, the duty under the Health and Safety Code and other regulations to reimburse hospitals for the reasonable value of services performed.
The Court of Appeal granted the petition and filed a writ of mandate directing the trial court to reverse its order, sustain the demurrer, and dismiss the Center’s lawsuit.
County of Santa Clara v. Superior Ct., 77 Cal.App.5th 1018 (2022).
Note:
This case further illustrates the expansive protections afforded to public entities via the Government Claims Act. Common law claims and tort claims are generally barred by the Act, while contractual claims are not.