Desert Healthcare District v. Pacificare, FHP, Inc.

Desert Healthcare District (Desert Healthcare) appeals from an order dismissing its second amended complaint following an order sustaining the demurrer of PacifiCare, FHP, Inc. (PacifiCare). Desert Healthcare alleges that PacifiCare (1) violated Health and Safety Code section 1371 of the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act) (Health & Saf. Code, § 1340 et seq.); 1 (2) acted negligently; and (3) violated the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). We find no merit to Desert Healthcare’s claims and affirm.

Statement of Facts

Desert Healthcare is the owner of a hospital in Palm Springs. PacifiCare is a health care service plan licensed to do business under the Knox-Keene Act. PacifiCare contracted with Desert Physicians Association (DPA) to provide medical services to PacifiCare’s subscribers. Although the complaint failed to fully describe the PacifiCare/DPA contract, the demurrer and response adequately clarified that it was a capitation agreement, i.e., PacifiCare paid DPA a flat fee per person to provide physicians and obtain hospital services for PacifiCare’s subscribers. DPA subsequently contracted with Desert…