Pac. Bay Recovery, Inc. v. Cal. Physicians' Servs., Inc.

*203 California Physicians' Services dba Blue Shield of California (Blue Shield) is a health care service plan subject to the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), Health and Safety Code section 1340 et seq. 1 Pacific Bay Recovery, Inc. (Pacific Bay) is a medical provider that treats substance abuse and narcotic addiction. Blue Shield contracts with certain medical groups and providers to provide medical care at reduced costs through a network of provider *565 contracts. (§ 1342.6.) Pacific Bay had no provider contract with Blue Shield during the time at issue in this matter. Thus, Pacific Bay was an out-of-network provider.

Pacific Bay treated an individual who was a subscriber to a Blue Shield health plan. It submitted invoices to Blue Shield for payment for the services rendered to the subscriber in the amount of $3,500 each of the 31 days of treatment. Blue Shield paid Pacific Bay for six days of treatment at the billed rate of $3,500 per day. Pacific Bay contends it was underpaid and brought suit against Blue Shield to recover the additional amount it claimed to be owed. The court sustained Blue Shield's demurrer to the first amended complaint…