Unfair Business Practices

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FairHealth.org          CalPERS’ & Anthem’s Breach of PEMCHA & Knox Keene Act

Breach of Contract     Breach of Fiduciary Duties     Unfair Business Practices

Administrative Process, Tolling, Delayed Accrual

Unfair Business Practices

 

Heinz and the proposed class assert claims under the UCL which permits a cause of action to be brought if CalPERS and/or Anthem’s practice violates some other law. In effect, the CalPERS and/or Anthem’s “unlawful” activity also makes them liable under § 17200 for a violation of the underlying law. [Kasky v. Nike, Inc. (2002) 27 C4th 939, 950, 119 CR2d 296, 304Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 C4th 163, 180, 83 CR2d 548, 561Farmers Ins. Exch. v. Sup.Ct. (1992) 2 C4th 377, 383, 6 CR2d 487, 491.

CalPERS and Anthem violate the insurance code and insert terms into the contract that do not exist. CalPERS and/or Anthem violate PEMCHA, the Knox Keene Act, the Constitution, fiduciary duties, the Probate Code, insurance standards, and contractual terms that make them liable under UCL. See Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 CA4th 700, 717,—Ins.C. § 11580.2; AICCO, Inc. v. Insurance Co. of North America (2001) 90 CA4th 579, 589,—insurer’s transfer of “asbestos and environmental” coverages to another company without obtaining policyholders’ consent in violation of CC § 1457; Community Assisting Recovery, Inc. v. Aegis Ins. Co. (2001) 92 CA4th 886,—alleged violations of Ins.C. §§ 2070, 2071; Farmers Ins. Exch. v. Sup.Ct. (1992) 2 C4th 377,—violation of Ins.C. §§ 1861.02 and 1861.05; Walker v. Allstate Indemnity Co. (2000) 77 CA4th 750,—violation of Ins.C. § 1861.05; see also Chabner v. United of Omaha Life Ins. Co. (9th Cir. 2000) 225 F3d 1042, 1050—Ins.C. § 10144.

CalPERS and/or Anthem assert a contract right to establish a reduced “Allowable Amount” for out-of-network services under the PPO coverage even though there is no right to that in contract. It is a violation of the UCL’s proscription against “unlawful” practices to assert a contractual right[1] that is not conferred in the contract or to include an unlawful provision in a contract even if one never intends to enforce that provision. [People v. McKale (1975) 25 C3d 626, 635; Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 CA4th 1284,; People v. Custom Craft Carpets, Inc. (1984) 159 CA3d 676, 683-684,; but cf. Olsen v. Breeze, Inc. (1996) 48 CA4th 608, 622-623.

CalPERS and/or Anthem acts violate the Unfair Business Practices Act that defines “unfair competition” as any “unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising …” (§17200.)

CalPERS’ and/or Anthem’s acts that place unlawful or unenforceable terms in form contracts are violations of §17200. (People v. McKale (1979) 25 C3d 626, 634-635, [asserting a contractual right that one does not have]; Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 CA4th 1284People v. Custom Craft Carpets, Inc. (1984) 159 CA3d 676, 683-684.) Systematically breaching a form contract affecting many consumers is a violation of §17200 (Orkin Exterminating Co., Inc. v. FTC (11th Cir. 1988) 849 F2d 1354, 1367-1368), or many producers (Allied Grape Growers v. Bronco Wine Co. (1988) 203 CA3d 432, 450-451). Taking advantage of a vulnerable group of consumers is a violation of § 17200. (See FTC v. Keppel & Bros. (1933) 291 US 304; Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 C3d 197.) Overreaching clauses in standard contracts is a violation of § 17200. (See AMREP Corp. (1983) 102 FTC 1362, aff’d (10th Cir. 1985) 768 F2d 1171 [forfeiture clauses in adhesion contracts].) Seller’s systematic breach of a standard-form contract is a violation of § 17200. (See Orkin Exterminating Co., Inc. v. FTC (11th Cir. 1988) 849 F2d 1354.)

CalPERS’ and/or Anthem’s business practices are “fraudulent” within the meaning of §17200 as “members of the public are likely to be deceived.” [Committee on Children’s Television v. General Foods Corp. (1983) 35 C3d 197, 211; accord, Kasky v. Nike, Inc. (2002) 27 C4th 939; and Prata v. Sup.Ct. (2001) 91 CA4th 1128, 1144,] CalPERS and/or Anthem’s advertisements of the PPO coverage potentially deceptive effect is measured by the audience to which it is addressed. Under the UCL and False Advertising statute, this will usually be the “reasonable person” standard. (Committee on Children’s Television, supra, 35 C3d at 214.)

CalPERS’ and/or Anthem’s statements made in connection with the sale of goods or services constitutes “advertising.” (Chern v. Bank of America (1976) 15 C3d 866, 875-876.) Advertising is “unfair, deceptive, untrue or misleading” if “members of the public are likely to be deceived.” (Committee on Children’s Television, supr 35 C3d 197, 211.)

Consumers Legal Remedies Act. CalPERS and/or Anthem violate a key provision of the Consumers Legal Remedies Act which prohibits “inserting an unconscionable provision in the contract.” [CC § 1770(s)] Thus, a violation of § 1770(s) could constitute an “unlawful” or “unfair” business practice under § 17200.

 

[1] CalPERS and/or Anthem violate the disclosure and terms in the contract. Section 17200 claims may be brought to correct business practices that violate rules adopted by prior court decisions, even if the law at issue has never been codified. [Bondanza v. Peninsula Hospital & Medical Center (1979) 23 C3d 260, 266-268,—holding that the hospital’s 33% surcharge on delinquent accounts was contractual penalty and thus “unlawful” under rule previously adopted in Garrett v. Coast & Southern Fed. Sav. & Loan Ass’n (1973) 9 C3d 731,; accord, Community Assisting Recovery, Inc. v. Aegis Ins. Co. (2001) 92 CA4th 886, 891,]