Governmental Claims Act Does Not Insulate Public Entities From Reimbursing Health Care Providers

CATEGORY: Client Update for Public Agencies
CLIENT TYPE: Public Employers
DATE: Aug 07, 2023

California’s Health and Safety Code requires hospitals and other medical providers to provide emergency medical services without regard to the patient’s insurance status or ability to pay. If the patient is enrolled in a health care service plan, the plan must reimburse the medical provider for providing such emergency care under the Knox-Keene Health Care Service Plan Act of 1975. If the plan does not have a contract with the medical provider that addresses the reimbursement rate, the plan must pay the provider the “reasonable and customary value” of the care.

Doctors Medical Center of Modesto, Inc., and Doctors Hospital of Manteca, Inc., (collectively, the Hospitals) provided emergency medical services to three individuals enrolled in a health care service plan the County of Santa Clara operated. The Hospitals submitted reimbursement claims, but the County paid only a portion of the claimed amounts. The Hospitals sued the County for the remaining amounts based on the Knox-Keene Act’s reimbursement provision.

The County relied on Section 815 of the Government Claims Act to justify its partial payment: “[e]xcept as otherwise provided by statute … [a] public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or any other person.” However, Section 814 of the Government Claims Act makes clear that “[n]othing … affects liability based on contract or the right to obtain relief other than money or damages against a public entity or public employee.”

The Hospitals sued the County for the payment.  They argued that the Knox-Keene Act’s reimbursement provision allows for reimbursement via an implied contract.

The County argued that the Section 815 immunity extended to all “non-contractual” claims for money or damages. The Hospitals countered that the Government Claims Act applies only to personal injuries, and did not bar an implied contract claim. They also maintained that their claim for reimbursement was mandated by the law and was not a claim for “money or damages” under Section 814.

The California Court of Appeal interpreted the Government Claims Act to determine the types of claims that receive governmental immunity. The Court consulted the legislative history and the text of the Governmental Claims Act and quickly determined that Section 814 does not shield public entities from liability based on contract. Because the Knox-Keene Act requires reimbursement to such an extent that a bona fide implied contract exists between the care provider and plan administrator, the Government Claims Act provided the County no immunity. Therefore, the Hospitals were entitled to collect the claimed reimbursements from the County.

County of Santa Clara v. Superior Court of Santa Clara, 14 Cal.5th 1034 (2023).

Note: This case serves as a helpful reminder that the Government Claims Act, in general, only applies to personal injuries and property damage and does not apply to contract or other forms of equitable relief that a claimant can pursue against a public entity.

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