San Diego Education Report
Former oncologist claims Kaiser Permanente pushed profits over patient care, files $7
million lawsuit
Aimee Green
Oregon Live
April 23, 2014

A former oncologist at Kaiser Permanente is suing the health care company for $7
million, claiming she had no choice but to quit her job after complaining the
organization was maximizing profits to the detriment of cancer patients.

Dr. Jennifer Lycette claims quality of care took a nosedive when Northwest
Permanente Medical Group hired Jeffrey Weisz as its president and executive medical
director in 2011. Weisz had previously worked for Kaiser in Southern California.

"During Dr. Weisz's tenure (in California), he established a reputation as a ruthless
administrator who found ways to minimize payrolls by shrinking staff while patient loads
skyrocketed, often leaving the remaining staff members trying to cope with impossible
patient demands which ultimately harmed Kaiser's patients," reads Lycette's lawsuit,
filed Tuesday in Multnomah County Circuit Court.

In an email statement, Kaiser spokesman Michael Foley said, "The care needs of our
members, patients, and customers come first. Allegations that claim otherwise are not
supported by fact.

"We're reviewing the lawsuit that was filed," he addied, "and will address its inaccurate
allegations through the judicial process."

The suit was filed by Lake Oswego attorney Roderick Boutin.

Lycette's suits claims that during a November 2012 meeting, Weisz ordered Kaiser's
Portland oncologists to cram an initial consultation and bone-marrow biopsy of patients
-- something that should take two to 2.5 hours and be done over two visits -- into one,
60-minute visit. Lycette’s suit states pain medication that must be taken orally takes 30
to 60 minutes to kick in, so a 60-minute visit would leave patients rushed and in pain.

Lycette "openly and respectfully voiced her concerns," and Weisz responded by
shouting at Lycette in "a very angry and threatening manner," her suit states.

Lycette's suit also claims she complained in April 2012 to the then-chief of medical
oncology, Nagendra Tirumali, about understaffing. She says patients were struggling
to schedule appointments and some chemotherapy patients were only seeing their
regular oncologist every two or three months.

Tirumali responded that Lycette was being “emotional,” according to a copy of an
email attached to the suit. Lycette’s suit characterizes Tirumali's response as a "veiled
attack" on her gender. Her suit states she later asked Tirumali whether he would have
accused a man of being "emotional" over the issue of understaffing.
Lycette, 40, worked for Kaiser for about seven years -- from 2006 until she resigned in
spring 2013 -- at its Interstate medical offices in North Portland and Sunnyside Medical
Center in Clackamas, according to her suit. Her suit states she had the highest patient
satisfaction rating, 89 percent, in her department.

Lycette’s suit alleges that before taking the job in 2006, she asked several Kaiser
doctors if they thought they could care for patients without feeling that financial
overhead compromised care. They assured her they could, the suit states.

Lycette’s suit states, however, that she became troubled by new Kaiser policies after
Weisz was brought in.

Among her other complaints, her suit alleges she expressed concerns about a ban on
referring patients to non-Kaiser specialists or clinical trials outside of Kaiser -- even
though doing so would be in the best interests of patients.

She resigned in April 2013, because of her oath to do no harm and her belief that
Kaiser policies were "making patients suffer," her suit states.

According to the website for Oregon Health & Science University, Lycette relocated to
Astoria and is now working at OHSU's Cancer Care Center at Columbia Memorial

Lycette is seeking $2 million in economic damages and $5 million in non-economic
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Kaiser Blamed for Slip of Knife, Bleed, Death
Courthouse News Service
April 18, 2014

MARTINEZ, Calif. (CN) - A woman died of a perforated bowel following hernia surgery
because doctors were "busy," her family claims in a lawsuit filed in Contra Costa
Superior Court.
Cynthia Black and Alyssa McCarty sued Kaiser Permanente International, Prescilla M.
Manglinong, R.N. and William Pao Cheung Ku, M.D. for the wrongful death of Delores
Burke was Cynthia Black's mother and Alyssa McCarty's step-grandmother, with
whom McCarty had lived since she was three years old, the complaint says.
Dr. Ku performed hernia repair surgery on Burke in December 2012, according to the
complaint. It says her bowel and small intestine were perforated during the operation.
"After the surgery, Ms. Burke had internal bleeding and/or fluid loss, as well as an
elevated white blood cell (WBC) count that indicated infection. However, no health
care professional adequately assessed and treated the resulting infection and blood
loss. In fact, her chart wrongly indicated that she was 'free of signs of infection.' This
failure to assess and treat her blood loss and infection occurred despite a number of
warning signs," the complaint continues.
Her white blood cell count climbed dramatically the day after the surgery and "her
post-operative intake of fluids was significantly higher than her output, which should
have resulted in a nurse or doctor evaluating her for internal bleeding and
responding appropriately. This did not occur," the complaint states.
"Later that day, Ms. Burke complained of what Nurse Manglinong described as
'unanticipated' pain. However, Nurse Manglinong told Ms. Burke that both her
surgeon and another doctor in the hospital were busy. As a result, her complaints
were not addressed, and she was merely told to take two pain pills," the complaint
By the time doctors operated again to repair the damage, "it was far too late. She had
slipped into a comatose state and never regained consciousness," it says.
Cynthia Black and Alyssa McCarty seek special and compensatory damages, loss of
Burke's care and economic support, prejudgment interest and a jury trial.
They are represented by Bradley R. Bowles and Nathaniel B. Duncan of Bowles &
Verna in Walnut Creek.
Blog posts Kaiser malpractice
Recent Kaiser cases
Former oncologist claims Kaiser Permanente pushed profits
over patient care, files $7 million lawsuit

"...Lycette’s suit states, however, that she became troubled by new Kaiser policies
after Weisz was brought in.

"Among her other complaints, her suit alleges she expressed concerns about a ban
on referring patients to non-Kaiser specialists or clinical trials outside of Kaiser -- even
though doing so would be in the best interests of patients.

"She resigned in April 2013, because of her oath to do no harm and her belief that
Kaiser policies were "making patients suffer," her suit states.

"According to the website for Oregon Health & Science University, Lycette relocated to
Astoria and is now working at OHSU's Cancer Care Center at Columbia Memorial
Courthouse News Service
November 19, 2014

Kaiser Ignored
Kidney Cyst,
Woman Claims

(CN) - Kaiser ignored a
kidney cyst that turned
out to be cancer, a
woman claims in the
Circuit Court for Howard
Loistene Lassiter sued
Kaiser Foundation
Health Plan of the
Mid-Atlantic States, Inc.,
seeking $5 million plus
interest, costs, attorney's
fees and a jury trial.
According to the lawsuit,
Lassiter had a CT scan of
her abdomen and pelvis
on Jan. 10, 2008. The
written report of her scan
stated, "Subcentimeter
hyperdense lesion
involving the mid left
kidney may represent a
hyperdense cyst, or other
etiology. Suggest
correlation with
sonography of the kidneys
or consider follow-up with
CT in three months to
assess for stability or
change," according to the
But the next day,
Lassiter's doctor
"informed Ms. Lassiter in
a letter that her most
recent CT revealed no
acute findings," the
complaint states. The
suggested follow-up
sonography or CT scan
did not happen, it says.
Over the next three
years, as Lassiter had a
variety of routine medical
appointments for various
conditions and
procedures, "nothing
was ever said of the
hyperdense lesion on
her left kidney nor did
any follow-up occur
concerning it," the
complaint states.
"On Jan. 11, 2011, Ms.
Lassiter reported to her
doctor that she was
experiencing lower back
pain covering a period of
three (3) weeks. She
stated that the pain had
expanded to the lower
right side, below her
stomach. She also
indicated that heat and
cold packs, Epsom salt
soaks, and medication
like Advil had not
resolved the pain. She
also mentioned that
upon urinating, she
experienced a burning
sensation and noticed
some blood," it
continues. (Parentheses
in complaint.)
Her doctor suggested a
kidney stone or infection,
according to the
complaint. However, after
a variety of tests over
the next month, Lassiter
was told she had a
kidney mass, much
larger than originally
seen in 2008,
"suspicious for neoplasm
(i.e. new and abnormal
growth, such as a
tumor). What had been a
millimeter in size (and not
monitored by Ms.
Lassiter's doctors) had
now grown to
centimeters, i.e., it grew
from .02 inches to 1.5
inches," the complaint
states. (Parentheses in
Lassiter says she told
her doctor she was upset
by the lack of monitoring
and discussion about the
cyst and options for
treating it. "Her doctor
informed her that she
never had conversations
with her about the cyst
because she did not
know about it until
recently! The doctor said
that 'zillions of people
have small cysts on their
kidneys - it is incredibly
common and not typically
worrisome,'" the
complaint states.
"Ms. Lassiter underwent
major surgery to remove
a part of her left kidney
in June 2011. The pre
and post operation pain,
stress, and anguish were
significant," the
complaint states.
"Sharing the news with
her family produced
more mental anguish
than Ms. Lassiter ever
experienced in her life.
The questions, fears,
anxiety, etc., were
overwhelming," it
continues. Lassiter says
she missed substantial
time from her work, her
vacation plans were
disrupted and she had to
give up competitive
"The strain on
relationships was also
palpable. Her husband
was gravely concerned
and questioned the
doctor about numerous
things. Sex was not
occurring, and this
lifestyle change was one
of many endured due to
Ms. Lassiter's medical
condition," the complaint
Even now, Lassiter says,
"she experiences
anguish about her
current and future health
condition, and she must
have follow-up medical
attention for the rest of
her life! Every pain or
discomfort causes
thoughts about cancer
returning, more surgery,
other organs being
cancerous, dying from
cancer, etc."
Loistene Lassiter is
represented by Rickey
Nelson Jones of
Kaiser Fired Woman in Retaliation, She Claims
Courthouse News Service
March 27, 2015

LOS ANGELES, Calif. (CN) - Kaiser managers said a woman was not trustworthy,
but retaliation was the reason she was fired, she claims in a Los Angeles Superior
Court complaint.
Belinda Branch began working at Kaiser's Parkview Building as a medical assistant
in 1978, earning "exemplary" job performance evaluations over the next 34 years.
In 2014, she became the focus of an investigation after reporting a Kaiser employee
for sharing a patient's private medical information with two other employees without
consent, in violation of the Health Insurance Portability and Accountability Act
This medical information released and obtained by the other employees contained
private and sensitive medical information including information from the General
Surgery File, according to the complaint.
Branch was called into two meetings where she was confronted by "compliance"
officers who she says were hostile, angry and repetitive in their interrogation-style
She was called into a third meeting on June 4, 2014 and told that, "her employment
with Kaiser was being terminated and gave [her] an ultimatum of either resigning
and be allowed to receive unemployment benefits or being fired and to not be able
to obtain unemployment benefits," the complaint states.
She added that the Human Resources department informed her that she had to
write the resignation letter immediately and that she would be fired if she didn't write
it using the exact wording provided to her. Branch says it was only under "coercion
and manipulation" that she did so.
"Ironically, plaintiff was being punished for following the law and reporting HIPAA
violations and for doing the right thing in looking out for the privacy rights of a
Kaiser patient," the complaint states.
When asked why she was being fired, Kaiser said she committed "egregious acts"
and that she "was no longer a trusted employee at Kaiser."
No action was ever taken against the employees who violated the federal law,
according to Branch who noted that all three are younger, "outside plaintiff's
protected class" and were "treated more favorably."
She says she believes Kaiser's actions against her were retaliatory, her
"whistle-blowing" used as a guise to fire her because she is older.
Branch was fired for false and pretextual reasons, in retaliation for her
whistle-blowing and based on age, the complaint states.
Branch sued Kaiser Permanente and Southern California Permanente Medical
Group for age discrimination under the Fair Employment and Housing Act, wrongful
termination and intentional infliction of emotional distress, and violation of state
labor laws.
She seeks general and special damages for loss of past and future earnings, and
benefits; damage to reputation; failure to advance employment; and loss of job
Branch is represented by Michael Carr, in Monrovia; and Roman Otkupman, in
Woodland Hills.

Courthouse News Service
August 13, 2015
$7M Claim Says Kaiser Delayed Cancer Diagnosis

PORTLAND, Ore. (CN) - A man's prostate cancer went undiagnosed for four
years, he and his wife claim in Multnomah County Circuit Court, seeking $7

Sam Pieh and his wife Kari Howland sued Kaiser Foundation Hospitals,
Northwest Permanente, P.C., Kaiser Foundation Health Plan of the Northwest
and a doctor, John Woo, for personal injury and medical malpractice. Pieh seeks
$5 million in non-economic damages and $1 million in economic damages.
Howland seeks $1 million in non-economic damages.

According to the lawsuit, Pieh was seen at Kaiser for prostate-related symptoms
in August 2010, May 2011, May 2012 and May 2013. Despite his elevated PSA
test levels, which were known in 2010 and 2011, no additional PSA test was
ordered in 2012 or 2013, according to the complaint.

"As a result of defendants' negligence, the diagnosis and treatment of Sam
Pieh's prostate cancer was unreasonably delayed, resulting in him developing
Stage III prostate cancer, having to undergo a radical prostatectomy, suffering
prolonged pain and distress, impotence and partial incontinence and having a
shortened life expectancy," the complaint states.

In addition to the $7 million, Sam Pieh and Kari Howland seek a jury trial. They
are represented by Patrick L. Block in Gresham.
More Kaiser lawsuits
Kaiser Nixes Interpreter for Emergency Patient
Courthouse News Service
January 22, 2016                

 HAYWARD, Calif. (CN) - Kaiser refused to get a sign language interpreter for an
emergency room patient, worsening her outcome, she claims in a private attorney
general action.
 Kristina and Gary Lundstrom, a couple who self-identify as "deaf" and are
considered "disabled," sued Fremont Hospital; Pooryi S. aka Poorvi S.; Vaseep S.
Kahlon MD; Kaiser Permanente Redwood City Medical Center; Kaiser
Permanente; The Permanente Medical Group Inc. and Kaiser Foundation
Hospitals in Alameda County Superior Court, Jan. 15.
 Mrs. Lundstrom was in the emergency room and then hospitalized for three days
without being able to effectively communicate with her doctors because she and
her husband were deprived of an American Sign Language interpreter, the
couple says.
 Yet, despite her distress at not being understood, and after repeated requests
for an interpreter echoed by her family, none was provided the Lundstroms say.
 Moreover, Kaiser did not have policies or procedures for providing a
sign-language interpreter or other auxiliary aids and services, which the
Lundstroms also requested, the suit claims. Kaiser also did not relay to plaintiffs
or their non-deaf family members that the establishment was legally required to
provide aids and services toward patient communication, it continues.
 The hospital must provide all patients full and equal access under the
Americans with Disabilities Act, and the opportunity to "effectively communicate,"
under California statutes, since it receives government funding, the lawsuit states.
 Kaiser's action, or lack thereof, "manifests a deliberate indifference rising to the
level of an intentional act to discriminate against plaintiff and persons similarly
situated," it continues.
 The lapse resulted in "unnecessarily prolonging her hospitalization, compelling
her to incur unnecessary medical expenses and for them both to suffer physical
and emotional injuries as a direct result of the above-mentioned incident, thus
causing them each humiliation, fear, fright, anger, disappointment,
embarrassment, exclusion, degradation and overall emotional distress," the
complaint states.
 They also claim that each watching each other's distress caused "severe and
debilitating injuries."
 The Lundstroms sue for disability discrimination, unfair business practices,
negligence, negligence per se, negligent infliction of emotional distress and loss
of consortium. They seek declaratory relief and an injunction to correct the
violations, special, general, and statutory damages, punitive damages, attorney's
fees and costs and interest.
 The Lundstroms request a jury trial and are represented by Charles S.
Roseman and Richard D. Prager of San Diego.
United States of America et al v. Kaiser
Foundation Health Plan, Inc.

Case Number: 2:14-cv-08051
California Central
Nature of Suit:
Other Statutes:
False Claims Act
Judge: John A. Kronstadt
Jan. 1, 2011
Additional documents may be available in Pacer.

   Kaiser Foundation Health Plan, Inc.
   Represented by:
      Nimrod Haim Aviad, Crowell and Moring LLP
      Shannon Barnard, Crowell and Moring LLP
      Jason M Crawford, Crowell and Moring LLP
      Beong-Soo Kim, Kaiser Foundation Health Plan Inc
      David W O'Brien, Crowell and Moring LLP
   Graham Mouw
   Represented by:
   Peter A Binkow, Glancy Prongay and Murray LLP
   Joshua Lon Crowell, Glancy Prongay and Murray LLP
   Kevin F Ruf, Glancy Prongay and Murray LLP
   Leanne Heine Solish, Glancy Prongay and Murray LLP

   United States of America

   Represented by:
   David K Barrett, AUSA - Office of US Attorney
   Shana T Mintz, AUSA - Office of the US Attorne
News, information and ideas about our
education system
by Maura Larkins
United States of
America et al v. Kaiser
Foundation Health
Plan, Inc. et al

Plaintiff: United States of
America, Mojgan Faraji and
David Sweigert

Defendant: Kaiser Foundation
Health Plan, Inc., Kaiser
Foundation Hospitals, Steve
Madeiros, Mary Wallace, David
Peterson and Randy Powell

Case Number: 3:2012cv06518
December 26, 2012

Court: California Northern
District Court

Office: San Francisco Office
County: San Francisco
Presiding Judge: Joseph C.
Nature of Suit: Other
Cause of Action: 31:3729
Jury Demanded By: Plaintiff

Case No. 12-cv-03896-WHO.

INC., Defendant.

United States District Court, N.D. California.

August 28, 2013.

United States of America, Plaintiff, represented by Charles Theodore Mathews , The
Mathews Law Group, Erica Blachman Hitchings , United States Attorney's Office, George
Stephen Azadian , The Mathews Law Group & Kimberly Friday , United States
Department of Justice.

State of California, Plaintiff, represented by Charles Theodore Mathews , The Mathews
Law Group, George Stephen Azadian , The Mathews Law Group & Brian John Keats ,
California Department of Justice.

Protransport-1, LLC, Plaintiff, represented by Charles Theodore Mathews , The Mathews
Law Group & George Stephen Azadian , The Mathews Law Group.

Kaiser Foundation Health Plan, Inc., a corporation, Defendant, represented by John
Russell Tate , Davis Wright Tremaine LLP, Gwendolyn L. Fanger , Davis Wright
Tremaine LLP & Jeffrey Bruce Coopersmith , Davis Wright Tremaine LLP.

Re: Dkt. Nos. 18, 19

WILLIAM H. ORRICK, District Judge.

On August 21, 2013, the Court heard argument on defendant's Motion to Dismiss and
Motion to Strike. For the foregoing reasons, the Court GRANTS in part and DENIES in
part both the Motion to Dismiss and the Motion to Strike.

Plaintiff ProTransport-1, LLC filed this complaint on behalf of itself, the United States, and
the State of California against Kaiser Foundation Health Plan, Inc. Plaintiff asserts causes
of action for violations of the False Claims Act ("FCA," 31 U.S.C. § 3729(a)(1)), violations
of the California False Claims Act (Cal. Govt. Code § 12651(a)), violation of California
Health and Safety Code § 1278.5, violations of California's Unfair Competition Law
("UCL," Cal. Bus. & Prof. Code § 17200), breach of the implied covenant of good faith
and fair dealing, quantum meruit, and unjust enrichment/restitution. Docket No. 1. All of
the claims stem from ProTransport's allegations that Kaiser refused to pay ProTransport
for its services transporting Kaiser patients with End Stage Renal Disease (ESRD) to and
from dialysis treatments and instead required ProTransport to seek reimbursement for its
services from Medi-Cal. Complaint ¶¶ 34-39. ProTransport alleges that under the
Medicare Act and its implementing regulations, Kaiser was required to pay ProTransport
in the first instance, and that requiring plaintiff to seek reimbursement from Medi-Cal was
improper and a fraud. Id. ProTransport also alleges that after its representatives
complained to Kaiser about its practice, Kaiser retaliated against ProTransport by
refusing to pay for any transports made by ProTransport and excluding ProTransport
from bidding to provide future services to Kaiser. Id., ¶¶ 42-43, 46, 50-51. In March 2013,
the United States and California declined to intervene in the action, and the Court on
April 2, 2013 ordered the Complaint served on Kaiser. Docket No. 23.

Kaiser now moves to dismiss the Complaint and strike allegedly immaterial and improper
references from the same. In response to the motion to dismiss, plaintiff agreed to
dismiss seven out of the ten claims, and opposes dismissal of only the claim under the
federal False Claims Act (31 U.S.C. § 3729(a)(1)(D)), violation of the anti-retaliation
provision of California Government Code section 1278.5, and violation of the UCL. See
Docket No.29 (Notice of Voluntary Dismissal of Claims); Plaintiff's Opposition at 1, 7.1

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint
if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6)
motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is
plausible on its face." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A claim is
facially plausible when the plaintiff pleads facts that "allow the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged." See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be "more than
a sheer possibility that a defendant has acted unlawfully." Id. While courts do not require
"heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a
right to relief above the speculative level." See Twombly, 550 U.S. at 555, 570.

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the
Court accepts the plaintiff's allegations as true and draws all reasonable inferences in
favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987).
However, the court is not required to accept as true "allegations that are merely
conclusory, unwarranted deductions of fact, or unreasonable inferences." See In re
Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).
A. False Claims Act

Plaintiff's FCA claim is brought under 31 U.S.C. section 3729(a)(1)(D) which provides for
FCA liability when an entity or person "has possession, custody, or control of property or
money used, or to be used, by the Government and knowingly delivers, or causes to be
delivered, less than all of that money or property." In the Complaint, plaintiff alleges that
Kaiser violated this section of the FCA ("Reverse False Claims," Complaint at 14) by
receiving and controlling money of the federal government and knowingly failing to
deliver less than the full sum of that money "for the benefit of its patients," when it
required ProTransport to seek payment from Medi-Cal. Complaint, ¶ 54. That conduct,
ProTransport alleges, amounted to false or fraudulent claims incurred by the United
States. Id. ¶ 55. In its Opposition, plaintiff argues that its FCA claim is a "implied false
certification" claim, which arises when an entity has "obligated itself to complying with a
law, rule or regulation" and that obligation is implicated by submitting a claim for payment.
Oppo. Br. at 11 (quoting Ebeid v. Lungwitz, 616 F.3d 993 (9th Cir. 2010)).
1. Subject Matter Jurisdiction and Administrative Exhaustion

As an initial matter, Kaiser argues that plaintiff's FCA claim is simply a disguised attempt
to secure payment for its services, and as such, the case "arises under" the Medicare Act
and must be dismissed for failure to exhaust Medicare's administrative procedures.2 Do
Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1141 (9th Cir. 2010). ProTransport responds
that this claim is not one for reimbursement, but one to secure a recovery for the United
States as a result of Kaiser's false claims. ProTransport argues that FCA claims are not
subject to the administrative exhaustion.

As the Ninth Circuit has noted: "the Supreme Court has identified two circumstances in
which a claim `arises under' the Medicare Act: (1) where the `standing and the
substantive basis for the presentation of the claims' is the Medicare Act . . . and (2)
where the claims are `inextricably intertwined' with a claim for Medicare benefits." Uhm,
620 F.3d at 1141 (quoting Heckler, 466 U.S. at 614-15). The Ninth Circuit has also found
another category of cases that "arise under" the Act, "those cases that are "`[c]leverly
concealed claims for benefits.'"" Id. (quoting Kaiser v. Blue Cross, 347 F.3d 1107, 1112
(9th Cir. 2003)).

In support of its argument that its FCA claim does not "arise under" the Medicare Act,
plaintiff relies primarily on United States v. Blue Cross & Blue Shield (In re ex rel Body),
156 F.3d 1098 (11th Cir. 1998) and United States v. Tenet Healthcare Corp., 343 F.Supp.
2d 922, 928 (C.D. Cal. 2004). In Body, a former employee of the defendant brought a
FCA action, asserting that defendant had fraudulently submitted inflated claims for
reimbursement under Medicare. The Court noted that section 405(h) was intended to
allow "the administrative process the first opportunity to resolve disputes over eligibility or
the amount of benefits awarded under the Act" and prevent "beneficiaries and potential
beneficiaries from evading administrative review by creatively styling their benefits and
eligibility claims as constitutional or statutory challenges to Medicare statutes and
regulations." Id. at 1103-04. The Court distinguished the FCA claim at issue there
because actions "which do not seek payment from the government and could not be
brought under section 405, are therefore not barred by subsection 405(h)." Id. at 1104.
The Court concluded that because the standing and basis of the claim alleged was the
FCA and not the Medicare Act — although the defendant's application of Medicare rules
and regulations "clearly would be determinative of whether false claims were, in fact,
submitted" — and because the plaintiff's suit could not go forward under the
administrative review process, the action was not barred by section 405(h). Id. at 1105-

In Tenent, the United States sued healthcare providers seeking reimbursement of monies
the government paid to the providers for Medicare services that were billed at higher-
rates than appropriate. The Court found that the government's standing was rooted in
the "False Claims Act and similar common law doctrine, which also provide the
substantive basis for relief." Id. at 927. The Court concluded that:
[s]ince the Court is not faced with a claim for reimbursement from a dissatisfied provider
that should be channeled through the administrative process, this case does not `arise
under' the Medicare Act. [] Rather, because the government's action is predicated on the
submission of inaccurate and misleading claims, the common law, not the Medicare Act,
provides both standing and the substantive basis for the claim.

Id. at 928.

As in Body and Tenent, here the FCA and not the Medicare Act provide both standing
and the substantive basis for ProTransport's claim. While Kaiser argues that
ProTransport could seek a determination of whether the transports at issue were covered
by Medicare (and should have been paid for by Kaiser in the first instance) through the
administrative claims resolution procedures,3 Kaiser does not argue or explain how the
FCA claim asserted on behalf of the United States could be pursued through the
administrative procedures.

Kaiser relies on Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010). In that
case the Ninth Circuit determined that breach of contract and unjust enrichment claims
based on a plan's failure to provide prescription drug coverage despite plaintiffs'
payment of premiums "arose under" the Medicare Act and were subject to administrative
exhaustion. The fact that plaintiffs were not seeking coverage under the plan or
reimbursement of lost benefits, but instead seeking breach of contract and unjust
enrichment damages, did not alter the Court's conclusion because "at bottom" the
plaintiffs were complaining about the denial of a benefit despite their payment of
premiums. Id. at 1142-43. The Court found that the breach of contract claim was simply,
"a backdoor attempt to enforce the Act's requirements and to secure a remedy for
Humana's alleged failure to provide benefits." Id. at 1143. Finally, the Court noted that
plaintiffs failed to allege any injury "that could not be remedied through the retroactive
payment of Medicare drug benefits" and concluded that plaintiffs' "claim for benefits could
have been remedied through the Act's administrative review process." Id. at 1144.

Here, as noted above, ProTransport was actually paid for the services it contends were
covered by Medicare, albeit by Medi-Cal. Therefore, payments to ProTransport for
services provided in the past are not at issue. Nor are payments that might be made in
the future, as ProTransport was allegedly barred by Kaiser from bidding to provide future
services. Complaint, ¶¶ 50-51. Moreover, the nature of the claim at issue — False Claims
Act — is fundamentally different than the breach of contract and unjust enrichment claims
at issue in Uhm. Here, there is no indication that the claims asserted on behalf of the
United States — return of monies paid as premiums to Kaiser — could be addressed in
the administrative process.

Defendant also relies on Kaiser v. Blue Cross, 347 F.3d 1107 (9th Cir. 2003). There,
plaintiffs brought claims alleging violations of various Medicare regulations, the
Administrative Procedure Act and the Fifth Amendment based on the Health Care
Financing Agency's (now known as Centers for Medicare and Medicaid Services, CMS)
issuance of various regulations and their cessation of payments to plaintiffs' business.
The Court found that these claims "arose under" the Medicare Act, despite the fact that
plaintiff's sought damages beyond the reimbursement of payments available under
Medicare because plaintiffs' claims were "inextricably intertwined" with the reimbursement
claims of their former business. The FAC claim asserted here stands on different footing
because it does not seek recovery for ProTransport's damages.4

Kaiser also points out that unlike Tenet, here plaintiff is clearly a "dissatisfied" provider,
and that the Court in Body distinguished the FCA claims at issue there from "veiled
claims for benefits by a disgruntled beneficiary that could have, and should have, been
pursued administratively in the first instance." 156 F.3d at 1109. There is no dispute in
this case that ProTransport was a "provider" and is "disgruntled" by Kaiser's conduct.
However, under the three claims left in the case, ProTransport is not seeking payment for
its Medicare-related transportation services. Indeed, in its Complaint, ProTransport
alleges that it was reimbursed for its transports by Medi-Cal (reimbursement it sought
only under Kaiser's direction). See Complaint ¶¶ 6, 39 (noting "Medi-Cal approved for
payment" ProTransport's claims for transportation). Similarly, ProTransport is not arguing
that Kaiser's direction to seek payment from Medi-Cal resulted in lower payments to
ProTransport — a claim which would need to be pursued through the administrative
claims process. Instead, ProTransport is asserting a claim on behalf of the United States
claiming Kaiser's conduct defrauded the government.

Similarly, the fact that the Medicare statute and regulations will need to be interpreted to
determine whether Kaiser's conduct violated the FCA does not make this case
"inextricable intertwined" with a claim for reimbursement or for benefits. But see Kaiser v.
Blue Cross, 347 F.3d at 1114. Indeed, as the Eleventh Circuit noted in Body, 156 F.3d at
1109, "subsection 405(h), viewed within the context in which it was drafted and made
applicable to Medicare, simply seeks to preserve the integrity of the administrative
process Congress designed to deal with challenges to amounts determinations by
dissatisfied beneficiaries, not to serve as a complete preclusion of all claims related to
benefits determinations in general."

Kaiser asserted during oral argument that if this Court allows ProTransport's FCA claim
to continue, it will open the "floodgates" for dissatisfied service providers to bring claims
in court and avoid administrative exhaustion. However, FCA claims can only be alleged
based on a particularized allegation of fraud to the United States and can only seek
recovery on behalf of the United States; only that narrow class of plaintiffs will be able to
proceed directly in federal court. Those who assert disguised claims for benefits or
services — like ProTransport's breach of implied covenant and quantum meruit claims —
will have to exhaust those claims in the first instance.

In conclusion, the Court finds that plaintiff's FCA cause of action is not a "disguised" claim
for benefits nor it is "inextricably intertwined" with a claim for benefits and, therefore, does
not "arise under" the Medicare Act.
2. Failure to Satisfy Rule 9(b)

Kaiser also argues that plaintiff's FCA claim must be dismissed because the Complaint
fails to plead the FCA claim with particularity under Federal Rule of Civil Procedure 9(b).
In Opposition, plaintiff clarifies that its theory of FCA liability under section 3729(a)(1)(D)
is based on an "implied false certification." Opposition Br. at 11. In the Ninth Circuit, the
four elements of a false certification claim are: "(1) a false statement or fraudulent course
of conduct, (2) made with scienter, (3) that was material, causing (4) the government to
pay out money or forfeit moneys due." U.S. ex rel Hendow v. Univ. of Phoenix, 461 F.3d
1166, 1174 (9th Cir. 2006). A theory of implied false certification is "`based on the notion
that the act of submitting a claim for reimbursement itself implies compliance with
governing federal rules that are a precondition to payment.'" Ebeid v. Lungwitz, 616 F.3d
993, 996 (9th Cir. 2010) (quoting U.S. ex rel. Mikes v. Straus, 274 F.3d 687, 699 (2d Cir.
2001)). As the Ninth Circuit explained in Ebeid:
Express certification simply means that the entity seeking payment certifies compliance
with a law, rule or regulation as part of the process through which the claim for payment
is submitted. Implied false certification occurs when an entity has previously undertaken
to expressly comply with a law, rule, or regulation, and that obligation is implicated by
submitting a claim for payment even though a certification of compliance is not required
in the process of submitting the claim. Under both theories, [i]t is the false certification of
compliance which creates liability when certification

is a prerequisite to obtaining a government benefit." Id. at 998 (quoting U.S. ex rel.
Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996)).

Under Federal Rule of Civil Procedure 9(b), a party must "state with particularity the
circumstances constituting fraud or mistake," including "the who, what, when, where, and
how of the misconduct charged." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106
(9th Cir. 2003) (internal quotation marks omitted). As applied here, "[t]o survive a Rule 9
(b) motion to dismiss, a complaint alleging implied false certification must plead with
particularity allegations that provide a reasonable basis to infer that (1) the defendant
explicitly undertook to comply with a law, rule or regulation that is implicated in submitting
a claim for payment and that (2) claims were submitted (3) even though the defendant
was not in compliance with that law, rule or regulation." Ebeid, 616 F.3d at 998.

The Court has reviewed the Complaint in detail and agrees with Kaiser that it fails to
adequately plead the remaining FCA claim. While the Complaint cites to various statutes
and regulations to argue that Kaiser's Medical Advantage plan is required to provide the
same level of coverage required under Medicare and that medically necessary transports
are covered by Medicare, see e.g., Complaint ¶¶24-25, 27-29, the Complaint does not
identify which law, rule or regulation Kaiser undertook to comply with that "is implicated in
submitting a claim for payment."5 Moreover, the Complaint does not identify what "claims"
Kaiser submitted that were "impliedly" false. Plaintiff attempts to rely on six representative
examples of patients suffering with ESRD who were transported by plaintiff but whose
claims for transportation were not paid by Kaiser. Opp. Br. at 13. But these "claims" were
submitted by ProTransport to Kaiser, not claims for payment submitted by Kaiser. Finally,
it is unclear how this "implied false certification" allegation fits within section 3729(a)(1)
(D), which prohibits a person or entity having custody of the government's money or
property from delivering "less than all of that money or property."6

Simply put, ProTransport's Complaint does not sufficiently allege the "who, what, when,
where, and how" of the asserted implied false certification claim to allow Kaiser to defend.
Therefore, Kaiser's Motion to Dismiss is GRANTED with respect to ProTransport's FCA
claim. However, as it is not clear that ProTransport would not be able to adequately
allege a FCA claim, the dismissal is WITH LEAVE TO AMEND. If ProTransport wishes to
amend, it must file an amended complaint within twenty (20) days of the date of this
B. California Health & Safety Code § 1278.5

Kaiser also moves to dismiss ProTransport's claim under California Health and Safety
Code section 1278.5, arguing that as a non-contracted transportation service provider
ProTransport is not within the scope of the statute's protection. Section 1278.5(b)(1)
provides that "[n]o health facility shall discriminate or retaliate, in any manner, against
any patient, employee, member of the medical staff, or any other health care worker of
the health facility because that person has" presented a grievance or complaint to the
facility, an agency or any other governmental entity. ProTransport asserts that it is
covered by the statute as "any other health care worker" of Kaiser, and that as a
"remedial statute" section 1278.5 should be broadly interpreted to include entities like
ProTransport. Opp. Br. at 14-15. There are two problems with ProTransport's position.

First, ProTransport is not "any other health care worker" but an entity. There is no
evidence in either the statute itself or in its legislative history that the California
Legislature intended to cover entities. All of the categories covered by the statute
"patient, employee, member of the medical staff, or any other health care worker" are
individuals, not entities. ProTransport argues that where the legislature wanted to limit
whistleblower protection to specific individuals or classes of individuals it did so. Opp. at
15 (citing Cal. Bus. & Prof. Code 2056 (providing "protection against retaliation for
physicians who advocate for medically appropriate health care") (emphasis added); Cal.
Bus. & Prof. Code § 510 (providing "protection against retaliation for health care
practitioners who advocate for appropriate health care for their patients") (emphasis
added)). But simply because the Legislature provided for whistleblower protection for
specific categories of professionals within the Business and Professions Code does not
mean "entities" are included in the list of persons expressly protected from retaliation by
health facilities in section 1278.5.7

Moreover, as Kaiser points out, the original statute covered only patients and employees.
In 2007, the Legislature — recognizing a gap in coverage for physicians and surgeons
who are not typically employees of a health care facility — amended the statute to "[a]dd
[] physicians and surgeons to employees of health facilities . . . that have `whistleblower
protection. . . ." Assemb. Comm. on Appropriations, Report re A.B. 632, 2007-08 Reg.
Session, at 1 (Apr. 24, 2007). The Senate Report noted that — according to the
legislation's sponsor — "any other health care worker of the health facility" "could be
interpreted to include persons such as blood, organ, and tissue transporters, emergency
medical technicians or paramedics, and physical therapists. By adding the phrase `other
health care workers' in the protected class, therefore, these persons would enjoy the
whistleblower protections now enjoyed only by patients and employees of the health
facility." S. Judiciary Comm., Report on A.B. 632, 2007-08 Reg. Sess.. at 6 (July 12,
2007). The legislative history repeatedly refers to individuals — "people" and "these
persons" — and there is no indication that the Legislature intended entities to be covered.

Second, ProTransport ignores that only a "health care worker of the health facility" is
covered. ProTransport does not work in or for Kaiser's various health care facilities.
Instead, it is a non-contracted transportation service, transporting patients of various
medical plans to various medical facilities. There is no indication in the statute itself or its
legislative history that the California Legislature intended to cover non-contracted entities
such as ProTransport under section 1278.5.8

ProTransport argues that if the Court finds that entities are not protected by section
1278.5, it will amend to add ProTransport's Chief Executive Officer, Mike Sechrist, as a
party. Opp. Br. at n. 4. The Court finds that amendment would be futile because there no
argument or evidence presented that ProTransport's CEO is a "health care worker."
Moreover, as with ProTransport itself, there is no evidence that ProTransport's CEO is a
health care worker "of" a Kaiser facility.

For the foregoing reasons, the California Health and Safety Code section 1278.5 claim is
C. Unfair Competition Law

Kaiser moves to dismiss ProTransport's Unfair Competition Law Claims ("UCL," Cal. Bus.
& Prof. Code § 17200 et seq.).9 In the Complaint, ProTransport alleges that Kaiser's
conduct violated the "illegal prong" of the UCL based on ProTransport's allegations that
Kaiser violated the FCA and California Health and Safety Code section 1278.5.
Complaint, ¶ 91. However, as those allegations have been dismissed, so must plaintiff's
"illegal" UCL allegations.

ProTransport also alleges that Kaiser's conduct is "unfair" under the UCL because it
refused to pay for medically necessary transports. ProTransport contends that its
unfairness allegation is "tethered" to legislative policies against defrauding the
government, protecting patients, protecting patients' advocates, and encouraging
competitive bidding. Complaint, ¶ 92. In its opposition, ProTransport explains that its
"unfairness" claim is based on its allegations that Kaiser retaliated against ProTransport
— after ProTransport complained of inadequate patient care and fraud — in that Kaiser
refused to pay for any of plaintiff's transports (not just Medicare transports) and Kaiser
refused to allow ProTransport to participate in its competitive bidding process. Opp. Br. at

Kaiser argues the "unfairness" allegations are barred for two reasons. First, Kaiser
argues ProTransport's consumer protection claims are preempted under the Medicare
Statute. Br. at 21-22; Reply Br. at 13-14; see also 42 U.S.C. § 1395w-26 ("The standards
established under this part [42 USCS §§ 1395w-21 et seq.] shall supersede any State law
or regulation (other than State licensing laws or State laws relating to plan solvency) with
respect to MA plans which are offered by MA organizations under this part."); 42 C.F.R. §
422.402(a) ("The standards established under this part supersede any State law or
regulation (other than State licensing laws or State laws relating to plan solvency) with
respect to the MA plans that are offered by MA organizations"). However, the two cases
Kaiser relies on Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 and Phillips v. Kaiser
Found. Health Plan, Inc., 2011 U.S. Dist. LEXIS 80456 (N.D. Cal. July 25, 2011), do not
support its argument here.

In Do Sung Uhm v. Humana, Inc., the Ninth Circuit held that plaintiffs' fraud and consumer
protection act claims — based on misrepresentations made by the defendant in
marketing its plan — were preempted under the Medicare Act's explicit preemption
provision. The Court reached that conclusion because determining whether the
marketing at issue was fraudulent and misleading would conflict with a specific "standard"
requiring CMS to approve plan marketing materials and determine whether or not they
were misleading. Id., 620 F.3d at 1150-53. Here, however, defendant has not identified
any particular portion of the Medicare Act or a standard promulgated by CMS that would
conflict with ProTransport's claim that Kaiser retaliated against it by refusing to pay for
non-Medicare transports and by excluding it from bidding to provide services to Kaiser.10

Similarly in Phillips v. Kaiser Found. Health Plan, Inc., the Court determined that that
plaintiff's claims were either (a) a disguised attempt to seek benefits, which were subject
to exhaustion; or (2) a challenge to the defendant's marketing materials, which was
preempted under the same specific standard identified in Uhm. 2011 U.S. Dist. LEXIS
80456 at *28-29. As noted above Kaiser fails to identify any standard that could be
implicated by determining whether it was unfair of Kaiser to retaliate against ProTransport
by failing to pay ProTransport for non-Medicare transports and excluding ProTransport
from its bidding process.

Second, Kaiser argues that ProTransport fails to adequately allege its UCL unfairness
claim under Rules 9(b) and 12(b)(6). Reply Br. at 14-15. However, "fraud" is not an
element of the remaining "retaliation" unfairness UCL claims, therefore, Rule 9(b) does
not apply. As to Rule 12(b)(6), the Court finds that Kaiser has adequately alleged the
basis for its assertion that Kaiser unfairly retaliated against it as a result of
ProTransport's complaints about billing and patient care.

As such, Kaiser's Motion to Dismiss the UCL claim is GRANTED in part and DENIED in
part. ProTransport's "illegal" prong UCL claims are DISMISSED, however, with leave to
amend if ProTransport amends its FCA claim.

Kaiser moves to strike various portions of the Complaint which, it contends, contain
immaterial and scandalous allegations which will serve only to distract and waste
resources. Kaiser also moves to strike portions of ProTransport's requests for relief
under its UCL claims, as the requests cover damages and other monies that are not
available as restitution under the UCL.
A. Immaterial and Scandalous Material

Federal Rule of Civil Procedure 12(f) provides that a court "may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter."
Fed. R. Civ. P. 12(f). The function of a motion to strike under Rule 12(f) is to avoid the
expenditure of time and money that must arise from litigating spurious issues by
dispensing of those issues before trial. See Fantasy, Inc. v. Fogerty, 984 F.2d 1524,
1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994) (citation omitted).
Motions to strike "are generally disfavored because they are often used as delaying
tactics and because of the limited importance of pleadings in federal practice." Rosales v.
Citibank, 133 F.Supp.2d 1177, 1180 (N.D. Cal. 2001). In most cases, a motion to strike
should not be granted unless "the matter to be stricken clearly could have no possible
bearing on the subject of the litigation." Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F.Supp.2d
1048, 1057 (N.D. Cal. 2004).
The Court will address each portion of the Complaint Kaiser moves to strike in turn.
Paragraph 4, Page 2, Lines 22-23: If they do not receive this treatment, they die within
weeks. The Court DENIES the Motion to Strike. This allegation is not immaterial or
scandalous. Paragraph 7, Page 3, Lines 13-17: What about the patients? These
patients, who could live for years with dialysis, die within weeks without these transports.
Of course, Kaiser welcomes these deaths because these are the `expensive patients'
who actually require care and cost Kaiser money. When these patients die, Kaiser is left
with a `cheaper' patient population that costs Kaiser much less money. With practices like
these, it's no wonder how Kaiser is making billions in profits year-after-year.

The Court GRANTS the Motion to Strike in part. References to Kaiser welcoming deaths,
causing deaths or profiting from deaths — unsubstantiated by factual allegations — are
immaterial and scandalous and should be stricken.
Paragraph 8, Page 3, Lines 18-25: Unfortunately, this is not the first (or even the third)
time Kaiser has been caught defrauding the government. Indeed, in 2009, Kaiser was
forced to settle two separate False Claims matters resulting from its Medicare and
Medicaid fraud for $5,580,000. Prior to those settlements, Kaiser was forced to settle
another False Claims action, in 2005, for $1,900,000 due to its Medicare and Medicaid
fraud. (Attached hereto as Exhibit A are press releases regarding these settlements.)
However, in this case, the unlawful practices opposed by ProTransport are far more
egregious than those at issue in the prior actions, and involve tens of millions of dollars if
not substantially more.

The Court DENIES the motion to strike. While of questionable relevance, the allegations
are not immaterial or impertinent.
Paragraph 41, Page 12, lines 16-19: Of course, Kaiser knows very well that without
dialysis these patients will die within weeks. That is part of Kaiser's plan. Dialysis is
expensive, so is transporting patients to and from dialysis. By killing off these patients,
Kaiser is left with a much more profitable patient base, resulting in billions in profits.

The Court GRANTS the Motion to Strike in part. References to Kaiser welcoming deaths,
causing deaths or profiting from deaths — unsubstantiated by factual allegations — are
immaterial and scandalous and should be stricken.
Paragraph 42, Page 12, Lines 23-26: ... ProTransport does care about these patients
and could not leave them to die as Kaiser had intended. Thus, ProTransport's action, at
bottom, is about protecting these vulnerable patients and ensuring that they are not
continually lied to by Kaiser who promises to comply with applicable law, yet fails to
provide these lifesaving transports for its patients.

The Court GRANTS the Motion to Strike in part. References to Kaiser welcoming deaths,
causing deaths or profiting from deaths — unsubstantiated by factual allegations — are
immaterial and scandalous and should be stricken.
Paragraph 49, Page 13, Lines 26-27: ... or these patients will die — yet Kaiser refuses to
pay for these medically necessary transports.

The Court DENIES the Motion to Strike. This allegation, when read in full, is not
immaterial or scandalous.
Paragraph 82, Page 18, lines 26-27 and page 19, lines 1-2: The retaliatory actions taken
by Kaiser against ProTransport, as alleged herein, occurred within 120 days of
ProTransport's complaints to Kaiser regarding its illegal refusal to pay for its patients'
transports with the funds provided to Kaiser by Medicare and Kaiser's insistence that
ProTransport bills Medi-Cal for these federal-paid-for services.

The Court DENIES the Motion to Strike. These allegations are not immaterial. Paragraph
83, Page 19, lines 3-5: "Accordingly; under Health & Safety Code § 1278.5(d)(1),
ProTransport is entitled to a rebuttable presumption that the retaliatory actions taken
against ProTransport are attributable to its complaints regarding Kaiser's illegal activity.";

The Court DENIES the Motion to Strike. While no longer relevant to the case, in light of
this claim's dismissal, the allegations are not immaterial.
Paragraph 96, Page 21, lines 13-14: who then die within weeks without dialysis.

The Court GRANTS the Motion to Strike. References to Kaiser welcoming deaths,
causing deaths or profiting from deaths — unsubstantiated by factual allegations — are
immaterial and scandalous and should be stricken.
Exhibit A, in its entirety. The Court DENIES the motion to strike. While of questionable
relevance, the materials in

Exhibit A are not immaterial or impertinent.
B. References to Non-Restitutionary Damages

Kaiser moves to strike portions of paragraphs 94 and 95 regarding requested remedies
for the alleged UCL violations on the grounds that the requested remedies fall outside of
restitution allowed under the UCL. Specifically, Kaiser moves the strike:
Paragraph 94, Page 21, Lines 1-5: As a direct, foreseeable, and proximate result of
Kaiser's unlawful business practices, ProTransport has suffered and continues to suffer
actual, consequential, and incidental financial losses, including without limitation,
substantial loss of revenue and the costs expended in transporting Kaiser's patients at
the request of Kaiser's doctors that Kaiser has illegally refused to pay for. Paragraph 95,
Page 21, Lines 6-8: Accordingly, pursuant to the UCL, ProTransport is entitled to
restitution of the amount expended in transporting Kaiser's patients at the request of
Kaiser's doctors that Kaiser has illegally refused to pay for.

The Court GRANTS the Motion to Strike. The only form of monetary damages authorized
by the UCL is restitution and the "object of restitution is to restore the status quo by
returning to the plaintiff funds in which he or she has an ownership interest." Korea
Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1148-49 (2003). ProTransport
opposes the Motion to Strike, arguing that it is "essentially seeking payment of wages for
work it completed at the specific direction of Kaiser's own physicians who requested the
transport" and it is well-settled that restitution under the UCL includes "lost wages." Opp.
Br. at 21. However, the cases Kaiser relies on — which recognize the rights of employees
to unpaid but owed wages as "vested property rights," see e.g., Montecino v. Spherion
Corp., 427 F.Supp.2d 965 (C.D. Cal. 2006); Hirel Connectors, Inc. v. United States, 2004
U.S. Dist. LEXIS 31036 (C.D. Cal. Jan. 23, 2004) — are not controlling here. The monies
ProTransport seeks to recover are disputed reimbursements, which Kaiser is alleged to
owe to a service provider. Those claimed damages are in no way akin to earned but
unpaid wages of an employee.

Pursuant to the plaintiff's request, and with the Attorney General's consent, plaintiff's
second through fifth and eight through tenth claims are DISMISSED WITHOUT
PREJUDICE. Plaintiff's first claim — for violation of 31 U.S.C. section 3729(a)(1)(D) is
DISMISSED WITH LEAVE TO AMEND within twenty days of the date of this Order.
Plaintiff's sixth claim for violation of California Health and Safety Code section 1278.5 is
TO AMEND. Defendant's Motion to Strike is DENIED in part and GRANTED in part.


1. Plaintiff's Notice of Voluntary Dismissal indicates that it dismisses Claims 2-5 (the
federal False Claim Act claim under 31 U.S.C. § 3729(a)(1)(A) and the California False
Claim Act claims) without prejudice subject to the consent of the Attorney General.
Docket No. 29. The Attorney General consented to the dismissal without prejudice on
August 1, 2013. Docket No. 31. In its Opposition, plaintiff also agrees to dismiss without
prejudice of its breach of the implied covenant, quantum meruit, and unjust enrichment
claims in order to exhaust Medicare's administrative requirements. Oppo. at 7.
Defendants do not object. The Court, therefore, DISMISSES WITHOUT PREJUDICE
Claims 2-5 and 8-10 of the Complaint.
2. Kaiser contends, and ProTransport does not dispute, that under 42 U. S. C. § 405(h)
as made applicable to the Medicare Act, claims for Medicare benefits or coverage for
services must be pursued through all available administrative procedures before judicial
review is available. See e.g., Heckler v. Ringer, 466 U.S. 602, 615 (1984); 42 U.S.C. §
405(g). As applicable to Medical Advantage Plans — the types of plans at issue in this
case — disputes over coverage or for reimbursement of services must be submitted
through the administrative dispute resolution process. See e.g., 42 CFR § 422.560
(requiring MA organizations to institute grievance and appeal procedures).
3. Kaiser asks the Court to take judicial notice of an Office of Medicare Hearings and
Appeals Notice of Decision: Lexxiom Medical Services, ALJ No. 1-1341807952. Request
for Judicial Notice [Docket No. 18], Attachment 3. In that decision, an ALJ denied a
request for Medicare Part B coverage for ambulance transportation services that were
provided without a written order from the beneficiary's attending physician and without
preapproval from the Plan. Plaintiff does not oppose the Request for Judicial Notice.
Pursuant to Rule 201, courts may only take judicial notice of "adjudicative facts" that are
"not subject to reasonable dispute." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.
2003). A court may also take judicial notice of some public records, including records and
reports of administrative bodies. Id. at 909. The Court, therefore, grants the request to
take judicial notice of the Notice of Decision, but not the conclusions of fact reached in
that decision. Cf. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (courts
can take judicial notice of other courts' decisions, but only for existence of the opinion
and not for truth of the facts asserted in the opinion).
4. In its breach of the implied covenant and quantum meruit claims — which are
dismissed to allow exhaustion of the claims in the administrative process — ProTransport
claims that Kaiser has refused to pay ProTransport "for the reasonable value of its
services for these medical transports" and ProTransport has "incurred loss of revenue
and the costs expended in transporting Kaiser's patients" at the request of Kaiser.
Complaint ¶¶ 102, 108, 109.
5. For example, in U.S. ex. rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001), the Court
held that an implied false certification claim under the Medicare Act could be based on 42
U.S.C. section 1395y(a)(1)(A), which prohibited payments for medical procedures not
"reasonably necessary," but not on 42 U.S.C. section 1320c-5(a), which mandated a
qualitative standard of care. As the Second Circuit explained, because section 1320c-5
(a) established "conditions of participation, rather than prerequisites to receiving
reimbursement" under the Medicare Act, it could not be a basis for an implied false
certification claim. Id. at 701-02. However, a claim could be based on section 1395y(a)(1)
(A) which contained "an express condition of payment — that is, `no payment may be
made' — it explicitly links each Medicare payment to the requirement that the particular
item or service be `reasonable and necessary.'" Id. at 700; see also Ebeid, 616 F.3d at
1000-10001 (discussing the difference between statutes and regulations which contain a
"condition of payment" as opposed to a "conditions of participation").
6. In case plaintiff attempts to revert to its "reverse false claims" allegation raised in the
Complaint, as the Ninth Circuit explained in Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d
1047 (9th Cir. 2011), allegations of "reverse false claims" require identification of a "false
claim" or "statement" made to avoid paying a debt or returning property to the United
States. Id. at 1056. No such allegations have been made here. Cf., Cafasso at 1056
(dismissing FCA claim because "it does not allege that GDC4S falsely asserted an
entitlement to obtain or retain government money or property. It does not allege that
GDC4S made a demand for payment, fraudulently used a receipt, participated in an
unauthorized purchase of government property, or used a false record or statement.").
7. Relatedly, Kaiser argues that because in other code sections the Legislature explicitly
defined "health care worker" to encompass only individuals, section 1278.5 should
likewise be limited, even absent an express definition. See Brief at 20 (citing Cal. Labor
Code § 6332(a)(1) and § 6403.5(e)). The Court does not find this argument persuasive
or necessary to its conclusion.
8. ProTransport also relies on a case where the Ninth Circuit held that a corporation's
experience of discrimination brought that corporation within the "prudential zone of
interest protected under [42 U.S.C.] § 1981." Thinket Ink Info. Res., Inc. v. Sun
Microsystems, Inc., 368 F.3d 1053, 1060 (9th Cir. 2004). That case, however, bears no
relevance to determining the scope of section 1278.5 in light of this statute's words and
legislative history.
9. The UCL "is written in the disjunctive, it establishes three varieties of unfair competition
— acts or practices that are unlawful, or unfair, or fraudulent." Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 180 (1999).
10. The Court agrees with Kaiser, however, that to the extent ProTransport is
complaining about Kaiser's failure to pay for Medicare transports, those claims are
subject to exhaustion and cannot form the basis of the UCL unfairness claim.