Case No. ______________

IN THE SUPREME COURT OF THE STATE OF CALIFORNIA

______________________________________________

ROBERT J. COHEN, an individual

and on behalf of the general public,

Petitioner,

vs.

HEALTH NET OF CALIFORNIA, INC., and

LOS ALAMITOS MEDICAL CENTER, INC.

Respondents.

______________________________________________

PETITION FOR REVIEW

AND REQUEST FOR JUDICIAL NOTICE

______________________________________________

From the Judgments of the Orange County Superior Court

Honorable Clay Smith, Judge Presiding, Case No. 02CC13219

From the Decision of the Court of Appeal,

Fourth Appellate District, Division Three, Case No. G033868

______________________________________________

Service on the Attorney General	Richard L. Spix (SBN 109109)

and Orange County District Atty.	1505 E. 17th St., Ste. 229

Pursuant to Business and	Santa Ana, California 92705

Professions Code § 17209	TEL: (714) 835-5112

FAX: (714) 835-8897

For Petitioner Robert J. Cohen

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . .	iv-xi

PETITION FOR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . .	1

A.	ISSUES PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . .	2

B.	WHY THIS ACTION DESERVES

REVIEW AS TO ALL ISSUES. . . . . . . . . . . . . . . . . . .	3

1.	The ER Funding Crisis Invokes

Important Public Concern. . . . . . . . . . . . . . . . . .	4

a.	Absent a Contract with Health

Net, ER Doctors Have No

Recourse Against HMOs. . . . . . . . . . . . . .	5

b.	Health Net's Underfunded

Intermediaries Routinely Fail to Pay. . . .	5

c.	Unpaid ER Doctors Must Either Donate

to HMO Profits or Dunn Members. . . . . . .	6

2.	Members Deserve to be Held Harmless

from Widespread HMO Risk Shifting. . . . . . . .	8

3.	Proposition 64 is Leading to Inconsistency. . . . .	10

C.	STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . .	11

1.	Petitioner Remains Eligible for Benefits

as a Member of the ERISA Plan. . . . . . . . . . . . .	11

2.	Respondents Agreed to Contract/Statutory

Duties to Protect Members. . . . . . . . . . . . . . . . . .	11

3.	The COS Imposed in the ER

Denies Limits on Member Liability. . . . . . . . . . .	12

TABLE OF CONTENTS, CONT'D	PAGE

4.	The Action Presents Clean,

Covered Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

5.	Respondents Breached their Duties by

Leaving Petitioner to be Dunned. . . . . . . . . . . . . .	13

D.	STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . .	15

1.	At the Pleading Stage, the Lower Court

Dismissed the ER Doctors Who had

Merely Followed Their Contract. . . . . . . . . . . . .	15

2.	The Lower Court "Severely

Limited" UCL Discovery. . . . . . . . . . . . . . . . . . . .	17

3.	Rulings on Cross-Motions Below

and the DCA Ignored Duties

to Protect Members. . . . . . . . . . . . . . . . . . . . . . . .	17

E.	DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

1.	The Widespread Practice Imposing Full

Liability for Basic ER Care Breaches

Respondents' Duties to Members . . . . . . . . . . . . .	18

a.	The Inclusion of Invalid

Terms Deceives Members. . . . . . . . . . . . .	20

b.	By Declining to Contract with ER Doctors,

Health Net has Failed to Earn

Premiums Paid for ER Care. . . . . . . . . . .	20

c.	The Respondents Simultaneously

Violate ERISA and State Laws. . . . . . . . .	21

2.	Continued Standing is Present

Under the New UCL. . . . . . . . . . . . . . . . . . . . . . .	24

/ / /

TABLE OF CONTENTS, CONT'D	PAGE

a.	UCL Standing Should be

Broadly Interpreted. . . . . . . . . . . . . . . . .	24

b.	The DCA Cavalierly Rejected

Petitioner's Factual Injuries. . . . . . . . . . .	25

c.	Taking of Policy Rights and

Diminution in Value Produce Standing. .	26

d.	In this Public Interest Action,

Petitioner Retains Capacity to

Maintain the Action Because He

Shares a Common Wrong. . . . . . . . . . . . .	26

3.	The Claims do not Hinder any

Jurisdiction of the Department . . . . . . . . . . . . . .	29

4.	Petitioner and the General Public/Class

are Entitled to Relief. . . . . . . . . . . . . . . . . . . . . . .	30

a.	The UCL Violation Justifies Relief

for the General Public. . . . . . . . . . . . . . . .	31

b.	ERISA Presents a Parallel Basis

for Relief for Members. . . . . . . . . . . . . . .	31

5.	Class Procedures Should be

Deemed Satisfied and Excused. . . . . . . . . . . . . . .	33

a.	Formalistic Pleading is Not Required. . . . . . . . .	33

b.	Delay in Certification is Excusable

and Does Not Expand Liability. . . . . . . . . . . . . .	34

F.	CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37

CERTIFICATE OF APPELLATE COUNSEL . . . . . . . . . . . .	37

/ / /

TABLE OF AUTHORITIES

CASES	PAGE

Aetna Health Inc, v Davila (2004) 542 US 200 . . . . . . . . . . . . . .	31

Alch v. Superior Court (2004) 122 Cal.App.4th 339 . . . . . . . . . .	27, 34

Alliance for a Better Downtown Millbrae v. Wade

(2003) 108 Cal.App.4th 123 . . . . . . . . . . . . . . . . . . . . . . . .	2

American Drug Stores v. Harvard Pilgrim Health Care

(D. Mass. 1997) 973 F. Supp. 60 . . . . . . . . . . . . . . . . . . . .	31

Anderson v. Continental Casualty Company

(E.D. Cal. 2003) 258 F. Supp. 2d 1127 . . . . . . . . . . . . . . .	21

Barquis v. Merchants Collection Assn. of Oakland

(1972) 7 Cal.3d 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

Barela v. Superior Court (1981) 30 Cal.3d 244 . . . . . . . . . . . . . . .	27

Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816 . . .	34

Bell v. Farmers Insurance Exchange

(2004) 115 Cal.App.4th 715 . . . . . . . . . . . . . . . . . . . . . . . .	36

Benton v. Vanderbilt (2000 M.D. Tenn.) 118 F.Supp.2d 877 . . . .	19

Bode v. St Joseph's Health Systems

(C.D. Cal. 2003) 298 F. Supp.2d 918 . . . . . . . . . . . . . . . . .	23

Brandt v. Superior Court (1985) 37 Cal.3d 813 . . . . . . . . . . . . . . .	9

Brochtrup v. Intep (1987) 190 Cal.App.3d 323 . . . . . . . . . . . . . . .	34

Bunker v. County of Orange (2002) 103 Cal.App.4th 542 . . . . . .	27

California Medical Association v. Aetna U.S. Healthcare

of California, Inc. (2001) 94 Cal.App.4th 151 . . . . . . . . . .	5

TABLE OF AUTHORITIES, CONT'D

CASES CONT'D	PAGE

California Water & Tel. Co. v. Los Angeles

(1967) 253 Cal.App.2d 16 . . . . . . . . . . . . . . . . . . . . . . . . .	26

Chateau Chamberay Homeowners Assn. v. Associated

Int'l. Ins. Co. (2001) 90 Cal.App.4th 335 . . . . . . . . . . . . .	2, 24

Cisneros v. UD Registry (1995) 39 Cal.App.4th 548 . . . . . . . . . .	26

City of Ontario v. Superior Court (1970) 2 Cal.3d 335 . . . . . . . . .	34

Civil Service Employees Ins. Co. v. Superior Court

(1978) 22 Cal.3d 362 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35

Coast & Southern Fed. S. & L. Assn. v. Trans-Coast

S. & L. Assn. (1971) 16 Cal.App.3d 205 . . . . . . . . . . . . . .	29

Coast Plaza Doctors Hospital v. UHP Healthcare

(2002) 105 Cal. App 4th . . . . . . . . . . . . . . . . . . . . . . . . . . .	5

College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704 . . .	20

Commercial Life Ins. Co. v. Superior Court of San Diego Co.

(1988) 47 Cal. 3d 473 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

Corbett v. Superior Court (2002) 101 Cal.App.4th 649 . . . . . . . .	36

Corsini v. United Health Plans of New England

(D.R.I. 2001) 145 F. Supp. 2d 184 . . . . . . . . . . . . . . . . . .	31

Cortez v. Purolator Air Filtration Products Co.

(2000) 23 Cal.4th 163 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26, 31, 36

Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425 . . . . . . . . . . . . .	26

Desert Healthcare Dist. v. PacifiCare, FHP, Inc.

(2001) 94 Cal.App.4th 781 . . . . . . . . . . . . . . . . . . . . . . . .	5

Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968 . . .	29

TABLE OF AUTHORITIES, CONT'D

CASES CONT'D	PAGE

Employment Devl. Dept. v. Superior Court

(1981) 30 Cal.3d 256 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35

Estate of Mendenhall (1960) 182 Cal.App.2d 441 . . . . . . . . . . .	26

Evangelatos v. Superior Court (1988) 44 Cal.3d 1188 . . . . . . . .	2

Eye Dog Foundation v. St. Bd. of Guide Dogs for the Blind

(1967) 67 Cal.2d 536 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

Farmers Ins. Exchange v. Superior Court

(1992) 2 Cal.4th 377 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30

Fidelity Federal Savings & Loan Assn. v. Long

(1959) 175 Cal.App.2d 149 . . . . . . . . . . . . . . . . . . . . . . .	34

Frieman v. San Rafael Rock Quarry

(2004) 116 Cal.App.4th 29 . . . . . . . . . . . . . . . . . . . . . . . .	34

Gaines v. The Sargent Fletcher, Inc. Group Life Ins. Plan

(E.D. Cal. 2004) 329 F. Supp.2d 1198 . . . . . . . . . . . . . . .	23

Grauberger v. St. Francis Hosp.

(N.D. Cal. 2001) 149 F. Supp.2d 1186 . . . . . . . . . . . . . . .	19

Hamwi v. Citinational-Buckeye, Inc.

(1977) 72 Cal.App.3d 462 . . . . . . . . . . . . . . . . . . . . . . . .	33

Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256 . . . . . .	30

Home Sav. & Loan Assn. v. Superior Court

(1974) 42 Cal.App.3d 1006 . . . . . . . . . . . . . . . . . . . . . . . .	35

Home Sav. & Loan Assn. v. Superior Court

(1976) 54 Cal.App.3d 208 . . . . . . . . . . . . . . . . . . . . . . . . .	35

Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309 . . . .	9

TABLE OF AUTHORITIES, CONT'D

CASES CONT'D	PAGE

Kentucky Assn of Health Plans v. Miller (2003) 538 U.S. 329. . .	21

Kinlaw v. State of California (1991) 54 Cal.3d 326 . . . . . . . . . . .	4

Kraus v. Trinity Management Services, Inc.

(2000) 23 Cal. 4th 116 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	passim

La Sala v. American Savings and Loan (1971) 5 Cal.3d 864 . . . .	27

Massey v. Bank of America (1976) 56 Cal.App.3d 29 . . . . . . . . .	33

McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412 . . . . . . .	29

McCormick v. Board of Supervisors

(1988) 198 Cal.App.3d 352 . . . . . . . . . . . . . . . . . . . . . . . .	34

Moore v. State of California (1984) 157 Cal.App.3d 715 . . . . . . .	34

Moss v. Superior Court (1998) 17 Cal.4th 396 . . . . . . . . . . . . . . .	35

Nader v. Allegheny Airlines (1976) 426 U.S. 290 . . . . . . . . . . . .	30

Nealy v. U.S. Health Care (1999) 93 N.Y.2d 209 . . . . . . . . . . . . .	31

Oceanside Union School District v. Superior Court

(1962) 58 Cal.2d 180 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

Ochs v. PacificCare of California

(2004) 115 Cal. App.4th 782 . . . . . . . . . . . . . . . . . . . . . . . .	5, 30

Olszewski v. Scripps Health (2003) 30 Cal.4th 798 . . . . . . . . . . . .	35

Parnell v. Adventist Health System/West

(2005) 35 Cal.4th 595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

Pastoria v. Nationwide Insurance

(2003) 112 Cal.App.4th 1490 . . . . . . . . . . . . . . . . . . . . . . .	20

TABLE OF AUTHORITIES, CONT'D

CASES CONT'D	PAGE

People v. Freemont Life Insurance Co.

(2002) 104 Cal.App.4th 508 . . . . . . . . . . . . . . . . . . . . . . .	21, 25, 31

People v. McKale (1979) 25 Cal.3d 626 . . . . . . . . . . . . . . . . . . .	20

People v. Toomey (1984) 157 Cal.App.3d 1 . . . . . . . . . . . . . . . .	25

Podolsky v. First Healthcare Corp.

(1996) 50 Cal.App.4th 632 . . . . . . . . . . . . . . . . . . . . . . . .	9, 19

Prata v. Superior Court (2001) 91 Cal.App.4th 1128 . . . . . . . . .	27

Riskin v. Towers (1944) 24 Cal.2d 274 . . . . . . . . . . . . . . . . . . .	34

Rodas v. Spiegel (2001) 87 Cal.App.4th 513 . . . . . . . . . . . . . . .	7

Rodoloff v. Provident Life and Accident Company

(S.D. Cal. 2003) 256 F. Supp. 2d 1137 . . . . . . . . . . . . . .	32

Samura v. Kaiser Foundation Health Plan, Inc.

(1993) 17 Cal.App.4th 1284 . . . . . . . . . . . . . . . . . . . . . . .	passim

Satten v. Webb (2002) 99 Cal.App.4th 365 . . . . . . . . . . . . . . . . .	30

Serafini v. Blake (1985) 167 Cal. App. 3d Supp. 11 . . . . . . . . . .	19

Solorzano v. Superior Court (1992) 10 Cal. App. 4th 1135 . . . .	8, 28, 29, 32

Souza v. Capital Co. (1963) 220 Cal.App.2d 744 . . . . . . . . . . . .	34

State Farm Fire & Casualty Co. v. Pietak

(2001) 90 Cal.App.4th 600 . . . . . . . . . . . . . . . . . . . . . . . .	34

State Farm Fire & Casualty Co. v. Superior Court

(1996) 45 Cal.App.4th 1093 . . . . . . . . . . . . . . . . . . . . . . .	30

Stocks v. City of Irvine (1981) 114 Cal.App.3d 520 . . . . . . . . . .	28

TABLE OF AUTHORITIES, CONT'D

CASES CONT'D	PAGE

University of Southern California v. Superior Court

(1990) 222 Cal.App.3d 1028 . . . . . . . . . . . . . . . . . . . . . . .	22

Valley Bank v. Superior Court (1975) 15 Cal.3d 652 . . . . . . . . . .	9

Vasquez v. Superior Court (1971) 4 Cal.3d 800 . . . . . . . . . . . . .	10, 25

Viles v. State of California (1967) 66 Cal.2d 24 . . . . . . . . . . . . .	34

Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224 . . .	28

Wertheim v. Hartford Life Insurance Co.

(E.D. Va 2003) 268 F. Supp. 2d 643 . . . . . . . . . . . . . . . . . .	24

Whiteside v. Tenet Healthcare Corp.

(2002) 101 Cal.App.4th 693 . . . . . . . . . . . . . . . . . . . . . . . .	7, 27

Wilens v. T.D. Waterhouse Group, Inc.

(2003) 120 Cal.App.4th 746 . . . . . . . . . . . . . . . . . . . . . . . .	27

Wilner v. Sunset Life Ins. Company

(2000) 78 Cal.App.4th 952 . . . . . . . . . . . . . . . . . . . . . . . . .	33

STATE STATUTES

Business and Professions Code Section 17200 et seq. . . . . . . . .	2

Business and Professions Code Section 17204 . . . . . . . . . . . . . .	24

Code of Civil Procedure Section 382 . . . . . . . . . . . . . . . . . . . . .	33

Code of Civil Procedure Section 473 . . . . . . . . . . . . . . . . . . . . .	10, 33

Evidence Code Section 452(c) . . . . . . . . . . . . . . . . . . . . . . . . . .	7

Evidence Code Section 459 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

Health and Safety Code Section 1317 . . . . . . . . . . . . . . . . . . . . .	6

TABLE OF AUTHORITIES, CONT'D

STATE STATUTES CONT'D	PAGE

Health and Safety Code Section 1340 . . . . . . . . . . . . . . . . . . . . .	2

Health and Safety Code Section 1360 . . . . . . . . . . . . . . . . . . . . .	8, 19, 20, 22

Health and Safety Code Section 1371 . . . . . . . . . . . . . . . . . . . . .	8, 22, 24

Health and Safety Code Section 1371(c) . . . . . . . . . . . . . . . . . . .	24

Health and Safety Code Section 1371.4 . . . . . . . . . . . . . . . . . . . .	8, 22, 29

Health and Safety Code Section 1371.35(f) . . . . . . . . . . . . . . . . . .	8, 22

Health and Safety Code Section 1371.37(e)-(f) . . . . . . . . . . . . . .	29

Health and Safety Code Section 1379 . . . . . . . . . . . . . . . . . . . . .	7, 12, 21, 29

Health and Safety Code Section 127630(a)(5) . . . . . . . . . . . . . . .	4

Revenue and Taxation Code Section 5140 . . . . . . . . . . . . . . . . . .	26

FEDERAL STATUTES

29 U.S.C. §1001 et seq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2

29 U.S.C. §1132 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

42 U.S.C. 1395dd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

OTHER CALIFORNIA AUTHORITIES

28 Cal. Code of Regs. 1300.63.1(c)(9) . . . . . . . . . . . . . . . . . . . .	19

28 Cal. Code of Regs. 1300.67(g)(1) . . . . . . . . . . . . . . . . . . . . . .	21

28 Cal. Code of Regs. 1300.67.8 . . . . . . . . . . . . . . . . . . . . . . . . .	7, 21, 29

28 Cal. Code of Regs. 1300.70 (b)(2)(H)1 . . . . . . . . . . . . . . . . .	8

28 Cal. Code of Regs. 1300.71 (b)(2) . . . . . . . . . . . . . . . . . . . . .	8, 22

28 Cal. Code of Regs. 1300.71(e) . . . . . . . . . . . . . . . . . . . . . . . .	24

TABLE OF AUTHORITIES, CONT'D

OTHER CALIF. AUTHORITIES CONT'D	PAGE

28 Cal. Code of Regs. 1300.71(e)(6) . . . . . . . . . . . . . . . . . . . . . .	7

28 Cal. Code of Regs. 1300.71(e)(8) . . . . . . . . . . . . . . . . . . . . . .	8, 22

28 Cal. Code of Regs. 1300.71 (h) . . . . . . . . . . . . . . . . . . . . . . .	24

AB 1455 (ch. 827 stats 2000) Section 1(c)-(d) . . . . . . . . . . . . . .	4, 29

California Rules of Court, Rule 28(b)(1) . . . . . . . . . . . . . . . . . .	10

California Rules of Court, Rule 28.1(e)(1) . . . . . . . . . . . . . . . . .	7

California Rules of Court, Rule 28.1(e)(2) . . . . . . . . . . . . . . . . .	10

California Rules of Court, Rule 1850(b) . . . . . . . . . . . . . . . . . . .	33

Proposition 64 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	passim

Proposition 99 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4

OTHER FEDERAL AUTHORITIES

29 C.F.R. 2560.503-1(b)(1) (2000) . . . . . . . . . . . . . . . . . . . . . . .	23

29 C.F.R. 2560.503-1 (b)(1)(iii) (2000) . . . . . . . . . . . . . . . . . . . .	23

29 C.F.R. 2560.503-1 (d)(3) (2000) . . . . . . . . . . . . . . . . . . . . . . .	23, 24

29 C.F.R. 2560.503-1 (e) (2000) . . . . . . . . . . . . . . . . . . . . . . . . . .	32

29 C.F.R. 2560.503-1 (f)(3)-(4) (2000) . . . . . . . . . . . . . . . . . . . .	24

29 C.F.R. 2560.503-1 (o) (2002) . . . . . . . . . . . . . . . . . . . . . . . . . .	23

Federal Rules of Civil Procedure, Rule 23(b)(2) . . . . . . . . . . . . . .	28

OTHER STATE AUTHORITIES

20 N.Y.L. Sch. J, Int'l & Comp. L. 249 (2000) . . . . . . . . . . . . . .	31

83 Boston U. Law Review 553, (June 2003) . . . . . . . . . . . . . . . .	6, 14

PETITION FOR REVIEW

TO THE HONORABLE RONALD M. GEORGE, CHIEF JUSTICE, AND HONORABLE ASSOCIATE JUSTICES OF THE SUPREME COURT OF CALIFORNIA:

ROBERT J. COHEN ("petitioner") petitions for review of the decision of the Fourth District Court of Appeals, Division Three (per Richard Fybel, J.) ("DCA"), affirming the Superior Court of Orange County's ("lower court") judgment in favor of HEALTH NET OF CALIFORNIA, INC. ("Health Net") and LOS ALAMITOS MEDICAL CENTER, INC. ("Los Alamitos") (collectively "respondents"). That decision is Ex. 1a . The order of the DCA of May 25, 2005, modifying its decision, denying rehearing, and ordering partial publication is Ex. 1b. Some of the issues herein are related to cases pending or granted review:

RELATED CASES/SUPREME COURT NO.

Kids Against Pollution v. California Dental Assn. S117156

California for Disability Rights v. Mervyn's S131798

Branick v. Downey Savings & Loan Assn S132433

Benson v. Kwikset Corp. S142443

Bivens v. Corel Corp. S132695

Lytwyn v. Fry's Electronics, Inc. S133075

Frey v. Trans Union Corp. S133272

Thornton v. Career Training Center S133275

Foundation Aiding the Elderly v. Superior Court S133293

Numerous related cases are also pending in the lower courts.

/ / /

A.	ISSUES PRESENTED

1. Petitioner, like millions, purchased HMO coverage from Health Net whose advertising and Evidence of Coverage ("EOC") state that member liability is limited to a co-payment. That limitation is contradicted by form Conditions of Service ("COS") imposed by in-network Emergency Rooms ("ER"), a time of conspicuous consumer vulnerability. Have respondents violated Health and Safety Code § 1340 et seq., 1 29 U.S.C. §1001 et seq. ("ERISA"), or Business and Professions Code § 17200 et seq. ("UCL"), when they promise members will only be responsible for co-payments, fail to pay, and impose full member liability for routine ER care?

2. What relief is available to members who paid ER bills, or premiums for ER care where pre-paid care was not established at assigned network hospitals?

3. The DCA did not apply the presumption in Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1207-1208. Does Proposition 64 apply retroactively?

4. When bills were not paid, care was disrupted, petitioner was dunned, called at home at night, and threatened with credit ruination and litigation. Has petitioner suffered "injury in fact and . . . lost money or property", even though he refused to pay the bills?

5. Under what circumstances will compliance be met where cross-motions for summary judgment were determined without class certification as authorized under former law?

6. Should this action be granted review and consolidated/held with related actions? Because of alternative stated grounds, limited review may not alter the results below.

B. WHY THIS ACTION DESERVES REVIEW AS TO ALL ISSUES.

This case challenges HMO practices that shift downstream risk to large numbers of members for bills not paid by often bankrupt, intermediary physicians' association/medical groups ("IPA"). The issues divide into: "balance billing" of members for unpaid provider claims (issues 1 and 2), and Proposition 64 (issues 3- 6). However, injury for standing under Proposition 64 (issue 4) flows from the injury caused by balance billing. The facts were ripened in cross-motions for judgment. Chateau Chamberay Homeowners Assn. v. Asso. Int'l. Ins. Co. (2001) 90 Cal.App.4th 335 (issues of law remain); Alliance for a Better Downtown Millbrae v. Wade (2003) 108 Cal.App.4th 123, 1299 (reviewed de novo). Public interest is present in: a) stability for a teetering emergency care system, b) rights of members to be held harmless for ER care; and c) application of Proposition 64.

The DCA prejudiced the public interest in two ways. First, it permits an ongoing failure of Health Net to timely pay ER bills which has been determined to "jeopardize the health care delivery system." Joint Appendix ("JA") p. 1876.2 Second, it allows members to continue being duped into paying their HMO's bills by "responsibility" terms imposed in form COS. The DCA contradicts law disapproving of balance billing and provides precedent that unpaid ER doctors freely bill members, who in turn have no judicial remedy against the HMO. If review is not granted at this time, or the opinion is depublished, restitution will be precluded for periods of high IPA defaults.

1. The ER Funding Crisis Invokes Important Public Concern.

The legislature has declared that "there is a looming health care crisis in America." § 127630(a)(5). Voters agreed by adopting Proposition 99 in 1988 which taxed cigarette sales to fund uninsured ER care. Ballot materials explained that, "The truth is it takes money to deliver medical care." However, that initiative did not abate the dilemma in ERs. See Kinlaw v. State of California (1991) 54 Cal.3d 326. Indeed, the funding crisis has expanded to HMOs, where the legislature has found that, "[T]here is an urgent need to resolve . . . [payment of ER claims]." AB 1455 (ch. 827 stats. 2000) § 1(c)-(d).

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a. Absent a Contract with Health Net, ER Doctors Have No Recourse Against HMOs.

However, in 2001 instead of urgent resolution, HMOs added a profit-
motivated shell game that further reduces ER doctors' "money to deliver medical care" even though the member is insured. Emerging cases held that providers do not have a recourse against HMOs for unpaid claims assigned to IPAs. Unrecognized below, those cases also held that HMOs owe duties to members. California Medical Asso. v. Aetna U.S. Healthcare of Cal., Inc. (2001) 94 Cal.App.4th 151, 166 (HMO duty is owed "to the enrollees . . . not to Physicians"); Desert Healthcare Dist. v. PacifiCare, FHP, Inc. (2001) 94 Cal.App.4th 781; Coast Plaza Doctors Hospital v. UHP Healthcare (2002) 105 Cal.App 4th 693, 703-704; Ochs v. PacificCare of California (2004) 115 Cal. App.4th 782, 791 (ER physician has C/A against member who has C/A against HMO). Without a direct relationship, there is nothing for ER doctors under the HMO shell.

b. Health Net's Underfunded Intermediaries Routinely Fail to Pay.

Health Net requires that ER claims be submitted pursuant to unspecified "industry standards". JA p. 1786. Uncontradicted evidence showed that, taking advantage of cases insulating HMOs, the industry standards changed in 2001 when ER physician's claims were delegated to IPAs. JA p. 3308.

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IPAs assume the risk of loss if costs of care exceed the "capitated" (per member) monthly payment set by the HMO. JA p. 3143. Providers trying to collect from IPAs experience a wide shortfall because of ubiquitous IPA insolvency. Between 1997 and 1999, 115 California IPAs declared bankruptcy, disrupting care for 2.5 million HMO members. 83 Boston University Law Review 553, 557 and 564 (June 2003). The years 1999 though 2003 experienced similar default rates when another 140 of Health Net's IPAs closed for financial reasons. JA p. 3144. The only evidence is that IPA insolvency is caused by actuarially unsound payments to IPAs, especially in unpredictable and often uncontrollable areas like oncology and radiology. JA p. 3144. California IPAs are in a "Darwinian struggle for survival," where success depends on "avoiding the high- cost patients who need us most." 83 Boston U. Law Review 553, 564 (June 2003). Health Net never contested that it "knew or should have known about this notorious problem that was the subject of industry-wide debate, study, and public hearings well before the treatment of plaintiff's son in 2001." JA p. 3144-45.

c. Unpaid ER Doctors Must Either Donate to HMO Profits or Dunn Members.

Health Net converts ER doctors into involuntary contributors to its massive subsidy. § 1317; 42 U.S.C. 1395dd (ER must stabilize without regard to ability to pay); Ex. 2 p. 4 ("number [of claims] . . . may be large").3 The member is not at risk where the provider, seeking referrals, implements non-recourse arrangements. JA p. 1616 (Jeremy's non-emergency, contracted COS at Long Beach Memorial Hospital, Para. 12: "The patient's plan will be financially responsible, subject to co-payments. . ." for covered services); see Whiteside v. Tenet Healthcare Corp. (2002) 101 Cal.App.4th 693, 703. However, Health Net explained that its gatekeeper power is ineffective with ER doctors who are "historically unwilling" to contract with its rag-tag IPAs, because "they don't need . . . patient referrals". Reporter's Transcript ("RT") p. 94. With ER doctors unwilling to bear IPA risk, Health Net forgets §1379 protection, violating 28 Cal. Code of Regs. 1300.67.8.

Health Net still fails to pay ER physicians. The 2005 Department action required some reimbursement for providers/members, but made findings only as to claims underpaid by an 80% reimbursement scheme over a 10 month period in 2004, and omitted completely unpaid claims during years of IPA failures. Ex. 2 pp. 1, 5. Additional shrinkage is assured because members are reimbursed only if they initiate a claim to be mixed in with other mail, rather than using available provider collection reports. Ex. 2 pp. 3, 5; see JA pp. 1772, 1825. After only 10 months of limited relief, the Department then gives up four years of further enforcement "for the balance billing . . . between January 1, 2000 and October 12, 2004". Ex. 2 at 6. This court is members' last resort, having been rejected by the DCA and deserted by the industry-dominated Department for times of high IPA default. The exclusive jurisdiction found by the DCA is just another empty shell.

2. Members Deserve to be Held Harmless from Widespread HMO Risk Shifting.

Health Net owes it members duties regardless of delegation. Solorzano v. Superior Court (1992) 10 Cal.App.4th 1135, 1144-45 (deception). Health Net must supervise the financial and administrative capacity of its IPAs (JA p. 2740 [admits duty], 28 Cal. Code of Regs. §1300.70 (b)(2)(H)1), and must assume claims if the IPA fails. 28 Cal. Code of Regs. §1300.71(e)(6); §§ 1360; 1371.4 (must pay for ER care); 1371; and 1371.35 (f) (HMO's duty "shall not be. . . waived when the plan requires its [IPA]. . . to pay claims. . ."); 28 Cal. Code of Regs. §1300.71 (b)(2) (cure misdirection of claims) and §1300.71(e)(8).

Without payment, the ER doctors, "can't be sure who is responsible other than the member." JA p. 3309. Downstream risk for basic ER, like the $713 billed to petitioner, is shifted to the member. The pre-paid plan member is left holding, and being beaten with, the ER stick. Uncontradicted evidence shows that balance billing of members for unpaid costs of care "is a large and serious problem in the HMO industry. . . . Members are often billed by providers for supposedly covered claims." JA p. 3145; see 1711 (Amount unpaid to one ER by one IPA is $5121.69). During the litigation, the ER doctors declared that members "on occasion" pay the bills. JA p. 3309. However, before litigation, when petitioner called and complained that HMO liability was being foisted on him, the ER group responded, "It happens a lot." JA p. 3035; see Ex. 2, p. 3 (there "may be . . . members who . . . have paid sums . . . in excess of their financial responsibilities [in the EOC]").

Billings are coercive because of the need for continuing treatment, credit reporting can affect loan costs, patients can be unwilling to disappoint their trusted doctors, and consumers would rather pay than litigate. JA pp. 1928, 3145. Similarly, the COS is adhesive. Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 652-54; Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309, 1318. Respondents' COS contradicts the promises by requiring members to guaranty payment for basic ER care. Podolsky, supra pp. 645-46 (Terms "guarantor" and "responsible party" are equivalent). The DCA held this practice lawful, refusing enforcement of HMO duties, ERISA, and UCL. It presents widespread interest of first impression warranting review. Brandt v. Superior Court (1985) 37 Cal.3d 813, 816; Valley Bank v. Superior Court (1975) 15 Cal.3d 652, 655. Millions of members deserve to be held harmless from balance billing. The consumer's central purpose in buying coverage, to shift the risk of costs to a pool of insureds, is damaged by respondents' shedding risk back to members. JA pp. 3143-44. In Vasquez v. Superior Court (1971) 4 Cal.3d 800, 808, this court held that, "[p]rotection of unwary consumers from being duped . . . is an exigency of the utmost priority in contemporary society."

3. Proposition 64 is Leading to Inconsistency.

Proposition 64 has divided the courts and "general guidelines can be laid down for future cases," resolving conflicts, and providing uniformity. Oceanside Union School District v. Superior Court (1962) 58 Cal.2d 180, 185-86; California Rules of Court, Rule 28(b)(1). Additionally, petitioner is one of few affected plaintiffs in pending petitions. The DCA took a view of continued standing that contradicts the remedial UCL. It is of first impression and review can provide guidance on standing as well as Code of Civil Procedure § 473 relief.

Petitioner's arguments on Proposition 64 generally duplicate those of similar parties in the related petitions at p. 1. He incorporates arguments that the initiative operates prospectively only pursuant to Cal. Rules of Court, Rule 28.1(e)(2). Discussion of Proposition 64 below is limited to the issues of standing and class procedures, assuming retroactivity arguendo.

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C. STATEMENT OF FACTS.

1. Petitioner Remains Eligible for Benefits as a Member of the ERISA Plan.

Petitioner and his then 16 year old son Jeremy, remain participants in his employer's ERISA plan (JA p. 3037), and formerly were members of an Health Net HMO offered to the public and as a service within that ERISA plan. JA pp. 1163 (membership), 1201 (Jeremy eligible), 1569, 1716. After enrollment, Health Net unilaterally changed petitioner's selected group, a still-solvent Allied, to Long Beach IPA without disclosure of any financial problems. JA p. 3031.

2. Respondents Agreed to Contract/Statutory Duties to Protect Members.

Unlike a Kaiser-type plan, Health Net does not provide care, but "arranges medical service . . . through contracts with IPAs and hospitals." JA pp. 123, 19 (2.1 million members), 3143 (one of the largest California HMOs); 1148, 1740 ("required by law to arrange" prepaid care). Hospital services for members involve 440 in-network hospitals in California. JA pp. 1695, 1945. Los Alamitos is one of 41 Tenet Hospitals contracting member ER services. JA pp. 1162-63 (admits Tenet Healthcare hospital); 1576, 1883 (admits "a contracted hospital where members. . . could receive medical services").

Health Net's marketing matrix (JA pp. 1589-90), and its EOC (JA pp. 1595-
96) mailed to members after enrollment (JA p. 126) state that members will only be responsible for a $50.00 co-payment for non-admitted emergency care, including both facilities and professional services. JA p. 311 (form "basis of coverage"); 1595-96 (ER $50 co-payment); 1805 and 1816, and 1892-93 (co- payment); 1589-90 (advertising matrix); 1579 (plain language expert for § 1360 standard); 1732 and 1882 (matrix authorized by Health Net).

The agreement between Los Alamitos and Health Net appears consistent with the advertising and EOC when at JA p. 1744 it provides:

In no event, . . . shall any member be liable for sums owed by HEALTH NET, and neither HOSPITAL nor any health care provider rendering services to Members pursuant to this agreement shall bill, charge, collect a deposit or other sum or seek compensation, remuneration or reimbursement from, or maintain any action or have any other recourse against a Member. . .

See also §1379; JA pp. 1770 (cannot bill ER costs to "members for any such service"); 1744 (surcharge prohibited).

3. The COS Imposed in the ER Denies Limits on Member Liability.

Tenet form COS still in use (JA pp. 2533-34) spawns downstream member risk by contradicting limited liability:

I further understand that I am responsible to the hospital and physician(s) for all reasonable charges incurred by me and not paid by third party benefits. [JA pp. 1605-09]

Similarly, Los Alamitos did not pass on any prohibition against billing members to its ER physicians. JA pp. 1804, 1815. There was no "billing error." ER doctors merely followed their contract with Los Alamitos which states:

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[ER Doctors'] Group shall separately bill patients for professional services rendered pursuant to this agreement . . . . JA p. 1827.

4. The Action Presents Clean, Covered Claims.

Jeremy received ER services from Los Alamitos on March 15, 2001, and suffered two episodes of seizures in June and November of 2001. JA pp. 1571-72. Coverage is clear. JA pp. 1740 ("emergency" defined); 1801 and 1813 (medically necessary); 1884 (transported by ambulance); 2856 ("There are no non-covered services"). The evidence uniformly shows that all co-payments were paid. JA pp 1571-2; 1717; 1885.

5. Respondents Breached their Duties by Leaving Petitioner to be Dunned.

Disruptions to Jeremy's care occurred after his November 2001 seizure, when he urgently required a referral to a neurologist. At that time, petitioner was denied access to a referral by his "primary care" physician until he changed IPAs because Long Beach IPA had not been paying its bills. JA p. 1573-74. Petitioner promptly called Health Net who refused. He called the Department and complained about the referral denial. It intervened. JA pp. 1574-75, 1626 (phone bills). During the calls, Health Net asked if petitioner's complaint to the DMHC would be resolved if it changed his IPA. The DCA infers some waiver when petitioner stated "that it would, but mentioned all of the bills that [he] had been receiving." JA p. 1574. Without any time to investigate, Health Net immediately responded that the bills were in error and should be ignored. JA pp. 1574, 3034.

The IPA plays a central role in authorizing and paying for care. JA pp. 1595 ("Always present your . . . [ID] card."); 1710 (ID states: "TO DOCTOR", contact Long Beach IPA). ER providers are required to consult and get authorization from the IPA. JA p. 1747, 1770, 1785. The president of Long Beach IPA stated that payment of claims was its obligation, "including non- admitted emergency room professional services." JA p. 3206. Long Beach IPA's contract with Health Net shows ER professional services as part of a "shared risk pool" of the IPA, but Health Net expunged particulars. JA pp. 2928 and 2933. "Shared risk pools" are items budgeted to the IPA which can be adjusted based on deviation from the initial amount set by the HMO. 83 Boston U. Law R. 553, 560 fn 34, 580 (June 2003).

The ER providers first billed Long Beach IPA as follows: a) 04/04/01 for services provided 03/15/01; b) 08/14/01 for services provided 06/07/01; and c) 12/05/01 for services provided 11/13/01. JA pp. 2727-31. However, due to an under funded delegation by Health Net of oncology costs in 2001, Long Beach IPA became insolvent. It eventually joined the hundreds of other Health Net IPAs in disruptive bankruptcy proceedings in January 2002. JA pp. 3207. The ER doctors, CA EM-1 MED SERVICES, are listed as creditors in that filing. JA p. 1711 ($5121.69 unpaid). When petitioner inspected that file, he found publicly filed claim forms containing his, and thousands of other members' personal identification and medical information, including the diagnosis and treatment of Jeremy. JA pp. 3031, 3039-54. The IPA "shell" had nothing under it but insult to members' privacy.

The ER doctors also submitted an "on demand" statement on 12/01/01 to Health Net. JA p. 2448. Following its own advice, Health Net ignored the bills, paid nothing, and requested no information. JA pp. 1575, 2727-31. The ER doctors remained unpaid for a year. Petitioner was billed numerous times, sent to collections, called at home at night, and threatened with credit ruination and suit. JA pp. 1573-75. Like millions of members assigned to insolvent IPAs, he became the only payment "pea" left under any Health Net shell.

D. STATEMENT OF THE CASE

1. At the Pleading Stage, the Lower Court Dismissed the ER Doctors Who had Merely Followed Their Contract.

Petitioner filed the complaint August 12, 2002. JA pp. 1, 3. Immediate service on Health Net followed. JA p. 1850 (August 14, 2002). Substituted counsel promptly moved to amend. JA pp. 47, 49, 340 (granted). Respondents demurred. RT pp. 2-3; JA pp. 355, 371, 384. Petitioner opposed. JA p. 421. Los Alamitos argued it has a right as a matter of law to collect from petitioner pursuant to the COS, even though petitioner never signed. JA pp. 614, 1571-72. Demurrers were sustained with leave. JA p. 629.

The operative Second Amended Complaint ("SAC") alleged petitioner's membership in Health Net's HMO individually, and that he brings the action "on behalf of the general public". JA p. 636. The SAC alleges breach of duty in not configuring ER care to comply with the EOC and law, and permitting that configuration to continue after notice, with the specific intent to avoid costs of doing business. JA p. 636. The SAC alleges a conflict between the EOC and the adhesive COS imposed by Tenet hospitals like Los Alamitos. JA pp. 636-38. Health Net is alleged to not pay numerous claims through systematic practices, which are then billed to and paid by the members. Respondents are alleged to be unjustly enriched. JA p. 639. Restitution for: the value of ER bills paid by members, and unearned premiums paid for ER care, and declaratory and injunctive relief are sought. JA p. 647.

Respondents demurrered. JA pp. 834, 846, 1002. Petitioner opposed. JA p. 971, 981-2. The lower court's ruling on demurrers dismissed the ER physicians. JA pp. 1011-12. Los Alamitos' demurrers were overruled to C/A 2 through 4, sustained as to remainder without leave. JA p. 1010. Health Net's demurrers were overruled as to C/A 1 through 5, sustained as to remainder without leave. Id. Respondents answered. JA pp. 1148 (Health Net), 1162 (Los Alamitos).

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2. The Lower Court Precluded UCL Discovery.

Petitioner attempted UCL discovery, described by Health Net as "severely limited" by lower court rulings. RT p. 46:13. Interrogatories seeking IDs of members whose claims were paid late or communicating about ER bills [JA p. 450, 456, 484-488] were denied as burdensome. JA pp. 907-08; RT p. 25. Subpoenas seeking blank ER COS from 44 of the 440 Health Net's in-network hospitals [RT pp. 73-4; JA pp. 2750-54] were quashed on motion of respondents [JA pp. 1509, 1931, 2705] as irrelevant. JA p. 2769.

Petitioner's Requests for Admissions seeking to establish widespread insolvency by IPAs supervised by Health Net [JA pp. 1392, 1400-17] were objected to by motion for protective order. JA pp. 1308, 1387, 2742. Petitioner opposed. JA pp. 2720-37. The lower court granted protection and sanctioned counsel and petitioner $2050. JA pp. 2755-56; RT pp. 60 (only this IPA and your client relevant); 64. Petitioner reasonably ceased discovery after sanctions were imposed on him personally for relevant information sought by counsel.

3. Rulings on Cross-Motions Below and the DCA Ignored Duties to Protect Members.

Petitioner moved for summary adjudication of the UCL. JA pp. 1548-1930. Respondents separately moved for summary judgment of the SAC. JA pp. 1953 et seq., 1975 et seq. Petitioner's motion was denied, respondents' motions were granted, and judgments entered. JA pp. 3381-82, 3422 et seq., 3445-55. Respondents filed cost bills totaling $10,000. JA pp. 3413, 3456. Petitioner's motion to Tax/Strike/Fix his fees was denied, except as to Health Net's $164 in "trial" exhibits. JA pp. 3466-67 (Payment insufficient correction).

Notice of Appeal was timely filed. JA p. 3463. The decision of the DCA affirming the judgment was entered April 27, 2005. Ex. 1a. Petitioner requested rehearing May 3, 2005. On May 25, 2005, the DCA denied rehearing, certified publication except parts IV-VI, and modified its opinion to reverse discovery sanctions resulting in a change in the judgment. Ex. 1b.

E. DISCUSSION

The argument is divided into three groups: Section 1--the merits of the UCL claims; followed by the related Section 2--standing under Proposition 64; and, Sections 3 through 5--theories in avoidance of the merits and remedy.

1. The Widespread Practice Imposing Full Liability for Basic ER Care Breaches Respondents' Duties to Members.

Los Alamitos authorized Health Net to represent that it provides ER care on a pre-paid basis. JA pp. 1593, 1760, 1812. It also contracts with Health Net to provide ER services consistent with the EOC. JA pp. 1805, 1816, 1744. It then ignores the agreed limitations as to ER care (JA pp. 614, 1607), and imposes full liability on members for 100% of both ER doctors and facilities charges as if a pre-paid policy did not exist. JA pp. 364, 1606, contra JA pp. 1780 (Health Net rate is 75% of facilities charges), 2730-31 (Health Net paid less than amounts dunned), 3068-69 (EOB for facilities charges). While the DCA cited the ER doctors' agreement to accept reductions if paid by the HMO [JA p. 1828], the member has no way to ascertain any reduction that is not reflected in the bills.

The respondents cannot convert a "co-payment" into a "down payment" consistent with reasonable expectations of consumers of basic ER services or §1360. 28 Cal. Code of Regs. 1300.63.1(c)(9) (EOC must identify exclusions). The COS nullifies a member's property interest in limited liability. Petitioner "got what he paid for" only if he waived those property rights, stood as guarantor of performance by Health Net and its intermediaries, and only after seven months of litigation.

Full liability cannot be a condition of care already required by the EOC. See Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, at 652-54 (guaranties for services already required by law "lack consideration"); Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595, 601 (hospital lien limited to agreement--"we simply give effect to its contracts"); Serafini v. Blake (1985) 167 Cal. App. 3d Supp. 11, 12; Benton v. Vanderbilt (2000 M.D. Tenn.) 118 F. Supp. 2d 877 (collection limited to agreement); see Grauberger v. St. Francis Hosp. (N.D. Cal. 2001) 149 F. Supp.2d 1186 (balance billing prohibited). The DCA is at odds with standard contract law by exempting HMOs from promises to millions of members for basic ER services.

a. The Inclusion of Invalid Terms Deceives Members.

The mere inclusion of invalid liability terms is an unlawful practice because of the likelihood that members will be deceived. People v. McKale (1979) 25 Cal.3d 626; accord Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1297 ("It is an unfair or fraudulent business practice to assert a contractual right that one does not have"); see Pastoria v. Nationwide Insurance (2003) 112 Cal.App.4th 1490, 1497 (nondisclosure of imminent reductions in coverage). Thus, the COS violates §1360 and the UCL even had no member ever been billed.

b. By Declining to Contract with ER Doctors, Health Net has Failed to Earn Premiums Paid for ER Care.

There is no provider of routine ER care on the stated terms, and Health Net has failed to make pre-paid arrangements for ER services. JA p. 1740 (Health Net is "required by law to arrange for [services] . . . on a prepaid basis"); RT p. 91 (tie a Health Net "ribbon" around an ER care "straw"). Health Net's knowledge that ER doctors are historically non-contracted implies ratification. See JA p. 1780 (Health Net reviews contracts); College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 726. Respondents have no defense "even when their conduct is consistent with industry standards." People v. Freemont Life Ins. Co. (2002) 104 Cal.App.4th 508, 526.

The most certain way to prevent balance billing is for Health Net to pay claims when services are provided. Health Net need only arrange a direct relationship, similar to that with Los Alamitos. JA pp. 1746, 3308-09 (like other HMOs); 28 Cal. Code of Regs. 1300.67.8 ("Written contracts must be executed [for] . . . each provider . . . which regularly furnishes services. . ."). Routine ER services are "regularly furnished" since they must be included in basic HMO coverage. 28 Cal. Code of Regs. 1300.67(g)(1); see JA p. 1711 ($5121.69 unpaid to one ER by one IPA). Form COS can then easily be aligned with the EOC to prevent continuing member deception. §1379; JA p. 1616. The DCA wrongly decided this issue of first impression when it left pre-paid members at risk.

c. The Respondents Simultaneously Violate ERISA and State Laws.

The DCA acknowledged ERISA jurisdiction by recasting the SAC, but found no material deception or violation using dates of claims presentation to Health Net after the litigation commenced. Such holding conflicts with published authorities and deserves review. Member's rights under state laws affecting insurance and the risk pooling arrangement are saved under ERISA. Anderson v. Continental Casualty Company (E.D. Cal. 2003) 258 F. Supp. 2d 1127, 1132, citing Kentucky Assn of Health Plans v. Miller (2003) 538 U.S. 329). The DCA creates a conflict since § 1360 et seq. has been found enforceable under ERISA, despite any Department jurisdiction. Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1299.

Health Net violated surviving statutory duties. §1371.4 (must pay for ER care); §§1371 and 1371.35(f) (an HMO's duty to promptly pay "shall not be . . . waived when the plan requires its [IPA]. . . to pay claims. . ."); 28 Cal. Code of Regs. § 1300.71 (b)(2) (cure misdirection within 10 days); § 1300.71 (e)(8). The DCA's finding that the ER bills were not delegated is based on a statement that does not actually deny delegation, but merely concludes that the IPA was "not responsible". JA p. 2876. Petitioner timely objected. JA p. 3341. Inadmissible evidence is not substantial. University of Southern California v. Superior Court (1990) 222 Cal.App.3d 1028, 1035. The contract speaks for itself. The courts below forgot the proper scope of inquiry on summary judgment.

As to the timing of payments, the DCA relied on a staged ceremony which Health Net used during the litigation to cover up its prior failures. JA pp. 2730, 2732 ("02/27/03 Susan from Hlth net cld - they would like the claim fax'd 818- 676-7200"). The DCA's finding of no adequate presentation of claims "until after the lawsuit was filed" (Ex. 1a p. 16) is incorrect. The payments reflect simple- minded theater, not timely compliance.

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In billing the IPA, the ER doctors did exactly what was requested of them by Health Net. JA p. 3309 (no directions to directly bill Health Net); see JA p. 1710 (ID instructs doctors to contact the IPA). The ER doctors billed the IPA on 04/04/01 for the first visit, on 08/14/01 for the second visit, and on 12/05/01 for the third visit. JA pp. 2727-31. Claims were filed with Health Net on those dates.

ERISA regulations, operative when the services were provided must apply. Bode v. St Joseph's Health Systems (C.D. Cal. 2003) 298 F. Supp. 2d 918, 920; 29 C.F.R. 2560.503-1 (o) (2002). Those regulations required that a reasonable claim procedure be established [29 C.F.R. 2560.503-1(b)(1) (2000)] and administered in a way that does not unduly hamper initiation or processing of a claim. Gaines v. The Sargent Fletcher, Inc. Group Life Insurance Plan (C.D. Cal. 2004) 329 F. Supp.2d 1198, 1220, 29 C.F.R. 2560.503-1 (b)(1)(iii) (2000). When Health Net failed to oversee its IPA, the disruption of claims handling was unduly hampered.

A claim is filed by either the member or representative when requirements of a reasonable claim procedure have been met. 29 C.F.R. 2560.503-1 (d) (2000). While doctors are directed to contact the IPA, the EOC contains no procedure for petitioner whose "claim is deemed filed when a written or oral communication is made . . . to the person or organizational unit which handles claims for benefits under the plan." 29 C.F.R. 2560.503-1(d)(3) (2000). Petitioner's phone calls in November 2001, brushed off by Health Net, presented a claim. Chateau Chamberay Homeowners Assn. v. Associated Int'l. Ins. Co. (2001) 90 Cal.App.4th 335, 347-48 (no investigation breaches contract and bad faith without dispute).

Further, personal service of the ER bills (JA pp. 1850 (Aug. 14, 2002), 43-6 [exhibits]) raises duties to process and pay. 29 C.F.R. 2560.503-1 (d)(3) (2000). Duties include promptly providing notice of any additional materials needed to perfect the claim. § 1371.35 (c), 29 C.F.R. 2560.503-1 (f)(3)-(4) (2000); 28 Cal. Code of Regs. 1300.71 (e) (must acknowledge receipt of claim) and 1300.71 (h) (45 days "of receipt . . . by plan or capitated provider" to contest).

Inaction by the plan causes claims to be "deemed denied". Wertheim v. Hartford Life Insurance Co., (E.D. Va 2003) 268 F. Supp. 2d 643, 659-660. Health Net violated ERISA by obdurate inaction; it failed to pay or request information within 45 days. JA pp. 1574-75, 2727-31; § 1371. Contrary to established authority, the DCA eviscerated ERISA and state law.

2. Continued Standing is Present Under the New UCL.

Presenting an issue related to the merits above, Business and Professions Code §17204 requires "injury in fact and. . . lost money or property."

a. UCL Standing Should be Broadly Interpreted.

The DCA's myopic view of standing offends the remedial purposes of the UCL. Barquis v. Merchants Collection Assn. of Oakland (1972) 7 Cal.3d 94, 99-
101, 11-112 ("given the creative nature of the scheming mind"). This remedial character was reaffirmed by Proposition 64 at SEC. 1 (1). This court has held:

Modern society seems increasingly to expose men to . . . injuries for which individually they are in a poor condition to seek legal redress, either because they do not know enough or because such redress is disproportionately expensive. If each is left to assert his rights alone if and when he can, there will at best be a random and fragmentary enforcement, if there is any at all. This result . . . will operate seriously to impair the deterrent effect of the sanctions which underlie much contemporary law. Vasquez v. Superior Court (1971) 4 Cal.3d 800, 807.

Identical policies attach to the UCL where the purposes include "the right of the public to protections from fraud and deceit [citations]." People v. Freemont Life Insurance Co. (2002) 104 Cal.App.4th 508, 514. "Restitution is . . . designed to penalize a defendant for past unlawful conduct and thereby deter future violations." People v. Toomey (1984) 157 Cal.App.3d 1, 25-26. Broad construction implements important public policies as identified by this court in Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126:

Representative UCL actions make it economically feasible to sue when individual claims are too small . . . and thereby encourage attorneys to undertake private enforcement actions.

b. The DCA Cavalierly Rejected Petitioner's Factual Injuries.

Actual injury flowed to petitioner: disruption of Jeremy's care, dunning, calls, and threats to credit and litigation. JA pp. 1626 (phone bills after disruption of critically needed care) 1628-30, 2450-51(mom and petitioner called upset), 3034-36 (distress). Such injuries have been found sufficient. See Cisneros v. UD Registry (1995) 39 Cal.App.4th 548, 580-81 (credit reporting); Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 433-434 (payment delay; "a plaintiff who . . . loses his property and suffers mental distress may recover"). The DCA's narrow view ignores recognized impacts from respondents' conduct.

c. Taking of Policy Rights and Diminution in Value Produce Standing.

Imposition of personal guaranties for routine care erodes the member's "benefit of the bargain". Uncontradicted evidence showed that the value of Health Net's plan is substantially reduced by its risk shifting. JA pp. 1928 (3% of premiums for ER services), 3234-35 (Difference in value of $1,764.56 compared to a Kaiser plan which can't compete with Health Net's risk shedding schemes). "Property" includes the pilfered policy term limiting liability. Estate of Mendenhall (1960) 182 Cal.App.2d 441, 444 (policy is property). "Money" includes restitution as allowed by this court in Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 174. Health Net's eventual payment of the claims does not affect this already spilt milk. Petitioner's loss of contractual limited liability, and the loss of premium value, independently confirm standing.

d. In this Public Interest Action, Petitioner Retains Capacity to Maintain the Action Because He Shares a Common Wrong.

Common law standing/capacity doctrines for public interest cases retain vitality despite partial codification. California Water & Tel. Co. v. Los Angeles (1967) 253 Cal.App.2d 16, 26; see Barela v. Superior Court (1981) 30 Cal.3d 244, 256. Thus, traditional common law concepts apply to this action once the statutory terms are satisfied. The DCA would require a member to pay the bills before enforcing duties against Health Net, similar to a taxpayer who may only seek a refund. Revenue and Taxation Code §5140. However, refusal to pay the bills does not affect public interest capacity. Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1146. Further, petitioner properly asserts only an "on behalf of the general public" claim, and need not join an individual UCL claim. Alch v. Superior Court (2004) 122 Cal.App.4th 339, 378, 387-89; Bunker v. County of Orange (2002) 103 Cal.App.4th 542, 546.

Eventual payment by Health Net also does not avoid the merits. In La Sala v. American Savings and Loan (1971) 5 Cal.3d 864, the trial court concluded that "there is no individual plaintiff remaining. . ." having recovered what was due them personally. Id. at p. 870. This court reversed stating that the personal recovery did not "render those plaintiffs unfit" in their representative capacity. Id., accord, Wilens v. T.D. Waterhouse Group, Inc. (2003) 120 Cal.App.4th 746, 755 ("picking off" plaintiffs disapproved). Indeed, payments to providers are not petitioner's property. Whiteside v. Tenet Healthcare Corp. (2002) 101 Cal.App. 4th 693, 703.

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Representative standing is recognized where consumers have suffered a common wrong, although not necessarily the same amounts or types of damages. In Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, the company advertised free 24-hour technical phone support with purchase, similar to pre-paid HMO promises. Id. at 230. To save money, Apple canceled free support but offered a paid support option to purchasers, like the fee-for-service COS. Id. The plaintiffs had called and been refused service, but had not paid for service. Id. at 232. The court approved the representative plaintiffs stating:

The fact that the class representatives had not personally incurred all of the damages suffered by each different class member does not necessarily preclude their providing adequate representation to the class. (citation) . . . [A]ll of the class members here allege a common wrong: They were deprived of the promised free technical support. Id. at 238-39.

Accord, Fed. Rules of Civil Procedure, Rule 23(b)(2). Petitioner and members suffer the common wrong of respondents' risk shifting.

Finally, an affected plaintiff who gains personal knowledge of the falsity of the HMO's promises, reasonably changes HMOs. Solorzano v. Superior Court (1992) 10 Cal.App.4th 1135, 1138, 1149. A rule avoiding the merits unless the plaintiff maintains enrollment in the HMO, would tend to insulate the most egregious conduct from review. See Stocks v. City of Irvine (1981) 114 Cal.App.3d 520, 531-33. The omissions are repetitive yet avoid review. They deserve a forum.

3. Petitioners' Claims do not Hinder any Jurisdiction of the Department.

Petitioner does not seek to rewrite Health Net's contracts approved by the Department, but rather, to challenge the failure of Health Net to: 1) contract at all for basic ER services in violation of 28 Cal. Code of Regs. 1300.67.8, 2) pay ER providers under §1371.4, and 3) protect members from risk in contracts per §1379 and the EOC; see Ex. 2, p.2 (Department: duty to pay and to prohibit billing applied before 2004). These claims fall within the holding of Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1299-1300 ("despite the existence of a statutory enforcement scheme, . . . may still sue. . .").

The Samura court did not have benefit of the 2000 amendments. §1371.37(e)-(f) (non-exclusive remedies which do not affect any other duty under statute or contract); AB 1455 (ch. 827 stats 2000) §1(d) (Department to "assist" in implementing law); cf McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 422 (intent must affirmatively appear). Exclusive intent was not shown for UCL claims involving insurance in Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 983, nor savings and loans. Coast & Southern Fed. S. & L. Assn. v. Trans-Coast S. & L. Assn. (1971) 16 Cal.App.3d 205, 210. "Congress clearly . . . intended a call to the states (and private parties) . . . for all the help it could get . . . in regulating the marketing of HMO's." Solorzano v. Superior Court (1992) 10 Cal.App.4th 1135, 1149. Claims are precluded only if they are "inconsistent with and subvert the exclusive jurisdiction. . .". Satten v. Webb (2002) 99 Cal.App.4th 365, 384; accord Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256, 266 ("hinder or interfere").

Any jurisdiction in the Department does not extend to hospital COS forms or any ERISA claims. Even had the Department approved the COS, it would not be entitled to deference. Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1294. The remedies sought do not rely on any expertise of the Department. See Nader v. Allegheny Airlines (1976) 426 U.S. 290, 304-06. The UCL must be consistent with the law that it "borrows". State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1103. Courts retain "considerable flexibility . . . as required by the interests of justice," in deciding administrative jurisdiction. Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 392. The DCA conflicts with legislative intent and sound policy.

4. Petitioner and the General Public/Class are Entitled to Relief.

Petitioner's action to reimburse members who paid bills beyond the co- payment was discussed by the court in Ochs v. PacificCare of California (2004) 115 Cal.App.4th 782, 791 ("Ochs [ER physician] may have a remedy against individual patients, and those patients a remedy against PacificCare"). The DCA contradicts the general public/class remedy opined in Ochs. It also conflicts with sound policy by precluding representative actions to avoid the individual, daisy-
chain of litigation envisioned by Ochs.

a. The UCL Violation Justifies Relief for the General Public.

UCL actions include an injunction to prevent future harm (People v. Fremont Life Insurance Co. (2002) 104 Cal.App.4th 508), and restitution of unlawfully collected amounts. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 174; Corsini v. United Health Plans of New England (D.R.I. 2001) 145 F. Supp. 2d 184. This court has approved remedial hearings which "identify, locate, and repay . . . the full amount of funds improperly acquired. . .". Kraus v. Trinity Mgt. Services, Inc. (2000) 23 Cal.4th 116, 138; RT pp. 77-8 (lower court defers ID of members until remedy).

b. ERISA Presents a Parallel Basis for Relief for Members.

Health Net confuses its HMO service plan with the underlying ERISA plan to which petitioner still belongs. See JA p. 3354 (no longer a member of "the plan"). The Secretary of Labor has succinctly observed that an "HMO . . . is not an ERISA plan at all, but rather a service provider to the ERISA plan established by the [employer]." 20 N.Y.L. Sch . J, Int'l & Comp. L. 249, 276 (2000), quoting Nealy v. U.S. Health Care (1999) 93 N.Y.2d 209; see American Drug Stores v. Harvard Pilgrim Health Care (D. Mass. 1997) 973 F. Supp. 60, 67-68.

In addition to his surviving rights under state law, the court in Aetna Health Inc, v Davila (2004) 542 US 200, 124 S.Ct. 2488, 2496 described parallel relief to the UCL as follows:

A civil action may be brought . . . (B) to recover benefits due him under the terms of his plan, to enforce his rights . . . or to clarify his rights to future benefits under the terms of the plan. 29 U.S.C. §1132(a)(1)(B)

See also Commercial Life Ins. Co. v. Superior Court of San Diego County (1988) 47 Cal.3d 473, 477; Solorzano v. Superior Court (1992) 10 Cal. App. 4th 1135, 1138 (injunction not preempted by Medicare laws). Thus, as a member of the ERISA plan, petitioner has rights to declaratory relief as to future benefits due under the HMO service offered within that plan. He is still being lied to by respondents at every open enrollment. This court in Eye Dog Foundation v. St. Bd. of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541 discussed the proper scope of declaratory relief as follows:

[T]he "present right" contemplated is the right to have immediate judicial assurance that advantages will be enjoyed or liabilities escaped in the future.

Retrospective declaratory relief was also ignored. Petitioner was never informed by an Explanation of Benefits ("EOB"), and Health Net did not pay the full amount nor applicable interest. Rodoloff v. Provident Life and Accident Co. (S.D. Cal. 2003) 256 F. Supp. 2d 1137, 1142 (removes cloud); cf JA pp. 3068-69 (EOB for facilities charges); 29 C.F.R. § 2560.503-1(e). The DCA's finding that relief is not justified leaves California residents uniquely precluded from exercising ERISA rights.

5. Class Procedures Should be Deemed Satisfied and Excused.

The need for relief under Code of Civil Procedure § 473 involves two aspects: a) leave to allege affected plaintiff/class issues; and b) relief from any failure to move to certify the putative class prior to a hearing on the merits. See Cal. Rules of Court, Rule 1850(b) (may "grant relief from compliance"). Directions for relief are required to prevent merit avoidance. See Massey v. Bank of America (1976) 56 Cal.App.3d 29, 32.

a. Formalistic Pleading is Not Required.

If retroactive, formal pleading of class certification issues is not necessary. In Wilner v. Sunset Life Ins. Company (2000) 78 Cal.App.4th 952, 964 the court noted that a prior class complaint was superseded by the filing of an amended complaint, but that, "[a]s a matter of practicality, we shall direct the trial court to deem the class action allegations to be incorporated into the second amended complaint, which, of course, contains no such allegations." Formalistic "mechanical allegations" of class procedures are undoubtedly well known to respondents. See Hamwi v. Citinational-Buckeye, Inc. (1977) 72 Cal.App.3d 462, 467. There is a close identity between the widespread business practices alleged and compliance with the substance of Code of Civil Procedure § 382. The class may be defined in a motion to certify, notice given, and due process satisfied.

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b. Delay in Certification is Excusable and Does Not Expand Liability.

The twin events of the passage of Proposition 64, and any judicial finding of retroactivity impose unanticipated requirements. Further, erroneous orders precluding discovery, require time to cure. Any omission was not caused by a failure to research, laxness, or incompetence justifying denial. Fidelity Federal Savings & Loan Assn. v. Long (1959) 175 Cal.App.2d 149, 154. Indeed, class treatment had been found unnecessary under former law. Alch v. Superior Court (2004) 122 Cal.App. 4th 339, 408; Frieman v. San Rafael Rock Quarry (2004) 116 Cal.App.4th 29, 37. After discovery sanctions were personally imposed on petitioner, further attempts would be futile pumping of oil from a dry well.

Relief for a mistake in law based on mere confusion was affirmed by this court in City of Ontario v. Superior Court (1970) 2 Cal.3d 335, 343 (counsel not omniscient); see also Viles v. California (1967) 66 Cal.2d 24, 29; Riskin v. Towers (1944) 24 Cal.2d 274 (court ruling); State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 607 (split of authority); McCormick v. Board of Supervisors (1988) 198 Cal.App.3d 352, 360, 363 (court decision); Brochtrup v. Intep (1987) 190 Cal.App.3d 323, 329-30 (ambiguity in statute); Moore v. State of California (1984) 157 Cal.App.3d 715, 722-23 (court ruling); Souza v. Capital Co. (1963) 220 Cal.App.2d 744, 758 (ambiguity as to stay).

/ / /

A claimed failure to certify prior to a determination of the merits raises constitutional implications for both sides. For petitioner, the "retroactive application of a decision disapproving prior authority on which a person may reasonably rely . . . denies due process." Moss v. Superior Court (1998) 17 Cal.4th 396, 429; Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 829. Many of the related pending petitions have inconsistently struggled with due process issues. Branick v. Downey Savings and Loan (2005) 126 Cal.App.4th 828, 844-45 (substitution of plaintiffs); Lytwyn v. Fry's Electronics (2005) 126 Cal.App.4th 1455 (class allegations); Bivens v. Corel Corp. (2005) 126 Cal.App.4th 1392, 1405-06 fns 5 and 6, (substitution of plaintiff); Benson v. Quickset Corp. (2005) 126 Cal.App.4th 887, Slip Op. p. 17 ("due process require[s]. . . an opportunity").

On the other hand, respondents may object to "one-way intervention" in class actions. Home Sav. & Loan Assn. v. Superior Court (1976) 54 Cal.App.3d 208, 213-14; Home Sav. & Loan Assn. v. Superior Court (1974) 42 Cal.App.3d 1006, 1013-14. Petitioner moved for summary adjudication of the UCL before the existence of Proposition 64. However, respondents also made cross-motions before class notice had been given and did not object to petitioner's motion. Respondents have waived any prematurity objection. Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 831 fn 8; Employment Devl. Dept. v. Superior Court (1981) 30 Cal.3d 256, 263; Civil Service Employees Ins. Co. v. Superior Court (1978) 22 Cal.3d 362, 371-373. Respondents stand in the same circle they try to draw around petitioner.

Respondents cannot prove the residual issue of prejudice from any delay, because class relief is identical to that previously available by way of former "representative" UCL action. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163. The only speculative deviation is in the cy pres doctrine for members who cannot be located. Kraus v. Trinity Mgt. Services, Inc. (2000) 23 Cal.4th 116, 137; Corbett v. Superior Court (2002) 101 Cal.App.4th 649, 668. Respondents cannot claim some vested right to their plunder based on failing to find their own members. Otherwise, a party could create a defense through delay and expungement of membership records. Further, the availability of cy pres funds is not expansive since it commonly avoids a separate award of attorneys' fees against respondents. e.g. Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 726. Thus, the pleadings should be liberally construed and relief directed so that remedy may be had by this petitioner or by substituted member.

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/ / /

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F. CONCLUSION

HMO members and their ER doctors should treated lawfully and as promised by granting of review.

Dated: June 27, 2005	Respectfully submitted,

___________________________

Richard L. Spix

Attorney for Petitioner

CERTIFICATE OF APPELLATE COUNSEL

I, RICHARD L. SPIX, certify that this brief contains 8390 words, not including tables or this certificate, as reported by the word processing program used in its generation.

Dated: June 27, 2005	___________________________

Richard L. Spix

Attorney for Petitioner

PROOF OF SERVICE BY MAIL--CCP 1013A AND 2015.5

STATE OF CALIFORNIA, COUNTY OF ORANGE

I declare as follows:

I am over eighteen years of age and not a party to the within action; my business address is 1505 E. 17th St., Ste. 229 Santa Ana, CA 92705.

On June 27, 2005, I served a copy of the foregoing PETITION FOR REVIEW on the interested parties in the within action by depositing a true copy thereof, enclosed in a sealed envelope with postage thereon fully prepaid, in the United States mail at Santa Ana, California, addressed as follows:

Law Office of Norman Filer (Los Alamitos)	PER B&P Code § 17209:

500 No. State College Blvd., Ste. 1270	Orange County District Atty.

Orange, CA 92868	700 Civic Center Drive West

Suite 200

Musik, Peeler & Garret (Health Net)	Santa Ana, CA 92702

Michael F. Klien, Esq.

225 Broadway, Ste. 1900	Ronald A. Reiter, Esq.

San Diego, CA 92101-5028	Supervising Deputy Atty. General

Office of the Attorney General

Honorable Clay Smith Dept. C-17(Lower Ct)	Consumer Law Section

Orange County Superior Court	455 Golden Gate Ave., Ste. 11000

700 Civic Center Drive West	San Francisco, CA 94102

Santa Ana, California 92702-1994

Clerk of the 4th DCA (Appellate Court)

925 N. Spurgeon

Santa Ana, California 92701

I declare under penalty of perjury under the laws of the State of California, that the foregoing is true and correct and that this declaration was executed on June 27, 2005, at Santa Ana, California.

______________________________

Richard L. Spix