Health Net fails to throw California Addiction Treatment Provider lawsuit out of court





Fourteen months ago Health Net launched a dragnet audit of California’s out-of-network addiction treatment providers and providers in four other states. Claiming widespread fraud, Health Net stopped paying claims, including claims that had been unpaid since the third quarter of 2015. You can read the history of the case by clicking here.

In the spring of 2016, two California treatment facilities filed suit. On July 22, 2016, the Phoenix law firm Gallagher & Kennedy filed a multi-plaintiff suit with the Superior Court of Maricopa County, Arizona. On August 10, 2016 they filed a second multi-plaintiff law suit was filed in Los Angeles Superior Court. The plaintiffs include ATAC members.

The Los Angeles case was quickly moved to the Complex Litigation Division. A “Complex Case” is defined as a civil action that requires continuous judicial management to avoid placing unnecessary burden on litigants, counsel and the Court. It is designed to expedite cases, keep costs reasonable, and promote an effective decision making process by the Court, parties and counsel.

The complex litigation case is being heard by Judge Carolyn Kuhl who graduated with distinction from Duke Law School and received her BA cum laude from Princeton University. She clerked for Supreme Court Judge Anthony Kennedy when he was on the 9th circuit court of appeals. She has been a Superior Court Judge since 1995.  

Representing Health Net and the Centene Corporation, which acquired Health Net in March 2016, is Manatt, Phelps & Phillips, LLP.

On January 27, 2017 Health Net filed a demurrer (a request for dismissal on the basis that even if the facts alleged in the complaint are true, there is no legal basis for a lawsuit).  

Today Judge Kuhl overruled the demurrer “in its entirety,” opening the door to depositions and discovery of documents for both sides. 

Health Net also attempted to strike the requests for six types of punitive damages from the complaint.  Punitive damages are defined as monetary compensation awarded an injured party that goes beyond what is necessary to just compensate that party for losses (i.e. proper payment of claims plus interest) and is intended to punish the wrongdoer. 

The judge let five requests stand, but disallowed the Plaintiff's request for punitive damages for "Aiding and Abetting." 


~ Joan Borsten is Vice President of ATAC, and co-founder and former CEO of Malibu Beach Recovery Center.


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