Stanford Health Care v. Hawaii Medical Service Association

• Court: District Court, N.D. California
• Decided: September 2, 2022
• Docket: 4:21-cv-06720
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 STANFORD HEALTH CARE, Case No. 21-cv-06720-HSG

8 Plaintiff, ORDER GRANTING MOTION TO 9 v. DISMISS

10 HAWAII MEDICAL SERVICE Re: Dkt. No. 22 ASSOCIATION, 11 Defendant.

12 13 Before the Court is Defendant Hawaii Medical Service Association’s (“HMSA”) motion to 14 dismiss for lack of personal jurisdiction. Dkt. No. 22. For the reasons below, the Court grants 15 HMSA’s motion.1 16 I. BACKGROUND 17 For purposes of this motion, the Court accepts the following allegations as true: 18 Plaintiff Stanford Health Care (“Stanford Hospital”) is a California non-profit with its 19 principal place of business in Santa Clara County, California. Defendant Hawaii Medical Service 20 Association (“HMSA”) is a Hawaiian insurance company with its principal place of business in 21 Honolulu, Hawaii. 22 Under a written contract between Stanford Hospital and Anthem Blue Cross of California 23 (the “Stanford/Blue Cross Contract”), Stanford Hospital agrees to provide medical services to 24 Anthem Blue Cross plan members at negotiated rates. Dkt. No. 1 ¶ 14. As an out-of-state affiliate 25 of Anthem Blue Cross, HMSA has an agreement with Anthem Blue Cross that allows its plan 26 members to also access Stanford Hospital’s medical care at the negotiated rates. 27 1 Between August 2016 and January 2020, Stanford Hospital provided medical care under 2 the Stanford/Blue Cross Contract to eight patients with HMSA insurance. The “usual and 3 customary bill” for the services that Stanford Hospital provided under the Stanford/Blue Cross 4 Contract was $2,329,184.40. However, HMSA paid only $355,674.46 and refused to pay the 5 balance after Stanford Hospital requested it. 6 On August 30, 2021, Stanford Hospital sued HMSA in this Court. Id. It brings claims for 7 breach of implied contract and quantum meruit. HMSA now moves to dismiss Stanford 8 Hospital’s complaint for lack of personal jurisdiction or, in the alternative, for failure to state a 9 claim, and to strike allegations from the complaint as time-barred. 10 II. LEGAL STANDARD 11 When a defendant objects to the Court’s exercise of personal jurisdiction over it under 12 Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing that 13 jurisdiction is proper. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Absent an 14 evidentiary hearing, however, the plaintiff need only make a prima facie showing of personal 15 jurisdiction. Id. The complaint’s uncontroverted allegations must be taken as true, and 16 “[c]onflicts between the parties over statements contained in affidavits must be resolved in the 17 plaintiff’s favor.” Id. (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th 18 Cir. 2004)). 19 “Where, as here, there is no applicable federal statute governing personal jurisdiction, the 20 district court applies the law of the state in which the district court sits.” Schwarzenegger, 374 21 F.3d at 800. “Because California’s long-arm jurisdictional statute is coextensive with federal due 22 process requirements, the jurisdictional analyses under state law and federal due process are the 23 same.” Id. at 800-01. The relevant question, therefore, is whether the defendant has “at least 24 ‘minimum contacts’ with [California] such that the exercise of jurisdiction ‘does not offend 25 traditional notions of fair play and substantial justice.’” Id. at 801 (quoting Int’l Shoe Co. v. 26 Washington, 326 U.S. 310, 316 (1945)). 27 There are two types of personal jurisdiction: “general or all-purpose” and “specific or 1 “General jurisdiction . . . permits a court to hear any and all claims against a defendant, 2 whether or not the conduct at issue has any connection to the forum.” Ranza v. Nike, Inc., 793 3 F.3d 1059, 1068 (9th Cir. 2015) (citation and quotation omitted). A court may assert general 4 personal jurisdiction over defendants “when their affiliations with the State are so ‘continuous and 5 systematic’ as to render them essentially at home in the forum State.” Goodyear, 471 U.S. at 919 6 (quoting Int’l Shoe, 326 U.S. at 317). 7 “Specific jurisdiction, on the other hand, depends on an affiliation between the forum and 8 the underlying controversy, principally, activity or an occurrence that takes place in the forum 9 State and is therefore subject to the State’s regulation.” Id. (internal quotation marks omitted). 10 The Ninth Circuit has established a three-part inquiry, referred to as the minimum contacts test, to 11 determine whether a court has specific personal jurisdiction over a defendant:

12 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or 13 resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the 14 forum, thereby invoking the benefits and protections of its laws;

15 (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and 16 (3) the exercise of jurisdiction must comport with fair play and 17 substantial justice, i.e., it must be reasonable. 18 Freestream Aircraft (Bermuda) Ltd. v. Aero L. Grp., 905 F.3d 597, 603 (9th Cir. 2018) (quoting 19 Schwarzenegger, 374 F.3d at 802). “The minimum contacts test ‘ensures that a defendant will not 20 be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts[.]’” Id. 21 (internal quotation marks omitted) (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985)). 22 “The plaintiff bears the burden of satisfying the first two prongs of the test.” Id. If the plaintiff 23 does so, “the burden then shifts to the defendant to ‘present a compelling case’ that the exercise of 24 jurisdiction would not be reasonable.” Id. 25 III. DISCUSSION 26 A. General Jurisdiction 27 HMSA argues that the Court does not have general personal jurisdiction over it. 1 contacts with the forum state are so constant and pervasive as to render it essentially at home in 2 the state.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2014) (internal quotation 3 marks omitted). “With respect to a corporation, the place of incorporation and principal place of 4 business are paradig[matic] . . . bases for general jurisdiction.” Daimler AG v. Bauman, 571 U.S. 5 117, 137 (2014) (internal quotation marks omitted). “[T]he Ninth Circuit has rejected the notion 6 that general jurisdiction is appropriate whenever a corporation engages in a substantial, 7 continuous, and systematic course of business in a state.” Cole-Parmer Instrument Co. LLC v. 8 Pro. Lab’ys, Inc., No. 20-CV-08493-LHK, 2021 WL 3053201, at *4 (N.D. Cal. July 20, 2021) 9 (quoting Martinez, 764 F.3d at 1070) (internal quotation marks omitted). “Rather, if a business is 10 not incorporated in and does not have its principal place of business in a forum state, ‘[o]nly in an 11 ‘exceptional case’ will general jurisdiction be available.’” Id. (quotation omitted). 12 HMSA cannot be fairly regarded as “at home” in California because it is neither 13 incorporated in nor has its principal place of business in California. See Daimler, 571 U.S. at 137. 14 Despite this, Stanford Hospital insists that the Court has general jurisdiction over HMSA where 15 HMSA (1) made payments acknowledging “the debt owed as a result of its conduct of business in 16 California with a California hospital,” (2) marketed services to persons traveling and living in 17 California, (3) directed its enrollees to at least 45 hospitals in California, (4) executed a “letter of 18 agreement” regarding Stanford Hospital’s care for one of the patients at issue in this case, and (5) 19 authorized services for the patients at issue in this case. Dkt. No. 24 at 11. The Court disagrees. 20 None of these allegations indicate that HMSA’s contacts with California are “exceptional” or “so 21 constant and pervasive as to render it essentially at home in the state.” Martinez, 764 F.3d at 22 1066, 1070. 23 Accordingly, the Court concludes that it does not have general personal jurisdiction over 24 HMSA. 25 B. Specific Jurisdiction 26 HMSA also argues that the Court does not have specific jurisdiction over it. 27 The Ninth Circuit has held that the analysis under the first prong of the specific jurisdiction 1 Commodities Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 F.3d 1101, 1107 (9th 2 Cir. 2020). Both parties address the specific jurisdiction inquiry under the purposeful availment 3 test, which courts apply to contract claims like this one. Id. Courts applying the purposeful 4 availment test look to whether the defendant deliberately engaged in significant activities within 5 the forum or created continuing obligations between itself and forum residents. Id. (citing Burger 6 King, 471 U.S. at 475-76). 7 For the same reasons that Stanford Hospital asserts the Court has general jurisdiction over 8 HMSA, it contends that the Court has specific jurisdiction. However, the Court concludes that 9 Stanford Hospital does not make a prima facie showing that HMSA “reach[ed] out beyond 10 [Hawaii]” to “create continuing relationships and obligations with citizens of [California].” 11 Burger King, 471 U.S. at 473. 12 Stanford Hospital asserts that HMSA purposefully avails itself of the benefits of doing 13 business in California by offering its members access to health care coverage in California. Dkt. 14 No. 24 at 12-13. In particular, Stanford Hospital claims that HMSA’s participation in Blue Cross 15 Blue Shield’s BlueCard program sufficiently establishes its jurisdictional contacts with California. 16 Id. at 12. 17 However, courts regularly find a provider’s participation in the BlueCard program 18 insufficient to establish specific personal jurisdiction. See Craig Hosp. v. Empire Healthchoice, 19 Inc., No. 18-CV-00794-WYD-STV, 2019 WL 10258608, at *4-5 (D. Colo. Apr. 1, 2019) 20 (collecting cases); see also Healthcare Ally Mgmt. of California, LLC v. Blue Cross Blue Shield of 21 Minnesota, 787 F. App’x 417, 418 (9th Cir. 2019) (finding patient insurance contracts to be 22 insufficient evidence of defendant Minnesota provider’s purposeful availment in California where 23 “six of the nine patients here were covered under plans administered – but not insured – by 24 [provider], and the other three patients were insured through [provider] plans issued in Minnesota 25 to Minnesota residents”).2 26 Stanford Hospital tries to distinguish this case from the substantial authority to the contrary 27 1 by contending that none of the other cases involved allegations that the defendant provider 2 “publicly advertises that its enrollees (when traveling or living on the Mainland) have access to 3 routine medical services with more than 500,000 participating providers located outside of its 4 geographical regions or involved a written contract with the provider.” Dkt. No. 24 at 13. The 5 Court is unpersuaded. As the court held in St. Luke’s Episcopal Hosp. v. Louisiana Health Serv. 6 & Indem. Co., No. CIV.A. H-08-1870, 2009 WL 47125, at *8 (S.D. Tex. Jan. 6, 2009), “merely 7 providing out-of-state health coverage to insureds does not subject an insurer to personal 8 jurisdiction in every foreign state in which an insured happens to obtain medical services.” Id. at 9 *8 (citing Perez v. Pan Am. Life Ins. Co., 1996 WL 511748, at *2 (5th Cir. 1996) (upholding the 10 district court’s conclusion that it lacked personal jurisdiction over a Guatemalan insurance 11 company that provided worldwide coverage and authorized treatment for its insured in Texas but 12 then refused to pay)). To “exercise . . . jurisdiction based solely on these thin ‘contacts’ would 13 offend the traditional notions of fair play and substantial justice.” Perez, 1996 WL 511748, at *2. 14 The Court finds the reasoning in Perez and St. Luke’s, and the reasoning of cases relying on them, 15 persuasive and applies it here. The patients at the center of this dispute are insured through 16 HMSA plans issued in Hawaii to residents of Hawaii and Washington, not California. Any 17 contacts with California are “attenuated” at best and do not create a “substantial connection” with 18 the state. Burger King, 471 U.S. at 475 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 19 U.S. 286, 299 (1980)). Stanford Hospital’s allegations that HMSA authorized Stanford Hospital 20 to provide medical services for six of the patients at issue in this case and Stanford Hospital’s 21 vague references to medical services it provided to unidentified HMSA enrollees that HMSA paid 22 for under the BlueCard program likewise do not constitute evidence of minimum contacts with 23 California. Moreover, HMSA’s alleged “advertising” of its out-of-state coverage is not evidence 24 that it deliberately engaged in significant activities within California or created continuing 25 obligations between itself and California residents. Glob. Commodities, 972 F.3d at 1107. At 26 most, even as alleged, HMSA is advertising to its own plan members (who do not live in 27 California). 1 Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911 (9th Cir. 1990), in which the 2 Ninth Circuit held that the District of Montana had personal jurisdiction over a Canadian 3 automobile liability insurer that contracted to indemnify and defend any person driving with the 4 consent of the insured. Id. at 914. But the circumstances here are different from those in Farmers 5 because HMSA is not an automobile liability insurer, but a health insurance provider. That 6 distinction is a meaningful one. As Farmers noted, “‘[a] health insurance policy is typically sued 7 upon where the insured resides, while an automobile liability policy is typically sued upon where 8 an accident takes place.’ As an automobile liability insurer, [defendant] could anticipate the risk 9 that its clients would travel in their automobiles to different states and become involved in 10 accidents and litigation there.” Id. at 913-14. By contrast, “[w]hile [a health insurance provider 11 like HMSA] could certainly anticipate that its insureds would travel out-of-state and need medical 12 treatment, there is no reason for them to anticipate being sued in the forum where they received 13 treatment.” Alaska Reg’l Hosp. v. Amil Int’l Ins. Co., No. A03-177 CV (JWS), 2003 WL 14 24085347, at *4 (D. Alaska Nov. 5, 2003). 15 Another case Stanford Hospital relies on, Santa Barbara Cottage Hosp. v. Glob. Excel 16 Mgmt., Inc., No. 2:19-CV-08546-RGK-SS, 2020 WL 2510684, at *3 (C.D. Cal. Jan. 28, 2020), is 17 likewise distinguishable. Stanford Hospital cites to Santa Barbara Cottage for the proposition 18 that sufficient minimum contacts were established where defendant directed patients to hospitals 19 in California and disputed bills after entering into payment discussions. Id. But in Santa Barbara 20 Cottage, the court found that because defendant “administers claims for insured individuals who 21 need medical assistance while traveling in the United States” and “travel is the crux of 22 [defendant’s] business,” “[i]t is therefore entirely foreseeable” that defendant would be sued in 23 California. Id. (“Defendant has voluntarily entered into relationships with hospitals in California 24 for purposes of obtaining medical services for its enrollees. Therefore, when an issue arises out of 25 one Defendants transactions undertaken pursuant to such relationships, Defendant should not be 26 surprised when it is haled to court in this state.”). Unlike Santa Barbara Cottage, this case does 27 not involve a travel insurer, and Stanford Hospital does not plead any allegations plausibly 1 Stanford Hospital also points to HMSA’s letter of agreement governing Stanford 2 Hospital’s services for one of the patients in this dispute as evidence of purposeful availment. But 3 “a contract alone does not automatically establish minimum contacts in the plaintiff’s home 4 forum.” Boschetto, 539 F.3d at 1017 (citing Burger King, 471 U.S. at 478). Instead, courts must 5 evaluate “prior negotiations and contemplated future consequences, along with the terms of the 6 contract and the parties’ actual course of dealing” to determine whether the defendant purposefully 7 established minimum contacts within the forum. Burger King, 471 U.S. at 479; see Glob. 8 Commodities, 972 F.3d at 1108 (“[C]ourts must evaluate the parties’ entire course of dealing, not 9 solely the particular contract or tortious conduct giving rise to the claim, when assessing whether a 10 defendant has minimum contacts with a forum[.]”). Here, however, Stanford Hospital does not 11 attach the letter to its complaint, opposition brief, or any declarations so as to permit the Court to 12 evaluate its relevance, if any, to whether HMSA has sufficiently established minimum contacts 13 with California. The Court views this omission as an odd one if the letter stands for the principle 14 Stanford Hospital claims it does. 15 * * * 16 Viewing HMSA’s contacts with California in their totality, the Court concludes that 17 Stanford Hospital has not made a prima facie showing purposeful availment by HMSA. Because 18 this failure alone means that Stanford Hospital has not established specific personal jurisdiction, 19 the Court need not address the remaining prongs. Given this conclusion, the Court also need not 20 reach HMSA’s motion to dismiss for failure to state a claim or motion to strike. 21 The Court grants HMSA’s motion to dismiss for lack of specific personal jurisdiction. 22 C. Jurisdictional Discovery 23 Stanford Hospital requests leave to conduct jurisdictional discovery. Dkt. No. 24 at 16. 24 The decision whether to grant jurisdictional discovery is within the discretion of the district 25 court. Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977). 26 “[C]ourts in this district have held that a plaintiff need not make out a prima facie case of personal 27 jurisdiction before it can obtain jurisdictional discovery.” Calix Networks, Inc. v. Wi-Lan, Inc., 1 cases). “Rather, a plaintiff must present a ‘colorable basis’ for jurisdiction, or ‘some evidence’ 2 constituting a lesser showing than a prima facie case.” Id. (citing Google, Inc. v. Egger, No. 08- 3 cv-03172-RMW, 2009 WL 1228485, at *1 (N.D. Cal. Apr. 30, 2009); Focht v. Sol Melia S.A., No. 4 10-cv-0906-EMC, 2010 WL 3155826, at *2 (N.D. Cal. Aug. 9, 2010)). A “‘colorable basis’ could 5 be understood to require the plaintiff to come forward with ‘some evidence’ tending to establish 6 personal jurisdiction over the defendant.” Google, 2009 WL 1228485, at *1 (quoting Chapman v. 7 Krutonog, 256 F.R.D. 645, 649 (D. Haw. 2009)). “Where a plaintiff’s claim of personal 8 jurisdiction appears to be both attenuated and based on bare allegations in the face of specific 9 denials made by defendants, the Court need not permit even limited discovery.” Terracom v. 10 Valley Nat’l Bank, 49 F.3d 555, 562 (9th Cir. 1995) (citations omitted); see also Getz v. Boeing 11 Co., 654 F.3d 852, 860 (9th Cir. 2011) (finding the denial of discovery appropriate when the 12 plaintiffs “fail[ed] to identify any specific facts, transactions, or conduct that would give rise to 13 personal jurisdiction” and offered only “purely speculative allegations of attenuated jurisdictional 14 contacts”). 15 The Court concludes that Stanford Hospital has not established a colorable basis for 16 personal jurisdiction so as to be entitled to jurisdictional discovery. Stanford Hospital’s 17 allegations of HMSA’s participation in the BlueCard program, HMSA’s authorization of Stanford 18 Hospital medical services for patients insured by HMSA, and HMSA’s alleged “letter of 19 agreement,” without asserting any conduct indicating direct targeting of California, do not 20 constitute “‘some evidence’ tending to establish personal jurisdiction over the defendant.” 21 Google, 2009 WL 1228485. And Stanford Hospital’s bare assertion that it “should be allowed the 22 opportunity to conduct discovery regarding HMSA’s contacts with California,” Opp. at 10, simply 23 begs the question without addressing the relevant standard. The issue is not that facts bearing on 24 jurisdiction are in dispute: it is that Stanford Hospital’s allegations and evidence, even if accepted 25 as true, fail to meet the standard for establishing personal jurisdiction. Because Stanford 26 Hospital’s claim of personal jurisdiction involves only “attenuated jurisdictional contacts” and 27 “speculative allegations,” it has not shown an entitlement to jurisdictional discovery at this stage. 1 CONCLUSION 2 As a matter of law, nothing in Stanford Hospital’s complaint or opposition details 3 sufficient contact with California so as to establish this Court’s personal jurisdiction over HMSA. 4 || Accordingly, the Court grants HMSA’s motion to dismiss. In light of the record discussed above, 5 the Court has some doubt as to whether Stanford Hospital can amend its complaint to allege facts 6 sufficient to make a prima facie showing supporting personal jurisdiction in this District. 7 However, because the Court cannot conclude that amendment would be futile, dismissal is with 8 leave to amend. Any amended complaint must be filed within 28 days of the date of this order. 9 By contrast, based on the record presented, it appears beyond dispute that this case could 10 || have been brought in the District of Hawaii, where HMSA resides. If there is any further litigation 11 in this Court in this matter, HMSA should address in the alternative whether transfer of the case to 12 || the District of Hawaii would be appropriate under 28 U.S.C. § 1404. 5 13 IT IS SO ORDERED. S 14 || Dated: 9/2/2022

Abstpureel 3 Sbl_| HAYWOOD S. GILLIAM, JR. 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28