SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC.

23CV057726: SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC. 06/02/2026 Hearing on Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. (Defendant) CRS# 472263107183 in Department 16

Tentative Ruling - 06/01/2026 Victoria Kolakowski

Kaiser Foundation Health Plan, Inc.’s Motion for Summary Adjudication is denied.

I.

Background

This dispute is one of a series of disputes between the parties that center upon the reasonable and customary value—i.e., the fair market value—of emergency and post-stabilization services that Sutter Bay Hospitals, Sutter Valley Hospitals, and Sutter Coast Hospitals (collectively, Sutter) have provided to Kaiser health plan members since January 2022. (Sutter’s 2d Am. Compl. ¶¶ 1– 8, 14–38, Oct. 21, 2024.)

In October 2024, Sutter filed a Second Amended Complaint against Kaiser asserting a cause of action for unlawful or unfair business practices, as relevant here. (Id. ¶¶ 58–63.) Sutter alleged that Kaiser’s “secret” internal methodology—developed in 2015—for determining the reasonable and customary value of these services (“Kaiser R & C Methodology”) constitutes an unlawful or unfair business practice because it is not based on the six factors provided by section 1300.71 of the Code of Regulations and this unlawful or unfairmethodology provides Kaiser a competitive advantage over its competitors, among other reasons. (Id. ¶¶ 23, 33, 35, 60.)

Sutter further alleged that Kaiser employed outside vendors to review certain claims for “charge disallowances” after January 2022, and that it compensated these vendors on a contingency basis. (Id. ¶ 37.) Sutter alleged that this practice was also an unlawful or unfair business practice. (Id. ¶ 60(e).) In connection with this cause of action, Sutter sought disgorgement of the difference between the actual fair market value and the value set by Kaiser’s R & C Methodology. (Id. ¶ 63.) Kaiser filed an answer generally denying the allegations, among other things. (Answer, Nov. 22, 2024.)

In October 2025, Kaiser moved for summary adjudication of the cause of action for unlawful or unfair business practices. (Mot., Oct. 13, 2025.) Kaiser first argued that Sutter’s cause of action was barred by the four-year statute of limitations under section 17208 of the Business and Professions Code as the Kaiser R & C Methodology was developed in 2015 and Sutter has known of its existence since November 2019. (Mem. Supp. Mot. 8:14–12:2, Apr. 16, 2026.) Kaiser next argued that the Court should abstain from reviewing whether the Kaiser R & C Methodology under the Unfair Competition Law as the California Department of Managed Health Care is better suited to review the propriety of the Kaiser R & C Methodology. (Id. 12:20–14:14.)

Kaiser next argued that Sutter is precluded from relitigating the issue that the Kaiser R & C Methodology is either unlawful or unfair as this issue was decided in a prior arbitration proceeding between the parties. (Id. 14:15–18:14.) Kaiser finally argued that the contingency fee dispute does not support the cause of action for unlawful or unfair business 23CV057726: SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC. 06/02/2026 Hearing on Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. (Defendant) CRS# 472263107183 in Department 16 practices as Sutter lacks standing because it did not suffer an “injury in fact.” (Id. 18:15–20:20.)

Sutter opposed the Motion. (Opp’n, Mar. 27, 2026.) Concerning the statute of limitations, Sutter argued that it is timely under the continuous-accrual doctrine as it is “challenging [the Kaiser R & C Methodology], but as applied to each individual payment;” and thus, the statute of limitations did not start running in 2015 or November 2019. (Id. 18:9–10.) Concerning abstention, Sutter argued that judicial adjudication of its cause of action for unlawful or unfair business practices would not interfere with the Department of Managed Health Care’s regulatory functions as the Department of Managed Health Care does not evaluate or approve a health plan’s reimbursement methodology; that judicial adjudication would not require it to resolve a complex economic policy; and that Sutter is not seeking injunctive relief. (Id. 18:12–22:22.)

Concerning preclusion, Sutter partly argued that the issues in this action are not the same as in the arbitration proceeding. (Id. 22:23–26:24.) Concerning the contingency fee dispute, Sutter argued that it suffered an injury in fact. (Id. 26:25–28:16.)

II.

Legal Standard

A party may move for summary adjudication of a cause of action if they contend that the cause of action has no merit. (Cal. Civ. Proc. Code § 437c(f)(1).) A defendant meets their initial burden of showing that a cause of action has no merit if they show that one or more elements of the cause of action cannot be established or that there is a complete defense to the cause of action. (§ 437c(p)(2).) If the defendant meets their burden, the burden shifts to the plaintiff to show the existence of a triable issue of material fact. (Id.) The plaintiff must identify “specific facts” and may not rely upon the allegations in their pleading to show the existence of a triable issue of material fact. (Id.) The court may grant the motion only if it completely disposes of a cause of action. (§ 437c(f)(1).)

III.

Discussion

The Court denies Kaiser’s Motion.

A. Statute of Limitations The Court finds that Sutter’s cause of action is not barred by the statute of limitations.

Under section 17208, a plaintiff must file an action concerning an unlawful or unfair business practice within four years of accrual. (Cal. Bus. & Prof. Code § 17208.)

Here, Sutter’s cause of action accrued each time that Kaiser underpaid the actual reasonable and customary value of emergency and post-stabilization services through use of the Kaiser R & C Methodology. (See Opp’n 18:9–11 (“Sutter is challenging Kaiser’s methodology, but as applied to each individual payment (which resulted in systemic underpayments to Sutter.”).) When

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

23CV057726: SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC. 06/02/2026 Hearing on Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. (Defendant) CRS# 472263107183 in Department 16 understood through this lens, Kaiser’s argument that the continuous-accrual doctrine has no application is unpersuasive.

B. Abstention The Court finds that judicial abstention is not proper as there are triable issues of material fact.

“Under the doctrine of judicial abstention, a trial court has discretion to abstain from adjudicating an action if: (1) ‘granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency’; (2) the action ‘involves determining complex economic policy, which is best handled by the Legislature or an administrative agency’; or (3) ‘granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress.’” (People ex rel. Elliott v. Kaiser Found. Health Plan, Inc. (2024) 105 Cal. App. 5th 1114, 1128 (quoting Hambrick v. Healthcare Partners Med. Grp., Inc. (2015) 238 Cal.App.4th 124, 147).)

Here, the Court finds a triable issue of material fact about whether the Department of Managed Health Care evaluated and approved the Kaiser R & C Methodology. (Sutter’s Opp’n Undisputed Facts ¶ 4, Mar. 27, 2026.) Accordingly, at this stage, the Court cannot resolve whether, as a matter of law, granting the requested relief would require it to assume the functions or interfere with the Department of Managed Health Care’s functions and responsibilities.

C. Issue Preclusion The Court finds that application of issue preclusion is not currently proper.1

Under this doctrine, a “prior judgment conclusively resolves an issue actually litigated and determined in the first action.” (DKN Holdings LLC v. Faerber (2015) 61 Cal. 4th 813, 824.) “[I]ssue preclusion applies: (1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.” (Id. at 825.)

The Court finds that Kaiser undermined its own argument that the Phase 1 Final Award in the arbitration proceedings involved an “identical issue” because it admitted in its supporting memorandum that it made changes to its methodology in 2024. (See Mem. Supp. Mot 16:26–27.) Accordingly, the Court defers ruling on whether the Phase 1 Final Award’s findings that the 2015 Kaiser R & C Methodology was not unlawful or unfair (see Keshavarzi Decl. Supp. Mot. Ex. 5, at pp. 60–64, Apr. 16, 2026 (relevant portion of final award) precludes relitigation of those two issues until the parties develop an adequate evidentiary record.

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

23CV057726: SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC. 06/02/2026 Hearing on Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. (Defendant) CRS# 472263107183 in Department 16 D. Contingency Fee Dispute The Court finds that adjudication of the contingency fee dispute would not completely dispose of the cause of action as the cause of action founded upon the Kaiser R & C Methodology survives. Accordingly, the Court does not further consider this argument.

IV. Orders The Motion is denied.

The Court overrules Kaiser’s objection to the amended declaration of Jennifer Clark.

The Court did not consider Kaiser’s response to Sutter’s separate statement of disputed facts as the Code of Civil Procedure does not allow such a filing. (See Cal. Civ. Proc. Code § 437c(b)(4) (“The reply shall not include any . . . separate statement submitted with the reply and not presented in the moving papers or opposing papers.”).) 1 The Court understands Kaiser’s reference to “collateral estoppel” as meaning issue

preclusion, not claim preclusion. Accordingly, the Court did not consider Sutter’s arguments concerning claim preclusion.

***

The Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. on 10/13/2025 is Denied.

The Court orders counsel to obtain a copy of this order from the eCourt portal.

If a party does not timely contest the foregoing Tentative Ruling and appear at the hearing, the Tentative Ruling will become the order of the court.

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SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

23CV057726: SUTTER BAY HOSPITALS, et al. vs KAISER FOUNDATION HEALTH PLAN, INC. 06/02/2026 Hearing on Motion for Summary Adjudication filed by Kaiser Foundation Health Plan, Inc. (Defendant) CRS# 472263107183 in Department 16

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