[00:00:06] Speaker 01:
I'd like to reserve four minutes for rebuttal, if I may.

[00:00:13] Speaker 01:
Good morning, Your Honors.

[00:00:14] Speaker 01:
Jonathan Stieglitz for Appellant Daniel Torres.

[00:00:17] Speaker 01:
Thank you, Your Honors, for allowing us to give oral argument here today.

[00:00:22] Speaker 01:
May it please the Court.

[00:00:23] Speaker 01:
Mr. Torres' briefing goes through a number of matters and bases for appeal.

[00:00:26] Speaker 01:
I'm ready and able to discuss all such bases, but I will begin by focusing

[00:00:31] Speaker 01:
on the fact that the district court erred by considering the determinations applied to Mr. Torres' receipt of benefits for emergency medical services he required under an abuse of discretion standard of review.

[00:00:43] Speaker 01:
This necessary change to the district court's analysis alone requires vacating the district court's decision and remanding for reconsideration by the district court in light of the proper de novo standard of review.

[00:00:58] Speaker 00:
What would be different if it was reviewed de novo?

[00:01:02] Speaker 01:
So Abati is clear that, and the case that it cites through Jebian, it seems to indicate in the Ninth Circuit that when you were, well first of all the district court, all of her analysis was constantly referred to abuse of discretion,

[00:01:27] Speaker 01:
They had a reasonable basis.

[00:01:29] Speaker 03:
I think there were significant facts that and I think that it doesn't make a difference because once you When you're looking at something from a de novo perspective instead of what would change I think the quite I give you that the standard would be different But what would change it as I understand it our case law says You know if it does need to be remanded

[00:01:51] Speaker 03:
if it's a different standard, but there's also cases that say that would be harmless because we can look at it and the same result would apply.

[00:01:58] Speaker 01:
The only case I've seen from the Ninth Circuit, which my opposing counsel has mentioned, is a case of Ross versus Paul Revere.

[00:02:06] Speaker 01:
And in that case, the district court actually specifically discussed how even under a de novo standard review, the court wouldn't have changed its opinion.

[00:02:17] Speaker 01:
It wouldn't have done anything differently.

[00:02:19] Speaker 01:
Here, our district court judge, she didn't make that determination.

[00:02:26] Speaker 01:
And every single portion of the decision discussed abuse of discretion and giving all deference to United.

[00:02:35] Speaker 01:
So I think that Abbate and the Ninth Circuit specifically says that, and then I have the quote from, actually Wenin, I didn't put this into, from Jabian, I apologize for

[00:02:49] Speaker 01:
butchering the name, it indicates, and this is the case that Abbate cites to, is now that we have clarified that de novo review is appropriate, the trial court must have an opportunity to determine whether to admit such additional evidence.

[00:03:05] Speaker 04:
Yeah, so you've answered that question that basically, if it's the wrong standard review, we have to send it back.

[00:03:11] Speaker 04:
But if that is not the case, can you offer us anything as to why the standard review would make a difference or something specific as to this case, something from the record?

[00:03:21] Speaker 01:
So I think that there's significant items within the record such as, I mean, I point to a case that I recently, I personally recently tried, an Arista case.

[00:03:29] Speaker 01:
It was MSurgCare versus Oxford, which happens to be also an entity that's affiliated with United, in which the language of the plan said, based off of the, I apologize, it's the same language, based off of the law, based off of the prevailing law, same language, and in that case,

[00:03:55] Speaker 01:
It ended up that the plan pays based off of a data source called Fair Health, which is a significantly higher payment rate than 250% of Medicare.

[00:04:04] Speaker 01:
In this particular case, this OCM program item, which was brought up, I think, completely unfairly, way after all of the deadlines in the case, this OCM program screenshot that United produced in this case, and after we even moved for leave to amend,

[00:04:25] Speaker 01:
It says that they pay based on 250 percent of Medicare.

[00:04:30] Speaker 01:
I don't believe that that's true.

[00:04:31] Speaker 01:
I think that that was all conjured together for the purposes of litigation.

[00:04:35] Speaker 01:
They went back and they manufactured it.

[00:04:37] Speaker 01:
If it really existed, why wasn't it produced initially as part of the administrative record?

[00:04:41] Speaker 01:
There's significant questions here relating to everything that went on in this case in terms of the administrative record.

[00:04:49] Speaker 01:
I think under the NOVO standard review, we would have the opportunity to

[00:04:52] Speaker 03:
Well, I thought one of the points, I mean you keep sticking to the administrative record, I thought one of the points was de novo review, we wouldn't be limited to that.

[00:05:00] Speaker 01:
Correct, so we wouldn't be limited to it.

[00:05:02] Speaker 03:
But I guess I'm still not sure I've heard what would actually change the outcome.

[00:05:09] Speaker 01:
The expectation perhaps would be that this fair health rate that I talked about in this MSURGE care case, which again is exact same exact

[00:05:18] Speaker 01:
verbatim, the exact same language that the district court relied upon.

[00:05:24] Speaker 01:
In that case, they paid based on something called fair health, which again is a much higher rate, as opposed to 250% of Medicare.

[00:05:33] Speaker 01:
And under the de novo standard, we'd be able to conduct discovery, be able to find out whether or not this is actually true, that this OCM program was the actual payment methodology.

[00:05:45] Speaker 04:
Can you tell us, as I recall,

[00:05:48] Speaker 04:
For the primary surgeon, it was the 250 percent was 1700 or something like that maybe.

[00:05:54] Speaker 01:
Yeah, it was like 1700.

[00:05:55] Speaker 04:
So what would the, can you tell us what that, what would that rate be, the other rate you're saying would be significantly higher?

[00:06:01] Speaker 04:
So like three times that, is it 10 times that?

[00:06:03] Speaker 01:
I mean, for example, it was, it was, so $1700, so in the, this M Surge Care case, the payment rate which we've now had, because it got remanded and they've now reprocessed it, they're paying about 17,000, so that's like 10 times as much.

[00:06:17] Speaker 01:
For the same exact sort of I believe it's for the very similar at the same procedure.

[00:06:21] Speaker 01:
I believe so and it can can you explain something?

[00:06:25] Speaker 04:
So let's say you get you were to get that we sent about you get that You get 17,000 and the second surgeon or whatever gets.

[00:06:31] Speaker 04:
I'm assuming less some some amount less, right?

[00:06:35] Speaker 04:
I'm just trying to figure out what is this case about?

[00:06:38] Speaker 04:
Why is this worth it?

[00:06:40] Speaker 04:
You've got to be costing more than the difference between the $1,700 your client got or would have got and the $17,000, even if your client got $10,000.

[00:06:50] Speaker 04:
Why is this case worth it?

[00:06:53] Speaker 01:
From trying to set precedent or I'm trying to I mean I don't think I mean yes.

[00:06:58] Speaker 01:
Yes, and but I mean our decision wouldn't Would our decision be precedent for the purposes of the standard review?

[00:07:05] Speaker 01:
I think it's certainly significant that I for sure I for sure believe but and so I think

[00:07:11] Speaker 01:
If you want to really dig into the granular into my mindset, probably I wouldn't have pursued this case up through the Ninth Circuit, but for the fact that the standard review was completely implied incorrectly.

[00:07:27] Speaker 01:
if the court had done its analysis.

[00:07:28] Speaker 04:
Your big reason for being here is the standard review.

[00:07:30] Speaker 04:
The standard review affects not just this case, but other cases.

[00:07:33] Speaker 01:
It affects all cases.

[00:07:34] Speaker 01:
And it certainly affects this case.

[00:07:35] Speaker 01:
The district court needs to be afforded the opportunity.

[00:07:37] Speaker 01:
In all cases, district courts need to be afforded the opportunity when you're dealing with the California health plan.

[00:07:42] Speaker 01:
When you're dealing with the California health plan, the district court needs to be afforded the opportunity of conducting the correct standard review, which is de novo in this case.

[00:07:52] Speaker 01:
So I'll just turn to the

[00:07:56] Speaker 01:
the other matter, which is the other basis for our appeal, which was the leave to amend, which was not granted to us.

[00:08:06] Speaker 01:
Let me see here, sorry, my apologies.

[00:08:09] Speaker 01:
And I just wanted to underscore this point relating to the leave to amend.

[00:08:13] Speaker 01:
I understand that all district courts, and for the same reason they should be given the opportunity to conduct a proper standard review, all district courts,

[00:08:20] Speaker 04:
uh... should be able to manage their calendar how are they about uh... and it's uh... we're we're familiar with your arguments on leave them in okay but that the the one practical problem seems to me have with your leave them in is this case was both the surgeons which is all that's left now i think but it also was reversed yet worse okay it was the surgeons and it was the um... the patient right and now all it is is just the patient

[00:08:48] Speaker 04:
But if it was both, and I assume maybe it was you that was representing them, how could you, the story you tell us, we didn't know until they dropped this late file or this late produced material that we, that they had failed to negotiate.

[00:09:06] Speaker 04:
But if you were representing the surgeons too, how could you not know that they had failed to do whatever you're saying?

[00:09:11] Speaker 04:
Because you know what they provided to the surgeons.

[00:09:14] Speaker 01:
It's not just that they failed to negotiate, it's that,

[00:09:16] Speaker 01:
it's the manner in which they, it's the manner in which that all went about.

[00:09:21] Speaker 01:
It's that nothing, so yes, they might have been phone calls and there might have been.

[00:09:25] Speaker 04:
If you're representing both the patient and you're representing the doctors, you know what was told the patient.

[00:09:31] Speaker 04:
Because I understand your argument is something like they were telling the patient that they were doing all this stuff,

[00:09:38] Speaker 04:
But they weren't really doing it.

[00:09:40] Speaker 04:
But you're also on the other end of the telephone.

[00:09:42] Speaker 04:
You know what you're getting and what you're not getting because you're representing the surgeons too.

[00:09:47] Speaker 04:
So as a practical matter,

[00:09:50] Speaker 04:
It's hard for me to see how you were somehow like, oh, wow, we didn't know until we got this document.

[00:09:54] Speaker 01:
I think we didn't know.

[00:09:55] Speaker 01:
We knew that they didn't negotiate, Your Honor.

[00:09:57] Speaker 01:
We absolutely knew they didn't negotiate.

[00:09:59] Speaker 01:
That's not a question.

[00:09:59] Speaker 01:
The question is, did we have the evidence to support that all of the documents lined up such that we could even bring the claim?

[00:10:06] Speaker 04:
But that's their argument.

[00:10:08] Speaker 04:
I mean, you don't have to have evidence, hard evidence, in order to

[00:10:13] Speaker 04:
to make a claim, you do have to have a good faith basis for making it, but it seems that you would have a good faith basis.

[00:10:19] Speaker 01:
But I think the case law is supportive of the fact that when the new evidence comes in, you still should have that right to be able to seek leave to amend.

[00:10:29] Speaker 03:
I mean, if you look at the procedural history of this case, we started with... But wait, but the new evidence, I mean, the new evidence didn't tell you anything you didn't already know.

[00:10:35] Speaker 01:
It did.

[00:10:36] Speaker 03:
It made the case... Not as to the claims that you wanted to make.

[00:10:41] Speaker 01:
In my opinion, it made the case, as opposed to before, it was just complete conjecture.

[00:10:46] Speaker 01:
It was like, okay, so they didn't negotiate, but did we know the timeline to say that they were supposed to negotiate then and then they just simply pocketed it and did nothing with it?

[00:10:57] Speaker 04:
No, you did know.

[00:10:58] Speaker 04:
That's my point.

[00:10:59] Speaker 04:
You did know that because you knew what they had told the patient and you also knew

[00:11:04] Speaker 04:
the conversations and the correspondence they'd have with the surgeon.

[00:11:07] Speaker 04:
I understand your point that you needed the evidence to prove your claim, but I'm really struggling with the idea that you were sitting there and you learned something that would allow you to make a claim that you couldn't make before by what they produced.

[00:11:23] Speaker 04:
That may have been the silver bullet you needed to prove your claim, but to know that that claim exists?

[00:11:28] Speaker 04:
I don't know.

[00:11:28] Speaker 04:
I'm struggling with that.

[00:11:30] Speaker 01:
Maybe you're right, Your Honor.

[00:11:31] Speaker 01:
Maybe you're right that perhaps we could have alleged it.

[00:11:33] Speaker 01:
I'm not saying we couldn't have alleged it, and maybe perhaps we even could have.

[00:11:36] Speaker 01:
And look, I've filed breach of fiduciary duty claims.

[00:11:39] Speaker 01:
And this is abuse of discretion, so if you concede that you could have alleged it and the district... But Your Honor, I've filed breach of fiduciary duty claims relating to... I've filed breach of fiduciary duty claims relating to ERISA in the central district, and they've been dismissed

[00:11:56] Speaker 01:
Left and right.

[00:11:58] Speaker 01:
Until I literally had the documents, I did not believe that I was going to be able to proceed with that claim.

[00:12:04] Speaker 01:
And so once we had that evidence, that was the time in which we then brought it.

[00:12:08] Speaker 01:
I can cite numerous examples where I brought breach of fiduciary duty claims, and they've been fought by United, and they've been dismissed by numerous courts.

[00:12:17] Speaker 01:
So I don't think it's so fair to put us in a position where I'm getting these cases also dismissed, but at the same time, I should still bring it.

[00:12:26] Speaker 01:
To my mind, once I have the evidence, once I have the ability to bring it, then I should bring it.

[00:12:31] Speaker 01:
But before that, to base it on the Iqbal Twombly standard has been used to dismiss so many of my claims in so many instances.

[00:12:40] Speaker 01:
And I want to reserve the rest of my time, so I'll leave it over.

[00:12:57] Speaker 02:
Good morning, Your Honor.

[00:12:57] Speaker 02:
May it please the court, Con Skolnick, for the defendant in Napoli, UnitedHealthcare.

[00:13:03] Speaker 02:
I'd like to start with where the court was, where the court started is on why it all matters, the standard of review.

[00:13:10] Speaker 02:
My friend was referring to the Abbati case.

[00:13:14] Speaker 02:
Abbati was an en banc decision of this court, where this court

[00:13:19] Speaker 02:
Reversed a prior standard it overruled a prior standard and so it necessarily Sent it back to the district court to apply a brand new standard That's not what happened here here of course

[00:13:31] Speaker 02:
Regardless of the standard of review this was a purely legal question if we step back What is the claim the claim is not that that the plan documents were somehow?

[00:13:42] Speaker 02:
Misapplied or that there was coverage or not coverage for a particular surgery here.

[00:13:48] Speaker 02:
There's no question the surgery was covered and

[00:13:50] Speaker 02:
It was an emergency surgery.

[00:13:52] Speaker 02:
It took about two hours.

[00:13:54] Speaker 02:
The surgery was covered under the terms of the policy.

[00:13:57] Speaker 02:
The only question is whether the doctors are owed more money.

[00:14:00] Speaker 02:
And as Your Honor pointed out, it's not the doctors who are here.

[00:14:04] Speaker 02:
It's the patient suing essentially to recover money for the doctors.

[00:14:08] Speaker 02:
And so that's what's going on here.

[00:14:10] Speaker 02:
And the only claim is that the doctors were owed more money.

[00:14:14] Speaker 02:
And the only basis for that is under the terms of the plan.

[00:14:18] Speaker 02:
And the question under the terms of the plan is whether the plaintiff, the appellant here, has identified any... It seems like the crux is whether or not health insurance is a form of disability insurance, falls within disability insurance.

[00:14:35] Speaker 04:
And I understand your sort of plain text argument that, you know, most of us probably don't think of.

[00:14:43] Speaker 04:
Health insurance being part of disability insurance and that when I first came to this space and I looked at it Yeah, that kind of makes sense but it does appear as if That's how that the California courts have you know have look at it and they've there's multiple cases to say that

[00:15:04] Speaker 04:
health insurance is part of disability insurance.

[00:15:06] Speaker 04:
So if you assume for a second, I'm not asking you to concede it, but if you assume for a second that health insurance is part of disability insurance and so it should be a de novo review, what do we do with that?

[00:15:17] Speaker 02:
I believe that the court still can and should affirm because the nature of the claim here is not something to which deference or discretion matters.

[00:15:29] Speaker 02:
The nature of the claim here is that the insurance company did not pay enough money.

[00:15:35] Speaker 02:
The rationale for that is under the terms of the plan.

[00:15:38] Speaker 02:
And the plan says, it's undisputed what the plan says.

[00:15:41] Speaker 02:
The plan says you have to pay in accordance with law.

[00:15:44] Speaker 02:
It's the plaintiff's burden in the district court and on appeal to show what law we didn't comply with.

[00:15:50] Speaker 02:
What legal obligation to pay more than United Pay did the plaintiff identify?

[00:15:56] Speaker 02:
And to date, the only law that the plaintiff and the appellant has identified

[00:16:01] Speaker 02:
is that the Department of Managed Healthcare regulations that have this reasonable and customary standard in it, the district court said that doesn't apply.

[00:16:09] Speaker 02:
That is not a legal obligation to which an insurance company, not an HMO, but an insurance company is subject.

[00:16:17] Speaker 02:
So the plaintiff's burden is to identify a law, an applicable law that requires United to pay more.

[00:16:24] Speaker 02:
The plaintiff and the appellant on appeal has almost abandoned that issue.

[00:16:27] Speaker 03:
But why did the district court apply abuse of discretion if it was just a legal issue?

[00:16:32] Speaker 03:
I mean, why didn't they just dismiss and say, I mean, I guess it would be in the alternative.

[00:16:39] Speaker 02:
It so the district court didn't phrase it that way the district court said even if it was de novo I would I would come out this way admittedly that's not what the opinion says or the decision says Frankly your honor the parties brief the standard of review the standard of review is something that this as your honor can tell this is a Set of parties that are frequently against each other so this standard of review issue comes up in those cases so that's just how it proceeded in the district court that briefed it and

[00:17:07] Speaker 02:
The court was asked to decide it.

[00:17:08] Speaker 02:
The district court did decide it.

[00:17:10] Speaker 02:
My point here on appeal, Your Honor, is it ultimately didn't matter given the claim.

[00:17:14] Speaker 03:
Well, so I understand.

[00:17:15] Speaker 03:
I mean, you're basically arguing harmless.

[00:17:19] Speaker 03:
If it's error, it's harmless error.

[00:17:21] Speaker 03:
And we do have one case that adopts that view, but that was, as opposing counsel pointed out, that was where the district court had said, well, I would rule the same way.

[00:17:33] Speaker 03:
Normally, I would agree with you and I'm intrigued by your legal argument because I think that's your best hook.

[00:17:39] Speaker 03:
But here, when we send it back down, there's actually a fundamentally different process that the district court looks at.

[00:17:45] Speaker 03:
I mean, I guess there's discovery and I mean, is there no way that extra evidence would weigh in on this?

[00:17:53] Speaker 03:
Because normally, we just remand these.

[00:17:55] Speaker 02:
I don't see how it could, Your Honor, and remember, the plaintiff appellant briefed this as a de novo issue in the Rule 52 motion, right?

[00:18:05] Speaker 02:
the appellant took below was that this was de novo and they put forward their best case.

[00:18:11] Speaker 02:
There's no suggestion, I mean I heard it today your honor, but practically speaking there's no discovery that's going to change the question of what law applies to this plan and what law requires the insurance company to pay a penny more.

[00:18:25] Speaker 04:
There's a couple of things.

[00:18:27] Speaker 04:
One is, I mean if it is in fact de novo, you know,

[00:18:34] Speaker 04:
That is a matter of California law so we typically don't like to, like to, I don't like to try to set California law but also if you think the district courts are getting it wrong, it's helpful not just for this case but for other cases.

[00:18:48] Speaker 04:
And then there's a second thing is I'm reading the district court's decision here.

[00:18:51] Speaker 04:
I mean the district court spends a page, single space, you know, talking about what the standard review is, concludes its abuse discretion, the heading is defendants did not abuse its discretion.

[00:18:59] Speaker 04:
So basically you're, if we assume and I understand you're not,

[00:19:04] Speaker 04:
agreeing this, if you assume it's de novo, you're really asking us to do the job the district court should have done.

[00:19:11] Speaker 04:
Why wouldn't it just be easier for us to send back and have the district court tell us if it reaches the same conclusion under that standard?

[00:19:17] Speaker 02:
It's just a matter of judicial economy, Your Honor.

[00:19:19] Speaker 02:
I think if there was some fact finding or some weighing to be done below, that would make sense.

[00:19:25] Speaker 02:
My point is simply that this is a binary legal question.

[00:19:28] Speaker 02:
What is the law that applies that requires payment of a penny more?

[00:19:32] Speaker 02:
Plaintiffs took their best shot.

[00:19:34] Speaker 02:
They identified a law.

[00:19:36] Speaker 02:
The district court said it doesn't apply.

[00:19:38] Speaker 02:
The decision about what law applies had no discretion or deference embedded in it whatsoever.

[00:19:45] Speaker 04:
That's a purely legal question.

[00:19:50] Speaker 04:
It is abuse of discretion in the plan and the plan gets its deference to its interpretation of the terms of the plan, right?

[00:19:59] Speaker 04:
So, I mean, am I thinking incorrectly that if I'm the district court judge and the plan says this is what we think the law means and I'm going to give some deference to that or I guess?

[00:20:10] Speaker 02:
In the abstract, maybe, but that's not what happened here.

[00:20:14] Speaker 02:
The terms of the plan were not disputed.

[00:20:15] Speaker 02:
It wasn't as if the plaintiff said the plan means one thing and United said it means another and the district court agreed with United because of the abuse of discretion standard of review.

[00:20:26] Speaker 02:
But parties agree on what the plan says.

[00:20:28] Speaker 02:
It says you have to pay in accordance with or as permitted by law.

[00:20:33] Speaker 02:
So then the question again turns, what law?

[00:20:35] Speaker 02:
Again, I think your honor is correct that there are situations in which

[00:20:39] Speaker 02:
Remand might make sense.

[00:20:40] Speaker 02:
My point here is that the nature of the claim itself lends itself to a determination, even if you think the standard of review is wrong.

[00:20:48] Speaker 03:
So if we were to say that the standard of review was wrong, you think we could just also say, we don't need to remand this because the legal predicate is not met.

[00:20:59] Speaker 03:
And that would distinguish it from the other cases where we have remanded.

[00:21:02] Speaker 02:
I think that's exactly what I would do your honor just as a matter again of judicial economy unless you're going to restart the whole case which is not what should happen because the question is even if you were going to remand what is the claim the claim is that we did not pay in accordance with a law plaintiff has argued the law this court is well equipped just like the district court to decide if the law applies it's a pretty easy call actually the plaintiff doesn't even contest it on appeal that the plaintiff relied solely on regulations that do not imply

[00:21:32] Speaker 02:
Apply to insurance companies so so that you're correct your honor I think that we cited some out-of-circuit authority where courts can cut through all that and and avoid a needless remand or sort of a wasteful Remand when it's purely a legal question that the district court already decided there's no indicia that deference was applied in making that legal determination and

[00:21:52] Speaker 02:
So we think that if you disagree with the standard of review, we think that affirmance is still warranted.

[00:21:58] Speaker 02:
I would like to talk about the standard of review because we think the district court got it right.

[00:22:04] Speaker 02:
Surprisingly enough, it doesn't come up a whole lot.

[00:22:06] Speaker 02:
We haven't seen cases.

[00:22:08] Speaker 02:
There's maybe five district court cases where this issue has been adjudicated.

[00:22:11] Speaker 02:
Most of them come out the way the district court did here.

[00:22:14] Speaker 02:
My colleague on the other side cites two California Court of Appeal decisions in footnotes that just make a vague reference to disability includes health insurance.

[00:22:26] Speaker 02:
Those cases did not address this statute at all.

[00:22:29] Speaker 02:
They didn't grapple with the issue we're grappling with today.

[00:22:32] Speaker 02:
So there's just some generic statements of law.

[00:22:35] Speaker 02:
Only the five district court cases

[00:22:37] Speaker 02:
actually address this issue.

[00:22:40] Speaker 02:
And I would acknowledge, Your Honor, that there's some confusion and some murkiness in California law as to the nature of disability and health insurance.

[00:22:48] Speaker 02:
And I think that's what the legislature tried to clear up in 2001 with enacting Section 106B of the Insurance Code.

[00:22:57] Speaker 02:
The purpose of that was recognizing that lay people think of health insurance and disability insurance differently and frankly courts ought to because disability insurance is income replacement for when someone is injured.

[00:23:10] Speaker 02:
Health insurance covers surgeries and doctors visits and medicine.

[00:23:14] Speaker 02:
It's a very different thing.

[00:23:15] Speaker 03:
Well, I agree, and maybe this is just echoing what Judge Van Dyke said.

[00:23:19] Speaker 03:
I mean, I agree with that intuitive aspect to this, but how do you grapple with the specific California law that says health insurance is a type of disability insurance?

[00:23:33] Speaker 02:
Those are the two cases I think you're referring to, the footnotes, where the court said not dealing with this particular statute at all,

[00:23:42] Speaker 02:
They just said generically that health insurance is included within disability insurance.

[00:23:47] Speaker 03:
Right, but that seems to be an overriding theme within California insurance law.

[00:23:53] Speaker 02:
I don't disagree, Your Honor, and my point is that's why Section 106B was enacted.

[00:23:59] Speaker 02:
And 106B was enacted to take effect for statutes that were,

[00:24:04] Speaker 02:
post-date 2002, January 1, 2002, which includes the statute at issue here.

[00:24:10] Speaker 02:
And what 106B does is it separates health insurance from disability insurance.

[00:24:16] Speaker 02:
106A has a very specific, so we have a statute here.

[00:24:20] Speaker 02:
The question is, what does the term disability insurance mean in the statute?

[00:24:23] Speaker 02:
That's 10110.6.

[00:24:26] Speaker 02:
That's the statute we're talking about.

[00:24:27] Speaker 00:
106A says it includes

[00:24:30] Speaker 00:
these various types of insurance, but in 106B, it says that health insurance means a disability insurance policy that provides coverage for hospital or surgical benefits.

[00:24:44] Speaker 00:
So explain how you think that shows that there are different forms of insurance.

[00:24:50] Speaker 02:
It is a little circular, Your Honor, I'll acknowledge.

[00:24:53] Speaker 02:
However, 106B

[00:24:56] Speaker 02:
The predicate of that is for statutes that use the term health insurance.

[00:25:01] Speaker 02:
This statute we're talking about, 10110.6, does not use the term health insurance.

[00:25:06] Speaker 02:
So I would argue that the specific language in 106B is not what matters.

[00:25:12] Speaker 02:
What matters is that the legislature intended to separate disability from health.

[00:25:17] Speaker 04:
Sometimes, yeah, I can understand if you assume for a second, again, I'm not asking you to agree with this, but that health insurance generally speaking for whatever

[00:25:24] Speaker 04:
crazy reason in California is a type of disability insurance.

[00:25:29] Speaker 04:
There's other types of disability insurance.

[00:25:31] Speaker 04:
So the circle of disability insurance is this big and health insurance is this big.

[00:25:36] Speaker 04:
There are times when the legislature is only going to want to regulate perhaps theory, just health insurance.

[00:25:42] Speaker 04:
There's also perhaps times when they may want to regulate the other types of disability insurance that don't include.

[00:25:48] Speaker 04:
So it makes sense that there would be statutes that would separate health insurance out for those reasons, right?

[00:25:52] Speaker 04:
That doesn't necessarily mean

[00:25:54] Speaker 04:
that health insurance is not.

[00:25:55] Speaker 04:
You seem to be using that general fact that that happens sometimes to say they must be two different things, but it just doesn't follow logically in my view.

[00:26:05] Speaker 04:
Health insurance could be a subspecies of disability insurance, and there could be times

[00:26:12] Speaker 04:
when California singles out health insurance because for some reason it wants to.

[00:26:17] Speaker 04:
The latter is not somehow evidence that the former is not true, illogically.

[00:26:21] Speaker 02:
Understood, Your Honor.

[00:26:22] Speaker 02:
And I think, again, the easiest way to resolve this case, in my favor, is to look at 106 again.

[00:26:30] Speaker 02:
We have a statute here

[00:26:31] Speaker 02:
The statute we're trying to interpret is 10110.6 that uses the term disability insurance.

[00:26:38] Speaker 02:
Section 106 of the insurance code defines disability insurance to include a bunch of things that are not health insurance.

[00:26:45] Speaker 02:
That is a guide to how we interpret this statute.

[00:26:50] Speaker 02:
I don't think this is in the papers, Your Honor, but there are statutes

[00:26:55] Speaker 02:
That California has enacted post 2002 that uses the terms disability and health insurance in the same statute now of course if disability already included health insurance that wouldn't be necessary and I'm thinking of section 32 and 36 of the insurance code which both refer to to disability and health insurance in the same the same sentence which again to me indicates that post 2002

[00:27:20] Speaker 02:
The legislature, when it wants to separate, when it wants to include only disability, it says disability.

[00:27:27] Speaker 02:
When it wants to include both, it mentions both.

[00:27:29] Speaker 02:
Just like the model code did here, Your Honor, and we cite that in the papers for the background, is that there's a model code that has two different parts, one for disability, one for health.

[00:27:40] Speaker 02:
The legislature here enacted only

[00:27:42] Speaker 02:
the former and not the latter.

[00:27:44] Speaker 02:
And that is good evidence, especially with the backdrop of 106 of the insurance code, that we ought not to be broadly inferring that health insurance is included in a statute that does not refer to health insurance.

[00:27:57] Speaker 02:
And unless there are further questions, I'll set down.

[00:28:01] Speaker 00:
Thank you.

[00:28:17] Speaker 01:
So I just wanted to touch off where he left off, when my colleague left off.

[00:28:22] Speaker 01:
It mentions in the code commissioner's note for 106 specifically, and we do cite this in our brief actually, where it says, sickness and either accident or health changed to disability throughout the code.

[00:28:37] Speaker 01:
I think your honor's right.

[00:28:39] Speaker 03:
I'm not going to... That goes to whether health insurance is disability insurance.

[00:28:45] Speaker 03:
Whether it is included within disability.

[00:28:47] Speaker 03:
Can you address this argument that assuming that you're right, that they're different, or that health insurance is a type of disability insurance, that there's a legal predicate that is just not satisfied?

[00:29:00] Speaker 03:
Because that's a little bit different than I'd understood coming in.

[00:29:05] Speaker 03:
You have to point to a law that

[00:29:09] Speaker 03:
that suggests they couldn't do what they did and you haven't done that.

[00:29:14] Speaker 03:
Because you've pitched it as a factual, like whether we remand or not, we've been discussing it as a factual remand.

[00:29:22] Speaker 03:
But if there's a legal predicate, why isn't that easier for us?

[00:29:25] Speaker 01:
Yes, Your Honor.

[00:29:26] Speaker 01:
So what you're saying is where the plan says we pay based on a particular law.

[00:29:33] Speaker 04:
Amount permitted by law is what the plan says.

[00:29:36] Speaker 04:
And their argument is, and again, I think I agree with, it seems a little bit different than what I remember.

[00:29:42] Speaker 04:
I'm sure, I don't think it's waived or something.

[00:29:44] Speaker 04:
Their argument is, yeah, yeah, de novo doesn't really matter because they could never win or they didn't win on amount permitted by law.

[00:29:52] Speaker 04:
So why, there would be no reason to remand even if you went on de novo if that's... Understood.

[00:29:58] Speaker 01:
So let me, so I'll touch on all those things.

[00:30:00] Speaker 01:
So first, as I mentioned, the MSURGE care case, which we, so we now know that amount permitted by law doesn't mean what they say it means, for sure not necessarily.

[00:30:09] Speaker 01:
It may not mean it at all, and it certainly doesn't mean it necessarily because the MSURGE care case

[00:30:13] Speaker 01:
If you read Judge Wilson's decision, you'll see that United acknowledges that the amount permitted by law in that instance means fair health.

[00:30:22] Speaker 01:
So we know that categorically, that amount permitted by law isn't necessarily an amount permitted by law.

[00:30:27] Speaker 01:
It doesn't mean that you have to refer to a specific law.

[00:30:30] Speaker 01:
You can take a look at that case, and you can see that Oxford, in that case, which is an entity.

[00:30:35] Speaker 04:
What would your argument be that

[00:30:41] Speaker 04:
It does say amount permitted by law, so what law would they be not following?

[00:30:47] Speaker 01:
I don't think there is a law.

[00:30:48] Speaker 01:
I think that there is no law in California that requires... Doesn't that mean they win, though?

[00:30:53] Speaker 04:
Because if they'd say, well, if there's no law, we only have to pay you based on an amount we negotiated, which we didn't negotiate an amount with you, or by an amount permitted by law.

[00:31:01] Speaker 01:
So there's a few things.

[00:31:02] Speaker 01:
First, there's other language in the plan that's not the only language in the plan.

[00:31:06] Speaker 01:
There's other language in the plan which talks about, there's also the language about negotiation.

[00:31:10] Speaker 01:
which I think either precedes it or comes after it, where it says that it's an amount we negotiate or an amount permitted by law.

[00:31:19] Speaker 01:
And also there's gap fillers as well.

[00:31:21] Speaker 01:
So if there's no amount permitted by law, as a matter of contract law, you can fill the gap to say, okay, what's a reasonable amount to pay?

[00:31:27] Speaker 01:
I think that Judge Wilson did that actually in that MSURGE care case.

[00:31:31] Speaker 01:
But also I want to point to a few facts that sort of support this as well, which we mentioned in our brief, is that

[00:31:37] Speaker 01:
The facility was paid 57% of its bill.

[00:31:41] Speaker 01:
The anesthesiologist was paid 40% of their bill.

[00:31:43] Speaker 01:
The anesthesiologist alone was paid more than both surgeons together, and the facility was paid hundreds of times.

[00:31:56] Speaker 01:
50, 60, 100 times more than both the surgeons were paid together.

[00:31:59] Speaker 01:
There's clearly something more in the plan or more to the plan than just the language that we have here.

[00:32:06] Speaker 01:
And there's language in the plan which specifically references this, and it's also again cited in our brief at page 34, where it talks about the plan states

[00:32:17] Speaker 01:
you referring to the beneficiary will not pay more than the network cost sharing amount.

[00:32:23] Speaker 01:
Well, that has a meaning also, Your Honor.

[00:32:24] Speaker 01:
So if the patient is not supposed to pay more than the net cost sharing amount, does that impose an obligation on United to actually negotiate, to try to reduce the responsibility of the patient?

[00:32:35] Speaker 01:
These are all questions.

[00:32:37] Speaker 01:
And the district court didn't weigh in on any of them.

[00:32:40] Speaker 01:
She said, it says an amount permitted by law.

[00:32:44] Speaker 01:
It's clear enough to me.

[00:32:45] Speaker 01:
That's what she said.

[00:32:45] Speaker 01:
Abuse of discretion standard.

[00:32:46] Speaker 01:
She was applying the abuse of discretion standard.

[00:32:48] Speaker 01:
It's an amount permitted by law.

[00:32:50] Speaker 01:
That's what it says in the plan.

[00:32:51] Speaker 01:
You haven't shown a law.

[00:32:52] Speaker 01:
Therefore, you lose.

[00:32:54] Speaker 01:
It was that simple.

[00:32:55] Speaker 01:
That's why she spent, as the court, as your honor mentioned, that's why that's a legal determination.

[00:33:00] Speaker 01:
But if they could point, I would concede that if they were able to point to a particular law that they were following.

[00:33:09] Speaker 01:
But there is no particular law that they're following.

[00:33:11] Speaker 01:
This OCM program thing is not a law that they were following.

[00:33:16] Speaker 01:
That's the point.

[00:33:20] Speaker 00:
You're over your time.

[00:33:23] Speaker 01:
Thank you, Your Honor.

[00:33:24] Speaker 00:
The case of Daniel Torres in MSURGE Care versus United Health Care Insurance Company is submitted and will next year end on in Louis B. Edelson versus Travel Insurance International Inc.

[00:33:40] Speaker 00:
and United States Fire Insurance Company.