Filed 3/17/16
                            CERTIFIED FOR PUBLICATION


                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                   STATE OF CALIFORNIA



TENET HEALTHSYSTEM DESERT, INC.,                  D069057

        Plaintiff and Appellant,

        v.                                        (Super. Ct. No. INC1303739)

BLUE CROSS OF CALIFORNIA et al.,

        Defendants and Respondents.


        APPEAL from a judgment of the Superior Court of Riverside County, John G.

Evans, Judge. Reversed and remanded.



        Helton Law Group, Carrie S. McLain, Kim M. Worobec, Teddy T. Davis and

Patrick S. Ludeman for Plaintiff and Appellant.

        Morgan, Lewis & Bockius, Thomas M. Peterson, Molly M. Lane and Lisa R.

Veasman for Defendants and Respondents.
                                              I

                                     INTRODUCTION

       Plaintiff Tenet Healthsystem Desert, Inc. (Hospital)1 appeals from a judgment

entered in favor of defendants Blue Cross of California, doing business as Anthem Blue

Cross (Blue Cross), Anthem Blue Cross Life and Health Insurance Company (BC Life),

and Anthem UM Services, Inc. (Anthem UM).2 Hospital sued Anthem, as well as

Eisenhower Medical Center (Eisenhower) and Keenan & Associates (Keenan), when the

defendants refused to pay approximately $1,996,265.50 for the cost of medical services

that Hospital provided to an insured patient following extensive communications with

Anthem over a period of approximately 50 days regarding "authorization" for the

services. The defendants ultimately denied coverage for the medical services based on an

exclusion in the patient's policy for injuries sustained as a result of having a blood alcohol

level over the legal limit. Hospital alleged that Anthem's continuing to "authorize"

medical services during the patient's stay at Hospital, even after Anthem was made aware

that the patient was admitted with a blood alcohol level far exceeding the legal limit,

constituted a misrepresentation as to coverage, on which Hospital relied in providing care

to the patient.

       The trial court entered judgment for Anthem after sustaining, without leave to

amend, Anthem's demurrer to Hospital's third amended complaint (TAC) with respect to



1      Plaintiff does business as Desert Regional Medical Center.

2      We will refer to Blue Cross, BC Life and Anthem UM collectively as "Anthem."
                                              2
the causes of action alleged against Anthem.3 The trial court determined that the TAC

lacked the necessary specificity to survive a demurrer.

       We conclude that the trial court erred. The TAC alleges facts with sufficient

particularity to overcome a demurrer. We therefore reverse the judgment and remand the

matter to the trial court for further proceedings.

                                              II

                   FACTUAL AND PROCEDURAL BACKGROUND

A.     Factual background4

       A patient (Patient X) was treated in Hospital's acute care facility after an

automobile accident that occurred in the days prior to May 7, 2012.5 Patient X had a

"member identification card," which "identifie[d] that the Patient has health care

coverage through a plan sponsored by Eisenhower." Patient X's "member identification

card identified BC Life and Keenan as Eisenhower's authorized agent[s] and

administrator[s] of Eisenhower's plan," and "further identified Blue Cross as

3       The trial court did grant Hospital 30 days to amend a single cause of action against
Anthem. Hospital elected to forego further amendment in favor of appealing the trial
court's ruling on the demurrer.

4      Because we are reviewing the trial court's ruling on a demurrer to an operative
pleading, our recitation of the factual background of this matter is derived from the
allegations set forth in that pleading.

5      The TAC does not state the exact date of Patient X's admission, but does allege
that "on or about May 7, 2012, at approximately 11:00 a.m., the Hospital's admissions
assistant Patricia West telephoned and spoke with Aileen A. at (800) 274-7767 to provide
notice of the Patient's admission for post-stabilization services in the Hospital's acute care
hospital and to request authorization for the Hospital to provide post-stabilization
services to the Patient."
                                              3
Eisenhower's and BC Life's authorized agent and administrator who administers claims

under Eisenhower's plan on behalf of BC Life."

       According to the allegations of the TAC, Anthem, Eisenhower and Keenan had an

agreement under which the Anthem entities and Keenan would act as Eisenhower's agent

in order to perform all of the administrative services on behalf of Eisenhower's "Health

Plan ERISA Trust," which "provides health care benefits for employees of Eisenhower

Medical Center and their family members," a group to which we infer, based on the

allegations of the TAC, Patient X belonged. These administrative services are alleged to

include "all communications and direct dealings with providers, such as the Hospital,

including but not limited to verification of eligibility, benefits and authorization of

services; negotiating with providers, such as the Hospital, concerning any matters

including the entering into and/or revisions to contracts; pricing claims in accordance

with the terms of the plan documents and Summary Plan Description; producing member

identification cards; conducting utilization review; processing authorizations of services

and responding to providers' requests for such authorizations; and coordination and

management of medical care through case management."

       Hospital alleges that all of the defendants "had actual knowledge of the terms of

the Plan's coverage, including exclusions." Further, Hospital notes that it "does not and

could not possibly maintain information regarding all exclusions from coverage for the

tens (if not hundreds) of thousands of health insurance plans that cover the patients the

Hospital treats each year . . . ."



                                              4
       Hospital specifically alleges that there exists "a trade custom and usage that, to the

extent that a health plan and its administrators have information indicating that services

are not covered under the plan, the health plan and its administrators do not authorize

such services." According to the operative pleading, the trade usage and custom is "that

an authorization of services constitutes an affirmative representation that, based on all of

the information the health plan has been provided to date, the services are covered."

(Italics added.) Even more specifically, Hospital alleges that there had been a "course of

dealing between the Hospital and [all the defendants] such that, to the extent that [the

defendants] have information indicating that services are not covered under the plan, [the

defendants] do not authorize such services. Accordingly, at all times mentioned there has

existed a course of dealing between the Hospital and [the defendants] that an

authorization of services constitutes an affirmative representation that, based on all of the

information the health plan has been provided to date, the services are covered. This

course of dealing is, and at all times mentioned has been, certain and uniform, of general

continuity and well known to the Hospital and to [the defendants]."

       The operative pleading alleges that a representative of Hospital called 800-274-

7767, which is the telephone number that was provided on Patient X's member

identification card "as the number to call for 'Pre-Authorization,' " and which is a number

that Hospital was informed and believes is answered "by individuals who are the agents

of Eisenhower and the employees and agents of [Anthem and] Keenan."

       On the morning of May 7, 2012, a Hospital admissions assistant called the 800-

274-7767 number and spoke with "Aileen A." to provide notice that Patient X had been

                                              5
admitted to the acute care hospital within Hospital for "post-stabilization services."

Aileen A. gave the Hospital admissions assistant "reference number 0225239133 and

requested that the Hospital fax a clinical review of the Patient's medical condition to

(888) 391-3134." Aileen A. possessed certain private information about Patient X, such

as his name and date of birth, that she and Anthem and Keenan "would not have had if

they were not . . . agents [of Eisenhower]." In addition, Hospital was informed and

believed that Anthem and Keenan hold out "fax number (888) 391-3134" as a number

they use "to communicate with providers regarding information necessary to authorize

care and make coverage determinations on behalf of Eisenhower."

       That afternoon, a Hospital case manager faxed to the number Aileen A. had

provided "a clinical review of the Patient's medical condition as of the date of service

May 7, 2012." The clinical summary included information that Patient X had been

brought to the emergency room by ambulance after having been in a motor vehicle

accident in which he was an unrestrained driver, and that he had "tested positive for

cannabis and a blood alcohol level ('ETOH' for ethyl alcohol) of .235."

       On the morning of May 8, Hospital's representatives attempted to verify Patient

X's benefit summary through a Web site maintained by Anthem, on behalf of

Eisenhower. The Web site did not disclose the existence of an exclusion for services for

injuries sustained as a result of a participant's driving with a blood alcohol level in excess

of the legal limit.

       Anthem repeatedly requested clinical information pertaining to Patient X over the

course of a multi-week period. Between May 7 and June 11, 2012, Anthem authorized

                                              6
Patient X's ICU treatment, in writing, on at least 11 occasions. Many of the authorization

letters included letterhead and documents containing the defendants' trademarks. For

example, on May 8, Hospital received a telephone call and a letter via fax from an

unnamed case manager employed by Anthem. The case manager "authoriz[ed]" Hospital

to admit Patient X and to provide medical services to him "at the ICU level of care." The

letter identified the case manager as an employee of Anthem, identified that the fax was

sent on Anthem's behalf, and included private information about the patient that an

individual would not have possessed if he or she were not an agent of Anthem. The letter

did not advise Hospital that Patient X's plan excluded coverage for services provided to

treat injuries sustained when a plan participant was driving with a blood alcohol level

over the legal limit, nor did the case manager inform Hospital of this fact over the

telephone.

       On or about May 9, 2012, Hospital received a letter via fax from an unnamed case

manager for Anthem "authorizing" services for Patient X through May 10 in the ICU.

This letter "failed to identify that the plan had any exclusion from coverage applicable to

injuries caused by a motor vehicle accident in which the Patient was driving with a blood

alcohol level in excess of the legal limit."

       On or about May 11, Hospital received a letter via fax from an unnamed case

manager for Anthem "authorizing" medical services for Patient X through May 12 in the

ICU. This correspondence did not identify a potentially applicable exclusion from

coverage for the services.



                                               7
       On or about May 14, 2012, Dionne Myers, a case manager for Anthem,

corresponded with Hospital's admissions assistant Patricia West. Myers requested

additional clinical information regarding Patient X's health status in order to determine

whether additional medical treatment would be authorized.

       No later than May 15, Patient X's case was referred to a "discharge planner" for

Anthem, Nell Steele-Alvarez. Steele-Alvarez was to make arrangements for where

Patient X would go for rehabilitation after being discharged from the acute care hospital.

Steele-Alvarez was provided with clinical information regarding Patient X, which she

reviewed, and was aware that Patient X's injuries had resulted from a vehicle accident

that occurred while he was driving with a blood alcohol level in excess of the legal limit.

Steele-Alvarez informed Hospital's case manager Janet Sobleskie that she was

"investigating acute rehab facilities where the Patient would go when the Patient was

discharged from [Hospital's] acute care hospital."

       Later that day, Hospital received another letter via fax from an unnamed case

manager for Anthem authorizing medical services for Patient X in the ICU through May

17. This correspondence did not inform Hospital of the coverage exclusion for injuries

sustained as a result of driving with an illegal blood alcohol level.

       On May 16, Hospital documented that "it was not reviewing the Patient's account

for potential alternative health care coverage because the existence of Patient's insurance

coverage had been confirmed."

       Hospital received additional faxed letters from representatives of Anthem on May

16, May 18, May 25, May 30, May 31, June 4, June 6 (two letters), and June 11,

                                              8
"authorizing" medical care for Patient X in the ICU. None of these letters informed

Hospital of the relevant exclusion.

        In the meantime, Anthem discharge planner Steele-Alvarez telephoned Hospital

from telephone number 818-234-6095 on May 17 and May 22 to discuss with Hospital's

case manager Sobleskie the plan for Patient X's rehabilitation care after his discharge

from the ICU.6 Steele-Alvarez discussed with Sobleskie Patient X's medical condition,

clinical information, and discharge planning. On June 12, Steele-Alvarez called Hospital

from the same telephone number and spoke with a nurse case manager regarding

facilities where Patient X could be sent pursuant to the terms of his coverage following

his discharge from the ICU. Steele-Alvarez discussed Patient X's medical condition, the

basis for his admission, the nature of his injuries, and discharge plans.

        On June 15, Steele-Alvarez, again calling from 818-234-6095, spoke with

Hospital's rehabilitation case manager Robyn Angeli. Steele-Alvarez requested that

Patient X be admitted to Hospital's acute inpatient rehabilitation hospital upon his

discharge from the ICU, and authorized the admission. The operative pleading alleges

that in engaging in this communication with Angeli, Steele-Alvarez was acting as the

agent and employee of Anthem, and that she was acting as the agent of Eisenhower as

well.

        On June 18, 2012, Hospital discharged Patient X from the acute care hospital and,

based on the representations by Steele-Alvarez regarding authorization for Patient X's


6      The operative pleading alleges not only the dates but the times that many of the
contacts between Hospital's representatives and representatives of Anthem occurred.
                                              9
treatment in Hospital's acute rehabilitation facility, transferred and admitted Patient X as

an inpatient at its acute rehabilitation hospital.

       On June 20, an unnamed case manager for Anthem sent Hospital a letter on

Anthem letterhead authorizing the provision of acute rehabilitation services to Patient X

through June 25. That same date, Dionne Myers spoke with a representative of Hospital

and verbally indicated that Hospital's provision of acute rehabilitation services to Patient

X was authorized under the terms of his plan until June 25.

       The operative pleading alleges that Anthem and the other defendants made these

communications when they "knew or should have known the clinical information

previously provided by Hospital, which specifically indicated that the Patient was injured

while driving in an automobile accident with a blood alcohol level in excess of the legal

limit and positive for cannabis, and that they knew or should have known of the

exclusions from coverage, including for injuries caused by a motor vehicle accident in

which the patient was driving with a blood alcohol level in excess of the legal limit." As

a result of a contractual agreement between Eisenhower and Anthem, Anthem knew of

and was in possession of the terms of Patient X's plan, including the exclusions from

coverage.

       In addition, the operative pleading alleges that all of the defendants "falsely

represented that the Hospital's acute rehabilitation hospital services it had provided, was

providing, and would provide to the Patient [were] covered under the Patient's plan and

that the Plan is financially responsible for paying for such services." The pleading further

alleges that the representations made by the defendants were false, and that at the time the

                                               10
representations were made, the defendants had no reasonable ground for believing them

to be true. The operative pleading alleges that the defendants made these

misrepresentations that the services "were authorized and covered with the intent to

induce the Hospital to act in reliance on them . . . , or with the expectation that the

Hospital would so act."

       Hospital alleges that it was ignorant of the falsity of the representations made by

the defendants, believed them to be true, and acted in reliance on them in admitting

Patient X to its acute rehabilitation facility and providing services to him there.

       Hospital was not informed of the existence of the exclusion for coverage in Patient

X's plan for "injuries sustained while drinking and driving" until October 24, 2012.7

Hospital contends that, as a result, Hospital was denied payment for the more than 50

days of services that Hospital rendered to Patient X in its ICU and acute rehabilitation

facility. In addition, because Hospital was not informed of the coverage exclusion until

late October 2012, Hospital was unable to seek reimbursement via Medi-Cal because

claims for Medi-Cal must be submitted within 60 days from the date the services were

rendered.

B.     Procedural background

       Hospital filed a complaint against Anthem, Eisenhower, and Keenan alleging 14

causes of action in June 2013. After demurrers and amendments, Hospital filed a second

amended complaint (SAC) in November 2013.


7      The operative pleading does not allege who specifically informed Hospital of the
exclusion on October 24, 2012.
                                              11
       Anthem filed a demurrer to the SAC, in which Eisenhower and Keenan joined.

The trial court sustained this demurrer, as well, and granted Hospital 30 days leave to

amend. The trial court acknowledged that in the first, second and third causes of action,

Hospital had identified several people by name. However, the court faulted Hospital for

failing to "allege specifically who the persons with whom plaintiff spoke, work for or

were representing, to whom the phone numbers belonged or who assigned the claim

number."

       Hospital filed the TAC in January 2014. The 276-page pleading outlines

Hospital's interaction with individuals, over a period of approximately 50 days, who held

themselves out as representing Anthem for purposes of reviewing and authorizing the

medical care provided to Patient X. The allegations in the TAC include dates, times, the

manner of communication, including correspondence, faxes and telephone calls, together

with telephone and fax numbers utilized, the names of individuals and their titles, if

known, the companies these individuals represented, and the factual basis for Hospital's

belief that an agency relationship existed. In the TAC, Hospital pled causes of action

against Anthem for negligent misrepresentation; fraud and deceit based on suppression of

facts; intentional fraud; and unfair business practices in violation of Business and

Professions Code section 17200.8

       Anthem filed a demurrer to the TAC, and the trial court again ruled that Hospital

had failed to "plead fraud/misrepresentation with the requisite specificity," and failed to



8      The TAC alleged 19 causes of action in total against the various defendants.
                                             12
"set forth a single actual specific misrepresentation that was made by [Anthem] that the

patient was covered." The court references pages 24 through 52 of the TAC in support of

its conclusion that the TAC lacked an allegation of a misrepresentation. The trial court

sustained Anthem's demurrer with respect to Hospital's causes of action for negligent

misrepresentation (causes of action 1 and 10), fraud based on suppression of facts (causes

of action 2 and 11), and intentional fraud (causes of action 3 and 12). This time, the court

denied leave to amend, except with regard to the unfair business practices cause of action

(cause of action 19), for which the court granted Hospital an additional 30 days in which

to amend to attempt to plead that cause of action.9

       Hospital elected not to file another amended pleading with respect to the unfair

business practices cause of action, instead reserving its right to appeal the ruling on the

demurrer to the TAC. As a result, the trial court filed an order dismissing the action

against Anthem with prejudice, and entered judgment in favor of Anthem in April 2014.

       Hospital filed a timely notice of appeal.

                                             III

                                       DISCUSSION

A.     Legal standards on appeal from the sustaining of a demurrer without leave to
       amend

       We apply the following well-established law in reviewing a trial court's order

sustaining a demurrer without leave to amend: "We independently review the ruling on a


9       In this order, the trial court also denied Anthem's request for judicial notice of
letters it purportedly sent to Hospital while Patient was in the hospital. The court noted
that "[t]he contents of the letters are not the proper subject of judicial notice."
                                             13
demurrer and determine de novo whether the complaint alleges facts sufficient to state a

cause of action. [Citation.] We assume the truth of the properly pleaded factual

allegations, facts that reasonably can be inferred from those expressly pleaded, and

matters of which judicial notice has been taken. [Citation.] We construe the pleading in

a reasonable manner and read the allegations in context." (Fremont Indemnity Co. v.

Fremont General Corp. (2007) 148 Cal.App.4th 97, 111 (Fremont).)

       When the trial court sustains a demurrer without leave to amend, "we decide

whether there is a reasonable possibility that the defect can be cured by amendment: if it

can be, the trial court has abused its discretion and we reverse; if not, there has been no

abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable

possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318

(Blank).)

B.     Analysis

       1.      Anthem improperly relies on evidence not in the record throughout its
               briefing

       As an initial matter, we must address the impropriety of Anthem's reliance on

certain evidence, throughout its response brief, in attempting to demonstrate that the trial

court ruled correctly in sustaining its demurrer. Anthem repeatedly refers to the contents

of letters that it alleges are letters that it sent to Hospital with respect to Patient X's care.

Anthem asks this court to "look at what the writings actually stated when they conveyed

to Hospital the allegedly actionable misrepresentations," in an effort to demonstrate that




                                                14
the writings referred to in the TAC "show[ ] something quite different from the

misimpression Hospital has created by its incomplete and vague pleading tactics[.]"

       Anthem's request that this court "look at what the writings actually stated" is

inappropriate. Because a demurrer challenges defects on the face of the complaint, it can

refer to matters outside the pleading only if those matters are subject to judicial notice.

(Blank, supra, 39 Cal.3d at p. 318.)

       The letters at issue were not incorporated into the operative pleading, and the trial

court declined to take judicial notice of the letters and thus did not consider them in

ruling on Anthem's demurrers.10 Anthem does not argue on appeal that the trial court

erred in denying Anthem's request for judicial notice. The letters are therefore not

properly before this court on the basis that the trial court judicially noticed them. Further,

Anthem does not properly request that this court take judicial notice of the documents

independently. Although Anthem argues in its briefing on appeal that the letters are

"relevant" to Hospital's claims and that this court "may evaluate" and/or

"properly/consider and judicially notice" them, an argument raised in a response brief is

insufficient to permit this court to take judicial of the evidence that is the subject of such

argument. (Formatting omitted.) If a party wants this court to take judicial notice of a

matter, that party must file a motion seeking judicial notice in this court, as required by

California Rules of Court, rule 8.252:




10     Again, the trial court concluded that "the letters are not the proper subject of
judicial notice."
                                              15
          "(1) To obtain judicial notice by a reviewing court under Evidence
          Code section 459, a party must serve and file a separate motion with
          a proposed order.

          "(2) The motion must state:

          "(A) Why the matter to be noticed is relevant to the appeal;

          "(B) Whether the matter to be noticed was presented to the trial court
          and, if so, whether judicial notice was taken by that court;

          "(C) If judicial notice of the matter was not taken by the trial court,
          why the matter is subject to judicial notice under Evidence Code
          section 451, 452, or 453; and

          "(D) Whether the matter to be noticed relates to proceedings
          occurring after the order or judgment that is the subject of the
          appeal."

       Anthem has not filed a separate motion that complies with these requirements.

This, alone, would be a sufficient reason to reject Anthem's request that this court

consider the contents of the letters; however, even if Anthem had properly requested that

this court take judicial notice of the letters, we would have ruled in the same way that the

trial court did. The letters that Anthem seeks to introduce are not matters that are

properly subject to judicial notice.

       " 'Judicial notice may not be taken of any matter unless authorized or required by

law.' (Evid. Code, § 450.) Matters that are subject to judicial notice are listed in

Evidence Code sections 451 and 452. A matter ordinarily is subject to judicial notice

only if the matter is reasonably beyond dispute." (Fremont, supra, 148 Cal.App.4th at

p. 113.) Neither the existence of the letters that Anthem is relying on, nor the content of

such letters, falls within any of the matters identified as those as to which judicial notice


                                              16
must be taken pursuant to Evidence Code section 451,11 or matters identified as those as

to which judicial notice may be taken pursuant to section 452.12




11    Evidence Code section 451 provides:

          "Judicial notice shall be taken of the following:

          "(a) The decisional, constitutional, and public statutory law of this
          state and of the United States and the provisions of any charter
          described in Section 3, 4, or 5 of Article XI of the California
          Constitution.

          "(b) Any matter made a subject of judicial notice by Section
          11343.6, 11344.6, or 18576 of the Government Code or by Section
          1507 of Title 44 of the United States Code.

          "(c) Rules of professional conduct for members of the bar adopted
          pursuant to Section 6076 of the Business and Professions Code and
          rules of practice and procedure for the courts of this state adopted by
          the Judicial Council.

          "(d) Rules of pleading, practice, and procedure prescribed by the
          United States Supreme Court, such as the Rules of the United States
          Supreme Court, the Federal Rules of Civil Procedure, the Federal
          Rules of Criminal Procedure, the Admiralty Rules, the Rules of the
          Court of Claims, the Rules of the Customs Court, and the General
          Orders and Forms in Bankruptcy.

          "(e) The true signification of all English words and phrases and of all
          legal expressions.

          "(f) Facts and propositions of generalized knowledge that are so
          universally known that they cannot reasonably be the subject of
          dispute."

12    Evidence Code section 452 provides:

          "Judicial notice may be taken of the following matters to the extent
          that they are not embraced within Section 451:
                                            17
       The only arguable "matter" identified in the relevant Evidence Code provisions

under which these letters could fall would be those matters identified in subdivision (h) of

Evidence Code section 452: "Facts and propositions that are not reasonably subject to

dispute and are capable of immediate and accurate determination by resort to sources of

reasonably indisputable accuracy." However, letters that were ostensibly created by a

party to the litigation regarding the subject of the litigation would appear to be the very

epitome of items "subject to dispute," as opposed to "not reasonably subject to dispute."


          "(a) The decisional, constitutional, and statutory law of any state of
          the United States and the resolutions and private acts of the Congress
          of the United States and of the Legislature of this state.

          "(b) Regulations and legislative enactments issued by or under the
          authority of the United States or any public entity in the United
          States.

          "(c) Official acts of the legislative, executive, and judicial
          departments of the United States and of any state of the United
          States.

          "(d) Records of (1) any court of this state or (2) any court of record
          of the United States or of any state of the United States.

          "(e) Rules of court of (1) any court of this state or (2) any court of
          record of the United States or of any state of the United States.

          "(f) The law of an organization of nations and of foreign nations and
          public entities in foreign nations.

          "(g) Facts and propositions that are of such common knowledge
          within the territorial jurisdiction of the court that they cannot
          reasonably be the subject of dispute.

          "(h) Facts and propositions that are not reasonably subject to dispute
          and are capable of immediate and accurate determination by resort to
          sources of reasonably indisputable accuracy."
                                             18
(Ibid., italics added.) Further, although the existence of a document, such as a document

recorded in the official records of a government body, may be judicially noticeable, the

truth of statements contained in the document and their proper interpretation are not

subject to judicial notice. (StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 457,

fn. 9 ["In ruling on a demurrer, a court may consider facts of which it has taken judicial

notice. (Code Civ. Proc., § 430.30, subd. (a).) This includes the existence of a

document. When judicial notice is taken of a document, however, the truthfulness and

proper interpretation of the document are disputable."].) As a result, even if we were to

conclude that it would be proper to take judicial notice of the existence of the letters to

which Anthem repeatedly cites, the existence of the letters would offer Anthem no

assistance in supporting its position that Hospital's TAC fails to state any valid causes of

action, since Anthem's position is premised on its own interpretation of the meaning of

the letters.13

       Because the evidence regarding the contents of these letters is not properly the

subject of judicial notice and, in fact, no judicial notice has been taken of these letters by




13      For example, Anthem claims that the letters "directly contradict Hospital's
allegations" in the TAC regarding the proper meaning of Anthem's "authorizations."
Anthem also asserts that an evaluation of these letters makes the "sham nature of
Hospital's allegations . . . immediately apparent." (Capitalization and boldface omitted.)
If anything, Anthem's argument demonstrates why such matters are not properly
considered on a demurrer, since the content of the letters can do no more than raise a
triable issue of fact with respect to whether Anthem made material misrepresentations or
concealed material facts. A demurrer is not the appropriate vehicle for challenging the
merits of a plaintiff's case.
                                              19
either the trial court or this court, the letters are not properly before us.14 We will

therefore ignore any and all references to these letters in Anthem's briefing on appeal.

Such letters do not, and cannot, provide a basis for affirming the trial court's ruling with

respect to Anthem's demurrer.15



14      Anthem's reliance on Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285,
footnote 3 (Ingram), is misplaced. In Ingram, the appellate court took judicial notice of a
"letter and media release (which were substantially the same)" issued by a district
attorney's office regarding the results of an investigation into potential Brown Act
violations by public officials. (Id. at pp. 1284, 1285, fn. 3.) The documents had not been
attached to the operative complaint. However, unlike in this case, the complaint had
"excerpted quotes from the letter and summarized parts of it in some detail." (Id. at p.
1285, fn. 3.) Even more significantly, the appellant in Ingram had not opposed the court
taking judicial notice of the documents. (Id. at p. 1285, fn. 3.) The appellate court
appears to have accepted the appellant's concession that such material was properly the
subject of judicial notice without undertaking an independent analysis as to the propriety
of taking judicial notice. (Ibid.) We therefore do not consider Ingram to be useful
authority for purposes of this case.

15      At oral argument, counsel for Anthem suggested that the TAC is deficient because
Hospital failed to include the full text of the written communications alleged to have been
sent from Anthem to Hospital, or to attach a copy of the communications. Relying on
Holly Sugar Corp. v. Johnson (1941) 18 Cal.2d 218, counsel's position at oral argument
was that when a fraud cause of action is predicated on a writing, the complaint must
include the full text of such a writing or attach a copy. We note that this position is
slightly different from the position taken in briefing, in which Anthem simply argued that
this court could consider the letters that Anthem contends are the writings containing
some of the alleged misrepresentations because "[a] cause of action predicated on a
writing―and here allegedly actionable misrepresentations are in writing―will ordinarily
plead what the writings state, or attach the writings to the complaint, or incorporate them
by reference." This is not an argument that Hospital's pleading is necessarily deficient
because it does not include the full text of the writings or attach a copy. Further, the
authority on which Anthem relies does not stand for the proposition that a pleading
alleging fraud is deficient if it does not include a copy of the writing in which an alleged
misrepresentation was made, either in the text of the complaint or by attaching a copy to
the complaint. Rather, the authority simply stands for the rule that a party may simply
quote from a document or attach a copy, rather than plead the legal effect of the
document: "It is well settled that a written instrument which is the foundation of a cause
                                              20
       2.      Intentional fraud (causes of action 3 and 12)

       " 'The elements of fraud, which give rise to the tort action for deceit, are (a)

misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of

falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance;

and (e) resulting damage.' " (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638

(Lazar).)

       "In California, fraud must be pled specifically; general and conclusory allegations

do not suffice. [Citations.] 'Thus " 'the policy of liberal construction of the

pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any

material respect.' " [Citation.] [¶] This particularity requirement necessitates pleading

facts which "show how, when, where, to whom, and by what means the representations

were tendered." ' " (Lazar, supra, 12 Cal.4th at p. 645.) In addition, a plaintiff is held to

a higher standard in asserting a fraud claim against a corporate defendant. "In such a

case, the plaintiff must 'allege the names of the persons who made the allegedly

fraudulent representations, their authority to speak, to whom they spoke, what they said

or wrote, and when it was said or written.' " (Ibid.)

       "The specificity requirement serves two purposes. The first is notice to the

defendant, to 'furnish the defendant with certain definite charges which can be

of action may be pleaded in haec verba, rather than according to its legal effect, either by
setting forth a copy in the body of the complaint or by attaching a copy as an exhibit and
incorporating it by proper reference." (Id. at p. 225, italics omitted.) Finally, even if
there existed a requirement that Hospital set forth in its complaint the full text of the
letters in which it contends the misrepresentations were made, such that this court could
consider the text of the letters as Anthem has requested it do, the letters do not, in and of
themselves, establish as a matter of law that there was no representation of coverage.
                                                21
intelligently met.' [Citations.] The pleading of fraud, however, is also the last remaining

habitat of the common law notion that a complaint should be sufficiently specific that the

court can weed out nonmeritorious actions on the basis of the pleadings. Thus the

pleading should be sufficient ' "to enable the court to determine whether, on the facts

pleaded, there is any foundation, prima facie at least, for the charge of fraud." ' "

(Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,

216-217 (Committee on Children's Television).)

       There exist, however, "certain exceptions which mitigate the rigor of the rule

requiring specific pleading of fraud." (Committee on Children's Television, supra, 35

Cal.3d at p. 217.) For example, less specificity is required of a complaint when " 'it

appears from the nature of the allegations that the defendant must necessarily possess full

information concerning the facts of the controversy,' [citation]; '[e]ven under the strict

rules of common law pleading, one of the canons was that less particularity is required

when the facts lie more in the knowledge of the opposite party . . . .' " (Ibid., italics

added.)

       Hospital has sufficiently met the pleading requirements for intentional fraud.

First, Hospital identifies multiple written and oral communications, made by the Anthem

entities and expressed to Hospital, in which Anthem authorized the services that Hospital

provided to Patient X. As to a large number of communications, Hospital alleges the

dates, times, and the names of the individuals who initiated these communications, which

occurred over a period of approximately 50 days. Moreover, Hospital identifies at least

one conversation between Anthem discharge planner Steele-Alvarez and a Hospital

                                              22
representative in which Steele-Alvarez, alleged to be an employee and/or agent of one or

more of the Anthem defendants, not only authorized but specifically requested that

Hospital admit Patient X to its acute rehabilitation facility upon his discharge from

Hospital's ICU. Hospital has thus clearly pled facts that show how the statements were

made (directly to agents of Hospital through telephone calls and written letters faxed to

Hospital); when the statements were made (on the identified dates and the specified

times); where the statements were made (at Hospital, where its representatives received

the communications); to whom the statements were made (to identified Hospital

employees); and the means by which they were made (by way of telephone calls placed

and letters faxed from numbers that are alleged to belong to defendants). (See Lazar,

supra, 12 Cal.4th at p. 645 [pleading with particularity necessitates pleading that

" ' "show[s] how, when, where, to whom, and by what means the representations were

tendered" ' "].) Further, Hospital alleged the identities of certain individuals acting as the

agents of Anthem, and further provided the basis for the allegation that such individuals

had the authority to act on Anthem's behalf, including the fact that these individuals were

originally reached through Hospital's call to the number provided on Patient X's member

identification card, and that these individuals possessed private health and identifying

information about Patient X that they would not have been in possession of absent their

employment/agency relationship with Anthem.

       Given the specificity of these numerous alleged communications, and given the

allegation that the provision of an "authorization" has a specific meaning in this context,

i.e., that an "authorization of services constitutes an affirmative representation that . . . the

                                               23
services are covered," Hospital has sufficiently alleged the existence of multiple

affirmative misrepresentations that the care that Hospital rendered to Patient X would be

covered by his insurance plan.

       In addition, the trial court failed to consider that a cause of action based in fraud

may arise from conduct that is designed to mislead, and not only from verbal or written

statements. (See Thrifty-Tel, Inc. v. Bezenek (1996) 46 Cal.App.4th 1559, 1567 ["A

misrepresentation need not be oral; it may be implied by conduct."]; Universal By-

Products, Inc. v. City of Modesto (1974) 43 Cal.App.3d 145, 151 ["A misrepresentation

need not be express but may be implied by or inferred from the circumstances."].)

Hospital has alleged repeated engagement by Anthem concerning the treatment of Patient

X, over a period of approximately 50 days, including the initiation of communications

with Hospital staff and requests for information that would imply that the services

authorized by Anthem and provided to Patient X by Hospital were not only medically

necessary, but were covered by Patient X's health insurance plan. If the services were

not covered, Anthem would have had no reason to continue to inquire about the medical

necessity of the services and, in fact, according to the allegations of the complaint, the

defendants would have been "legally barred from requesting information regarding the

Patient for health care services that [were] not covered." Thus, to the extent that the trial

court believed that Hospital had to allege that the defendants made an oral or written

statement informing Hospital that the services in question were "covered" by Patient X's

health insurance plan in order to sufficiently allege a cause of action for fraud, the trial

court was in error.

                                              24
       Anthem suggests that Hospital's TAC is insufficient because it does not identify

each individual and defendant entity who is alleged to have engaged in communications

with Hospital regarding Patient X's care. To the extent that Hospital may be relying on

the communications it received from unnamed case managers at Anthem, Hospital

provided sufficient information to permit Anthem, the party with superior knowledge of

who was responsible for preparing the documents in question, to identify the specific

individual or individuals; Hospital is relieved from having to plead that particular

information with specificity under such circumstances. (See West v. JPMorgan Chase

Bank, N.A. (2013) 214 Cal.App.4th 780, 793 [plaintiff was not required to plead the

identity of the preparer of a letter from "the Chase Fulfillment Center" because that

information "was uniquely within Chase Bank's knowledge"]; see also Committee on

Children's Television, supra, 35 Cal.3d at p. 217 [less specificity is required in pleading

fraud when " 'it appears from the nature of the allegations that the defendant must

necessarily possess full information concerning the facts of the controversy,' " italics

added]; Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 [" 'While

the precise identities of the employees responsible . . . are not specified in the loan

instrument, defendants possess the superior knowledge of who was responsible for

crafting these loan documents.' "].)

       For this same reason, we reject Anthem's contentions that the allegations are not

sufficiently detailed as to which defendant entity employed "Aileen A." or any other

individual identified in the complaint, or which defendant entity maintained each

telephone number and fax number identified in the complaint. This information is

                                              25
uniquely within the defendants' knowledge. Patient X's member identification card listed

a single telephone number for care providers to contact for purposes of obtaining " 'Pre-

Authorization' " for care. Hospital used the number that was provided on Patient X's card

to seek authorization for his care. The defendants are the entities who decided what

information to place on Patient X's member identification card. The defendants are also

the ones who have decided which entity is responsible for the different tasks that are

required to administer Eisenhower's health insurance plan. The mere fact that the nature

of defendants' relationships with each other and each entity's particular role in conducting

and administering the health insurance plan at issue are unclear, does not necessitate that

a court permit them to escape any responsibility at the pleading stage of a lawsuit.

Hospital has alleged a number of very specific facts that provide the defendant entities,

who possess superior knowledge of the relationships between and among them, to be able

to defend against the claims that Hospital asserts in its TAC. These specific factual

allegations, including the times that various communications occurred and the telephone

or fax numbers used, are also sufficient to demonstrate that there is a prima facie

foundation for Hospital's allegation of fraud. (See Committee on Children's Television,

supra, 35 Cal.3d at pp. 216-217.)

       Anthem attempts to avoid the framing of the complaint by arguing that Hospital's

allegations that "Anthem authorized particular services for the patient" do not constitute

misrepresentations that the services would be covered, and not excluded. However,

Anthem's position is based on its argument, both in the trial court and on appeal, that it



                                             26
"provides no coverage for Eisenhower plan benefits,"16 and that its "role was limited to

providing 'utilization management' and administrative services."17 However, according

to the allegations of the TAC, Anthem, Eisenhower and Keenan had an agreement under

which the Anthem entities and Keenan would act as Eisenhower's agents, performing all

of the administrative services on behalf of Eisenhower's "Health Plan ERISA Trust,"

which "provides health care benefits for employees of Eisenhower Medical Center and

their family members." These administrative services are alleged to include "all

communications and direct dealings with providers, such as the Hospital, including but

not limited to verification of eligibility, benefits and authorization of services; negotiating

with providers, such as the Hospital, concerning any matters including the entering into

and/or revisions to contracts; pricing claims in accordance with the terms of the plan

documents and Summary Plan Description; producing member identification cards;

conducting utilization review; processing authorizations of services and responding to

providers' requests for such authorizations; and coordination and management of medical



16     This assertion is not supported by a citation to the record.

17      Notably, Anthem does not explain what other services it is referencing when it
mentions "administrative services." In addition, Anthem spends three pages of its
appellate brief describing the process of "[u]tilization management or utilization
review"—which refers to "the process of determining whether services are medically
necessary"—under the heading "Utilization Review by Anthem On Behalf Of The Health
Plan." (Boldface omitted.) However, the question whether Anthem's role was or was not
limited to "utilization review" is not a question that can be answered on demurrer, unless
the allegations of the operative complaint or matters of which judicial notice may be
taken establish such a fact. As we explain, the TAC does not allege that Anthem's role
was so limited, and there are no facts as to which judicial notice has been taken.
Anthem's discussion regarding this issue is therefore wholly irrelevant.
                                              27
care through case management." (Italics added.) Thus, the TAC alleges that Anthem's

role was, essentially, to administer Eisenhower's health plan on behalf of Eisenhower—

i.e., Anthem was to act as Eisenhower's agent in implementing all aspects of the health

plan, and to be the sole contact for entities such as Hospital. In addition, the TAC alleges

that Patient X's member identification card identified one of the Anthem entities, BC

Life, and Keenan, as Eisenhower's "authorized agent and administrator of Eisenhower's

plan." The card further identified another Anthem entity, Blue Cross, as the agent and

administrator for Eisenhower and BC Life who "administers claims" under Patient X's

plan. (Italics added.)

       Beyond these allegations, the TAC alleges that "there has existed a trade custom

and usage that, to the extent that a health plan and its administrators have information

indicating that services are not covered under the plan, the health plan and its

administrators do not authorize such services." Thus, "there has existed a trade custom

and usage that an authorization of services constitutes an affirmative representation that,

based on all of the information the health plan has been provided to date, the services are

covered."18 (Italics added.)

       Anthem's assertions as to the limitations of Anthem's role in administering

Eisenhower's health plan may or may not be true. However, these are factual questions



18     The TAC further alleges that this "custom and usage is, and at all times mentioned
has been, certain and uniform, of general continuity and notoriety, and acquiesced-in by
the whole of this industry," and, beyond this, "was well known to the Hospital and to
Blue Cross, BC Life, Anthem UM, Eisenhower, Keenan, and Does 1 through 25 at the
time of their communication of each of the authorizations."
                                             28
that cannot be determined on a demurrer to a pleading that contains allegations that

conflict with Anthem's assertions in briefing in this court. Further, Anthem's attempts to

rely on evidence that it contends contradicts the allegations of the operative complaint

(i.e., the contents of letters that we have determined are not the proper subject of judicial

notice) is improper at this procedural juncture. Again, this matter was decided on a

demurrer, which exists as a procedural mechanism to determine whether, if the

allegations of the operative complaint are presumed to be true, the plaintiff has

sufficiently stated a cause of action. It is not the appropriate procedural vehicle to argue

the merits of the plaintiff's allegations.

       Anthem's attempt to rely on Tenet Healthsystem Desert, Inc. v. Fortis, Ins. Co.

(C.D.Cal. 2007) 520 F.Supp.2d 1184, 1192-1195 to argue that Hospital's allegations

regarding trade usage, custom, and course of dealing should be ignored, is misplaced. If

anything, Tenet supports this court's conclusion that this case was not appropriately

decided on demurrer. In Tenet, the federal court was considering a motion for summary

judgment; as a result, the district court's decision in Tenet was decided based on

uncontroverted evidence that had been presented to the trial court, including declarations

from representatives of both the plaintiff and defendant about the communications

between them regarding the patient's care, an admission by the plaintiff that it "knew of

no false, misleading, or untrue statements made by Defendant in connection with the calls

or at any other time" and that "Defendant did not fail to provide it with any information"

(id. at p. 1191), as well as "expert testimony regarding industry custom" (id. at p. 1192,

capitalization and boldface omitted), involving "emergency room admissions." (Id. at

                                             29
p. 1193.) The conclusions reached by the trial court in Tenet on a motion for summary

judgment are simply of no assistance to Anthem with respect to the questions raised by

its demurrer to Hospital's complaint.

       The TAC also sufficiently alleges facts to support the elements of defendants'

knowledge of the falsity of the alleged misrepresentations, their intent to induce

Hospital's reliance, as well as Hospital's justifiable reliance on the alleged

misrepresentations. The TAC alleges that knowledge of the plan's coverage, including

the exclusions, was, as between the parties, exclusively in the defendants' possession, and

that Hospital informed Anthem that Patient X was admitted to Hospital as a result of

being "injured while driving in an automobile accident with a blood alcohol level in

excess of the legal limit and positive for cannabis." The TAC alleges that Anthem knew

this information because Hospital provided it to Anthem on May 7, 2012, and that

Anthem continued to monitor, discuss, and authorize Patient X's treatment at Hospital on

multiple occasions after having been informed about his blood alcohol level and positive

test for cannabis. In addition, the TAC alleges that Anthem knew of the coverage

exclusions. As a result, any representations Anthem made that indicated to Hospital that

the services Hospital was providing to Patient X would be covered are alleged to have

been made with the knowledge that those representations were false.

       In addition, the TAC alleges that the defendants made misrepresentations to

Hospital that the services "were authorized and covered with the intent to induce the

Hospital to act in reliance on them . . . or with the expectation that the Hospital would so

act." Further, the TAC includes allegations that Hospital "was ignorant of the falsity of

                                              30
the representations [made by the defendants] and believed them to be true," and that

Hospital acted in reliance on the representations when it, for example, admitted Patient X

to its acute rehabilitation facility. The TAC also alleges that Hospital refrained from

seeking reimbursement from Medi-Cal for services provided to Patient X within Medi-

Cal's time limits because, as a result of the representations made by Anthem, Hospital

believed that the defendants would pay Hospital for the services provided. These

allegations sufficiently allege justifiable reliance.

       In sum, the TAC provides a detailed set of allegations of fraud against Anthem.

Given the specificity of these numerous alleged communications, and given the allegation

that the provision of an "authorization" has a specific meaning in this context, i.e., that an

"authorization of services constitutes an affirmative representation that . . . the services

are covered," Hospital has sufficiently alleged the existence of multiple affirmative

misrepresentations that Patient X's care would be covered by his insurance plan.

       3.     Fraud based on suppression of facts (causes of action 2 and 11)

       For similar reasons we conclude that the trial court erred in sustaining defendants'

demurrer to the TAC's causes of action for fraud based on the intentional suppression of

material facts. The tort of concealment is simply another species of fraud or deceit. (See

Civ. Code, § 1710, subd. (3) [fraud includes "[t]he suppression of a fact, by one who is

bound to disclose it, or who gives information of other facts which are likely to mislead

for want of communication of that fact"]; Lovejoy v. AT&T Corp. (2004) 119 Cal.App.4th

151, 158.) "[T]he elements of an action for fraud and deceit based on concealment are:

(1) the defendant must have concealed or suppressed a material fact, (2) the defendant

                                               31
must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must

have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,

(4) the plaintiff must have been unaware of the fact and would not have acted as he did if

he had known of the concealed or suppressed fact, and (5) as a result of the concealment

or suppression of the fact, the plaintiff must have sustained damage." (Marketing West,

Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613 (Marketing West).)

Thus, the elements of fraud and deceit based on concealment are the same as for

intentional fraud, with the additional requirement that the plaintiff allege that the

defendant concealed or suppressed a material fact in a situation in which the defendant

was under a duty to disclose that material fact.

       " 'In transactions which do not involve fiduciary or confidential relations, a cause

of action for non-disclosure of material facts may arise in at least three instances: (1) the

defendant makes representations but does not disclose facts which materially qualify the

facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known

or accessible only to defendant, and defendant knows they are not known to or

reasonably discoverable by the plaintiff; [or] (3) the defendant actively conceals

discovery from the plaintiff.' (Fns. omitted.)" (Marketing West, supra, 6 Cal.App.4th at

p. 613, quoting Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.)

       Although Hospital has not alleged the existence of a fiduciary or confidential

relationship, the allegations do set forth facts demonstrating that Anthem made

representations to Hospital but failed to disclose facts that rendered misleading the

disclosures that Anthem did make. Again, Hospital alleged that over a period of almost

                                              32
two months, representatives of Anthem repeatedly "authorized" the medical services that

Hospital provided to Patient X, despite possessing knowledge that his care would not be

covered by the insurance policy because his injuries were sustained as a result of his

driving with a blood alcohol level in excess of the legal limit. Even if Hospital had not

alleged that by "authorizing" services defendants were also representing that the services

would be "covered" or paid for by insurance, Hospital sufficiently alleged that Anthem's

statements to Hospital concerning the authorization of services and Anthem's requests for

information, to which it would not be entitled if the services were not covered by

insurance, were misleading. In the absence of facts disclosing the exclusion from

coverage for Patient X's injuries, the nature and number of Anthem's communications

with Hospital over approximately 50 days would cause a reasonable person to believe

that the services would be paid for by Patient X's insurer.

       4.     Negligent misrepresentation (causes of action 1 and 10)

       The tort of negligent misrepresentation is similar to fraud, except that it does not

require scienter or an intent to defraud. (Gagne v. Bertran (1954) 43 Cal.2d 481, 487-

488.) Because the same elements of intentional fraud also comprise a cause of action for

negligent misrepresentation, with the exception that there is no requirement of intent to

induce reliance (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173), Hospital's

complaint, which we have already determined sufficiently pleads the elements of

intentional fraud, also necessarily sufficiently pleads the elements of Hospital's

alternative claim that if intentional fraud cannot be established, then the facts are

sufficient to establish the existence of a cause of action for negligent misrepresentation.

                                              33
We therefore conclude that the trial court erred in sustaining the demurrer with respect to

causes of action 1 and 10.

       5.     Unfair business practices (cause of action 19)

       Our conclusion that the trial court erred in sustaining the demurrer to Hospital's

first, second, third, tenth, eleventh, and twelve causes of action has the further effect of

reviving Hospital's nineteenth cause of action, which sets forth a claim for unfair business

practices pursuant to Business and Professions Code section 17200. An unfair business

practice includes " ' "anything that can properly be called a business practice and that at

the same time is forbidden by law." ' " (Farmers Ins. Exchange v. Superior Court (1992)

2 Cal.4th 377, 383.)

       Hospital's cause of action for unfair business practices is based on a variety of

alleged conduct, including that defendants "engaged in misrepresentation [and] fraud" in

their business practices with Hospital based on the same conduct underlying the other

deceit-based causes of action. We therefore conclude that Hospital has sufficiently

alleged facts to state a claim for unfair business practices pursuant to Business and

Professions Code section 17200.




                                              34
                                            IV

                                     DISPOSITION

       The judgment of the trial court in favor of Anthem on causes of action 1, 2, 3, 10,

11, 12 and 19 is reversed and the matter is remanded. Hospital is entitled to costs on

appeal.



                                                                               AARON, J.

WE CONCUR:



NARES, Acting P. J.



IRION, J.




                                            35
