Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Cal. App.: Blue Shield of California cleared of insured’s UCL claims, (Jun 1, 2016)

By Greg Hammond, J.D.

A California insurance company did not violate the unlawful or unfair prongs of California’s Unfair Competition Law (UCL), the California appellate court in Los Angeles has decided. In affirming the trial court’s entry of summary judgment in the insurance company’s favor, the appellate court concluded that the insurance company did not act unlawfully in calculating premiums and the insured failed to demonstrate any injury (Lample v. California Physicians’ Service, May 31, 2016, Yegan, K.).

The insured claimed that California Physicians’ Service, doing business as Blue Shield of California, violated the UCL by using a straight average to calculate premiums, in violation of sections 1399.805 and 1399.811 of the California Insurance Code.

Unlawful prong. On appeal, the insured argued that the trial court erred in denying her motion for summary judgment and granting Blue Shield’s motion for summary judgment on her cause of action for violation of the unlawful prong of the UCL. In particular, the insured alleged that the interpretation of the Insurance Code by the California Department of Managed Health Care (DMHC) required Blue Shield to use a weighted average when calculating premiums. The court rejected this argument, however, finding that the insured provided no evidence to demonstrate that the DMHC ever required any health care plan provider to use the weighted average formula. Conversely, Blue Shield offered uncontradicted evidence demonstrating that the DMHC did not interpret the Insurance Code as requiring the use of a weighted average, and that the DMHC determined that the statutes were too ambiguous to require the use of any particular formula to calculate the average premium. The court also noted that, even if the DMHC had adopted a policy of interpreting the Insurance Code as requiring the use of a weighted average, the policy would be void under the Administrative Procedure Act. Blue Shield therefore did not violate the unlawful prong of the UCL.

Unfair prong. Blue Shield also did not violate the unfair prong of the UCL, the court affirmed. The insured claimed that she suffered substantial injury because she paid more than she would have, had Blue Shield used the weighted average. Blue Shield, however, was not required to use the weighted average, and the UCL does not require a business to charge the lowest possible price. The insured was therefore not injured within the meaning of the UCL, which was fatal to her cause of action.

The case is No. B259380.

Attorneys: William L. Larson (Kiesel, Boucher & Larson) for Amalia Corona Lample. Craig S. Bloomgarden (Manatt Phelps & Phillips LLP) for California Physicians’ Service.

Companies: California Physicians’ Service

Cases: StateUnfairTradePractices CaliforniaNews