Dameron Hospital Association v. Progressive Cas. Ins. Co.

Dameron Hospital Association v. Progressive Cas. Ins. Co. (May 27, 2025, C099467) __ Cal.App.5th __, 2025 WL 1502017

A conditions of admission provision assigning uninsured motorist benefits to the hospital is an unenforceable adhesion contract even for Medi-Cal patients.

M.G. was treated at Dameron Hospital following a car accident. Dameron required her to sign its standard conditions of admissions (COA) form, which included a provision assigning M.G.’s underinsured motorist (UM) auto insurance benefits to Dameron and directing her auto insurer (Progressive) to pay those benefits directly to Dameron.  Although M.G. had Medi-Cal coverage, Dameron demanded that Progressive pay UM benefits toward her medical services at Dameron’s full billed rate, rather than at the lower rates Medi-Cal would pay.  After Progressive declined, Dameron filed suit against Progressive seeking damages, an injunction enjoining Progressive from ignoring the assignment of benefits, and a declaration that the assignment of benefits was enforceable. The trial court sustained Progressive’s demurrer, relying on Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th 971 (AAA), which held the same COA form was beyond patients’ reasonable expectations and an unenforceable contract of adhesion. Dameron appealed.

The Court of Appeal affirmed. Dameron argued that AAA was distinguishable because it addressed patients who had private health insurance or were uninsured, not patients covered by Medi-Cal.  The court disagreed, holding that the COA were still an unenforceable adhesion contract because “it is not within the reasonable expectation of a Medi-Cal patient that a COA will contain an assignment of UM benefits to the facility providing him or her with emergency care, particularly an assignment that allows the hospital to collect its full bill without ever presenting a bill to Medi-Cal.” The court explained that providers must submit a claim to Medi-Cal for reimbursement when a patient has Medi-Cal coverage and must not seek payment from anyone other than the Department of Healthcare Services or third-party payors who provide contractual or legal entitlement to healthcare services. Because a UM insurer does not provide entitlement to healthcare services, a provider cannot seek payment from UM insurance.  The court rejected Dameron’s argument that Medi-Cal priority of payments laws (making Medi-Cal a “payor of last resort”) compelled a different result because those laws require state plans to seek recovery from liable third parties and compel an assignment to the state of a beneficiary’s right to third-party payments for medical care.  In sum, while M.G. might be expected to use some portion of her UM benefits to pay medical expenses, she would not reasonably expect Dameron to use its COA assignment of benefits to collect its full hospital bill from her limited UM coverage—which was intended to cover her lost wages, pain and suffering, and other damages—without submitting a mandatory Medi-Cal claim.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson, Peder K. Batalden, and Lacey Estudillo at the appellate firm Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800.

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