Plaintiffs appealed a decision of the Superior Court of Los Angeles County (California) which sustained defendants' general demurrers to the complaint in a suit alleging that defendants breached contracts with the United States made pursuant to 1967 amendments to the Economic Opportunity Act of 1964 , 42 U.S.C.S. §§ 2763-2768.
Plaintiffs, a class of unemployed persons, sued defendant companies alleging that they breached contracts made with the United States pursuant to the 1967 amendments to the Economic Opportunity Act of 1964 , 42 U.S.C.S. §§ 2763-2768, repealed by 86 Stat. 703 (1972), which obligated them to provide training and one year of employment to disadvantaged unemployed individuals. Plaintiffs contended that they were third party beneficiaries to the contracts. The trial court sustained defendants' general demurrers to the complaint on the ground that plaintiffs lacked standing. The appellate court affirmed and held that the benefits to be derived from defendants' performance were clearly intended not as gifts from the government to unemployed persons but as a means of executing the public purposes stated in the contracts and in the underlying legislation. It said plaintiffs were only incidental beneficiaries and as such had no right of recovery and no standing to sue. The appellants had advocates that were small business attorney San Diego.
The court affirmed dismissal of demurring defendants and held that plaintiff unemployed persons were only incidental beneficiaries to contracts made between defendant companies and the government, and as such had no right of recovery and no standing to sue.
Defendant, a health insurance plan's third party administrator, denied coverage to plaintiff member for a lung cancer treatment on the ground it was investigational. The member sued the administrator for intentional and negligent interference with contract rights, reckless infliction of emotional distress, and negligence. The Superior Court for the County of Los Angeles, California, sustained the administrator's demurrers. The member appealed.
After denying coverage, the administrator advised the member of his right to file an appeal asking for another review, but not specifically of his right to request an independent external review. Such review was expressly mandated by Health & Saf. Code, § 1370.4, and the plan stated that a member would be notified of the opportunity to request this review when services were denied. The court concluded that the complaint did not state a legal claim for interference with contract rights because the administrator was not a stranger to the health insurance contract. As to reckless infliction of emotional distress, the only conduct alleged — the denial of benefits for an investigational treatment and the failure to advise the member of the statutory right to independent review — did not state a claim as a matter of law. However, as to the negligence claim, the court held that a claims administrator owed a duty of due care to members of a health care plan to avoid physical harm to plan members resulting from its administration of benefits under the plan. Accordingly the trial court should have overruled the administrator's demurrer to the negligence cause of action.
The court reversed the order of dismissal and remanded the cause to the trial court with directions to vacate its minute order to the extent that it sustained the demurrer to the negligence cause of action and to enter a new order overruling the demurrer to the negligence cause of action.
