Simply because your organization chooses to divert resources to address your allegedly unfair business practices, alleging that your practices are a perceived threat to the organization's mission. Can I sue you? The California Supreme Court has just opened the door to such lawsuits. California Medical Association v. Aetna Health, Inc. of California,California. 5th, 2023 WL 4553703, 2023 Cal. LEXIS 4100 (July 17, 2023) (“CMA”).
California's Business and Professions Code is designed to prevent unfair competition that harms both consumers and competitors by prohibiting “any unlawful, unfair, or deceptive business act or practice.” I am. Cal. bus. This law is commonly referred to as the “Unfair Competition Law” (“UCL” or “Section 17200”) and has broad application. But in 2004, California voters approved a ballot initiative known as Proposition 64. This limited private actors who could enforce the UCL to those who had “suffered actual injury” or “lost money or property as a result” of the challenged business. Practice. In other words, only individuals who can meet this high-level standing can bring a lawsuit under the UCL, and companies cannot be targeted by anyone who has not suffered harm as a result of the alleged wrongdoing. died.
So what if your organization wears a suit? Can an organization sue on behalf of its members or the people it serves who may have been harmed by its business practices? After the passage of Prop. 64, the answer is no. did. An organization cannot sue under Section 17200 unless it can allege and conclusively prove that it can meet the UCL's strict survival requirements. This led the California Supreme Court to address the question of how an organization could prove sufficient injury to qualify under her UCL. in particular, CMAThe court addressed whether an organization could meet the permanence requirement “by diverting its resources to combat alleged unfair competition.” 2023 Cal. *3 Lexis.
in CMAThe California Medical Association, a nonprofit professional association representing California physicians, accused health insurance companies of implementing policies that restrict in-network providers from referring patients to out-of-network providers. Appealed. The association argued that the policy prevented doctors from exercising independent and sound medical judgment. The association, whose mission is to protect “the advancement of public health and the medical profession,” carried out its work by engaging in “legislative, legal, regulatory, economic, and social advocacy,” but also: He alleged that he misappropriated more than 250 medical expenses. Staff spent many hours dealing with an insurance company's policies before suing them for unfair commercial practices under the UCL. It is said that an unknown portion of this staff time would otherwise have been spent serving the association's members in other unrelated ways.
The insurer argued that the organization had no standing to sue under the UCL because it had not lost money or property as a result of the referral agreement. The organization responded that it had suffered financial harm as a result of diverting personnel and other resources to the response. [the policy, i.e., the challenged business practice], resources that would otherwise have been deployed to assist CMA members in other ways. ” CMA, 2023 Cal. *15 Lexis. The Supreme Court noted that Prop. 64 “is not intended to 'define or limit' what constitutes lost money or property,” and “concludes that…”[d] Diversion of salaried staff's time or other office resources may constitute a loss of 'money or property' within the meaning of the UCL. ID. *At 15-16.
The court explained:
All organizations, including the CMA, have limited resources to devote to their mission. For example, if an organization uses staff time for a particular project, it may need to draw that time from another project or augment its staff. Even if the people involved are paid on a salary basis rather than an hourly rate, as here, their time clearly has economic value to the organization. When staff are diverted to new projects undertaken in response to unfair business practices, organizations lose the value of time that could have been used to benefit the organization in other ways.
ID. *At 16. The court emphasized that no out-of-pocket expenses were necessary. The association said the company “may not have incurred additional out-of-pocket costs in response to the allegedly illegal conduct. Employees are paid salaries and are not paid regardless.” However, the economic value the association derived from their labor was reduced.” ID. *At 18. In other words, the association “lost money and property.” . . When its personnel are diverted from other activities that could also serve its purpose of supporting physician members. ” ID. The association said that by diverting staff from other “useful projects” to address unfair business practices,[ed] Getting involved in a transaction that costs money or property that would otherwise have been unnecessary. ” ID. The court stated that this was sufficient injury to confer status on the organization under the UCL. “An organization that spends staff time and other resources responding to new threats to its mission and then diverts those resources to other projects is at a disadvantage.” Even if the organization does so voluntarily. Even if you choose to. ID. *28, 30-33.
As a result of this decision, the California Supreme Court has determined that nonprofits, trade associations, and other advocacy-based organizations may be subject to unfair expanded access to courts to challenge claims of unethical commercial practices; their mission.
