SUMMER 2026 – #56
QUARTERLY NEWSLETTER
When the Contract Ends, the Obligation Doesn’t:
What Pomona Valley v. Kaiser Means for Emergency Reimbursement By Joy Stephenson-Laws, Managing Partner On June 23, 2026, a Los Angeles County Superior Court entered a final judgment of about $82.3 million against Kaiser Foundation Health Plan, payable to Pomona Valley Hospital Medical Center, for years of underpaid out-of-network emergency care. The California Supreme Court had already declined to review the case, which brought the statecourt appellate fight to an end before the superior court entered final judgment. Interest continues to accrue until Kaiser pays.
For hospitals fighting to be paid the fair value of emergency services they are legally required to provide, this ruling is worth understanding in detail. The headline number matters, but the reasoning matters more. The decision confirms that a plan’s own post-termination payment number does not get the last word on what emergency care is worth. A factfinder does.
What the case was about
Pomona Valley is a 427-bed nonprofit community hospital serving eastern Los Angeles and western
San Bernardino counties. It was in Kaiser’s network under a contract that ran from 2004 until Kaiser terminated it in 2017. After termination, the hospital kept doing what the law requires of any emergency department: treating Kaiser members who arrived in an emergency. Kaiser kept paying, but at rates it set on its own, which the hospital considered far below the value of the care. The numbers tell the story. Across roughly 4,100 claims for Kaiser members treated between October 2017 and March 2020, the hospital billed about $136.6 million. Kaiser paid about $39.8 million.
QUARTERLY NEWSLETTER The hospital sued for the difference it believed it was owed. At trial in 2023, the jury sided with the hospital and found that Kaiser had underpaid it by $66,091,712. Set against the roughly $39.8 million Kaiser had already paid, that finding put the reasonable value of the services at about $105.9 million, well above what Kaiser paid but below the full $136.6 million billed. The fight did not end there. A judge who took over the case after the verdict concluded that the jury should not have seen the parties’ old contract and offered the hospital a choice: accept a reduced judgment of $58,030,564.08 or face a new trial.
Kaiser argued the jury should never have seen the old 2004 contract rates. Part of its argument relied on language in that contract stating its terms could not be used as evidence of reasonable and customary value under the state’s minimum-payment regulation. The judge who presided at trial allowed the contract in. After the verdict, a different judge took over, decided that admitting it had been error, and used that conclusion to justify the reduced judgment and the threat of a new trial. The Court of Appeal reversed. It drew a line between two different valuation questions. One is the regulatory question: what a plan must pay as a regulatory
ments to Pomona Valley exceeded what the hospital typically accepted from other health plans and ran above the hospital’s costs. It also points to other court and arbitration outcomes that found its payment methodology met or exceeded fair market value. Those are real defenses, and in some forums they have worked. On these facts, in front of this jury, they did not. That distinction is worth holding onto: the ruling does not declare Kaiser’s methodology unlawful in every case. It says a hospital is entitled to put its own evidence of value in front of a jury, including a prior contract, and let the jury decide.
Why this matters beyond one hospital
Pomona Valley is not alone. Other hospitals have pressed similar claims against Kaiser’s health plan, including Providence facilities in California. The underlying tension is structural. When a plan terminates a contract, the hospital still has to treat the plan’s members in an emergency, but the rate is no longer fixed. The plan has an incentive to pay less, and the hospital has to decide whether the gap is worth litigating. For hospital finance and managed care leaders, a few takeaways follow directly from this decision: The hospital took the reduction, and both sides appealed. The Court of Appeal then restored the full $66,091,712 verdict. After the interest rate was corrected and costs were added, the final judgment entered in June 2026 came to about $82.3 million.
The legal foundation: quantum meruit
The hospital’s claim was for quantum meruit, Latin for “as much as he deserved.” In plain terms, when one party provides valuable services that another party receives and accepts, the law can require payment of the reasonable value of those services even when no contract sets the price. That doctrine sits on top of California’s emergency care rules. Under the Knox-Keene framework, a health plan must cover emergency services for its members even when the member goes to a hospital outside the plan’s network. State regulations set minimum payment criteria for that care, but a minimum is not a ceiling. When no contract fixes the rate, California law lets the hospital pursue a common-law quantum meruit claim for the fair market value of what it provided, and that value can run higher than the regulatory methodology produces. The gap between the two is where these cases live and die. California courts measure fair market value the way they measure it elsewhere: the price a willing buyer would pay a willing seller, each with full knowledge of the relevant facts. A factfinder decides that value after hearing evidence from both sides.
The holding that should change how hospitals think about old contracts
The most useful part of this decision is what the Court of Appeal said about the expired contract.
floor. The other is the common-law question the jury actually decided: the fair market value of the services. The contract’s restriction applied only to the first question. It did not bar using the old rates as evidence of value in a common-law quantum meruit case. So the prior rates were fair game, and the jury was entitled to weigh them. The practical lesson is blunt. A terminated contract is not a dead document. The rates two parties once agreed to can carry real weight later as evidence of what services are worth, even after the agreement is gone.
The one point Kaiser won: interest
The hospital did not get everything. The trial court had set prejudgment interest at 10 percent, treating the claim as an action on a contract. The Court of Appeal lowered the rate to 7 percent, and its reasoning is worth understanding. A quantum meruit claim is an action in contract, but it is not an action for breach of contract. The statute that fixes a 10 percent rate for unpaid contract obligations is keyed to breach, so it did not apply here, and the California Constitution’s default rate of 7 percent governed instead. For a hospital running the numbers on a possible claim, that distinction is not academic. Over several years, three percentage points of interest on a verdict this size is worth millions, and it belongs in any decision about whether and when to sue.
Kaiser’s position, stated fairly
Kaiser did not concede it had underpaid, and its arguments are not frivolous. The plan says it works within California law to value out-of-network emergency care, setting payments by reference to hospitals’ own financial reports filed with the state. It says its pay-
The regulatory minimum is a floor, not a ceiling on what you can recover. Paying the regulatory minimum does not foreclose a quantum meruit claim for the difference between that minimum and fair market value. Keep your terminated contracts and your full rate history. They are evidence. Destroying or losing them removes a tool you may need years later. Build the value record while the claims are current. Billed charges, what comparable payers actually pay for the same services, and your own cost data all feed the reasonable-value analysis a jury will eventually weigh. Post-termination underpayment is litigable, and the timeline is long. Pomona Valley filed in 2017, added its quantum meruit claim by amendment in 2019, tried the case in 2023, then worked through post-trial motions, an appeal, and a denied Supreme Court petition before final judgment in 2026. Hospitals weighing these claims should plan for a multi-year fight and account for prejudgment interest, because years of accrual can add materially to the recovery.
The bottom line
The lesson is narrower than it first looks, and more useful for it. A terminated contract does not control what a plan owes going forward, but it can still be powerful evidence of what the services are worth. When a plan ends a contract and starts paying on its own terms, while the hospital remains legally bound to treat the plan’s members in an emergency, the plan’s chosen number does not settle the question. The hospital can build the record, put its evidence of fair market value in front of the factfinder, and have the value decided rather than left to the payer.
SUMMER 2026 – #56
Attorney, Lauren Miller. What is your area of expertise within SAC? I am admitted to practice law in fourteen states throughout the country and I focus my practice on complex healthcare reimbursement litigation, representing hospitals and other healthcare providers in disputes against commercial insurers and government payors. I regularly handle high-stakes matters involving denied and underpaid healthcare claims, navigating complex contractual, statutory, and regulatory issues in state and federal courts throughout the country. In addition, I advocate for clients through arbitration and mediation, helping them resolve disputes efficiently while protecting their financial interests. My experience includes litigating claims involving commercial health plans, Medicare and Medicaid reimbursement, ERISA, EMTALA, and the “pre-existing duty” rule. By combining a deep understanding of healthcare law with strategic litigation and negotiation skills, I help providers maximize reimbursement and resolve complex payor disputes effectively.
What one piece of sage advice can you offer to our clients that can help them in the future? My advice is simple: document every significant decision, communication, and transaction as though a lawyer will one day rely on it to tell your story in court. Thoughtful documentation today can make the difference between a favorable resolution and a costly loss tomorrow. Providers should approach documentation with the understanding that every email, note, contract, claim file, and internal communication may one day be reviewed by a judge, jury, arbitrator, or opposing counsel. In litigation, the quality of a provider’s documentation often determines the strength of its case and can significantly impact its ability to recover damages or defend against a claim. Clear, accurate, and contemporaneous records establish the facts, demonstrate compliance, and provide credibility when memories have faded and witnesses disagree. Conversely, incomplete, inconsistent, or poorly maintained records can undermine otherwise strong claims and create unnecessary litigation risk.
arbitrations into a single global mediation, creating a streamlined and expedited path toward an efficient and favorable resolution. Through strategic preparation, thoughtful negotiation, and a deep understanding of my client’s business objectives, I achieved a settlement that exceeded the client’s expectations while eliminating all exposure from the opposing party’s counterclaims and pending dispositive motion. The resolution provided my client with a meaningful recovery while avoiding the significant additional time, expense, uncertainty, and resource drain associated with continuing to prosecute nine separate matters. This was especially important for a client facing practical financial constraints and needing a solution that balanced legal opportunity with business realities. By focusing not only on the merits of the claims but also on the client’s broader goals, I was able to preserve value, reduce risk, and provide a path forward with greater financial stability.
Do you have any hobbies or interests outside of work? Outside of the office, I enjoy exploring new places and creating lasting memories with my children. Whether we are discovering a new city or country, going on food tours to experience different cuisines, or planning weekend adventures to uncover local hidden gems, I value experiences that encourage curiosity and connection. I believe travel is an investment that broadens perspectives, strengthens family bonds, and creates stories that last a lifetime. My office is filled with mementos from our travels, and the new flavors we discover often make their way into our family dinners, allowing us to relive those experiences together.
Do you have any charitable causes that interest you and events you have participated in recently?
Can you talk about a recent success story of yours? What was the challenge and how were you able to overcome it?
I am passionate about supporting the mission of the American Red Cross and its commitment to helping individuals and communities in times of greatest need. I admire the organization’s dedication to providing disaster relief, emergency assistance, lifesaving education, and support to families facing unexpected challenges. Through my support of the American Red Cross, I hope to contribute to an organization that brings compassion, resilience, and hope to people during some of their most difficult moments.
I recently helped transform a complex and costly litigation landscape by consolidating nine separate
Giving back to my local community is also important to me. I regularly donate food to local pantries
and clothing to shelters to help provide essential resources to individuals and families in need. One cause that is especially meaningful to me is ensuring that young people have the opportunity to experience important milestones, including sourcing and providing prom dresses for teens who otherwise may not be able to attend their special event. Through these efforts, I hope to make a tangible difference by meeting immediate needs while also helping create moments of confidence, dignity, and joy.
Do you have family and/or pets you’d like to tell us about? I am celebrating ten years of marriage with my husband, Peter Miller, this October. Together, we share this beautifully chaotic life with our two young children (Theodore and Lottie), and our dog (Houlihan). They keep me laughing, grounded, and constantly reminded of what matters most.
Do you have any guilty pleasure television shows, movies, or other activities to tell us about? I enjoy a variety of creative and cultural pursuits outside of my legal practice. I have a passion for modern handicrafts, including quilting and needlepoint, embracing the contemporary revival of these traditions through bold designs, unique patterns, and creative expression; truly “not your grandmother’s” approach to these arts. I appreciate the patience, creativity, and attention to detail these crafts require, as well as the opportunity they provide to slow down and be present. I also enjoy the performing arts, particularly Broadway musicals and theater. I love the storytelling, music, and artistry that bring each production to life and appreciate the creativity and collaboration behind every performance.
What are your favorite foods? Colors? Other favorites? When it comes to personal favorites, I embrace the simple joys of great food and vibrant spaces. I have a particular appreciation for indulgent comfort foods, especially anything involving carbs; from perfectly crisp French fries and flavorful Korean fried chicken to homemade pasta and fresh, crusty bread. I am also drawn to spaces that feel vibrant, welcoming, and full of personality. I love jewel-toned interiors, comfortable furnishings, and maximalist design that embraces color, texture, and meaningful details. Whether discovering a new restaurant, sharing a meal with family and friends, or enjoying a favorite dish at home, I believe good food and beautiful spaces have a special way of bringing people together and creating memorable experiences where the people, flavors, and atmosphere all tell a story.
ANNOUNCEMENT
Congratulations to Our 2027 Super Lawyer
Super Lawyer
Super Lawyer
Super Lawyer
Rising Star
Rising Star
Rising Star
Joy Stephenson-Laws
Richard Lovich
Karlene Rogers-Aberman
Shadi Shayan
Nesrein El-Haddad
Lauren Miller
Mallory McTarnaghan
SAC is proud to congratulate seven of our attorneys recognized on the 2027 Super Lawyers and Rising Stars lists. Joy Stephenson-Laws, Richard Lovich, Karlene Rogers-Aberman and Shadi Shayan were selected to the 2027 Southern California Super Lawyers list. Nesrein El-Haddad was named a 2027 Southern California Rising Star, while Lauren Miller and Mallory McTarnaghan were selected to the 2027 Illinois Rising Stars list.
All articles are written by the SAC Litigation team. The SAC Litigation team includes attorneys, nurses and physicians with extensive experience in all areas of law related to healthcare matters. Additionally, SAC partners hold legal advisory positions with healthcare organizations and sit on the boards of numerous healthcare-related organizations, and monitor all outgoing SAC client marketing materials and related content. DISCLAIMER: This newsletter is for general educational and informational purposes only. You should not act upon this information without seeking your own independent professional advice.
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