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Give Health Net of California Inc. credit for persistence. Two weeks after an attorney fainted while arguing the company’s seemingly losing cause in an insurance coverage case, Health Net was back Wednesday in front of the same San Francisco appellate panel repeating the same arguments � albeit with a new lawyer. But it quickly became clear that repeated pounding on a closed door doesn’t necessarily mean anyone’s going to respond. As they were on Oct. 12, the justices of the First District Court of Appeal seemed irked and unmoved by the company’s insistence that the trial court judge had no jurisdiction over its case. The Woodland Hills-based insurer was in court defending itself against the San Francisco Trial Lawyers Association, which sued for breach of contract after Health Net refused in 2003 to renew a 6-year-old contract to provide coverage for about 300 of the group’s members. Health Net contends that the association doesn’t qualify for coverage under state law because it has fewer than 1,000 members and hadn’t provided benefits for at least five years prior to Jan. 1, 1992. SFTLA claims that Health Net entered into a contract and, therefore, cannot terminate coverage without good cause. Health Net’s chief argument is that the case presents a licensing issue that trial courts have no jurisdiction to resolve, but should be left to the state’s Department of Managed Health Care. That contention ran into a buzz saw two weeks ago when Justices Carol Corrigan and Stuart Pollak shredded the arguments presented by Robert Olson, a partner at Los Angeles’ Greines, Martin, Stein & Richland. Those arguments were rescheduled to Wednesday after Olson passed out in the courtroom. Corrigan and Pollak went easier Wednesday on William Taylor, a partner in Morgan, Lewis & Bockius’ San Francisco office who has served as Olson’s co-counsel. But they still made it clear they remained highly skeptical of Health Net’s position on jurisdiction. The two justices also took issue with Taylor’s contention that the Department of Managed Health Care had said Health Net would violate its professional license if it provided coverage for SFTLA members. Corrigan asked Taylor where in the court record that was stated and what specific language from the state agency he was relying on. The trial court judge, she noted, didn’t think the Department of Managed Health Care reached the result that Health Net claimed. Taylor said it was “implicit” in the agency’s decision that Health Net couldn’t provide the trial lawyers group coverage without violating its license. Justice Pollak, meanwhile, said he found it inconsistent for Health Net to argue that the trial court had no jurisdiction, while simultaneously demanding the enforcement of contractual terms for arbitration by the same court. Pillsbury & Levinson partner Terrence Coleman, who represented the trial lawyers association, told the justices that the case was a “very simple breach-of-contract matter” routinely handled by trial courts. He also argued that there’s nothing in the state’s Knox-Keene Act, which governs health care service plans, prohibiting coverage for groups such as the SFTLA. “There is no statute,” he said, “that says this is a violation of the law or exceeds the scope of [Health Net's] license.” Taylor wouldn’t comment afterward, referring all questions to Health Net, whose media contacts could not provide comment by press time. There also was no explanation for Olson’s absence Wednesday. But in an Oct. 14 letter filed with the court, Olson apologized to the justices for passing out and forcing a continuance. “I am taking the necessary steps to ensure that there is no medical cause,” he wrote. “So far, all we’ve discovered is a severely bruised ego.” Olson also told the justices he didn’t take personally any of their “lively” exchanges two weeks ago. “Probing questions and expression of the court’s concerns are both what I expect and look forward to in oral argument,” he wrote. Coleman said he was surprised that Health Net’s attorneys returned to an argument that was flayed the first time around. “They’ve never been able to point anyone to any statute, rule or regulation to suggest that their argument holds any water,” he said. “It’s a made-up argument to try to cover the fact that they went and canceled out this coverage because they didn’t like it.” The case is San Francisco Trial Lawyers Association v. Health Net of California, A104458. Presiding Justice William McGuiness was also on the panel.

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