Judge: Cynthia A Freeland, Case: 37-2023-00004740-CU-NP-NC, Date: 2023-10-27 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - October 26, 2023

10/27/2023  01:30:00 PM  N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited  Non-PI/PD/WD tort - Other Demurrer / Motion to Strike 37-2023-00004740-CU-NP-NC DAVIS VS. CORVEL CORPORATION [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 09/01/2023

Defendant Corvel Corporation ('Defendant')'s demurrer to Plaintiff Brianna Davis ('Plaintiff')'s First Amended Complaint (the 'FAC') is sustained. Defendant's motion to strike portions of the FAC is granted.

Defendant's Demurrer to the FAC A demurrer tests the legal sufficiency of a pleading. See McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1469. When reviewing a demurrer, the court 'give[s] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.' Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. The court 'treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law.' Durell v. Sharp Healthcare (2010) 183 Cal. App. 4th 1350, 1358. The court's analysis is limited to the complaint, exhibits attached to the complaint and incorporated by reference, and matters properly subject to judicial notice. See Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal. App. 4th 659, 665; Thorburn v. Department of Corrections (1998) 66 Cal. App. 4th 1284, 1287-1288; Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994. '[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.' Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal. App. 4th 1125, 1135. Such demurrers are strictly construed since ambiguities can be clarified during discovery. See Khoury v. Maly's of California, Inc. (1993) 14 Cal. App. 4th 612, 616.

Defendant's demurrer to the first cause of action for fraud and deceit and the second cause of action for violation of California Business & Professions Code §§ 17200 et seq. ('UCL') is sustained. For the following reasons, the court finds that Plaintiff's claims are subject to the exclusivity provisions of the California Workers' Compensation Act (Cal. Lab. Code §§ 3200 et seq.) (the 'WCA').

The Fourth District Court of Appeal has explained: An employee's right to recover against an employer is usually limited to remedies set forth in the Workers' Compensation Act (Lab.Code, § 3201 et seq.) The exclusivity feature of the workers' compensation system is sometimes known as the 'compensation bargain.' (Shoemaker v. Myers (1990) 52 Cal.3d 1, 15-16, 276 Cal.Rptr. 303, 801 P.2d 1054.) The function of exclusivity, 'is to give efficacy' to that bargain. (Id. at p. 16, 276 Cal.Rptr. 303, 801 P.2d 1054.) Under the deal, 'the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure Calendar No.: Event ID:  TENTATIVE RULINGS

3020484 CASE NUMBER: CASE TITLE:  DAVIS VS. CORVEL CORPORATION [IMAGED]  37-2023-00004740-CU-NP-NC or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.' (Ibid.) The Legislature has extended the protection of these exclusive remedy provisions to workers' compensation insurance carriers by defining the word 'employer' to include 'insurer.' (Lab.Code, § 3850, subd. (b).) Mosby v. Liberty Mutual Ins. Co. (2003) 110 Cal. App. 4th 995, 1001-1002.

California courts employ a two-step analysis in determining whether exclusivity bars a cause of action against an employer or insurer. First, the court must 'determine whether the alleged injury falls within the scope of the exclusive remedy provisions. Where the alleged injury is 'collateral to or derivative of' an injury compensable by the exclusive remedies of the WCA, a cause of action predicated on that injury may be subject to the exclusivity bar.' Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal. 4th 800, 811 (quoting Snyder v. Michael's Stores, Inc. (1997) 16 Cal. 4th 991, 997). 'If the alleged injury falls within the scope of the exclusive remedy provisions, then courts consider whether the alleged acts or motives that establish the elements of the cause of action fall outside the risks encompassed within the compensation bargain.' Charles J. Vacanti, M.D., Inc., 24 Cal. 4th at 811-812. Courts construe the WCA 'in favor of awarding work[ers'] compensation, not in permitted civil litigation.' Arriaga v. County of Alameda (1995) 9 Cal. 4th 1055, 1065.

As to the first step in the exclusivity analysis, '[i]t is by now well established that the WCA's exclusivity provisions preempt not only those causes of action premised on a compensable workplace injury, but also those causes of action premised on injuries 'collateral to or derivative of' such an injury. Such collateral or derivative injuries include injuries stemming from conduct occurring during the workers' compensation claims process.' King v. CompPartners, Inc. (2018) 5 Cal. 5th 1039, 1051-1052. Toward that end, the Second District Court of Appeal has noted that the 'derivative injury doctrine' 'preempts civil claims for contractual or economic damages arising from the workers' compensation claims process, for example, by employees contending their workers' compensation benefits were wrongfully delayed or discontinued . . . .' See's Candies, Inc. v. Superior Court of California for County of Los Angeles (2021) 73 Cal. App. 5th 66, 78.

The court finds that the injuries alleged in the FAC fall within the scope of the WCA's exclusivity provisions as they stem from conduct occurring during the workers' compensation claims process. More specifically, the FAC alleges that Defendant is an entity providing workers' compensation claims administration services. See FAC, ¶ 4. Plaintiff was formerly employed at Tri-City Medical Center as an EMT. Ibid., ¶ 11. On May 15, 2018, Plaintiff injured her back, neck, and legs while catching a heavy patient who had passed out in a restroom. Plaintiff filed a workers' compensation claim based on this industrial accident the same day. Ibid. On May 25, 2019, Plaintiff suffered a second industrial injury while performing chest compressions intermittently on a patient for over two hours. Ibid., ¶ 17. On May 28, 2019, Plaintiff submitted another workers' compensation claim for her second injury. Ibid. Defendant Dr.

Patrick O'Meara, who had previously evaluated Plaintiff in conjunction with her first injury, under pressure from Defendant and Defendant Rob Maag (a Senior Claims Specialist for Defendant), provided false statements and findings in a medical report he prepared allegedly based on a medical examination.

Ibid., ¶¶ 5, 15, 18. Dr. O'Meara stated under penalty of perjury that he physically examined Plaintiff on a date he did not see her. Instead, he relied upon outdated information from a previous examination he conducted of Plaintiff. Ibid., ¶ 18. On June 30, 2021, Plaintiff discovered that Dr. O'Meara deliberately provided this false information under coercion from and in collusion with Mr. Maag and Defendant to deny her workers' compensation claim. Toward that end, Dr. O'Meara, Mr. Maag, and Defendant schemed to present false reports and statements to others in a conspiracy to prevent Plaintiff from receiving workers' compensation benefits. Ibid., ¶ 18. Indeed, Dr. O'Meara concluded that Plaintiff was not disabled and, based on that finding, Plaintiff returned to work without physical limitations and consequently suffered further injuries. Ibid., ¶ 19. Defendants' collusion and pressure resulted in other medical providers denying Plaintiff necessary treatment. Ibid., ¶ 20. For example, in August 2019, Dr.

Clarence Lee refused to fill out paperwork for Plaintiff to obtain disability benefits owing to pressure from Defendant and Mr. Maag. Ibid. The FAC, in essence, contends that the Defendants engaged in a conspiracy to deny Plaintiff workers' compensation benefits through the submission of false/fraudulent Calendar No.: Event ID:  TENTATIVE RULINGS

3020484 CASE NUMBER: CASE TITLE:  DAVIS VS. CORVEL CORPORATION [IMAGED]  37-2023-00004740-CU-NP-NC medical reports. The foregoing conduct is a normal part of the workers' compensation claims process and thus subject to the WCA's exclusivity provisions. See Charles J. Vacanti, M.D., Inc., 24 Cal. 4th at 824.

The court must therefore consider whether the alleged acts or motives that establish the elements of Plaintiff's claims fall outside the risks encompassed within the compensation bargain. The California Supreme Court has noted: In addition to the acts themselves, the motive element of a cause of action may insulate that cause of action from the purview of the exclusive remedy provisions. This exception to exclusivity, however, is quite limited. '[A]ny inquiry into an employer's motivation is undertaken not to determine whether the employer intentionally or knowingly injured the employee, but rather to ascertain whether the employer's conduct violated public policy and therefore fell outside the compensation bargain.' (Fermino, supra, 7 Cal.4th at pp. 714-715, 30 Cal.Rptr.2d 18, 872 P.2d 559.) In other words, the motive element of a cause of action excepts that cause of action from exclusivity only if it violates a fundamental public policy of this state. (See Gantt, supra, 1 Cal.4th at p. 1100, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Thus, we have refused to bar both statutory and tort claims where their motive element violates such a policy.

Ibid., at 823.

In this case, Plaintiff 'cannot hide from the sweep of WCAB jurisdiction merely by alleging that an insurer's conduct violates the UCL or is otherwise tortious.' Hughes v. Argonaut Ins. Co. (2001) 88 Cal. App. 4th 517, 531. Moreover, Plaintiff's fraud claim does not require an intent that violates a public policy rooted in a constitutional, statutory, or regulatory provision. See Charles J. Vacanti, M.D., Inc., 24 Cal. 4th at 824. Nor does Plaintiff's characterization of the alleged fraud as a scheme/conspiracy insulate her claims from preemption. Ibid. The same holds true to the extent Plaintiff contends that Defendant's alleged violations of California Penal Code § 550(b) and/or California Insurance Code § 1871.4 violate a fundamental public policy of California. Ibid. ('Unlike those classes of intentional ... crimes against the employee's person by means of violence and coercion, such as those crimes numerated in part 1, title 8 of the Penal Code, regulatory crimes like the ones cited by plaintiffs do not violate the employee's reasonable expectations and transgress the limits of the compensation bargain.') (internal quotations omitted).

In addition to the foregoing, the court finds that the FAC, as presently pled, fails to state facts sufficient to constitute a cause of action for fraud and deceit. Under California law, the elements for intentional misrepresentation/fraud are: '(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.' Chapman v. Skype Inc. (2013) 220 Cal. App. 4th 217, 230-231. Intentional misrepresentation is subject to heightened pleading requirements. See Lazar v. Sup. Ct. (1996) 12 Cal. 4th 631, 645; Rossberg v. Bank of America, N.A. (2013) 219 Cal. App. 4th 1481. This means that '(1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.' Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331. Indeed, '[t]he specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.' West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App. 4th 780, 793. See also Small v. Fritz Co., Inc. (2003) 30 Cal. 4th 167, 184.

The court finds that the FAC is not pled with the requisite specificity to state a viable fraud claim against Defendant. The FAC merely alleges that Defendant, Mr. Maag, and Dr. O'Meara 'conspired to and did engage in fraud by authoring, directing the authorship of, false medical reports attested to under penalty of perjury by O'MEARA denying that Plaintiff was disabled and needed no accommodation so that Calendar No.: Event ID:  TENTATIVE RULINGS

3020484 CASE NUMBER: CASE TITLE:  DAVIS VS. CORVEL CORPORATION [IMAGED]  37-2023-00004740-CU-NP-NC DAVIS would not receive worker's compensation benefits' and partook in a scheme to defraud Plaintiff and deny her benefits 'with the intent that DAVIS and others rely on the false reports[.]' See FAC, ¶¶ 22-23. The FAC is devoid of allegations concerning, inter alia: (1) when, how, and where the fraudulent acts purportedly occurred; (2) the name(s) of the person(s) employed by Defendant who engaged in the purported fraudulent acts; and (3) when, where, and by what means the fraud was carried out.

Accordingly, the court sustains the demurrer to the first and second causes of action with leave to amend to address the foregoing deficiencies, if possible. See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 967.

Defendant's Motion to Strike Portions of the FAC California Code of Civil Procedure ('CCP') § 436 provides that '[t]he court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.' Cal. Code Civ. P. §§ 436(a)-(b). In ruling on a motion to strike, courts do not read allegations in isolation.

See Perkins v. Sup. Ct. (1981) 117 Cal. App. 3d 1, 6. 'In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.' Clauson v. Sup. Ct. (1998) 67 Cal. App. 4th 1253, 1255. The grounds for a motion to strike must appear on the face of the challenged pleading or any matter of which the court is required to take judicial notice. See Cal. Code Civ. P. § 437(a).

Initially, the court notes that the motion to strike must be granted because the FAC, as presently pled, fails to state a cause of action under any theory. However, even if the FAC did state viable causes of action, the court nevertheless would find that Plaintiff has not alleged facts warranting a recovery of attorney's fees or the imposition of punitive damages in this matter.

As to attorney's fees, CCP § 1033.5(a)(10) provides that attorney's fees are allowable as costs under CCP § 1032 when specifically authorized by contract, statute, or law. See Cal. Code Civ. P. § 1033.5(a)(10); Santisas v. Goodin (1998) 17 Cal. 4th 599, 606. In this case, the FAC fails to identify a contractual, statutory, or other legal basis supporting her request for attorney's fees. In her opposition, Plaintiff suggests that attorney's fees may be recoverable under CCP § 1021.5. The court respectfully disagrees. CCP § 1021.5 permits a party to recover attorney's fees in an action to enforce an important right affecting the public interest if: '(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.' Cal. Code Civ. P. § 1021.5. In this case, the FAC fails to identify an important right affecting the public interest that this action might vindicate. Plaintiff merely alleges in conclusory fashion that she 'seeks an award of attorney's fees based on the fact that by this action Plaintiff is vindicating a substantial public interest.' See FAC, ¶ 41. However, she does not identify that substantial public interest. Moreover, the FAC is clear that Plaintiff is seeking a recovery in her individual capacity rather than on behalf of a large class of persons.

As to punitive damages, '[i]n order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damages statute, Civil Code section 3294.' Turman v. Turning Point of Central California, Inc. (2010) 191 Cal. App. 4th 53, 63. California Civil Code § 3294 allows a plaintiff to recover punitive damages '[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.' Cal. Civ. Code § 3294(a). Moreover, '[a]n employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to Calendar No.: Event ID:  TENTATIVE RULINGS

3020484 CASE NUMBER: CASE TITLE:  DAVIS VS. CORVEL CORPORATION [IMAGED]  37-2023-00004740-CU-NP-NC a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.' Cal. Civ. Code § 3294(b). For purposes of awarding punitive damages, ''[m]alice' means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.' Cal. Civ. Code § 3294(c)(1). ''Oppression' means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.' Cal. Civ. Code § 3294(c)(2). ''Fraud' means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.' Cal. Civ. Code § 3294(c)(3). 'Despicable conduct' is conduct that is so mean, vile, base, or contemptible that it would be looked down upon and despised by reasonable people. See CACI 3940. Such conduct has been described as having 'the character of outrage frequently associated with crime.' Scott v. Phoenix Schools, Inc. (2009) 175 Cal. App. 4th 702, 715.

The court finds that the FAC fails to plead the ultimate facts with the requisite specificity demonstrating that Defendant's conduct, if ultimately proven by clear and convincing evidence, could give rise to the imposition of punitive damages. See Brousseau v. Jarrett (1977) 73 Cal. App. 3d 864, 872; Hillard v. A.H. Robins Co. (1983) 148 Cal. App. 3d 374, 391-392. To start, punitive damages are not recoverable for violations of the UCL. See Ghazarian v. Magellan Health, Inc. (2020) 53 Cal. App. 5th 171. To the extent Plaintiff seeks punitive damages in conjunction with her fraud claim, the court has already found, for the above reasons, that the FAC fails to state facts sufficient to constitute a cause of action under that theory. Moreover, to the extent the FAC alleges that Defendant is liable for punitive damages owing to fraud committed by its employee, Mr. Maag, the FAC is insufficiently pled. The FAC fails to allege that Defendant had advance knowledge of Mr. Maag's unfitness yet nevertheless employed him with a conscious disregard for Plaintiff's rights or safety, or otherwise authorized or ratified Mr. Maag's conduct.

Nor does the FAC identify an officer, director, and/or managing agent of Defendant who had advance knowledge of Mr. Maag's unfitness/misconduct.

Accordingly, the court grants the motion to strike with leave to amend to address the foregoing deficiencies, if possible. See Grieves v. Sup. Ct. (1984) 157 Cal. App. 3d 159, 168.

In light of the foregoing, the court: (1) sustains the demurrer with leave to amend, and (2) grants the motion to strike with leave to amend. Plaintiff shall file and serve a second amended complaint, if she chooses to file such a pleading, within ten (10) days of this hearing. See Cal. R. Ct. 3.1320(g).

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, October 27, 2023. If no party appears at the hearing, this tentative ruling will become the order of the court as of October 27, 2023. If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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