Judge: Daniel M. Crowley, Case: 21STCV45088, Date: 2023-12-01 Tentative Ruling


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Case Number: 21STCV45088    Hearing Date: April 15, 2024    Dept: 71

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES 

 

DEPARTMENT 71 

 

TENTATIVE RULING 

 

PEOPLE OF THE STATE OF CALIFORNIA, ex rel., ALLSTATE INSURANCE COMPANY,   

   

         vs. 

 

ADAM AVELARDO PEREZ, et al.  

 Case No.:  21STCV45088 

 

 

 

 

 

 Hearing Date:  April 15, 2024 

 

Plaintiff Allstate Insurance Company’s motion to compel Defendant Healthcare Financial Solutions, LLC’s compliance with the agreement reached at this Court’s December 19, 2023, IDC Order is granted.  Defendant Healthcare Financial Solutions LLC is ordered to deliver copies of the documents identified in Attachment 3 to the subpoena (Request Nos. 1-17) served on Healthcare Financial Solutions LLC on August 3, 2023, along with an affidavit in compliance with Evidence Code section 1561, to the deposition officer specified in the subpoena within 10 business days, at Plaintiff’s expense. 

Plaintiff’s request for monetary sanctions against Defendant Healthcare Financial Solutions LLC and its counsel, Ervin Cohen & Jessup LLP, is denied. 

Plaintiff Allstate Insurance Company’s motion to compel Non-parties Rockpoint Funding, LLC, and First Priority Management Services, LLC, to comply with Plaintiff’s subpoenas for business records issued on November 10, 2023, is granted.  Rockpoint Funding, LLC, and First Priority Management Services, LLC are to produce all of the requested documents in the form specified in the subpoenas and produce affidavits in compliance with §1561, to the deposition officer, Titan, within 10 business days. 

 

Plaintiff Allstate Insurance Company (“Allstate”) (“Plaintiff”) moves to compel Defendant Healthcare Financial Solutions, LLC (“HFS”) (“Defendant”) to comply with the agreement reached at this Court’s December 19, 2023, IDC.  (Notice of Motion HFS, pg. 2.)  Plaintiff further moves for sanctions against Defendant and its counsel of record in the amount of $7,800.00. (Notice of Motion HFS, pg. 3; C.C.P. §§1987.2, 2025.430, 2025.480, 2023.010, 2023.030, 2031.310.) 

Plaintiff moves to compel Non-parties Rockpoint Funding, LLC (“Rockpoint”) and First Priority Management Services, LLC (“FPMS”) (collectively, “Responding Entities”) to comply with Plaintiff’s subpoenas for business records issued on November 10, 2023, on the grounds Responding Parties failed to produce any responsive documents in compliance with the lawfully issued subpoena without justification.  (Notice of Motion SDT, pg. 2; C.C.P. §2025.480(a).)1 

 

  1. Motion to Compel Compliance- HFS 

Background  

On August 3, 2023, Plaintiff served HFS with a subpoena for production of business records, with directions to produce the records to the deposition officer, Titan Legal Services, Inc., on August 24, 2023.  (Decl. of Steele2, Exh. A.)  By the production date of August 24, 2023, HFS did not respond to the subpoena, move to quash the subpoena, nor serve any written objection or document production.  (Decl. of Steele3.)  HFS did not produce any of the requested records either prior to or on August 24, 2023.  (Decl. of Steele3.)  Although the deposition date had already passed, HFS requested an extension until September 18, 2023, to respond to the subpoena, but still did not produce any of the requested records by September 18.  (Decl. of Steele4.)   

On December 19, 2023, the parties met for an IDC, wherein the Court conferred with counsel regarding issues of further discovery and after discussion the Court deemed the issues resolved.  (12/19/23 Minute Order (Informal Discovery Conference).)  The parties agreed that HFS would comply with the subpoena as to records relating to New Hope and would do wo within 30 days, subject to an existing protective order.  (Decl. of Steele ¶8; 1/31/24 Stipulation.) 

On December 26, 2023, HFS objected that the Court did not require production within 30 days of Dec. 19, and estimated that it would take 45-60 days to comply.  (Decl. of Steele ¶11, Exh. E.)  More than sixty days since December 19 have passed since the date of Plaintiff’s filing and HFS has not produced anything.  (Decl. of Steele ¶11.)  To date, HFS has not produced a single document in response to Plaintiff’s subpoena. (Decl. of Steele ¶16.) 

Plaintiff filed the instant motion on February 22, 2024.  On March 20, 2024, Defendant filed its opposition.  Plaintiff filed its reply on April 8, 2024. 

 

Legal Standard 

“If a party filing a response to a demand for inspection, copying, testing, or sampling under Sections 2031.210, 2031.220, 2031.230, 2031.240, and 2031.280 thereafter fails to permit the inspection, copying, testing, or sampling in accordance with that party’s statement of compliance, the demanding party may move for an order compelling compliance.”  (C.C.P. §2031.320(a).) 

 

Motion to Compel Compliance 

Plaintiffs’ motion to compel compliance is granted pursuant to C.C.P. §2031.320(a).  HFS is ordered to deliver copies of the documents identified in Attachment 3 to the subpoena (Request Nos. 1-17) served on HFS on August 3, 2023, along with an affidavit in compliance with Evidence Code §1561, to the deposition officer specified in the subpoena within ten business days. Plaintiff must bear the cost of the production.  

 

Sanctions 

C.C.P. §2031.320(b) provides, “Except as provided in subdivision (d), the court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel compliance with a demand, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.”  (C.C.P. §2031.320(b).) 

The Court finds because the issue of which party should bear the cost of the production remained unresolved and because Plaintiff did not return to court to request resolution of the issue that sanctions are unwarranted.  

 

Conclusion 

Plaintiff’s motion to compel Defendant to comply with this Court’s December 19, 2023, IDC Order is granted.  HFS is ordered to deliver copies of the documents identified in Attachment 3 to the subpoena (Request Nos. 1-17) served on HFS on August 3, 2023, along with an affidavit in compliance with Evidence Code §1561, to the deposition officer specified in the subpoena within 10 business days. Plaintiff is to bear the expense of the production.  

Plaintiff’s request for sanctions against HFS and its counsel, Ervin Cohen & Jessup LLP is denied. 

Moving Party to give notice. 

 

  1. Motion to Compel Compliance- Rockpoint and FPMS 

Background 

On November 10, 2023, Plaintiff served Rockpoint and FPMS with deposition subpoenas for production of business records, with directions to produce the records to the deposition officer, Titan Legal Services, Inc., on November 30, 2023.  (Decl. of Reichmuth¶3-4, Exhs. A, B.)   

The subpoenas seek information about agreement and transactions with non-moving Defendant New Hope Imaging Services, LLC (“New Hope”), including (1) agreements with New Hope (Request No. 1); (2) Records of communications relating to its agreements with and relating to New Hope (Request No. 2), and of any delegations under such agreement(s) (Request No. 13); (3) Documents relating to the individual patients and accounts purchased from and/or assigned by New Hope (Request Nos. 3 and 7); (4) Records of referral of patients to New Hope (Request No. 5) and scheduling of patient appointments at New Hope (Request No. 6);  (5) New Hope’s internal forms and documents that the Responding Entities prepared for New Hope to provide to patients (Request Nos. 8-9), including lien agreements with patients (Request No. 11); (6) Records of payments to New Hope, including specific payment rates for MRIs (Request Nos. 4) and records of payments made and received relating to the patient accounts it purchased from New Hope (Request Nos. 14-15); (7) Records of communications regarding its decision-making regarding New Hope patient accounts (Request No. 10); (8) Records of its communications with New Hope (Request Nos. 16-17); and (9) Records relating to the Responding Entities’ qualifications to do business in California (Request No. 12).  (Decl. of Reichmuth¶3-4, Exhs. A, B.) 

On December 11, 2023, both Rockpoint and FPMS responded with blanket objections and refused to produce any documents.  (Decl. of Reichmuth ¶¶5-6, Exhs. C, D.)  To date, the Responding Entities have refused to produce a single document.  (Decl. of Reichmuth ¶9.) 

Plaintiff filed the instant motion on February 29, 2024.  On April 3, 2024, Rockpoint and FPMS filed their oppositions.  Plaintiff filed its reply on April 8, 2024. 

Rockpoint and FPMS argue Plaintiff’s motion is untimely because any motion to compel must be made within 60 days of completing the deposition record, and that despite numerous extensions granted during the meet and confer process, Plaintiff missed the cutoff deadline on February 26, 2024, and filed its motion three days after the deadline.  (Oppositions, pg. 3; C.C.P. §2025.480(b).)  However, Plaintiff attached exhibits demonstrating their motion was timely based on emails between counsel, in which Rockpoint’s and FPMS’ counsel agreed on February 23, 2024, to extend the filing deadline from February 26 (as previously agreed on February 15) to February 29 based on Farooq Mir’s February 23, 2024 representation that he had “no problem extending the motion filing deadline by another 3 days.”  (Supp.-Decl. of Reichmuth ¶5, Exh. P.)  Therefore, Plaintiff’s motion is timely and will be considered by this Court. 

 

Legal Standard 

“If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders.”  (C.C.P. §1987.1(a), emphasis added.) 

If a nonparty disobeys a deposition subpoena, the subpoenaing party may seek a court order compelling the nonparty to comply with the subpoena within 60 days after completion of the deposition record.  (C.C.P. §2025.480(b); see Unzipped Apparel, LLC v. Bader (2007) 156 Cal.App.4th 123, 127.) 

 

Meet and Confer 

A motion to compel compliance with a deposition subpoena “shall be accompanied by a meet and confer declaration under Section 2016.040.”  (C.C.P. §2025.480(b).) 

Plaintiff’s counsel declares she met and conferred with counsel for FPMS and Rockpoint by telephone and letter, first on February 19, 2024, and again on February 26, 2024.  (Decl. of Reichmuth ¶¶7-8, Exhs. E, F.)  Plaintiff’s counsel’s meet and confer declaration is proper under C.C.P. §2025.480(b).  Therefore, the Court will consider Plaintiff’s motion. 

 

Motion to Compel Compliance 

Plaintiff’s motion to compel Rockpoint’s and FPMS’ compliance with its deposition subpoenas is granted pursuant to C.C.P. §2025.480.  Plaintiff’s deposition subpoenas request documents that may “reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement.”   (Moore v. Mercer (2016) 4 Cal.App.5th 424, 447.)  At this stage, relevance is construed broadly and “[a]dmissibility is not the test” – “information unless privileged, is discoverable if it might reasonably lead to admissible evidence.”  (Stewart v. Colonial W. Agency, Inc. (2001) 87 Cal.App. 1006, 1013.) 

Here, the only documents Plaintiff has requested are related to the transactions that form the alleged fraudulent scheme.  Plaintiff alleges (1) New Hope and Defendant Adam Perez (“Perez”) practiced medicine without a license; (2) defendants engaged in an unlawful patient-steering/kickback scheme; and (3) defendants presented fraudulent bills to Plaintiff and other carriers.  (SAC ¶¶75-92.) Plaintiff’s subpoenas directed to Responding Entities concern are related to its allegations that they referred patients to New Hope pursuant to lien-based transactions for allegedly unlicensed and improper medical services.  

“If an objection is based on a claim of privilege or a claim that the information sought is protected work product, the response shall provide sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log.” (C.C.P. §2031.240(c)(1); see also HLC Properties, Limited v. Superior Court (2005) 35 Cal.4th 54, 59 [“The objecting party has the burden to file evidence of the preliminary facts establishing a privilege exists.”].) 

Here, the Responding Entities have not demonstrated that any such privilege or protection they have claimed in their objections applies, and any concern is outweighed by Plaintiff’s need for the documents and the protections available under the existing protective order.  The Responding Entities’ objections do not describe any of these purportedly privileged documents with particularity, nor have the Responding Entities produced any privilege log.  

Regardless, Plaintiff’s particular need for the information outweighs any purported confidentiality.  (See, e.g., Britt v. Superior Court (1978) 20 Cal.3d 844, 856 [stating discovery of confidential information permitted where party seeking discovery shows a particularized need—that the information is directly relevant to a cause of action or defense].)  Here, there particular need for this information is related to Plaintiff’s allegations of fraud. 

Similarly, the Responding Entities’ objections about patient privacy do not excuse compliance with the subpoenas.  (See Snibbe v. Superior Court (2014) 224 Cal.App.4th 184, 194-195, quoting Board of Medical Quality Assurance v. Hazel Hawkins Memorial Hospital (1982) 135 Cal.App.3d 561, 565 [stating request for unnamed charts of four patients did not infringe on patients’ privacy rights].) 

The limited production of information about the Responding Entities’ agreements with New Hope and related financial transactions and communications that does not even pertain to any individual patient cannot be said to infringe on patients’ privacy rights any more than the production of unnamed patients’ charts. (See id.; see also Kizer v. Sulnick (1988) 202 Cal.App.3d 431, 439 [stating privacy rights require no more than deletion of named medical records in health study or “if feasible, the deletion of information which individually identifies the participants”].) 

Further, “[p]rivate information may be discoverable if directly relevant to the litigation.”  (Snibbe, 224 Cal.App.4th at pg. 196.)  Absent a showing of a serious intrusion into patient privacy, there is no need to balance privacy interests against the need for discovery.  (Los Angeles Gay & Lesbian Center v. Superior Court (2011) 194 Cal.App.4th 288, 307.) 

Producing the requested information under the protective order also does not violate HIPAA, which allows disclosure of medical information pursuant to a court order without patient authorization.  (See Snibbe, 224 Cal.App.4th at pgs. 197-198; 45 C.F.R. §164.512(e)(1)(i) [stating disclosure authorized by court order permitted].)  HIPAA explicitly permits disclosure of protected health information “without the written authorization of the individual . . . or the opportunity for the individual to agree or object” where the party seeking the information has sought a protective order that accomplishes two goals: (1) restricting use of the protected health information to the litigation, and (2) requiring its return or destruction at the end of the litigation.  (45 C.F.R. §164.512(e)(1)(iv)(A), (B).)  

Disclosure is permitted where the disclosing party “receives satisfactory assurance . . . that reasonable efforts have been made” by the requesting party “to secure a qualified protective order.”  (45 C.F.R. § 164.512 (e)(1)(ii).)   

Here, the existing protective order meets this test, mooting the Responding Entities’ objections to producing the requested documents based on purported patient privacy interests.  (3/23/23 Protective Order at ¶¶22-24.) 

Further, Responding Entities’ objections that the subpoenas were “overly broad” or “oppressive” are unavailing because Responding Entities failed to make a showing of undue burden.  (C.C.P. §2020.220(e) [subpoenaed person “bears the burden of demonstrating that the information is from a source that is not reasonably accessible because of undue burden or expense”]; Vasquez v. California School of Culinary Arts, Inc. (2014) 230 Cal.App.4th 35, 42 [stating subpoenaed entity may only “oppose production of electronically stored information on the basis that the information is from a source that is not reasonably accessible because of undue burden or expense”].)  

Accordingly, Plaintiff’s motion to compel compliance is granted.  Responding Entities are to produce all of the requested documents in the form specified in the subpoena, and an affidavit in compliance with §1561, to the deposition officer, Titan, within 10 business days. 

 

Sanctions 

In light of the Court’s ruling, Rockpoint’s and FPMS’ requests for sanctions against Plaintiff are denied. 

 

Conclusion 

Plaintiff’s motion to compel compliance is granted.  Responding Entities are to produce all of the requested documents in the form specified in the subpoenas and affidavits in compliance with §1561, to the deposition officer, Titan, within 10 business days. 

Moving Party to give notice. 

 

Dated:  April _____, 2024 

 

Shape 

Hon. Daniel M. Crowley 

Judge of the Superior Court