Judge Elaine W. Mandel, Case Number: 23SMCV0381, Date: 2024-02-13 Tentative Ruling

Judge: Elaine W. Mandel, Case: 23SMCV0381, Date: 2024-02-13 Tentative Ruling

Case Number: 23SMCV0381 Hearing Date: February 13, 2024 Dept: P

Tentative Ruling

California Physicians Service dba Blue Shield of California v. Advanced Orthopedic Center, Case No. 23SMCV0381

Hearing Date February 13, 2024

Defendant Advanced Orthopedic’s Anti-SLAPP Motion

Plaintiff Blue Shield’s Motion to Seal

Plaintiff California Physician’s Service dba Blue Shield of California (Blue Shield) sues defendant Advanced Orthopedic Center (AOC) for declaratory relief and money had and received. AOC has filed numerous small claims actions against Blue Shield, arguing it was underpaid for emergency services provided to Blue Shield members. Blue Shield seeks a court declaration stating its payment methodology is valid, resulting in payments to AOC equal to or exceeding fair market value, that AOC is not entitled to its full billed charges for services to Medicare members and Blue Shield is entitled to reimbursement for overpaid claims.

Defendant AOC files an anti-SLAPP motion, arguing this lawsuit arises out of protected litigation activity, namely its filing of small claims actions.

Courts resolving an anti-SLAPP motion under Cal. Civ. Code §425.16 follow a two-step process. Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733. In prong one, the court determines whether the conduct underlying plaintiff’s cause of action arises from defendant’s constitutional rights of free speech or petition. Baral v. Schnitt (2016) 1 Cal. 5th 376, 395. This is a threshold issue—if moving party fails to show the conduct is constitutionally protected, the court need not address prong two. Jarrow, supra, 31 Cal.4th at 733. The anti-SLAPP statute covers litigation-related activities, with any statement or writing made in “connection with” litigation receiving protection. Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 962.

Under the second prong, the burden shifts to plaintiff to establish a legally sufficient claim and to prove with admissible evidence a reasonable probability that plaintiff will prevail. E.g. Navellier v. Sletten (2002) 29 Cal.4th 82, 88. To fulfill prong two, plaintiff cannot rely on allegations of the complaint but must produce evidence admissible at trial. HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.

Blue Shield’s Motion to Seal

Blue Shield seeks to seal portions of exhibit 3 to the declaration of Bruce Deal, which allegedly include confidential and proprietary information related to Blue Shield’s rates.

A court may order a record sealed if it finds (1) an overriding interest exists that overcomes the right of public access to the record, (2) the overriding interest supports sealing the record, (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed, (4) the request is narrowly tailored and (5) no less restrictive means exist to achieve the overriding interest. Cal. Rule of Court 2.550(d).

Blue Shield has shown its fee schedules are unique, proprietary information. Nordon Decl. ¶¶3-4. Blue Shield has an overriding interest in maintaining the confidentiality of this information. The request is narrowly tailored, with only a small portion of the exhibit sealed. GRANTED.

Evidentiary Objection

Objection 1 SUSTAINED (lack of foundation, relevance); other objections OVERRULED.

AOC’s Anti-SLAPP Motion

Filing a small claims action is litigation activity. If this lawsuit arises out of AOC’s filing of small claims actions, the first prong is fulfilled.

AOC argues Blue Shield filed this lawsuit is to preempt AOC’s reimbursement actions in small claims court. Blue Shield’s complaint alleges “AOC has filed (and continues to file) numerous small claims court actions in various Los Angeles courts against Blue Shield,” and complains that in small claims court “there is no time to dig in to the complex reimbursement rules that may apply to different health plans in which Blue Shield members are enrolled. And Blue Shield cannot take discovery of any underlying facts, such as the amounts AOC is paid by other payors in the marketplace[.]” Complaint ¶¶3-4.

Blue Shield alleges “the complex legal and factual issues surrounding physician reimbursement cannot be fully and properly litigated in a small claims court action,” and “[t]hese procedural limitations . . . have deprived Blue Shield of key due process protections[.]” Id. ¶¶4, 7. The complaint states Blue Shield’s dissatisfaction with the small claims venue and admits the purpose of this action is to prevent AOC from continuing to pursue reimbursement in that venue.

In opposition, Blue Shield argues a plaintiff’s motive for bringing a lawsuit is immaterial to the anti-SLAPP analysis, and prong one is concerned only with the alleged activity underlying the dispute. Blue Shield argues the underlying activity is not AOC’s bringing of small claims actions but its ongoing dispute with Blue Shield regarding reimbursement.

Blue Shield cites City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 which held “subjective intent is not relevant,” when determining whether a claim arises from protected activity. Cotati states “a claim filed in response to, or in retaliation for, threatened or actual litigation is not subject to the anti-SLAPP statute simply because it may be viewed as an oppressive litigation tactic . . . [t]hat a cause of action arguably may have been triggered by protected activity does not entail that it is one arising from such.” Id.

Cotati is dispositive. This lawsuit was filed in response to AOC’s numerous small claims actions, and some of the language in the complaint suggests Blue Shield intends to chill AOC’s right to pursue damages in small claims court. Nonetheless, under Cotati, this is largely irrelevant.

The small claims actions themselves are not the conduct giving rise to AOC’s causes of action. Rather, the relevant conduct is AOC providing medical services to Blue Shield’s members, Blue Shield paying for those services, and AOC disputing the amount paid. AOC expressed that disagreement via the various small claims actions, but the complaint does not allege that the small claims actions themselves give rise to liability.

It is the parties’ ongoing payment dispute, not that dispute’s expression in small claims actions, that underlies this lawsuit. Under Cotati, the first prong is not fulfilled. Since AOC has not established the first prong of anti-SLAPP analysis, the court need not address the second prong. DENIED.

Blue Shield asks the court to find AOC’s motion is frivolous and award attorney’s fees. The court declines to do so. Blue Shield’s complaint included references to protected litigation activity; based on this language, it was not unreasonable or a sign of bad faith for AOC to conclude that the lawsuit arose out of that activity. No fees to be awarded.