Judge Jill Feeney, Case 20STCV02388 2023-01-20 Tentative Ruling

The issue presented by both of these motions is the discoverability of information about the sale of Plaintiff’s medical lien by Docs Surgical Hospital to GRS Funding, a medical factoring business.

Relevance for purposes of discovery is a broader concept than what evidence will be admissible at trial. In the discovery context, information is relevant if it might assist a party in the evaluation of a case, the preparation for trial or the reaching of a settlement. (Haniff v. Superior Court (2017) 9 CA5th 191, 205.)

A plaintiff seeking to recover past medical expenses in a personal injury action is entitled to recover the lesser of (a) the reasonable value of the medical services provided or (b) the amount paid or incurred for the medical services. (Howell v. Hamilton Meats & Provisions. Inc. (2011) 52 Cal.4th 541, 556.)

In Moore v. Mercer (2016) 4 Cal.App.5th 424, 447)the Court of Appeal held that a trial court abused its discretion when it denied a similar motion to compel this type of information. (Id.) The Moore court concluded that “evidence surrounding the sale of bills and liens. . . does bear some probative value in determining the reasonable value of the services. And given the breadth of a party’s right to discovery any information that might assist him in evaluating or preparing his case, the court erred.” (Id.)

Were Docs Surgical Hospital and GRS Funding not claiming the existence of a trade secret with respect to the requested information that would be the end of the analysis here and indeed Moore v. Mercer supports the conclusion that at least at the discovery stage the factoring agreement should be produced.

This claim of the existence of a trade secret must be analyzed in the context of the parameters discussed at the IDCs on these matter. At that time, the Court made it clear that it did not think that the wide scope of discovery about the factoring agreement sought by Defendant was appropriate based on the information presented. The Court indicated that the amount paid for the accounts receivable (subject to a protective order) would be the only information ordered to be produced.

Non-party entities Docs Surgical Hospital and Global Receivables Funding oppose the motion contending, among other things, that a trade secret is at issue here. The declarations of Dr. Siddique and Christa Tavolieri are attached in support of this contention.

The party claiming a trade secret privilege under Evidence Code Section 1060 has the burden of proving the party’s entitlement to that privilege. (Amgen Inc. v. California Correctional Health Care Servs. (2020) 47 CA5th 716, 733.) The evidence Code defines a trade secret as anything defined as a trade secret under the Uniform Trade Sections Act. (Evidence code Section 1061(a)(1).) The Uniform Trade Secrets Act defines the term as information, including a formula, pattern, compilation, program, device method, technique or process that derives independent economic value from not being generally known to the public or others who may obtain economic value from its disclosure and use and is the subject of reasonable efforts to keep the information secret. (Civil Code Section 3426.1(d).)

Neither entity establishes the existence of a trade secret with respect to the limited information to be disclosed here. The only information to be disclosed is the amount of the payment for the accounts receivable as a whole without any details regarding how that number was reached or the agreement details or indeed any other information. Neither declaration explains how this information alone would reveal rate schedules or models or any other competitive information. Here, the information being disclosed would not be an item by item disclosure of what was paid for every line item on Plaintiff’s account receivable nor any information about how the “bottom line” was reached. As set forth in Dr. Siddique’s Declaration at paragraph 8 “each patient billing is unique and different.”

With respect to Defendant’s argument that it needs additional information beyond the price paid for the lien, Defendant has not met the burden of proving that the information is directly relevant to a material element of a cause of action or defense.(Bridgestone/Firestone, Inc. v. Superior Court (1992) 7 CA4th 1384, 1392-1396.) This is because no case has held that this type of material as a general matter is admissible at trial as relevant to the issue of damages and Defendant has not provided evidence from an expert explaining the importance and relevance of this information to the calculation of damages such that it should be admitted at trial.

With respect to the issue of privacy protection of financial information of the third party corporations/business entities here, any such right, to the extent it exists, is not constitutional in nature. (Roberts v. Gulf Oil Corp. (1983) 147 CA3d 770, 791.)

Hence, a balancing test applies. (SCC Acquisitions, Inc. v. Sup. Ct. (Western Albuquerque Land Holdings, LLC) (2015) 243 CA4th 741, 755-756.) Here, the balancing weighs in favor of producing this limited information deemed relevant pursuant to the Discovery Act.

Deposition questions and documents establishing the following items only must be answered/produced: (1) the date the lien was sold; (2) the amount paid for the lien by GRS; and (3) any provision of the agreement indicating whether or not Plaintiff is still liable or not for the full amount of the lien. The Court has added this third item as it is disclosed by the entities in their opposing papers and the information is relevant and apparently not the subject of controversy.

Any documents produced may be redacted to the extent that they include additional information. Furthermore, the information (both deposition testimony and documents) will be produced pursuant to a protective order. The parties should stipulate to the terms of a protective order and file it with the court.