Judge: Joseph Lipner, Case: 20STCV41811, Date: 2024-08-13 Tentative Ruling
Case Number: 20STCV41811 Hearing Date: August 13, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
LAKESIDE MEDICAL ORGANIZATION, A
MEDICAL GROUP, INC., Plaintiff, v. JONATHAN NISSANOFF, M.D., et al., Defendants. |
Case No:
20STCV41811 Hearing Date: August 13, 2024 Calendar Number: 1 |
This is an anti-SLAPP motion on remand from the Court of
Appeal. The Court of Appeal
affirmed-in-part and reversed-in-part an order by the Superior Court denying
the anti-SLAPP motion. The Court of
Appeal determined that certain specific allegations were subject to the
anti-SLAPP statute. The Court of Appeal
remanded to this Court to determine whether there has been a reasonable
probably of success on the particular allegations at issue.
Advanced Orthopedic Center, Inc. (“AOC”), which is plaintiff
in a non-lead case, asserted a Second Amended Complaint (“SAC”) against
Defendants Regal Medical Group, Inc. (“Regal Medical Group”) and Lakeside
Medical Organization, A Medical Group, Inc. (“Lakeside”) (collectively, “Regal”).
The Court GRANTS Regal’s anti-SLAPP motion as to the
allegations identified by the Court of Appeal as falling under the anti-SLAPP
statute. These allegations will be
stricken from the SAC.
The Court strikes the following allegations of the SAC:
1.
Paragraph 11 (except for the portions that state
“despite the lack of any legitimate health care or business justification for
doing so” and “drafted entirely by Defendants or their attorneys, containing
outright misrepresentations and falsehoods about AOC’s business practices”).
2.
The first sentence of paragraph 91.
3.
Paragraph 94.
4.
Paragraph 95.
5.
Sub-paragraphs 115(g) and (h).
6.
Paragraph 118
7.
Paragraph 119; and
8.
Subparagraph 4(e) of AOC’s declaratory relief claim.
This action arises out of a medical fee dispute between AOC and
Regal.
The Regal Parties are an independent physician association
that works with health care insurers to coordinate care for their insureds and
assumes the financial risk of providing physician care services to those
insureds. Jonathan Nissanoff, M.D., a defendant in the lead case, is a
physician and the sole owner of AOC. Nissanoff offers orthopedic medical
services. Nissanoff and AOC are not “in-network” with Regal.
On October 3, 2019, a patient that the parties refer to as
“Patient 5” presented at Nissanoff’s practice. Nissanoff examined Patient 5 for
an issue relating to the patient’s foot. After the appointment, Nissanoff took
a $500.00 deposit from Patient 5. (Nissanoff Decl. in Support of AOC’s
Opposition to Opening Brief (“Nissanoff Decl.”) ¶ 11.) Nissanoff explained to
Patient 5 that all or part of the deposit would be returned once Regal had paid
Patient 5’s claim. (Nissanoff Decl. ¶ 11.) Nissanoff billed Regal for $1,716.00
for his services to Patient 5. (Nissanoff Decl. ¶ 12.)
Regal paid AOC a total of $150.33 for Nissanoff’s services
and assigned an additional $40.00 to patient responsibility. (Nissanoff Decl. ¶
14.) Because AOC had not been paid in full, it retained the $500.00 deposit.
(Nissanoff Decl. ¶ 14.)
In 2020, AOC filed a small claims lawsuit in the Los Angeles
Superior Court against Regal seeking payment of the full $1,716.00 charge.
(Nissanoff Decl. ¶ 15.) The case was tried and judgment was entered in favor of
AOC for the amount requested. (Nissanoff Decl. ¶ 15.) Regal filed an appeal and
obtained a de novo trial, which would eventually occur on March 7, 2022.
In the meantime, on October 30, 2022, Regal sued Nissanoff
and AOC for violating the Unfair Competition Law (Bus. & Prof. Code, §
17200 et seq.) and for fraud, unjust enrichment, and declaratory relief. That
lawsuit is the lead case in this action. Regal alleged, inter alia, that
Nissanoff billed for emergency services when there was no emergency.
On August 24, 2021, AOC filed a separate lawsuit, which was
consolidated with the lead case in this action and now forms the basis for
Regal’s anti-SLAPP motion. AOC originally raised claims for quantum meruit and
breach of contract, contending that it was entitled to receive payment based on
its total billed charges. The
allegations at issue in the current anti-SLAPP motion were not included in the
original complaint.
According to the declaration of Regal’s vice president of
legal affairs, Mary Coash, Regal had “a strict policy against providers
‘balance billing’ patients, i.e., collecting money from the patient that is
above the patient’s financial responsibility.” (Coash Decl. in Support of
Anti-SLAPP Motion (“Coash Decl.”) ¶ 2.)
On January 24, 2022, slightly over a month before the second
trial stemming from AOC’s small claims action, Coash spoke with Patient 5.
(Coash Decl. ¶ 3.) Although Coash declares that Patient 5 stated that Nissanoff
had required the $500.00 deposit as a prerequisite to treatment (Coash Decl. ¶
3.), Patient 5’s statement is not evidenced through declarations from Patient
5, and is therefore inadmissible hearsay. In any event, Coash told Patient 5
that Regal would reimburse him for the $500.00 deposit that Patient 5 had paid
to AOC. (Coash Decl. ¶ 3.) On February 3, 2022, Regal issued a check to patient
5 in the amount of $500.00. (Coash Decl. ¶ 4.)
On February 9, 2022, Regal’s counsel in the small claims
case, Michael Amir, had a telephone call with Patient 5 and asked whether
Patient 5 would testify in the then-upcoming March 7, 2022 trial. (Amir Decl.
in Support of Anti-SLAPP Motion (“Amir Decl.”) ¶ 8.) Patient 5 agreed to
provide testimony in the form of a declaration. (Amir Decl. ¶ 8.) On February
11, 2022, Amir sent Patient 5 an email providing a draft declaration for
Patient 5’s review and signature. (Amir Decl. ¶ 8, Ex. 5.) Amir’s email requested
that Patient 5 make sure that all the statements were accurate. (Amir Decl. ¶
8, Ex. 5, Part 1.) Amir’s email also noted that Regal had reimbursed Patient 5
for the $500.00 deposit and stated that “as [Amir] said yesterday, the
statements in the declaration should in no way be impacted by the reimbursement
check. You are entitled to the check, with or without your assistance.”
(Amir Decl. ¶ 8, Ex. 5, Part 1 [emphasis in original].)
During the de novo trial, Regal’s counsel disclosed the
$500.00 payment that Regal had made to Patient 5 and explained that the payment
was reimbursement of the $500.00 deposit that Nissanoff had taken from Patient
5. The Court entered judgment in the amount of $1,716.00 in AOC’s favor but
also ordered AOC to refund $500.00 to Patient 5.
On May 9, 2022, AOC filed the SAC in the non-lead case in
this action, adding claims for unfair competition and for declaratory relief.
These claims were based in part on allegations that Regal’s $500.00 payment to
Patient 5 violated California’s bribery statute (Pen . Code, § 137) and the
federal anti-gratuity statute (18 U.S.C. § 201(c)(2).)
On June 20, 2022, Regal moved to strike allegations related
to the bribery and gratuity theories under Code of Civil Procedure, section
425.16. This is the anti-SLAPP motion that is now at issue. On August 2, 2022,
the Court denied the anti-SLAPP motion. In reaching its ruling, the Court found
that neither Penal Code, section 137 nor 18 U.S.C. section 201(c)(2) require
the actual procurement of false testimony, but only payment and corresponding
intent. The Court therefore concluded that AOC’s allegations of false testimony
merely served as evidence of liability, and did not comprise the wrongful act
complained of, which the Court found was the allegedly illegal payment. The
Court therefore found that the basis of AOC’s claims was not protected
activity.
Regal appealed the denial of its anti-SLAPP motion. The
Court of Appeal affirmed in part and reversed the Court’s finding of
non-protected activity as to paragraph 11 (except for the portions that state
“despite the lack of any legitimate health care or business justification for
doing so” and “drafted entirely by Defendants or their attorneys, containing
outright misrepresentations and falsehoods about AOC’s business practices”),
the first sentence of paragraph 91, paragraphs 94, 95, 115(g) and (h), 118, 119,
and subparagraph 4(e) of AOC’s declaratory relief claim. (Remittitur at p. 28.)
The Court of Appeal noted that “[a]cts undertaken to obtain
or shape witness testimony are protected activity” (Remittitur at p. 20) and
determined that “[t]he allegations at issue state, and require as elements to
establish liability, payment with the intent of procuring favorable testimony
coupled with Regal having indicated to Patient 5 that payment was offered to
influence his testimony.” (Remittitur at p. 24.)
The Court of Appeal directed the Court to determine whether
AOC met its burden of demonstrating a reasonable probability of prevailing on
the merits of its claims at trial with respect to those portions of the SAC.
(Remittitur at p. 28.)
On May 30, 2024, the Court set a hearing for the
determination of the merits issue and ordered additional briefing by the
parties. Regal filed an opening brief on June 28, 2024. AOC filed an opposition
on July 29, 2024. Regal filed a reply on August 6, 2024.
Code of Civil Procedure section 425.16 permits the court to
strike causes of action arising from an act in furtherance of the defendant’s
right of free speech or petition unless the plaintiff establishes that there is
a probability that the plaintiff will prevail on the claim.
This remand involves the second prong of the anti-SLAPP
analysis. Once a defendant has met its
initial burden and established that the anti-SLAPP statute applies, the burden
shifts to the plaintiff to demonstrate a “probability” of success on the
merits. (Code Civ. Proc., § 425.16, subd. (b); Equilon Enters. LLC v.
Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “[T]he plaintiff must
demonstrate that the complaint is both legally sufficient and supported by a
sufficient prima facie showing of facts to sustain a favorable judgment if the
evidence submitted by the plaintiff is credited.” (Matson v. Dvorak
(1995) 40 Cal.App.4th 539, 548, internal quotations omitted.) At this “second
stage of an anti-SLAPP hearing, the court may consider affidavits,
declarations, and their equivalents if it is reasonably possible the proffered
evidence set out in those statements will be admissible at trial. Conversely,
if the evidence relied upon cannot be admitted at trial, because it is
categorically barred or undisputed factual circumstances show inadmissibility,
the court may not consider it in the face of an objection. If an evidentiary
objection is made, the plaintiff may attempt to cure the asserted defect or
demonstrate the defect is curable.” (Sweetwater Union High School Dist. v.
Gilbane Building Co. (2019) 6 Cal.5th 931, 949.)
The trial court properly considers the evidentiary
submissions of both the plaintiff and the defendant, but it may not weigh the credibility
or comparative strength of the evidence and must instead simply determine
whether the plaintiff’s evidence would, if believed by the trier of fact, be
sufficient to result in a judgment for plaintiff. (McGarry v. Univ. of San
Diego (2007) 154 Cal.App.4th 97, 108-109.) The court “accepts as true the
evidence favorable to the plaintiff and evaluates the defendant’s evidence only
to determine if it has defeated that submitted by the plaintiff as a matter of
law.” (Flatley v. Mauro (2006) 39 Cal.4th 299, 326 (Flatley).)
Further, whether or not the evidence is in conflict in the context of a motion
to strike under the anti-SLAPP statute, if the plaintiff has presented a
sufficient pleading and has presented evidence showing that a prima facie case
will be established at trial, the plaintiff is entitled to proceed. (Moore
v. Shaw (2004) 116 Cal.App.4th 182, 193.) Only a minimal showing of merit
is required. (Robinzine v. Vicory (2006) 143 Cal.App.4th 1416,
1421.) However, a court need not accept uncorroborated, self-serving
declarations in order to create a triable issue of fact. (King v. United
Parcel Service, Inc. (2007) 152 Cal.App.4th 426, 433 [holding that
uncorroborated and self-serving declarations provided by the plaintiff did not
create triable issues of fact on summary judgment].)
Here, the Court considers only whether AOC can satisfy its
burden to show a reasonable probability of success on the merits as to the
portions of the SAC that the Court of Appeal held to constitute protected
activity. The allegations at issue are as follows:
“11.
Defendants’ unlawful and unfair competition also includes blatant efforts to
bribe AOC’s patients, including one who will be referred to as ‘Patient 5,’ by
paying them money directly. For instance, Defendant directly paid Patient 5 at
least $500 in gratuitous compensation [allegations of unprotected conduct
omitted]. In exchange for this illegal payment, Defendants persuaded Patient 5
to sign a declaration, [allegations of unprotected conduct omitted], containing
outright misrepresentations and falsehoods about AOC’s business practices.
Defendants’ practice of paying members in exchange for testimony favorable to
Defendants’ own interests is illegal under both state and federal law. [….]
88.
As noted above, AOC recently learned that Regal had paid $500 in cash directly
to one of its own enrollees, known as Patient 5, more than two years after
Patient 5 received emergent and/or urgent services from AOC. AOC first learned
of this fact when counsel for Defendants admitted to making this illegal
payment during an unrelated court proceeding brought by AOC. [….]
91.
AOC is informed and believes that Defendants paid $500 to Patient 5 at least in
part in order to influence Patient 5’s testimony in AOC’s lawsuit against
Regal. [Allegations of unprotected conduct omitted.] [….]
94.
On information and belief, the payment by Defendants constitutes bribery under
California law and is punishable as a felony. Cal. Penal Code § 641.3. On
information and belief, the payment also constitutes bribery under the federal
antigratuity statute. 18 U.SC. § 201(c).
95.
It is highly likely that Defendants’ illegal payment to Patient 5 is merely
part of a larger pattern and practice of paying their own enrollees and members
in order to influence their testimony against AOC – as part of Defendants’
efforts to avoid paying the reasonable and customary value of AOC’s services.
Further discovery will be needed to ascertain the true scope of Defendants’
unlawful scheme to make unsolicited payments to their own patients. [….]
115. [….]
(g)
Violation of Penal Code 641.3, which prohibits the offering or solicitation of
a bribe of $250 or more with corrupt intent, in exchange for the recipient
using his or her position to convey a benefit on the other person;
(h)
Violation of the federal antigratuity statute, 18 U.SC. § 201(c)(2), which
prohibits the payment of anything of value to any person, for or because of
that person’s testimony under oath as a witness upon a trial, hearing, or other
proceeding, before any court; [….]
118.
In order to remedy these unfair and unlawful violations, AOC seeks restitution
and disgorgement of the amounts wrongfully withheld by Defendants, to be
determined at trial.
119.
AOC also seeks an order enjoining Defendants from making illegal patients to
their own members and insureds. [….]
4. [AOC seeks
declaratory relief as to]
(e)
Whether Defendants violate Penal Code Section 641.3 and/or 18 U.S.C. § 102(b)
by paying money directly to their own members and enrollees; [….]”
(See generally SAC.)
“[A]n anti-SLAPP motion, like a conventional motion to
strike, may be used to attack parts of a count as pleaded.” (Baral v.
Schnitt (2016) 1 Cal.5th 376, 393 [emphasis added].) “Thus, in cases
involving allegations of both protected and unprotected activity, the plaintiff
is required to establish a probability of prevailing on any claim for relief
based on allegations of protected activity.” (Id. at p. 395
[emphasis added].) “[C]laims for relief that are based on allegations of
protected activity …. may be stricken only if they lack any merit.” (Id.
at p. 396.) “Allegations of protected activity supporting the stricken claim
are eliminated from the complaint, unless they also support a distinct claim on
which the plaintiff has shown a probability of prevailing.” (Ibid.)
AOC spends the majority of its brief arguing that its claims
can stand without the allegations that comprise protected activity. That is not
the issue here. The issue set forth for the Court’s determination is whether
AOC has a reasonable probability of success as to the allegations that do
constitute protected activity.
“Every person who gives or offers, or promises to give, to
any witness, person about to be called as a witness, or person about to give
material information pertaining to a crime to a law enforcement official, any
bribe, upon any understanding or agreement that the testimony of such witness
or information given by such person shall be thereby influenced is guilty of a
felony.” (Pen. Code, § 137, subd. (a).)
Anyone who “directly or indirectly, gives, offers, or
promises anything of value to any person, for or because of the testimony under
oath or affirmation given or to be given by such person as a witness upon a
trial, hearing, or other proceeding, before any court, … or for or because of
such person’s absence therefrom” is guilty of a federal felony. (18 U.S.C. §
201(c)(2).)
“[I]n order to establish a violation of 18 U.S.C. §
201(c)(1)(A) [a parallel anti-gratuity statute], the Government must prove a
link between a thing of value conferred upon [the person receiving the
gratuity] and a specific ‘official act’ for or because of which it was given.”
(U.S. v. Sun-Diamond Growers of California (1999) 526 U.S. 398, 414.)
California law does not permit liability for communications
relating to lawsuits, except in the case of malicious prosecution. (See Civ.
Code, § 47.) The litigation privilege applies to any communication: (1) made in
judicial or quasi-judicial proceedings; (2) by litigants or other participants
authorized by law; (3) to achieve the objectives of the litigation; and (4)
that have some reasonable relevancy to the subject matter of the action. (Silberg
v. Anderson (1990) 50 Cal. 3d 205, 212.) “It is also well settled that the
absolute privilege … extends to preliminary conversations and interviews
between a prospective witness and an attorney if they are some way related to
or connected with a pending or contemplated action. (Ascherman v. Natanson
(1972) 23 Cal.App.3d 861, 865.)
Regal argues that its payment to Patient 5 is protected by
the litigation privilege. As explained by the Court of Appeal, both the bribery
statute and the anti-gratuity statute require communicative conduct.
(Remittitur at p. 23.) Here, the conduct in question involves communications
with a prospective witness connected with pending litigation. AOC’s claim
asserts that Regal made the $500.00 payment to Patient 5 with the purpose of
influencing Patient 5’s testimony. Both AOC’s bribery theory and its anti-gratuity
theory therefore rely on communicative conduct to achieve the objectives of
litigation.
A plaintiff “may not avoid the bar of section 47(b) by
pleading [a] claim as one for injunctive relief under the unfair competition
statute.” (Rubin v. Green (1993) 4 Cal.4th 1187, 1193.)
The Court therefore concludes that the litigation privilege
applies to bar liability based on the allegations at issue. The Court therefore grants the anti-SLAPP
motion with respect to those allegations. As discussed below, this includes
AOC’s declaratory relief claim, the protected portion of which only alleges
that Regal violated the bribery and anti-gratuity statutes.
As an alternate basis for its ruling, the Court finds that
AOC cannot prevail on the merits of its unfair competition claim as to these
allegations of protected comments because it has provided no evidence that it
suffered damages.
“[O]nly plaintiffs who have suffered actual damage may
pursue a private UCL action. A private plaintiff must make a twofold showing:
he or she must demonstrate injury in fact and a loss of money or property
caused by unfair competition.” (Peterson v. Cellco Partnership (2008)
164 Cal.App.4th 1583, 1590.)
AOC argues that it need not show that Regal’s payment of
$500.00 to Patient 5 – as opposed to the broader collection of unfair practices
alleged in its unfair competition claim – caused damages to AOC. The Court
disagrees. “[I]n cases involving allegations of both protected and unprotected
activity, the plaintiff is required to establish a probability of prevailing on
any claim for relief based on allegations of protected activity.” (Baral
v. Schnitt, supra, 1 Cal.5th at p. 395 [emphasis added].) “Allegations
of protected activity supporting the stricken claim are eliminated from the
complaint, unless they also support a distinct claim on which the plaintiff has
shown a probability of prevailing.” (Id. at p. 396.)
AOC does not point to evidence of damages in its brief, nor
does the record appear to support such a finding. AOC recovered the full fee
that it billed to Regal in the small claims action. It has not identified any
other damages that it suffered.
Regal raises a number of other arguments that AOC has no
reasonable probability of prevailing on the merits. (See Regal’s 6/28/2024 Br. at pp.
16-20.) Because the Court rules in
Regal’s favor on two substantive issues—the litigation privilege and the lack
of proof of damages—the Court does not reach these additional merits issues.
“To qualify for declaratory
relief, a party would have to demonstrate its action presented two essential
elements: (1) a proper subject of declaratory relief, and (2) an actual
controversy involving justiciable questions relating to the party’s rights or
obligations.” (Jolley v. Chase Home
Finance, LLC (2013) 213 Cal.App.4th 872, 909, quotation marks and brackets
omitted.)
A cause of action for declaratory
relief should not be used as a second cause of action for the determination of
identical issues raised in another cause of action. (General of America Insurance Co. v. Lilly (1968) 258 Cal.App.2d
465, 470.) “The availability of another form of relief that is adequate will
usually justify refusal to grant declaratory relief” (California Insurance Guarantee Association v. Superior Court (1991)
231 Cal.App.3d 1617, 1624), and a duplicative cause of action is subject to
demurrer (Palm Springs Villas II
Homeowners Association, Inc. v. Parth (2016) 248 Cal.App.4th 268, 290).
Further, “there is no basis for declaratory relief where only past wrongs are
involved.” (Osseous Technologies of
America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357,
366, quotation marks omitted.)
Paragraph
4(e), the only portion of this claim that is protected, solely seeks
determination of whether Regal violated the bribery statute and the
anti-gratuity statute. The Court therefore finds that AOC has not shown a
reasonable probability of prevailing on its request for declaratory relief laid
out in paragraph 4(e).