Judge Kevin C. Brazile, Case 20STCV41811 2022-10-14 Tentative Ruling

TENTATIVE RULINGS

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STANLEY MOSK COURTHOUSE, DEPARTMENT 20 - JUDGE KEVIN C. BRAZILE

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Motion: Plaintiff’s Motion to Compel Compliance and Compel Further Responses

Ruling: The Motion to Compel Compliance and Further Complete Responses to RFP No. 10, including “Zero Pay Claims” data is GRANTED.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.

This is a fraud case brought by Plaintiffs, Regal Medical Group (“Regal”) and Lakeside Medical Organization (“Lakeside”) (collectively, “Plaintiffs”) who are independent physician associations, against Defendants Dr. Jonathan Nissanoff (“Nissanoff”) and Nissanoff’s medical facility, Advanced Orthopedic Care (“AOC”) (collectively, “Defendants”). Plaintiffs allege that Defendants are guilty of billing fraud because Defendants repeatedly demand that Plaintiffs pay a full billed price that is not customary or reasonable. Plaintiff’s First Amended Complaint (“FAC”) asserts causes of action for: (1) unfair business practices under California Business & Professions Code § 17200; (2) fraud; (3) unjust enrichment; and (4) declaratory relief.

On May 24, 2021, Regal served Defendants with Requests for Production Set One containing Request No. 10. (Amir Decl. ¶ 3.) On March 22, 2022, Regal served Defendants with Requests for Production Set Three containing Requests Nos. 123-125. (Amir Decl. ¶ 10.)

On September 6, 2022, Plaintiff Regal filed this instant motion to compel compliance and compel further and requested monetary sanctions.

On October 7, 2022, Regal filed a reply. Additionally, parties filed a joint stipulation on October 7, 2022, stating that Plaintiffs have agreed to (i) withdraw the Alter Ego Discovery (Request for Production Set Three Nos. 123-125) from the pending motion; (ii) schedule an IDC on the Alter Ego Discovery; and (iii) schedule a hearing date for a separate motion to compel, should the dispute over the Alter Ego Discovery not be resolved by the IDC. (10/07/22 Stipulation and Order re: Advancement of Hearing Date on Plaintiff’s Motion to Compel Further Responses and Production re “Alter Ego” Discovery.)

Thus, this ruling will just be on Plaintiff’s Request to Compel Compliance and Compel Further as to Request for Production Set One No. 10.

“On receipt of a response to a demand for inspection… the demanding party may move for an order compelling further response to the demand if the demanding party deems that…(1) A statement of compliance with the demand is incomplete; (2) A representation of inability to comply is inadequate, incomplete, or evasive…” (Cal. Civ. Proc., § 2031.310(a).) The moving party has the burden to “set forth specific facts showing ‘good cause’ justifying the discovery sought by the inspection demand.” (Cal. Civ. Proc. § 2031.210(b)(1).) To establish such “good cause,” the moving party must make a fact-specific showing of “relevance.” (Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) Upon a showing of “good cause,” the burden shifts to Defendants to justify any objections. (Ibid.)

“If a party filing a response to a demand for inspection,… 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.” (Cal. Civ. Proc., § 2031.320(a).)

A party moving to compel further responses to an inspection demand must include a meet and confer declaration. (Cal. Code Civ. Proc. § 2031.310.) However, a party wishing to compel compliance with a discovery agreement has no obligation to meet and confer. (See Cal. Code Civ. Proc. § 2031.320.)

Defendants allege that Plaintiff failed to comply with the meet and confer requirement because although they met and conferred about previous issues relating to this Request, Plaintiffs did not attempt to meet and confer as to the “completeness” of Defendants latest submission. Namely, Plaintiff’s allege now that Defendant’s latest spreadsheet is incomplete because, upon comparing Defendant’s pay claims spreadsheet with Blue Cross and Blue Shield’s subpoenaed pay claims spreadsheets, Plaintiff found that Defendant had omitted claims. Defendants admit that Plaintiff has met and conferred with respect to the Zero Pay Claims. (Opp. 6:7.)

Plaintiff has filed a concurrent attorney declaration with this Motion. The Declaration states that there were two separate IDCs relating to the paid claims data. (Amir Decl. ¶ 4, 5.) In these IDCs, Defendant agreed to produce a “paid claims” spreadsheet and then promised that the updated spreadsheet reflected a complete set of their paid claim files.

The Court finds that the meet and confer requirement was sufficiently met. Even if Plaintiff did not specifically meet and confer about the current issue with Defendant’s updated spreadsheet, Plaintiff’s previous meet and confer efforts sufficiently set forth the requirements for the spreadsheet and Defendant’s had agreed to comply with the requirements. Thus, as to the completeness issue, Plaintiff is compelling compliance with a previous agreement, which does not have a specific meet and confer requirement.

At issue are Requests for Production Set One No. 10, served on Defendants on May 24, 2021. (Amir Decl. ¶ 3.) This Request for Production asks Defendant to produce “All of YOUR ‘paid claims files’ (preferably in electronic or spreadsheet form) for any medical services YOU have rendered from January 1, 2015 to present.” (Amir Decl. Exh. 1.) The complete and accurate “paid claims” data that Plaintiffs are seeking consists of a spreadsheet containing: (1) data concerning patient claims where some payment was made by a health plan or payor, and (2) data concerning patient claims where health plans or payors paid nothing at all for Defendants’ billed services (“Zero Pay Claims”).

Plaintiffs state that after a meet and confer process and an IDC with the Court in December 2021, Defendants agreed to produce a complete paid claims spreadsheet. (Amir Decl. ¶ 4.) On March 8, 2022, Defendants produced this spreadsheet. After Defendant produced this information, Plaintiff found that it was incomplete because Defendant failed to provide certain fields of information and omitted certain claims, including the Zero Pay Claims. (Id.)

At an IDC on May 11, 2022, Plaintiffs state that the Court indicated that, should Regal file a motion to compel, the Court likely would grant the motion as to certain missing fields of information, but deny it as to the Zero Pay Claims. (Amir Decl. ¶ 5.) Defendants state that the court believed that the zero-pays were not relevant to the issues and presented a risk of confusing the jury. (Chan Decl. ¶ 11.) Defendants agreed to produce an updated paid claims spreadsheet and produced one on August 5, 2022. (Amir Decl. ¶ 5.) However, after issuing subpoenas to Blue Cross and Blue Shield to compare the data, Regal found that the spreadsheet was allegedly missing hundreds of claims. (Amir Decl. ¶ 6.)

In non-contracted billing cases, the law allows a provider to recover the “reasonable and customary value” of the services, which is determined by analyzing the relevant market. (Cal. Code Regs. tit. 28, § 1300.71; Children’s Hospital Central California v. Blue Cross of California (2014) 226 Cal.App.4th 1260, 1274.) Plaintiffs argue that paid claims data, including the Zero Pay Claims, is relevant to the “reasonable and customary value” issue because this data contains files with rows of billing codes reflective of each instance where the doctor billed others for the same services at issue, how much the doctor charges for those services, and how much (if anything) health plans historically have paid for such services. (Motion 9:1-9.)

Regal cites to Children’s Hospital, which states that “relevant evidence [to the issue of the reasonable and customary value of the services] would include the full range of fees that Hospital both charges and accepts as payment for similar services.” (Children’s Hospital, supra, 226 Cal.App.4th at 1275.) Regal argues that this “full range of fees” includes the Zero Pay Claims because they are part of the full range of fees others believe that Defendants’ billed services are worth. Plaintiff also believes that this data may show that other payors have ascribed zero value to services and refused to make any payment. (Motion 14:10-17.)

Regal believes that the Zero Pay Claims data is relevant to proving unfair and fraudulent business practices because Regal alleges that Defendants have billed certain improper codes and the Zero Pay Claims data will show that other payors do not reimburse Defendants for these codes. Thus, it will be relevant to industry practice of these improper codes. (Motion 15:3-12.)

In response Defendant argues, along with insufficient meet and confer addressed above, that (1) Plaintiff cannot compel Defendant to create a document, only produce an existing one, and the request is unduly burdensome; (2) Plaintiff failed to consider the lack of overlapping time frames when concluding that the spreadsheet was incomplete; (3) because the Court said it would likely not consider the Zero Pay Claims relevant, Defendants should not be compelled to produce them; and (4) the information sought is irrelevant. The Court finds each of Defendants arguments fail.

Defendant first argues that Plaintiff cannot compel Defendants to create a document, only produce an existing one. However, Defendants admit they have already created a spreadsheet and, in reply, Plaintiff argues that they are merely seeking compliance with an agreement to produce a complete set of paid claims data.

The Court finds that, because Defendants have agreed to create the spreadsheet showing all the “paid claims data for two years before filing the Complaint,” (Chan Decl. Exh. D.), they are obligated to provide a complete document with all of the paid claims for this period. A document omitting certain payments that are not favorable to Defendant would defeat the relevance and purpose of Plaintiff’s discovery request because Plaintiff is seeking this information so they can determine the reasonable and customary payments made. Thus, they need a full and complete document for all paid claims for this two-year period, without omissions. Additionally, Defendants cite to no authority that would provide justification for them to not create a document that they had agreed to produce. Defendants allege that because this request to recreate the spreadsheet is burdensome, Plaintiff could obtain this information through subpoena of various health plans, as they did with Blue Cross and Blue Shield. The Court finds that it would be much more burdensome for Defendant to have to subpoena the remaining eight payors than for Defendant to have to comply with its agreement to produce this data.

Defendants allege that Plaintiff failed to consider the lack of overlapping time frames when Plaintiffs concluded that discovery was incomplete. Blue Cross and Blue Shield include data from January 2018 to December 2021, while Defendants data includes only data from July 2019 to December 2020. (Compare Amir Decl. Exh. G, H to Exh. I.) However, Plaintiff’s counsel has referenced discrepancies that appear within the appropriate two-year time frame. For instance, Plaintiff’s counsel points out a discrepancy on July 26, 2019, and again references the applicable time period stating that “while Defendant’s spreadsheet identified only 37 instances where Blue Shield reimbursed Defendants for services to Blue Shield members, Blue Shield’s spreadsheet for the same time period identified 136 separate instances.” (Amir Decl. ¶ 6 (emphasis added).) Defendants do not dispute these discrepancies, nor do they assert in the Opposition that they did not omit certain claims.

Defendants also state that their spreadsheet does not include “Zero Pay Claims” because at the IDC on May 11, 2022, the Court informed Plaintiff that it was not inclined to grant their request for “Zero Pay Claims” because they were not relevant and had potential to confuse a jury. Defendants assert that Zero Pay Claims are not necessarily indicative of the value of services rendered because a zero-paid claim can result from any number of circumstances, including third party liability, application of deductibles, and patient liability; it does not represent that a service was deemed worthless. However, Regal believes that the Zero Pay Claims data is relevant to proving unfair and fraudulent business practices because Regal alleges that Defendants have billed certain improper codes and the Zero Pay Claims data will show that other payors do not reimburse Defendants for these codes. (Motion 15:3-12.)

The Court finds that the Zero Pay Claims data is relevant, even if it is not necessarily admissible. At the discovery stage, admissibility at trial is not required. Rather, the test is whether information sought might reasonably lead to other evidence that would be admissible. (Cal. Code Civ. Proc., § 2017.010.) The Court finds that these Zero Pay Claims are relevant because they could show that Defendants have previously billed improper codes and not gotten reimbursement for these codes. This would show Defendants knowledge of the improper nature of these codes. Even if the Court finds that the Zero Pay Claims are misleading to a jury and could not come in as evidence during trial, the Court finds that the Zero Pay Claims could still lead to admissible evidence.

Finally, Defendants allege that this information is not relevant to Plaintiff’s fraud claim because whether the fees exceed the “reasonable and customary” value of the services does not constitute fraud. However, Defendants have previously agreed to produce this same data that they now are arguing is irrelevant. Thus, the Court does not consider this argument.

Cal. Code Civ. Proc., §§ 2031.310(h) and 2031.320(b) state that “the court shall impose a monetary sanction against any party who unsuccessfully makes or opposes a motion to compel [further response/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.”

Plaintiff requests monetary sanctions in the amount of $5,727.00, as reasonably incurred by Regal in connection with this motion. (Amir Decl., ¶ 18.) The $5,727.00 consists of: (a) filing fee for the Motion of $40.00; (b) three hours to conduct the meet-and-confer process, at a rate of $517.00 per hour; (c) five hours to prepare and file the motion; and (d) three hours to prepare the reply and prepare and attend the hearing. Defendant has not argued substantial justification for failing to comply with the discovery request. The Court awards the Plaintiff five hours total to file the motion, reply, and prepare for the hearing at a billing rate of $517.00 per hour, totaling $2,625.

The Motion to Compel Compliance and Further Complete Responses to RFP No. 10, including “Zero Pay Claims” data is GRANTED.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.

Motion: Plaintiff’s
Motion to Seal Unredacted Declaration of Michael M. Amir Filed in Support of
Plaintiffs’ Motion to Compel

If counsel do not
submit on the tentative, they are strongly encouraged to appear by
LACourtConnect rather than in person due to the COVID-19 pandemic.

This is a fraud case brought by
Plaintiffs, Regal Medical Group (“Regal”) and Lakeside Medical Organization
(“Lakeside”) (collectively, “Plaintiffs”) who are independent physician
associations, against Defendants Dr. Jonathan Nissanoff (“Nissanoff”) and Nissanoff’s
medical facility, Advanced Orthopedic Care (“AOC”) (collectively,
“Defendants”). Plaintiffs allege that Defendants are guilty of billing fraud
because when one of Plaintiffs’ members receives treatment from Defendants,
Defendants demand that Plaintiffs pay a full billed price that is not customary
or reasonable. In a related case, AOC asserts that Regal underpaid on four
specific patient claims. Plaintiff’s
First Amended Complaint (“FAC”) asserts causes of action for: (1) unfair
business practices under California Business & Professions Code § 17200;
(2) fraud; (3) unjust enrichment; and (4) declaratory relief.

On September 6, 2022, Plaintiff
Regal filed a motion to compel further responses to a Request for Production.
Plaintiff additionally filed a Unredacted Declaration in Support of the Motion
to Compel. Plaintiff now moves to seal this Unredacted Declaration.

¿¿The presumption of open access to court records does
not apply to “records that are required to be kept confidential by law.”¿(Cal.
Rules Court, rule 2.550(a)(2).)¿A party seeking to seal a court record or
seeking to file a record under seal must do so by motion or application
supported by a declaration showing facts justifying the record’s sealing.¿¿(Id.,
rule 2.551(b)(1).)¿¿

California
Rules of Court rule 2.550(d) states: “The court may order that a record be
filed under seal only if it expressly finds facts that establish:¿

(1) There exists an overriding
interest that overcomes the right of public access to the record;

(3) A substantial probability
exists that the overriding interest will be prejudiced if the record is not
sealed;¿

Once
sealed, a record can only be unsealed by order of court.¿¿(Id., rule
2.551(h)(1).)¿¿So long as it remains under seal, all parties must refrain from
filing anything not under seal that would disclose the sealed matter.¿¿(Id.,
rule 2.551(c).)¿¿If a party files a new document referring to sealed matter, it
must submit an unredacted version of the document under seal and a redacted one
for the public record.¿¿(Id., rule 2.551(b)(5);¿H.B. Fuller Co. v.
Doe¿(2007) 151 Cal.App.4th 879, 889.)¿

Plaintiff
wishes to seal the unredacted Declaration of Michael M. Amir in support of
Plaintiff’s Motion to Compel Production and Exhibits G, H, and I attached to
the Declaration. This unredacted Declaration and the referenced Exhibits
contain paid claims data from Defendants, Blue Shield, and Blue Cross.

Plaintiff asserts that the documents contain personal
medical information that is protected under HIPAA and California’s
Confidentiality of Medical Information Act.

Plaintiff’s
memorandum complies with the requirements of Rules 2.550 and 2.551. The parties
have also entered a Stipulated Protective Order with the Court that any
Confidential Materials should be sealed pursuant to rules 2.550 and 2.551 and
amended the Protective Order to specifically include the disclosure of
confidential payment rates. (Amir Declaration Exhs. 1-2.) Additionally,
Defendants have filed a notice that they do not take any position on the
Application to Seal, but they do not oppose the motion. (Non-Opposition to
Application to Seal Unredacted Declaration.)

The Motion to Seal Unredacted Declaration of Michael M.
Amir Filed in Support of Plaintiffs’ Motion to Compel, and Exhibits G, H, and I
Attached is GRANTED