Judge Randolph M. Hammock, Case Number: 22STCV11349, Date: 2024-11-20 Tentative Ruling

Plaintiff Allstate Insurance Company brings this action on behalf of itself and the State of California under the California Insurance Frauds Prevention Act and the Unfair Competition Law. Plaintiff alleges that Defendants Jaklin Benji, Mathew Rashidi, Michael Rashidi, Precise MRI Corp., and Yokhevet, LLC—who are not licensed medical professionals—acted as “MRI brokers” to connect injured persons with legitimate MRI facilities. Defendants would pay the MRI facilities a fee for the MRI services, and then turn around and bill insurers like Allstate at a substantial markup, falsely representing that they had conducted the MRI services themselves. Plaintiff alleges that Defendant radiologists Ranon Udkoff, M.D. and Stuart E. Strausberg, D.O. aided this scheme by conducting or reviewing MRIs, but permitting the other unlicensed Defendants to pass-off the services as their own at a substantial upcharge. Plaintiff brings causes of action against all Defendants for (1) violation of California Insurance Code section 1871.7 and (2) violation of the UCL.

Rockpoint’s Motion to Quash is GRANTED IN PART AND DENIED IN PART. Rockpoint is ordered to produce: (1) all agreements between Rockpoint and Precise MRI; (2) all communications between Rockpoint and Precise MRI where such agreements are directly referenced; and (3) any communications wherein Rockpoint recommended or suggested a patient use Precise MRI’s facilities from January 1, 2016 onward.

A court may quash a subpoena entirely or partially, and issue an order to protect parties, witnesses or consumers from unreasonable or oppressive demands including violations of privacy. (Code Civ. Proc., § 1987.1.) A motion to quash the production of documents or tangible things requires a separate statement. (Cal. Rules of Court, rule 3.13459(a)(5).) “[U]pon motion reasonably made by the party, judges may rule upon motions for quashing, modifying or compelling compliance with, subpoenas.” (Lee v. Swansboro Country Property Owners Ass'n (2007) 151 Cal.App.4th 575, 582-583.)

Non-party Rockpoint moves to quash the deposition subpoena issued on August 7, 2024. The Subpoena at issue seeks 27 categories of documents related in some manner to dealings between Rockpoint and Defendants going back to January 1, 2016. (Kohli Decl., Exh. 1; Separate Statement.)

In this case, Plaintiff alleges a scheme by Defendant Benji, the Rashidis, and the entities they controlled to defraud insurance companies by billing for MRI services that Defendants themselves did not (and legally could not) provide. (FAC ¶¶ 54-57.) Plaintiff also alleges Defendants are “the alter ego of Precise and of Yokhevet.” (Id. ¶¶ 28-31.)

By its own description, Rockpoint “provides litigation funding in personal injury disputes.” (Mtn. 1: 3-4.) “Among other things, Rockpoint buys receivables—the right to monetary proceeds—from those ‘suppliers’ and ‘providers’ who provide services on a medical lien to litigants. If and when a personal injury case is resolved (through settlement or litigation),

In support of its motion to quash, Rockpoint argues there is no “good cause” for the subpoena, that the subpoena is unduly burdensome, violates HIPAA and the constitutional right to privacy, and seeks confidential and sensitive information. Rockpoint suggests that Plaintiff is using the discovery to uncover new targets for its qui tam actions. [FN 1]

Plaintiff opposes the motion. It is Plaintiff’s position that Rockpoint is one of the patient sources that referred patients to Precise under lien-based transactions for Precise’s unlicensed and improper medical services. (Hasegawa Decl., ¶¶ 3, 4, Exhs. A & B.) “It is thus likely,” Plaintiff suggests, “that Rockpoint paid Precise for the sham services alleged in the Complaint, and in return, Precise allowed Rockpoint all rights to payment.” (Opp. 7: 7-9.) Therefore, Plaintiff contends the records sought by subpoena are “directly relevant to key issues, such as how Defendants’ fraud scheme operated and what role Rockpoint had in the scheme.” (Opp. 1: 4-5.) Plaintiff argues it is entitled to determine whether Rockpoint participated in the alleged scheme, that the “compelling interest” in production outweighs any privacy rights, and that Plaintiff has been unable to obtain the documents from the Defendants directly. Plaintiff also argues that to the extent any patient privacy rights exist, they will be adequately protected by the protective order in place.

Evidence is relevant if it “ha[s] any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action.” (Evid. Code § 210.) “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (CCP § 2017.010; Davies v. Superior Court (1984) 36 Cal.3d 291, 301 [“discovery is not limited to admissible evidence”].)

As to the privacy objections, “[t]he party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citation.] The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” (Williams v. Superior Ct. (2017) 3 Cal. 5th 531, 552.)

Here, the court would agree that the subpoena seeks relevant information in part. However, its current scope is unduly broad. The relevant question is how the fraud scheme operated. Any agreements between Rockpoint and Precise MRI would likely bear on this question. Thus, the subpoena is appropriate to the extent it seeks documents of this type. However, Plaintiff has failed to articulate the relevancy of the subpoena beyond this scope.

With that in mind, this court believes that Defendant has offered a reasonable compromise in its Reply. Defendant proposes that the Court limit the Subpoena by only requiring Rockpoint to produce: (1) agreements between Rockpoint and Precise MRI; (2) communications between Rockpoint and Precise MRI where such agreements are directly referenced; and (3) any communications wherein Rockpoint recommended or suggested a patient use Precise MRI’s facilities.

This modification to the Subpoena strikes a balance between the discovery of potentially relevant documents with the right of privacy of Rockpoint and third-party patients. When balancing the third-parties’ privacy interests against Plaintiff’s interest in discovering documents that are particularly relevant to its claims, this court find’s the balance shifts in favor of disclosure. While the third parties have a recognized privacy interest in the records, these categories are relevant and not overbroad in light of the circumstances and allegations in the complaint. This conclusion is consistent with the legislature’s “very liberal and flexible standard of relevancy,” such that any “doubts as to relevance should generally be resolved in favor of permitting discovery.” (Williams, supra, 3 Cal. 5th at 542.)

Accordingly, Rockpoint’s Motion to Quash is GRANTED IN PART AND DENIED IN PART. Rockpoint is ordered to produce: (1) all agreements between Rockpoint and Precise MRI; (2) all communications between Rockpoint and Precise MRI where such agreements are directly referenced; and (3) any communications wherein Rockpoint recommended or suggested a patient use Precise MRI’s facilities from January 1, 2016 onward.

In making an order pursuant to California Code of Civil Procedure section 1987.1, “the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney's fees, if the court finds the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.” (Code Civ. Proc., § 1987.2, subd. (a).)

Judge of the Superior Court

FN 1 - Indeed, Plaintiff essentially concedes this in opposition where it contemplates naming Rockpoint as a Doe defendant. (Opp. 7: 21-22.) Be that as it may, that fact doesn’t necessarily invalidate the subpoena, as this is a proper use of a third-party records subpoena.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.