Case Number: BC656651 Hearing Date: October 28, 2019 Dept: 61

Plaintiff People of the State of California ex rel. State Farm Mutual Automobile Insurance Company’s Motion to Compel Further Responses to Requests for Production of Documents, Set One, from Defendants Hedayat Golcheh, M.D. and Ventura Imaging & Radiology Center, Inc., is GRANTED. Sanctions are awarded against Defendants and their counsel in the amount of $3,864.

MOTION TO COMPEL FURTHER – PRODUCTION OF DOCUMENTS

“A party may demand that any other party produce . . . a document that is in the possession, custody, or control of the party on whom the demand is made.” (Code Civ. Proc., § 2031.010(b).) 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, or (3) an objection in the response is without merit or too general. (Code Civ. Proc., § 2031.310(a).) “The motion shall set forth specific facts showing good cause justifying the discovery sought by the demand,” and “[t]he motion shall be accompanied by a meet and confer declaration under Section 2016.040.” (Code Civ. Proc., § 2031.310(b).)

A motion to compel a further response to an inspection demand must set forth specific facts showing “good cause” justifying the discovery sought by the inspection demand. (Code Civ. Proc., § 2031.310(b)(1); Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) Unless there is a legitimate privilege issue or claim of attorney work product, that burden is met simply by a fact-specific showing of relevance. (TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 444.) Once the moving party demonstrates good cause for the discovery, the burden is on the responding party to justify any objection or failure to fully respond to the inspection demand. (Coy v Superior Court (1962) 58 Cal.2d 210, 220.)

State Farm seeks further responses to Requests No. 2, 5, 16, 19, 20, and 26, from defendants Golcheh and Ventura. These requests are as follows:

Request No. 2 (Ventura and Golcheh): All DOCUMENTS RELATED to any claims presented or submitted to any insurer for SERVICES YOU provided to any patient who also received any SERVICES from any other DEFENDANT, including but not limited to all COMMUNICATIONS, medical records, test results (including raw data, reports, films, and interpretations), notes, bills, referrals for treatment, referrals for consultations, referrals for testing, sign-in sheets, prescriptions, disability determinations, and orders for each patient RELATED to those claims.

Request No. 5 (Ventura and Golcheh): All DOCUMENTS reflecting PAYMENTS made to or received from any DEFENDANT, or their owners, officers, employees, or agents.

Request No. 16 (Ventura and Golcheh): All DOCUMENTS RELATED to any PAYMENTS YOU made to or received from any PERSON RELATED to any referral for SERVICES.

Request No. 19 (Ventura): All DOCUMENTS comprising YOUR financial records, including but not limited to financial statements, general ledgers, income ledgers, journals, balance sheets, profit and loss statements, income statements, cash flow statements, accounting records, accounts payable and receivable, aging reports, bank statements, and any reconciliations prepared for or by YOU. If YOUR general ledgers or any other accounting documents are kept in electronic form such as QuickBooks, please produce those ledgers or DOCUMENTS in electronic form.

Request No. 20 (Ventura): All DOCUMENTS RELATED to any banking or financial accounts controlled, owned, managed, or otherwise used by YOU or for YOUR benefit, including but not limited to all bank, trust, savings, checking, money market, or other accounts into which funds were deposited or from which funds were withdrawn by YOU or someone else on YOUR behalf or at YOUR direction.

Request No. 26 (Golcheh and Ventura): All DOCUMENTS RELATED to any COMMUNICATIONS by, between, or among YOU and any agent or representative of any insurer RELATED to diagnostic testing, including but not limited to x-ray or MRI services.

State Farm first argues Ventura and Golcheh waived objections to these requests by serving late responses. (Motion at p. 4.) State Farm then argues that for Request No. 2, regarding patient documents, Ventura and Golcheh have agreed to produce documents for patients who have filed claims with State Farm, but have declined to produce documents for other insurers. (Motion at p. 1.) State Farm argues that it is entitled to medical records related to other claims because its qui tam action is not limited to claims fraudulent brought against itself. (Motion at p. 1, citing Ins. Code § 1987.7, subd. (b).) State Farm also argues that Requests No. 5, 16, and 26 are relevant because they will show whether Ventura provided anything of value to the providers who referred patients to it, as well as the identity of the actual MRI providers. (Motion at p. 12.) Finally, State Farm argues that Requests No. 19 and 20, which have been narrowed to seek only Ventura’s “general ledgers and profit and loss statements” (Motion at p. 4, fn. 8), are relevant to show Ventura’s intent as well as the profits of its alleged fraud. (Motion at p. 14.)

Ventura responds in opposition that it cannot determine whether a given patient submitted a claim to an insurer, and release of medical records for patients who did not submit claims to State Farm would violate their privacy rights. (Opposition at pp. 3–4.) Ventura also argues that Request No. 5 seeks payroll information of its employees, which violates the employee’s right to privacy as to that information. (Opposition at pp. 4–5.) Ventura also argues that Request No. 26, which seeks communications with insurers regarding the provision of x-ray or MRI services, is overbroad and unduly burdensome because all such communications will likely involve those services. (Opposition at pp. 5–6.) Ventura finally argues that its profit and loss ledgers are not discoverable because State Farm essentially seeks premature financial discovery for the purpose of establishing punitive damages. (Opposition at pp. 6–9.)

As an initial matter, the court notes that Ventura presents no arguments as to why its objections are not waived for being untimely served. The requests were served on March 14, 2018, and the agreed deadline for response was extended to May 18, 2018. (Fawaz Decl. ¶¶ 2–3.) Defendant Calvin Yang’s anti-SLAPP motion and subsequent appeal triggered a stay of discovery on May 7, 2018, but the stay was lifted with the dismissal of the appeal on April 10, 2019, meaning the new discovery deadline was April 22, 2019. (Fawaz Decl. ¶ 4.) But Ventura failed to serve responses until June 28, 2019. (Fawaz Decl. ¶ 5.) Untimely discovery responses waive objections to the discovery requests. (See Code Civ. Proc. § 2031.300, subd. (a).) Ventura has not explained why its objections are not waived here.

Even if not waived, the objections lack merit. As to the request for patient information for those who submitted claims to insurers other than State Farm, State Farm persuasively argues that its qui tam claims are not limited only to those claims filed with itself, since in a qui tam action under Insurance Code § 1871.7 the State of California is the real party in interest. (See People ex rel. Strathmann v. Acacia Research Corp. (2012) 210 Cal.app.4th 487, 491–92.) State Farm’s claims are thus not limited to its own injury.

Ventura argues that patients who submitted claims with other insurers have not waived the right to privacy in their medical records as to State Farm. (Opposition at p. 4.) But while they might not have waived their privacy rights with respect to State Farm, the context of this action as a qui tam action ostensibly brought to vindicate the public’s interest in fighting medical insurance fraud is significant counterweight to the privacy interests involved. (See Fett v. Medical Bd. of California (2016) 245 Cal.App.4th 211, 224–25 [allowing state disciplinary board to access medical records to investigate negligence of medical provider].) And the court understands that these records are necessary to analyze the full scope of Ventura’s referral business. (Motion at p. 10.) Moreover, State Farm has presented evidence that the most private information contained in the medical records sought is that contained in various MRI reports. (Motion at p. 9; Fawaz Decl. ¶ 5.) The documents sought thus do not necessarily implicate the full extent of privacy protections of which medical records are capable. (Se Snibbe v. Superior Court (2014) 224 Cal.App.4th 184, 196 [documents that showed “information about the patients’ health and ailments, such as the type of surgery performed or type and dosage of pain medication ordered” did not “reveal particularly sensitive or embarrassing information”].) Finally, the court notes that the existence of a protective order in this case helps to safeguard the privacy interests of patients implicated in this matter.

Ventura finally argues that it has no way to glean from its records whether any patient’s claim has been presented to an insurer. (Golcheh Decl. ¶ 4.) But if Ventura or Golcheh are unable to comply with a particular discovery demand, they may serve a statement of inability to comply under Code of Civil Procedure § 2031.230.

Ventura also argues that Request No. 5 would require it to disclose payments to employees. (Opposition at pp. 4–5.) Ventura presents no authority for the proposition that such information is subject to a reasonable expectation of privacy, and the court finds in any event that what privacy interests exist in such information is mitigated by the existence of the protective order. Additionally, the request is supported by good cause because information as to what entities made payments to or received payments from Ventura is relevant to assess the scope of its alleged kickback scheme.

Ventura argues that Request No. 26 (or No. 24 as directed to Golcheh) is overbroad because it concerns communications with insurers related to MRIs or x-rays, around which Ventura’s business revolves. (Opposition at pp. 5–6.) But the court finds that the broad substantive scope of the documents requested is mitigated by the limited context; the request does not seek all communications or all documents related to these services, but only communications with insurers.

Ventura finally argues that Request No. 20 is overbroad because it seeks discovery of its financial condition prematurely under Civil Code § 3295. (Opposition at pp. 6–9.) State Farm argues that the discovery — specifically limited to general ledgers and profit and loss statements — is relevant to show the profitability of Ventura’s allegedly fraudulent practices, and relatedly whether such practices were necessary for Ventura to be profitable, going to show its intent to commit the practices. (Motion at p. 14.)

The court agrees with State Farm that in this case, Ventura’s profit and loss statements and general ledgers are relevant to prove fraudulent intent or a motive to commit fraud. (See People v. Freeman (1955) 135 Cal.App.2d 11, 14 [evidence that defendant “was heavily in debt” was relevant to support conviction for arson committed for the purpose of insurance fraud]; see also Boston Ins. Co. v. Jenson (9th Cir. 1958) 259 F.2d 482, 484 [when seeking to prove insurance fraud, “bad financial condition can be shown as a motive for such conduct”].)

Accordingly, State Farm’s Motion to Compel Further is GRANTED.

SANCTIONS

Statute provides that the court shall impose sanctions upon a party who unsuccessfully makes or opposes a motion to compel further response to interrogatories or requests for production of documents, absent substantial justification otherwise. (Code Civ. Proc. §§ 2030.300, subd. (d); 2031.310, subd. (h).)

State Farm asks for $4,181.00 in sanctions, representing twelve hours of attorney work at $317 per hour, plus a $60 filing fee. (Fawaz Decl. ¶ 14.) The court does not see substantial justification for opposing the motion as it appears objections have been waived due to the late response. However, since the calculation of the above hours worked yields an amount of only $3,864.00, no sanctions will be awarded in excess of this amount.

The court awards $3,864 in sanctions to State Farm against Defendants and their counsel.