Case Number: BC681073 Hearing Date: August 09, 2018 Dept: 37

CASE NAME: People of the State of California, ex rel. State Farm Mutual Automobile Insurance Company v. Beverly Hills Center for Arthroscopic and Outpatient Surgery, LLC, et al.

CASE NO.: BC681073

HEARING DATE: 8/9/18

DEPARTMENT: 37

CALENDAR NO.: 12

FILING DATE: 10/26/17

TRIAL DATE: None

NOTICE: OK

SUBJECT: Application to Appear as Counsel Pro Hac Vice

MOVING PARTY: Defendants Beverly Hills Center for Arthroscopic and Outpatient Surgery, LLC and Shirin Hekmat, M.D.

OPPOSING PARTY: Plaintiff People of the State of California, ex rel. State Farm Mutual Automobile Insurance Company
COURT’S TENTATIVE RULING

The court DENIES the motion. Counsel for Plaintiff to give notice.
STATEMENT OF THE CASE

This case arises from allegations that Defendants Beverly Hills Center for Arthroscopic and Outpatient Surgery, LLC (“Beverly Hills”), Shirin Hekmat, M.D. (“Hekmat”) and Toby Robinson (“Robinson”) knowingly prepared and presented, or caused to be prepared and presented, false and fraudulent insurance claims to Plaintiff and Relator State Farm Mutual Automobile Insurance Company (“State Farm”). Plaintiff brings this action pursuant to Insurance Code, section 1871.7, subdivision (e)(1) which allows any interested person to bring a civil action on behalf of the State of California.

In the Complaint, Plaintiff alleges two causes of action for: (1) violation of Insurance Code, § 1871.7(b) against Hekmat and Robinson and (2) violation of Insurance Code, § 1871.7(b) against Beverly Hills and Robinson.

Defendants Beverly Hills and Hekmat (collectively the “Moving Defendants”) now specially move to strike the Complaint pursuant to Code of Civil Procedure, section 425.16 (“anti-SLAPP motion”). Plaintiff opposes the motion.
DISCUSSION
I. Legal Standard

Code of Civil Procedure section 425.16 sets forth the procedure governing anti-SLAPP motions.[1] In pertinent part, the statute provides: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike (“anti-SLAPP motion”), unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16, subd. (b)(1).) The purpose of the statute is to identify and dispose of lawsuits brought to chill the valid exercise of a litigant’s constitutional right of petition or free speech. (§ 425.16, subd. (a); see Sylmar Air Conditioning v. Pueblo Contracting Servs., Inc. (2004) 122 Cal.App.4th 1049, 1055-1056.)

Courts employ a two-step process to evaluate anti-SLAPP motions. (Equilon Enters. v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) To invoke the protections of the statute, the defendant must first show that the challenged lawsuit arises from protected activity, such as an act in furtherance of the right of petition or free speech. (Ibid.) From this fact, courts “presume the purpose of the action was to chill the defendant’s exercise of First Amendment rights.” (Id. at p. 61.) “It is then up to the plaintiff to rebut the presumption by showing a reasonable probability of success on the merits.” (Ibid.) In determining whether the plaintiff has carried this burden, the trial court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (Code Civ. Proc., § 425.16, subd. (b)(2); see Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.) “When assessing the plaintiff’s showing, the court must also consider evidence that the defendant presents.” (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 585.) “The court does not, however, weigh that evidence against the plaintiff’s, in terms of either credibility or persuasiveness. Rather, the defendant’s evidence is considered with a view toward whether it defeats the plaintiff’s showing as a matter of law, such as by establishing a defense or the absence of a necessary element. [Citation.]” (Ibid.)
II. Analysis
A. First Prong: Whether the Alleged Conduct Arises From Protected Activity

Code of Civil Procedure, section 425.16, subdivision (e) provides in relevant part that “act[s] in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue” include: “(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law . . . .” (Code Civ. Proc. § 425.16, subds. (e)(1)-(2).) This provision “broadly encompasses participation in official proceedings, generally, whether or not such participation remains strictly focused on ‘public’ issues,” and is to be construed broadly. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1118; see also Code Civ. Proc., § 425.16, subd. (a).)

As the party bringing the anti-SLAPP motion, the Moving Defendants bear the initial burden to demonstrate that the challenged claims arise from protected activity. (Code Civ. Proc, § 425.16, subd. (b).) The court independently reviews the allegations of the Complaint to determine whether the challenged claims arise from protected activity. “[T]he anti-SLAPP statute’s definitional focus is not the form of the plaintiff’s cause of action but, rather, the defendant’s activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 393 (Baral).) “Determining whether a cause of action arises from protected speech or petitioning activity requires a focus on the principal thrust or gravamen of the cause of action. If the allegations of protected activity are merely incidental to a cause of action based essentially on nonprotected activity, the allegations will not transform the nonprotected cause of action into an action subject to the anti-SLAPP law. . . . Instead, courts are to focus on the acts on which liability is alleged to be based.” (People ex rel. Fire Ins. Exchange v. Anapol (2012) 211 Cal.App.4th 809, 823 (Anapol), emphasis in original.)

The Court of Appeal directly addressed the question of whether the presentation of insurance claims can constitute protected conduct under the anti-SLAPP statute in Anapol. (Id. at 211 Cal.App.4th at pp. 826-827. The Anapol Court held that the issue is not whether an insurance claim in the abstract constitutes protected prelitigation activity as a matter of law, but the determination must be made based on the circumstances of the claim. (Id. at p. 827.) “[T]he submission of contractual claims for payment in the regular course of business is not an act in furtherance of the right of petition. [Citation.] However, when the claim is submitted under circumstances demonstrating that the claim was not submitted for payment in the regular course of business, but was instead merely a necessary prerequisite to expected litigation or was submitted as the equivalent of a prelitigation demand letter, it may constitute protected petitioning activity.” [2] (Ibid., internal quotation marks omitted; see also id. at p. 825, citing People ex rel. 29th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.4th 280, 285 [“If we protect the reports and claims under [Code of Civil Procedure] section 425.16 because they eventually could be used in connection with an official proceeding, we would effectively be providing immunity for any kind of criminal fraud so long as the defrauding party was willing to take its cause to court. Defendants have cited nothing to us that demonstrates the anti-SLAPP law embraces such actions. We are satisfied it does not.”].)

The Moving Defendants contend that Plaintiff’s causes of action arise from protected activity because the claims attached to the Complaint were either presented or caused to be presented for injury claims against State Farm insureds either as a potential plaintiff’s claim for medical damages or in a litigation which alleged medical damages. (Mot. 2.) The Moving Defendants point to portions of the Complaint that identify admissions that were allegedly made by nonparty Samuel Seelig, M.D. (“Seelig”) at deposition as evidence that the insurance claims in question were presented in litigation. (Mot. 2-4, citing Compl. ¶ 42; see also Compl. ¶ 23.) According to the Moving Defendants, the insurance claims constitute protected conduct because the first party claimant and claimant’s counsel presented the claims as a “necessary prerequisite to obtaining performance under the insurance contract.” The court disagrees.

As explained in Baral, the focus of the anti-SLAPP statute is “the defendant’s activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.” (Baral, supra, 1 Cal.5th at p. 393, emphasis added; see also Anapol, 211 Cal.App.4th at p. 823.) In the case at hand, the alleged conduct by Defendants that gives rise to liability in this matter is the Moving Defendants’ alleged submission of false claims to State Farm in violation of Insurance Code, section 1871.7, subdivision (b)—not any conducted by the insureds. (See Compl. ¶¶ 66-76.) [3] That these claims subsequently became the subject of litigation in personal injury claims does not demonstrate that the Moving Defendants’ submission the insurance claims was conducted as a necessary prerequisite to expected litigation or as the equivalent of a prelitigation demand letter rather than for payment in the regular course of business. (See Anapol, supra, 211 Cal.App.4th at p. 827.) The claims at hand differ from the circumstances identified by Anapol as examples where insurance claims could be submitted in anticipation of litigation contemplated in good faith and under serious consideration, such as where a claim is submitted after informal negotiations with the insurance company have proven unfruitful, and the insured has already decided to bring suit on the policy or where a claim is submitted after an insured has already been informed that its claim will be denied. (Ibid.) In contrast, Moving Defendants allegedly submitted the insurance claims in question for reimbursement; this does not constitute protected prelitigation activity by the Moving Defendants—regardless of any litigation that subsequently occurred involving the insureds.

As the moving party, the Moving Defendants bear the burden to demonstrate that their conduct in connection with the insurance claims in question constitute protected prelitigation conduct. Here, the Moving Defendants have not met that burden. That the insurance claims may have subsequently become at issue in personal injury litigation between the insured is insufficient to establish that the Moving Defendants submitted the insurance claims merely as a necessary prerequisite to expected litigation rather than for payment in the regular course of business, as is alleged. (See Anapol, supra, 211 Cal.App.4th at p. 827.)

For these reasons, the court DENIES the motion. Having denied the motion on this basis, the court need not address the parties’ arguments regarding the anti-SLAPP statute applies based on the public interest or Plaintiff’s probability of success on the merits.

III. Conclusion

The court DENIES the motion.

[1] All subsequent statutory references will be to the Code of Civil Procedure, unless otherwise specified.

[2] “This conclusion is mandated by the somewhat hybrid nature of an insurance claim. The attorneys argue that submission of an insurance claim is a necessary prerequisite to litigation. This is true. (Ins. Code, § 2071 [the standard form policy of fire insurance in Cal. requires claim submission and provides that suit cannot be brought unless there has been compliance with the requirements of the policy].) However, it is also true that submission of an insurance claim is a necessary prerequisite to obtaining performance under the insurance contract. Indeed, the submission of a claim is often the first time an insurer becomes aware that its insured seeks payment under the contract. Thus, it cannot be determined, by the mere fact of submission of a claim, that the claim has been submitted merely for adjusting or if it has been submitted in anticipation of litigation contemplated in good faith and under serious consideration.” (Anapol, 211 Cal.App.4th at pp. 826-827.)

[3] The Moving Defendants point to the Complaint’s references to Seelig’s deposition testimony as evidence that the source of Plaintiff’s claims was based on prelitigation conduct. However, both of the identified cases were personal injury cases in which State Farm was not a party. The fact that Plaintiff allegedly discovered or obtained evidence of the alleged misconduct based on Seelig’s testimony during litigation does not alter the nature of the Moving Defendants’ conduct that forms the basis of Plaintiff’s claims. (See Anapol, ibid. [“[A] court ruling on an anti-SLAPP motion must distinguish between allegedly wrongful acts and evidence of those acts. ‘Where [a party’s] protected activity will only be used as evidence in the plaintiff’s case, and none of the claims are based on it, the protected activity is only incidental to the claims,’ and will therefore not support an anti-SLAPP motion.”], emphasis added.)