Case Number: BC648395 Hearing Date: June 18, 2018 Dept: 47

State of California v. Bruce E. Fishman, M.D.

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY: Defendants Bruce E. Fishman, M.D., an individual, Bruce E. Fishman, M.D., FISC, Inc. and Family Urgent Care & Industrial Medical Clinic, Inc., a California medical professional corporation

RESPONDING PARTY(S): Plaintiffs State of California, the Counties of Los Angeles, Kern, San Bernardino, Ventura, Santa Barbara, the Cities of Los Angeles and Bakersfield, the School Districts of Los Angeles, McFarland, Visalia and Kern, the Health Care District of Tehachapi, ex al. Med-Legal Associates, Inc. and CLCI, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Qui tam action alleging that Defendant Bruce E. Fishman lied on his application (concealing a felony conviction) to serve as a qualified medical evaluator (“QME”) in connection with the examination of injured workers for purposes of their eligibility for workers’ compensation benefits. Defendants billed Plaintiffs for medical evaluation services Defendant Fishman unlawfully performed under the pretense of being a validly-appointed QME and collected public funds for such services.

Defendant Bruce E. Fishman, M.D., an individual, Bruce E. Fishman, M.D., FISC, Inc. and Family Urgent Care & Industrial Medical Clinic, Inc., a California medical professional corporation demur to the first amended complaint.

TENTATIVE RULING:

The demurrer of Defendants Bruce E. Fishman, M.D., an individual, Bruce E. Fishman, M.D., FISC, Inc. and Family Urgent Care & Industrial Medical Clinic, Inc., a California medical professional corporation to the first amended complaint is OVERRULED as to the first cause of action and SUSTAINED without leave to amend as to the second cause of action, unless Plaintiffs demonstrate a reasonable possibility of successful amendment.

DISCUSSION:

Demurrer

Requests For Judicial Notice

Defendants’ request that the Court take judicial notice of the entire files of LASC Case No. 648802 and BS168126 is DENIED. Defendants did not present the specific materials cited by Defendants and, as Plaintiffs point out, expect the court to fish around the file for the relevant documents. Because Defendants failed to comply with CRC Rule 3.13056(c) and CRC Rule 3.11139(l), the request for judicial notice is DENIED. Judicial notice is only required if the party furnishes the court with sufficient information[1].

(c) Judicial notice. A party requesting judicial notice of material under Evidence Code sections 452 or 453 must provide the court and each party with a copy of the material. If the material is part of a file in the court in which the matter is being heard, the party must:

(1) Specify in writing the part of the court file sought to be judicially noticed; . . .

CRC, Rule 3.1306 (bold emphasis added).

(l) Requests for judicial notice. Any request for judicial notice must be made in a separate document listing the specific items for which notice is requested and must comply with rule 3.1306(c).

CRC, Rule 3.1113(l)(bold emphasis added).

Plaintiffs’ request that the Court take judicial notice of the documents filed in this action and court documents from BC168126 is GRANTED per Evid. Code § 452(d)(court records). Plaintiff’s request that the court take judicial notice of the From DWC 1-Workers’ Compensation Claim Form available at the State of California, Department of Industrial Relations website is GRANTED. “[W]e may take judicial notice of this data since they are contained in a publication issued by an agency of the state. (Watson v. Los Altos School Dist. (1957) 149 Cal.App.2d 768, 772-773 [308 P.2d 872].)” Board of Education v. Watson (1966) 63 Cal.2d 829, 836.

Analysis

As previously noted by this Court in its previous tentative rulings on this matter, Defendants filed a 19-page brief in excess of the 15-page limit set forth in CRC Rule 3.1113(d), without first obtaining leave of court (Rule 3.1113(e)). Accordingly, the argument presented at pages 16 – 19 will be disregarded.

Also, Defendants attempts to submit extrinsic evidence in the form of the 16-page Declaration of counsel Howard A. Kapp. “The demurrer admits the facts pleaded in the complaint and raises the question whether those facts are sufficient to state a cause of action on any legal theory. . . . ‘The function of a demurrer is to test the sufficiency of the complaint alone and not the evidence or other extrinsic matters. [Citation.]’ (Citation omitted.)” Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1308-09. The Court will not consider anything set forth in the evidentiary Declaration of attorney Kapp, as it serves, in effect, to circumvent the 15-page limit by introducing additional argument.

At the June 4, 2018 hearing, the Court made a finding that Defendant is in compliance with the meet and confer requirements set forth in CCP § 430.41. The Court will not address the merits of the demurrer.

1. Entire First Amended Complaint.

Defendants argue that causes of action cannot be stated against Bruce Fishman, M.D. and Bruce E. Fishman, M.D, FICS, Inc. and against Family Urgent Care & Industrial Medical Clinic, Inc.

The doctrine [of res judicata] is applicable “if (1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding or parties in privity with them were parties to the prior proceeding.” (Citation omitted.) “[R]es judicata will not be applied ‘if injustice would result or if the public interest requires that relitigation not be foreclosed.’ ” (Citation omitted.) (Emphasis added.)

Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 577.

Defendants’ argument that the findings of the Medical Board of California in 1990 and 1994 are res judicata and/or collateral is not persuasive. Defendants have not demonstrated that the elements of res judicata and/or collateral estoppel apply to the Medical Board’s determination. For one thing, Defendants argue that Dr. Fishman’s medical license was reinstated in 1990 after the Medical Board of California found that he had been sufficiently rehabilitated to have his license returned with only technical supervisorial restrictions. There is no showing how this equates to an expungement of the felony conviction. The basis of this lawsuit is that, in connection with the application to be a Qualified Medical Evaluator (“QME”), Defendants failed to disclose that Dr. Fishman had been convicted of a felony. See 1AC, ¶¶ 10- 23. While it very well may be that Defendants can prove in this lawsuit that Dr. Fishman’s felony conviction was, in fact, expunged such that he lawfully did not disclose his felony conviction, such showing was not made by way of this demurrer.

Defendants’ argument that the 2017 binding arbitration award constitutes res judicata and collateral estoppel is not persuasive. Defendants admit that the confirmation of the arbitration award is currently on appeal (demurrer at Page 8:4-8).

Collateral estoppel will bar unnecessary relitigation of issues under the following circumstances: (1) the issue previously decided must be identical to the one sought to be relitigated; (2) the party to be estopped must have been a party or privy of a party in the prior suit; and (3) that suit must have resulted in a final judgment on the merits. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal. 3d 903, 910 [226 Cal. Rptr. 558, 718 P.2d 920].)

The liability verdicts in McLaughlin, on the assigned causes of action as well as the statutory cause, were bootstrapped into Abelson under a collateral estoppel concept while the McLaughlin judgment was on appeal. But according to California law, a judgment is not final for purposes of collateral estoppel while open to direct attack, e.g., by appeal. ( National Union Fire Ins. Co. v. Stites Prof. Law Corp. (1991) 235 Cal. App. 3d 1718, 1726; [1 Cal. Rptr. 2d 570]; Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal. App. 3d 155, 169 [275 Cal. Rptr. 449]; Sandoval v. Superior Court (1983) 140 Cal. App. 3d 932, 936-937 [190 Cal. Rptr. 29].)

Abelson v. National Union Fire Ins. Co. (1994) 28 Cal.App.4th 776, 787.

Moreover, Defendants do not present a persuasive argument that the arbitration award determined the same issues presented in this action, for instance, that Fishman did not falsely state in his QME applications that he was not convicted of a felony.

The demurrer to the entire first amended complaint is OVERRULED.

2. First Cause of Action (California Insurance Fraud Prevention Act—Insurance Code § 1871.7).

Defendants argue that Insurance Code § 1871.7 relates to “capping,” which has nothing to do with the allegations in the Complaint.

Plaintiffs point out that Insurance Code § 1871.7 addresses violations of § 1871.7 or Penal Code §§ 549, 550 or 551:

(a) It is unlawful to knowingly employ runners, cappers, steerers, or other persons to procure clients or patients to perform or obtain services or benefits pursuant to Division 4 (commencing with Section 3200) of the Labor Code or to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.

(b) Every person who violates any provision of this section or Section 549, 550, or 551 of the Penal Codeshall be subject, in addition to any other penalties that may be prescribed by law, to a civil penalty of not less than five thousand dollars ($5,000) nor more than ten thousand dollars ($10,000), plus an assessment of not more than three times the amount of each claim for compensation, as defined in Section 3207 of the Labor Code or pursuant to a contract of insurance. The court shall have the power to grant other equitable relief, including temporary injunctive relief, as is necessary to prevent the transfer, concealment, or dissipation of illegal proceeds, or to protect the public. The penalty prescribed in this paragraph shall be assessed for each fraudulent claim presented to an insurance company by a defendant and not for each violation.

. . .

(e)

(1) Any interested persons, including an insurer, may bring a civil action for a violation of this section for the person and for the State of California. The action shall be brought in the name of the state. The action may be dismissed only if the court and the district attorney or the commissioner, whichever is participating, give written consent to the dismissal and their reasons for consenting.

Ins. Code, § 1871.7 (bold emphasis and underlining added).

Plaintiffs allege that this cause of action is based upon Defendants’ violations of Penal Code § 550. See 1AC, ¶ 43. “An action under [Insurance Code] section 1871.7 may be brought on behalf of the state against ‘every person’ who violates Penal Code sections 549 and 550. Those statutes, in turn, criminalize the making of false or fraudulent claims to insurers.” State of California ex rel. Nee v. Unumprovident Corp. (2006) 140 Cal.App.4th 442, 447.

As such, this ground for demurrer is not persuasive.

Defendants also argue that Labor Code § 139.21, by its own terms, does not apply to Dr. Fishman.

The 1AC alleges at ¶ 10 that Labor Code §139.2 authorizes the California Department of Labor , Division of Workers’ Compensation – Medical Unit to appoint physicians as QMEs to examine injured workers to evaluate disability and write medical-legal reports. ¶ 15 cites Labor Code § 139.2(m), which provides:

(m) The administrative director shall terminate from the list of medical evaluators any physician where licensure has been terminated by the relevant licensing board, or who has been convicted of a misdemeanor or felony related to the conduct of his or her medical practice, or of a crime of moral turpitude. The administrative director shall suspend or terminate as a medical evaluator any physician who has been suspended or placed on probation by the relevant licensing board. If a physician is suspended or terminated as a qualified medical evaluator under this subdivision, a report prepared by the physician that is not complete, signed, and furnished to one or more of the parties prior to the date of conviction or action of the licensing board, whichever is earlier, shall not be admissible in any proceeding before the appeals board nor shall there be any liability for payment for the report and any expense incurred by the physician in connection with the report.

Labor Code § 139.2(m) (bold emphasis added).

Defendants argue that Plaintiff’s conviction did not involve any of the class of felonies defined in Labor Code § 139.21, which provides at subdivision (a):

(a)

(1) The administrative director shall promptly suspend, pursuant to subdivision (b), any physician, practitioner, or provider from participating in the workers’ compensation system as a physician, practitioner, or provider if the individual or entity meets any of the following criteria:

(A) The individual or entity has been convicted of any felony or misdemeanor and that crime comes within any of the following descriptions:

(i) It involves fraud or abuse of the federal Medicare or Medicaid programs, the Medi-Cal program, or the workers’ compensation system, or fraud or abuse of any patient.

(ii) It relates to the conduct of the individual’s medical practice as it pertains to patient care.

(iii) It is a financial crime that relates to the federal Medicare or Medicaid programs, the Medi-Cal program, or the workers’ compensation system.

(iv) It is otherwise substantially related to the qualifications, functions, or duties of a provider of services.

Labor Code § 139.21.

However, in that Defendants have not properly requested judicial notice of supporting materials, whether or not Defendant Fishman’s felony conviction does not come within Labor Code § 139.21 is outside the scope of this demurrer.

As such, this ground for demurrer is not persuasive.

Defendants’ argument that Labor Code § 139.21 requires administrative action and due process which have not occurred here is inapposite. Plaintiffs are not seeking to have the administrative director suspend Fishman. Rather, Plaintiffs seek to recover the amount of claims for compensation made to the insurance companies and damages to California and the Political Subdivisions as well as civil penalties.

As previously noted, the Court does not address any arguments presented at Pages 16 – 19 of the memorandum of points and authorities.

The demurrer to the first cause of action is OVERRULED.

3. Second Cause of Action (California False Claims Act—Gov. Code § 12650).

Citing Government Code § 12651(e), Defendants argue that the second cause of action fails because it explicitly excludes Workers Compensation claims from its scope.

(e) This section does not apply to claims, records, or statements made pursuant to Division 3.6 (commencing with Section 810[2]) of Title 1 or to workers’ compensation claims filed pursuant to Division 4 (commencing with Section 3200[3]) of the Labor Code.

Gov. Code, § 12651 (bold emphasis added).

The Court finds this to be persuasive. This cause of action is premised upon Defendant Fishman’s alleged false representation that he was qualified to serve as a QME, AME, PTP or treating or consulting physician in connection with billing statements submitted in connection with Workers’ Compensation claims based upon permanent disability rating contained in the medical-legal reports prepared by Fishman. See 1ac, ¶¶ 45 – 50. The gist of Plaintiffs’ 1AC is that the QME medical-legal reports are used to determine an injured workers’ eligibility for workers’ compensation benefits. 1AC, ¶ 10.

This argument is persuasive.[4]

The demurrer to the second cause of action is SUSTAINED without leave to amend. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. Goodman v. Kennedy (1976) 18 Cal.3d 335, 348. In this instance, however, Plaintiff must demonstrate this possibility at the hearing, otherwise no leave to amend will be given.

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: June 4, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@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.

[1]

The trial court shall take judicial notice of any matter specified in Section 452 if a party requests it and:

(b) Furnishes the court with sufficient information to enable it to take judicial notice of the matter.

Evid. Code, § 453(b).

[2] Gov. Code § 810, et seq. is the Government Claims Act.

[3] Labor Code § 3200, et seq. pertains to Workers’ Compensation and Insurance.

[4] The Court notes that Defendants’ argument that the relators are ineligible to pursue this cause of action because they themselves are co-participants and beneficiaries of the purported fraud presents a question of fact outside the scope of this demurrer.