Healthsmart Pac., Inc. v. Golia

• Decision Date: 28 June 2018
• Docket Number: B266311,c/w B269627
• Parties: HEALTHSMART PACIFIC, INC., et al. Plaintiffs and Appellants, v. ARTHUR GOLIA et al. Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

HEALTHSMART PACIFIC, INC., et al. Plaintiffs and Appellants, v. ARTHUR GOLIA et al. Defendants and Respondents.

B266311

c/w B269627

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION ONE

June 28, 2018

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC578484)

APPEALS from a judgment of dismissal and order awarding attorney fees of the Superior Court of Los Angeles County, Michael L. Stern, Judge. Affirmed.

Horvitz & Levy, Jeremy B. Rosen, John F. Querio, Scott P. Dixler; Keith Fink & Associates, Keith A. Fink, and Olaf J. Muller for Plaintiffs and Appellants.

Buchalter, Harry W.R. Chamberlain II, Robert M. Dato, and Efrat M. Cogan for Defendants and Respondents Kabateck Brown Kellner LLP, Brian S. Kabateck, Robert B. Hutchinson, Cotchett Pitre & McCarthy LLP, Knox Ricksen LLP, Frank M. Pitre, Alexandra A. Hamilton, Joanna W. Licalsi, Eric Danowitz, Maisie C. Sokolove, Joseph M. Barrett, Lina Melindonian, Richard A. Dicorrado, and Benjamin S. Hakimfar.

Kabateck Brown Kellner, Brian S. Kabateck, Shant A. Karnikian; Knox Ricksen, Thomas E. Fraysse, Maisie C. Sokolove; Cotchett, Pitre & McCarthy, Frank M. Pitre, and Robert B. Hutchinson for Defendants and Respondents Arthur Golia, Mary Bravo, Derika Moses, Stacy Averhart, Linda Cahill, Ronald Cichy, Kim Coslett, Yvette Arroyo, Mark Dail, Jo Elizabeth Dixon, Rose Duron, Zettie Epps, Jaime Espinoza, Gisela Fabila, John Gutkowski, Kathleen Gonzales, Rose Ann Heath, Joanna Lorton, Patricia Marciel, Rehta Mashtalier-Scott, Shawn McAlonan, Coleen Mejia, Ava Perry, Gary Phillips, Laura Plescia, Matthew Toppel, Carmen Yolanda Vargas, Richard Ventimiglia, Phillip Williams, and John Wilson.

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The question before us is whether the trial court erred in granting the special motions to strike brought under the anti-SLAPP¹ statute, Code of Civil Procedure section 425.16, by 30 patient defendants² and 14 lawyer defendants³ in a malicious prosecution action filed by plaintiffs Michael Drobot (Drobot) and his companies, Healthsmart Pacific, Inc. (Healthsmart) and International Implants LLC (International Implants). The malicious prosecution action arose from 30 individual complaints filed by the patient defendants, alleging that plaintiffs participated in a broad conspiracy that encompassed insurance fraud, kickbacks, and inflated billing for spinal implants, as well as the manufacture, sale and use of "counterfeit" and unsafe spinal hardware possibly implanted in the patient defendants. The lawsuits named as defendants a host of medical device manufacturers and distributors, hospitals, marketers, and doctors who had also been named in a qui tam action allegedly arising from the same scheme. But none of the 30 patient defendants alleged that her or his surgery had been performed at Pacific Hospital of Long Beach (Pacific Hospital), a facility owned and operated by Healthsmart.

Reviewing the matter de novo, we conclude that plaintiffs have failed to establish a probability of prevailing on their malicious prosecution claims, as required to defeat an anti-SLAPP motion. We therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Drobot's Plea Agreement

Drobot owns and operates Healthsmart, which owned and operated Pacific Hospital from approximately 1997 until October 2013. Pacific Hospital specializes in spinal surgeries and spine-related procedures.

In February 2014, Drobot pled guilty in federal court to charges of conspiracy to violate certain federal statutes (18 U.S.C. § 371)⁴ and payment of kickbacks in connection with a federal health care program (42 U.S.C. § 1320a-7b(b)(2)(A)).⁵ According to his plea agreement, Drobot "conspired with dozens of doctors, chiropractors, marketers, and others to pay kickbacks in return for those persons [referring] thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the Federal Employees' Compensation Act ('FECA') and the California Workers' Compensation System ('CWCS')."

Drobot generated funds for the kickbacks by using either his own company, International Implants, or a co-conspirator distributor to inflate fraudulently the price of medical hardware purchased by Pacific Hospital for use in spinal surgeries. As part of this scheme, surgeons received larger kickbacks if they used hardware supplied by a specified distributor, usually International Implants. For surgeries covered by CWCS, International Implants or the co-conspirator distributor charged Pacific Hospital a price inflated far beyond the price at which the distributor had purchased the medical hardware from the manufacturer. Pacific Hospital then submitted the inflated invoices, plus an additional $250, to workers' compensation insurance carriers. The costs for medical hardware submitted in Pacific Hospital's claims were thousands of dollars, or even tens of thousands of dollars, higher than the prices charged by the manufacturers. Although International Implants was not a manufacturer, Drobot and his co-conspirators included on the company's invoices stamps falsely stating that International Implants was an "FDA Registered Manufacturer." According to Drobot's plea, from 2008 to 2013, Pacific Hospital billed workers' compensation insurance carriers approximately $500 million in claims for thousands of spinal surgeries resulting from the payment of kickbacks, and Drobot and his co-conspirators paid between $20 million and $50 million in kickbacks relating to those claims.

Drobot also admitted that he "provided a stream of financial benefits to California State Senator Ronald S. Calderon" to influence Senator Calderon to support legislation and regulations that allowed hospitals to "pass through" to workers' compensation insurance carriers the entire cost of medical hardware used in spinal surgeries.⁶ These benefits included payments to Senator Calderon's son for work as a summer file clerk, trips to "exclusive, high-end golf resorts," "expensive dinners," and "free flights on a private plane."

Neither the charging pleading in the federal criminal case nor Drobot's plea agreement referred to plaintiffs or anyone else manufacturing, purchasing, or using any counterfeit or "non-FDA-approved" medical hardware or devices. Nor did either of these documents state that plaintiffs or anyone else supplied prostitutes or "adult entertainment" as part of the kickback or bribery schemes.

B. The Qui Tam Action

A qui tam action (State of California ex rel. Mark Sersansie and William Reynolds v. Garden Regional Hospital Management Co.) describing an insurance fraud scheme similar to that admitted by Drobot was filed by Mark Sersansie and William Reynolds, alleging violations of the Insurance Frauds Prevention Act, Insurance Code section 1871 et seq., and the False Claims Act, Government Code section 12650 et seq.⁷ The qui tam plaintiffs were represented by attorneys from the law firm Cotchett, Pitre & McCarthy LLP, one of the lawyer defendants in the instant action.

The qui tam complaint alleges a scheme involving a number of Southern California hospitals in addition to Pacific Hospital. It names as defendants individuals, including Drobot; hospitals, including Pacific Hospital; distributors and marketers, including International Implants and Spinal Solutions, LLC (Spinal Solutions); Crowder Machine & Tool Shop; and surgeons, including Jack Akmakjian, M.D. and G. Sunny Uppal, M.D.

In addition to alleging a kickback scheme and fraudulent claims to insurance carriers inflating the cost of spinal hardware, the complaint alleges that "several of the Defendants . . . manufacture and/or knowingly utilize counterfeit screws and rods" in spinal surgeries with the defendant hospitals' "knowledge or reckless disregard for the truth." The complaint specifically alleges that International Implants purchased counterfeit screws and implant systems from Spinal Solutions and resold those systems to hospitals.

C. The Medical Fraud Lawsuits

1. Thirty-two Individuals, Including Patient Defendants, Filed Medical Fraud Actions Naming Drobot, Healthsmart, and International Implants as Defendants

Beginning in June 2014 and through October 2014, the lawyer defendants filed 32 lawsuits on behalf of individuals (including the 30 patient defendants) who had undergone spinal fusion surgeries involving the implantation of medical hardware. Like the qui tam action, these suits alleged a broad scheme of insurance fraud, inflated billing, kickbacks, "sham" distributorships, and "sham" consulting agreements as a cover for the hospitals' payment of kickbacks. The complaints additionally alleged that the kickbacks included prostitutes and " 'adult entertainers' for the spinal surgeons' enjoyment" aboard airplanes owned or leased by Roger Williams, the owner of Spinal Solutions. They named as defendants an array of hospitals, distributors, manufacturers, marketers, surgeons, and other individuals—most of them the same entities and individuals named in the qui tam action. Each of the suits named Drobot, Healthsmart, and International Implants as defendants.

The complaints alleged that, as part of the conspiracy to defraud insurance carriers and increase profits from spinal surgeries, "Defendants manufactured, distributed, sold, purchased, and/or implanted counterfeit, non-FDA approved,⁸ 'knock-off ' spinal fixation implant devices." The complaints specifically named Spinal Solutions, its subsidiary Orthopedic Alliance, LLC (Orthopedic Alliance), its owner Roger Williams, Williams' wife, and Jeffrey Fields, the operations manager for Spinal Solutions and Orthopedic Alliance, as the parties who allegedly...