People ex rel. Alzayat v. Hebb

• Citation: 18 Cal.App.5th 801,226 Cal.Rptr.3d 867
• Decision Date: 19 December 2017
• Docket Number: E066471
• Court: California Court of Appeals
• Parties: The PEOPLE EX REL. Mahmoud ALZAYAT, Plaintiff and Appellant, v. Gerald HEBB et al., Defendants and Appellants.

18 Cal.App.5th 801

226 Cal.Rptr.3d 867

The PEOPLE EX REL. Mahmoud ALZAYAT, Plaintiff and Appellant,

v.Gerald HEBB et al., Defendants and Appellants.

E066471

Court of Appeal, Fourth District, Division 2, California.

Filed December 19, 2017

English Lloyd & Armenta and Juan M. Armenta, Rancho Mirage, for Plaintiff and Appellant.

Rutan & Tucker, Duke F. Wahlquist and Proud Usahacharoenporn, Costa Mesa, for Defendants and Appellants.

OPINION

McKINSTER, Acting P. J.

IINTRODUCTION

Plaintiff Mahmoud Alzayat, on behalf of the People of the State of California, filed this qui tam action against his employer, Sunline Transit Agency, and his supervisor, Gerald Hebb, alleging a violation of the Insurance Frauds Prevention Act (IFPA or the Act). ( Ins. Code, § 1871 et seq. ) Alzayat alleged Hebb made false statements in an incident report submitted in response to Alzayat's claim for workers' compensation, and Hebb repeated those false statements in a deposition taken during the investigation into Alzayat's claim for compensation. Hebb's false statements resulted in Alzayat's claim being initially denied.

Defendants filed motions for judgment on the pleadings contending: (1) this lawsuit is based on allegedly false and fraudulent statements Hebb made in connection with a workers' compensation proceeding and is, therefore, barred by the litigation privilege under Civil Code ¹ section 47, subdivision (b) (hereafter § 47(b) ); and (2) Alzayat's claim is barred by the workers' compensation exclusivity rule. The superior court concluded the workers' compensation exclusivity rule is inapplicable, but ruled the litigation privilege bars Alzayat's claim. Therefore, the court granted the motions without leave to amend and entered judgment dismissing the lawsuit.

Alzayat appeals from the judgment, contending the litigation privilege only applies to tort claims and not to statutory claims such as an action under the IFPA, and the IFPA is a specific statute that prevails over the general litigation privilege.

Defendants cross-appeal, arguing that, even if Alzayat's lawsuit is not barred by the litigation privilege, the superior court erred by not granting judgment on the pleadings on the ground that Alzayat's claim is barred by the workers' compensation exclusivity rule.

We agree with Alzayat that his lawsuit is not barred by the litigation privilege. The litigation privilege is broad, but it has its limits. Like any statute, Civil Code section 47(b) is subject to the rule of statutory construction that a particular provision prevails over a general one. ( Civ. Code, § 3534 ; Code Civ. Proc., § 1859 ; Action Apartment Assn ., Inc . v. City of Santa Monica (2007) 41 Cal.4th 1232, 1246, 63 Cal.Rptr.3d 398, 163 P.3d 89 ( Action Apartment ).) The courts have concluded the litigation privilege does not bar an action filed under a more specific statute when application of the privilege would render the specific provision "significantly or wholly inoperable." ( Action Apartment , at p. 1246, 63 Cal.Rptr.3d 398, 163 P.3d 89.) The IFPA is a more specific statute than the litigation privilege, and application of the litigation privilege to claims under the IFPA—which in many cases will be based on communications that are otherwise privileged under Civil Code section 47(b) —would in large measure nullify the Act. Therefore, we conclude the litigation privilege does not bar Alzayat's claim.

We also conclude this lawsuit is not barred by the workers' compensation exclusivity rule. The Workers' Compensation Act (WCA; Lab. Code, § 3200 et seq. ) provides exclusive remedies for injuries to a worker arising out of his or her employment. Like any qui tam lawsuit, Alzayat's claim under the IFPA is based on an injury suffered by the People, not based on any injury he himself suffered. Therefore, the exclusivity rule is inapplicable.

The trial court erred by granting judgment on the pleadings for defendants, so we reverse the judgment.

II.FACTS AND PROCEDURAL BACKGROUND

In conformity with the standard of review of an order granting a motion for judgment on the pleadings, we accept as true the facts pleaded in the complaint. ( Truong v. Orange County Sheriff's Dept. (2005) 129 Cal.App.4th 1423, 1427, 29 Cal.Rptr.3d 450.)

Sunline Transit Agency (Sunline) is a public entity that provides regional transportation services and oversight of other transportation entities such as taxi companies. Alzayat was employed by Sunline as a stops and zones technician, and in that capacity he maintained bus stop infrastructure. Hebb was Alzayat's supervisor.

Sometime before his current injury, Alzayat suffered a work-related lumbar injury and was later released back to work. On the day of the current injury, Alzayat was working on a bus stop and needed concrete mix to anchor some posts. The only available bags of concrete mix weighed 90 pounds. To avoid reinjuring his lumbar, Alzayat asked Hebb for permission to either break down a 90-pound bag into lighter ones or to have another employee help him lift the 90-pound bag. Hebb refused Alzayat's requests, and the two argued for about two minutes. Hebb ultimately ordered Alzayat to lift the 90-pound bag by himself without breaking it down first. Alzayat complied and, immediately upon lifting the bag, Alzayat felt intense pain in his lumbar spine, and he partially collapsed. Alzayat dropped the bag and its contents spilled out. When Hebb asked Alzayat why he had dropped the bag, Alzayat complained he had injured his back when lifting the bag.

Alzayat was still in pain the next day, so he filled out a workers' compensation claim form about the incident. Some time thereafter, Hebb filled out a standard Sunline report for work injuries that is used in determining whether to accept or deny liability for workers' compensation claims. In the report, Hebb wrote he did not witness Alzayat's injury. Alzayat alleged this statement was false, because Hebb was an active participant in the incident.

Hebb was deposed during the investigation into Alzayat's workers' compensation claim. Hebb testified under oath that he had no conversation with Alzayat about the request to either break down the bag of concrete mix or to obtain help in lifting the bag. Hebb also denied having witnessed Alzayat injure himself when he lifted and then dropped the bag. Alzayat alleged Hebb knowingly provided false testimony because Hebb was present and had witnessed Alzayat's injury. In addition, Alzayat alleged Sunline adopted and ratified Hebb's misrepresentations, and Hebb and Sunline knew or should have known that Hebb's deposition testimony would be used in determining whether Alzayat's workers' compensation claim would be granted or denied.

Sunline's risk management authority denied Alzayat's workers' compensation claim based on Hebb's report and deposition testimony. Alzayat alleged Hebb's misrepresentations were material in that a reasonable insurance carrier would consider them important when determining whether to accept or deny liability for Alzayat's injuries.²

Alzayat filed this lawsuit alleging Hebb's false statements in relation to Alzayat's claim for workers' compensation benefits constituted violations of Penal Code section 550, and formed predicate offenses for liability under the IFPA.³ Alzayat alleged he is an "interested person" under the IFPA, and that he had direct and independent knowledge of the information on which the lawsuit was based within the meaning of Insurance Code section 1871.7, subdivision (h)(2)(B). On behalf of the People of the State of California, Alzayat prayed for a civil penalty against Hebb and Sunline of no less than $5,000 and no more than $10,000, an assessment of no more than three times the amount of his workers' compensation claim, attorney fees, and costs.

In their first motion for judgment on the pleadings, Hebb and Sunline argued self-insured risk pools, like Sunline's, are not considered insurance for purposes of the IFPA. The superior court agreed, granted the motion without leave to amend, and entered judgment for defendants. In an unpublished opinion, we concluded self-insured risk pools are subject to the IFPA and reversed the judgment. ( People ex rel. Alzayat v. Hebb et al. , supra , E060593.)

On remand, Hebb and Sunline again moved for judgment on the pleadings. In their separate but identical motions, defendants argued Alzayat's lawsuit was based on communications Hebb made in the context of a workers' compensation proceeding and, therefore, the lawsuit is barred by the litigation privilege under section 47(b). Defendants also argued Alzayat's lawsuit seeks damages for injuries that he incurred in the workplace and is, therefore, barred by the workers' compensation exclusivity rule. In his opposition to Sunline's motion, Alzayat argued his lawsuit is not barred by the litigation privilege. Relying on Action Apartment , supra , 41 Cal.4th 1232, 63 Cal.Rptr.3d 398, 163 P.3d 89, Alzayat argued the IFPA is a specific statute designed to combat workers' compensation fraud, and permitting the general litigation privilege to immunize communications the IFPA was designed to penalize would frustrate the purposes of the Act. Alzayat also argued his claim under the IFPA is not barred by the workers' compensation exclusivity rule. Alzayat did not file an opposition to Hebb's motion.

In its tentative ruling, which became the final ruling, the superior court agreed with defendants that Alzayat's claim is barred by the litigation privilege. The court noted the litigation privilege is absolute, applies to quasi-judicial proceedings such as workers' compensation actions, and immunizes communications that have some logical relation to the proceeding and are made to achieve the objects of the litigation. Although the court acknowledged that the general litigation privilege must yield when immunity would render a more specific statute to be significantly or wholly inoperable, the court concluded application of the privilege in this case...