Premier Med. Mgmt. Systems v. Cal. Ins.

• Decision Date: 06 February 2006
• Docket Number: No. B179325.,B179325.
• Citation: 39 Cal.Rptr.3d 43,136 Cal.App.4th 464
• Court: California Court of Appeals Court of Appeals
• Parties: PREMIER MEDICAL MANAGEMENT SYSTEMS, INC., et al., Plaintiffs and Respondents, v. CALIFORNIA INSURANCE GUARANTEE ASSOCIATION et al., Defendants and Appellants.

39 Cal.Rptr.3d 43

136 Cal.App.4th 464

PREMIER MEDICAL MANAGEMENT SYSTEMS, INC., et al., Plaintiffs and Respondents, v. CALIFORNIA INSURANCE GUARANTEE ASSOCIATION et al., Defendants and Appellants.

No. B179325.

Court of Appeal, Second District, Division 4.

February 6, 2006.

Lord, Bissel & Brook, C. Guerry Collins, William S. Davis, and Conrad V. Sison, Los Angeles, for Defendant and Appellant California Insurance Guarantee Association.

Pillsbury Winthrop Shaw Pittman, John S. Poulos and Andrea L. Courtney, Sacramento, for Defendant and Appellant Pacific Secured Equities, Inc.

Heggeness & Sweet and Clifford D. Sweet III, San Diego, for Defendants and Appellants Insurance Company of the West and The Explorer Insurance Company.

Yohman, Parker, Kern, Nard & Wenzel and Richard J. Kern, for Defendant and Appellant American All-Risk Loss Administrators.

Gray, York & Duffy and John J. Duffy, Los Angeles, for Defendant and Appellant HMI Associates, Inc.

Schaffer, Lax, McNaughton & Chen and John H. Horwitz, Los Angeles, for Defendant and Appellant Lehman Foods, Inc.

Roxborough Pomerance & Nye and Michael Breen Adreani, Woodland Hills, for Defendants and Appellants Elite Personnel Services, Inc. and Select Personnel Services.

Riley & Reiner, Raymond L. Riley and Christopher J. Hamner, Los Angeles, for Plaintiffs and Respondents.

EPSTEIN, P.J.

The principal issue on this appeal is whether the trial court erred in denying a special motion to strike a complaint under the anti-SLAPP law, Code of Civil Procedure section 425.16 (Strategic Lawsuit Against Public Participation, hereafter section 425.16). The dispute originated in efforts by insurers and employers to obtain a determination from the Workers' Compensation Appeals Board (WCAB) as to whether the plaintiff Premier Medical Management Systems, Inc. was improperly representing treating physicians in WCAB proceedings. Premier and five affiliated treating physicians sued the insurers and employers, alleging various tort and statutory causes of action based on claims that the defendants were in fact engaged in anticompetitive activity. The trial court denied the defendants' special motion to strike.

We conclude the complaint falls within the ambit of section 425.16. We also conclude that plaintiffs cannot establish a probability of prevailing on the merits because the conduct of defendants which forms the basis for the complaint is petitioning activity protected by the First Amendment. Plaintiffs fail to present any exception to that doctrine that would enable them to prevail on the merits. The trial court erred in denying defendants' special motion to strike.

FACTUAL AND PROCEDURAL SUMMARY

The Workers' Compensation Act (WCA) is "a comprehensive statutory scheme governing compensation given to California employees for injuries incurred in the course and scope of their employment." (Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 810, 102 Cal.Rptr.2d 562, 14 P.3d 234 (Vacanti), citing Labor Code, § 3201.) Under this scheme, an insurer ordinarily must pay all medical or medical-legal bills of an injured employee within 60 days of receipt. (Lab.Code, §§ 4603.2, subd. (b), 4622, subd. (a).) If the insurer contests the bill, payment is due only if ordered by the WCAB. (Lab.Code, §§ 4603.2, subd. (b), 4622, subd. (a).)

As the Supreme Court explained in Vacanti, medical providers who treat employee injuries covered by the WCA may file lien claims for the cost of their services directly with the WCAB. (Vacanti, supra, 24 Cal.4th at p. 811, 102 Cal.Rptr.2d 562, 14 P.3d 234, citing Lab.Code, §§ 4903, 5300.) Such a provider is a "party in interest" to the WCAB proceeding, with full due process rights, including the right to be heard. (Ibid.)

In this case, CIGA became responsible for some covered claims because of the insolvency and liquidation of the insurer on those claims. It disputed charges for services rendered through Premier. In July 2002, CIGA asked the WCAB to consolidate 13 pending cases involving claims filed by Premier plaintiffs in litigated cases covered by CIGA. An amended petition for removal and consolidation was filed in October 2002.

In September 2002, defendant The Explorer Insurance Company (Explorer) and defendant Insurance Company of the West (ICW) filed separate petitions to consolidate several pending proceedings before the WCAB involving Premier-related bills and liens. In late 2003, other defendants¹ also filed petitions to consolidate Premier-related WCAB liens.

Defendants argued that these proceedings should be consolidated, based on allegations that Premier and its affiliates were unlawfully practicing medicine, chiropractic treatment, and physical therapy as a result of illegal fee-sharing in violation of Business and Professions Code section 650. They also alleged that Premier and its affiliates were illegally referring business and making improper and excessive charges.

Premier opposed the consolidation petitions, arguing that they were brought for the improper purpose of delay. The WCAB ordered consolidation in May 2004. It reasoned that the business practices of Premier and its affiliates were common issues in each of the cases for which consolidation was sought, and that to litigate these issues separately in hundreds of workers' compensation cases would clog the workers' compensation tribunals. The workers' compensation judge noted that if the defendants prevailed in their arguments, all lien claims could be denied. The WCAB granted consolidation and stayed all liens. Its order was later amended to add claims involving the other defendants in this action. The workers' compensation judge clarified that the scope of the stay extended to all Premier bills and liens against the defendants in the consolidated actions. During the appearance at which this ruling was announced, counsel for Premier stated that he planned to sue defendants under the Racketeer Influenced and Corrupt Organizations Act, 18 United States Code section 1961 et seq. (RICO).

The complaint was filed in July 2004. Plaintiffs are Premier Medical and five individual physicians affiliated with it (Francis G. D'Ambrosio, Robert Schatz, Frank J. Coufal, Afshin Mashoof, Manuel Anell). We refer to them collectively as Premier or Plaintiffs. The named defendants are CIGA, several insurance companies, and other entities.² All are defendants in the consolidated workers' compensation cases in which lien claims have been filed by the plaintiffs. We refer to them collectively as defendants.

The gravamen of the complaint is that after Premier submitted plaintiff physicians' bills to defendants for payment, and filed liens in numerous workers' compensation cases before the WCAB, defendants collectively conspired to contest, delay, and avoid payment of these bills and liens.

The first cause of action alleges violation of the Cartwright Act (Bus. & Prof.Code, § 16720), the state antitrust statute. The complaint alleges that the defendants conspired to delay or avoid payment of the bills and liens; reduce the amount paid on the claims; prevent lawful competition by the plaintiff physicians; fix the amount plaintiffs could bill or lien for treatment of medical services to the employers' applicants; agree to pay a certain price (unilaterally agreed upon by defendants) on plaintiffs' claims; and "pool, combine and directly or indirectly unite other interests connected with the payment to Plaintiffs for medical treatment and services provided Employers' Applicants so that the price of such treatment and medical services would be affected to Defendants' benefit." It also alleges the price fixing directly or indirectly affected free and unrestricted competition between plaintiffs and defendants' preferred medical providers. Plaintiffs allege that these activities produced multiple anti-competitive results, such as restriction on competition and on applicants' ability to choose service providers.

The second cause of action claims violations of the RICO statute, 18 United States Code sections 1961(f), 1962(c). It alleges that the insurers were "enterprises" through which defendants conspired to perpetrate a scheme of unlawfully delaying or refusing to pay claims. The complaint also alleges that defendants engaged in racketeering activities including mailing and electronically wiring multiple wrongful and unlawful objections to billings and liens so that defendants could strong-arm plaintiffs to accept less on the claims.

The third cause of action, for violation of Business and Professions Code section 17200, incorporates the previous allegations of improper conduct and asserts that defendants conspired to do these acts, which were not a normal part of the workers' compensation claims process. The fourth cause of action, for intentional interference with contractual and prospective economic relations, alleges: "Physicians had an existing economic relationship with certain attorneys for various Applicants, and such relationships held present and probable future economic benefits to Physicians. Physicians customarily provided for the clients of those attorneys medical treatment and medical services for which they were entitled to payment under the workers' compensation system." Plaintiffs allege that defendants engaged in the conduct which forms the basis of the compliant with the intent to interfere with said relationships.

The fifth cause of action for negligent interference is similar, alleging that defendants knew, or should have been aware, of the relationship between the physicians and applicant attorneys, and that damage to the physicians' businesses would also damage those relationships. The sixth cause of action for abuse of process alleges that defendants utilized proceedings before the WCAB to engage in an unlawful course of conduct for the purpose of obtaining a collateral advantage not directly related to the WCAB. Defendants allegedly...