People ex rel. Alzayat v. Hebb

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.

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.

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

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 would not frustrate enforcement of the IFPA. According to the court, Penal Code section 550, which lists the predicate offenses for liability under the IFPA, "prohibits a wide array of conduct related to the false submission of insurance claims, most of which could arise before litigation is ever contemplated." The court gave two examples: causing a vehicular accident for the purpose of filing a false insurance claim, and misrepresenting an insured's state of domicile when obtaining motor vehicle insurance. Citing People ex rel. Monterey Mushrooms, Inc. v. Thompson (2006) 136 Cal.App.4th 24 , 38 Cal.Rptr.3d 677 ( Thompson ), the court concluded the workers' compensation exclusivity rule does not bar an action under the IFPA, and rejected defendant's alternative basis for judgment on the pleadings. The court granted judgment on the pleadings for defendants without leave to amend and entered a judgment dismissing the lawsuit.

Alzayat timely appealed from the judgment. Defendants filed a protective cross-appeal from the order denying judgment on the pleadings based on the workers' compensation exclusivity rule.

DISCUSSION

A. Standards of Review .

"A motion for judgment on the pleadings presents the question of whether 'the plaintiff's complaint state[s] facts sufficient to constitute a cause of action against the defendant.' [Citation.] The trial court generally considers only the allegations of the complaint, but may also consider matters that are subject to judicial notice. [Citation.] ' "Moreover, the allegations must be liberally construed with a view to attaining

exclusivity rule is also a question of law we review de novo. ( Melendrez v. Ameron Internat . Corp . (2015) 240 Cal.App.4th 632 , 639, 193 Cal.Rptr.3d 23 ( Melendrez ).)

B. Alzayat 's Qui Tam Claim Under the IFPA Is Not Barred by the Litigation Privilege.

Alzayat does not dispute that, in general, the litigation privilege bars tort liability for communications that are made in judicial and quasi-judicial proceedings such as a workers' compensation proceeding. Rather, he argues the IFPA is an exception to the litigation privilege. We agree.

1. The IFPA .

The IFPA was in large measure designed to prevent workers' compensation insurance fraud, and the Act includes a number of legislative findings and declarations that are relevant here. "Workers' compensation fraud harms employers by contributing to the increasingly high cost of workers' compensation insurance and self-insurance and harms employees by undermining the perceived legitimacy of all workers' compensation claims." ( Ins. Code, § 1871, subd. (d).) Preventing workers' compensation fraud "may reduce the number of workers' compensation claims and claim payments thereby producing a commensurate reduction in workers' compensation costs," and "will assist in restoring confidence and faith in the workers' compensation system, and will facilitate expedient and full compensation for employees injured at the workplace." ( Id ., subd. (e).) In addition, "[t]he actions of employers who fraudulently underreport payroll or fail to report payroll for all employees to their insurance company in order to pay a lower workers' compensation premium result in significant additional premium costs and an unfair burden to honest employers and their employees." ( Id ., subd. (f).) Finally, "[t]he actions of employers who fraudulently fail to secure the payment of workers' compensation as required by Section 3700 of the Labor Code harm employees, cause unfair competition for honest employers, and increase costs to taxpayers." ( Id ., subd. (g).)

Any person who makes a false claim for workers' compensation benefits, or who presents a false or fraudulent statement in support of or in opposition to such a claim, is guilty of a felony wobbler. ( Ins. Code, § 1871.4, subd. (b).) In addition, the IFPA provides for civil liability for various forms of workers' compensation insurance fraud. "Every person who violates any provision of this section or Section 549, 550, or 551 of the Penal Code shall 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

( Strathmann ); People ex rel . Allstate Ins . Co . v. Weitzman (2003) 107 Cal.App.4th 534 , 538, 132 Cal.Rptr.2d 165 ( Weitzman ).) The relator's complaint must be served on the district attorney and the insurance commissioner, who have 60 days to decide whether to intervene and proceed with the lawsuit. ( Ins. Code, § 1871.7, subd. (e)(2).) If the district attorney and the insurance commissioner both decline to take over the action ( id ., subd. (e)(4)(A)), the relator may proceed with the action and recover a bounty of 40 to 50 percent of the recovered proceeds, plus reasonable expenses and attorney fees ( id ., subds. (e)(4)(B), (g)(2)(A); Strathmann , at p. 500, 148 Cal.Rptr.3d 361 ).

Relying on State of California ex rel. Metz v. Farmers Group , Inc . (2007) 156 Cal.App.4th 1063 , 67 Cal.Rptr.3d 842 ( Metz ) and

People v. Butler (2011) 195 Cal.App.4th 535 , 540, 124 Cal.Rptr.3d 610 .) We need not decide whether Nee correctly interpreted the scope of Penal Code section 550. As stated, ante , in footnote 2, we do not read Alzayat's complaint as being limited to the predicate offense of concealment in violation of Penal Code section 550, subdivision (b)(3). When reviewing a judgment on the pleadings, it is our duty to determine whether the complaint states a cause of action under any theory. ( Jacks v. City of Santa Barbara , supra , 3 Cal.5th at p. 272, 219 Cal.Rptr.3d 859 , 397 P.3d 210 .)

As defendants must concede, Nee concluded, albeit in dicta, that Penal Code section 550, subdivision (b)(1) and (b)(2), "extend liability to persons other than those who actually file the suspect claim" for workers' compensation benefits. ( Nee , supra , 140 Cal.App.4th at p. 450, 44 Cal.Rptr.3d 491 ; see Metz , supra , 156 Cal.App.4th at p. 1070, 67 Cal.Rptr.3d 842 .)

Insurance Code section 1871.7(b) has three sentences. The first sentence provides that a "civil penalty" of no less than $5,000 and no more than $10,000, plus an assessment of no more than three times the amount of the underlying claim for compensation, "shall" be imposed on "[e]very person who violates any provision of this section or Section 549, 550, or 551 of the Penal Code." As noted, ante , sections 549 through 551 of the Penal Code criminalize various forms of insurance fraud, including but not limited to the filing of a fraudulent claim. The second sentence of Insurance Code section 1871.7(b) provides that the superior court also has the power to grant equitable or injunctive relief as necessary to protect the public from insurance fraud. Finally, the third sentence provides that the "civil penalty" mentioned in the first sentence "shall be assessed for each fraudulent claim presented to an insurance company by a defendant and not for each violation."

Defendants argue that, notwithstanding the incorporation of all predicate violations of Penal Code sections 549 through 551 into the first sentence of Insurance Code section 1871.7(b), the third sentence limits penalties to the sole predicate violation of filing a fraudulent claim, and that the only available remedies for other predicate violations is the equitable and injunctive relief mentioned in the second sentence. But "[t]he meaning of a statute may not be determined from a single word or sentence; the words must be construed in context, and provisions relating to the same subject matter must be harmonized to the extent possible. [Citation.]" ( Lungren v. Deukmejian (1988) 45 Cal.3d 727 , 735, 248 Cal.Rptr. 115 , 755 P.2d 299 ; accord, Weitzman , supra , 107 Cal.App.4th at p. 544, 132 Cal.Rptr.2d 165 .) The most reasonable reading of Insurance Code section 1871.7(b), which harmonizes all three sentences, is that the "civil penalty" mentioned

related specifically to the Legislature's intent to adopt a proper distribution of the penalties recovered, and not to any intent to limit the type of predicate violation that would give rise to penalties in the first place, we decline to read section 1871.7(b) as narrowly

In the trial court and in their briefs on appeal, defendants argue this court's decision in Harris v. King (1998) 60 Cal.App.4th 1185 , 70 Cal.Rptr.2d 790 ( Harris ) is dispositive and mandates dismissal of Alzayat's suit. The plaintiff in Harris sued a physician alleging he submitted false and defamatory medical reports to the State Compensation Insurance Fund, which resulted in the temporary termination of the plaintiff's disability and rehabilitation benefits. ( Id . at pp. 1186-1187, 70 Cal.Rptr.2d 790 .) The plaintiff alleged causes of action for general negligence, fraud, and libel, and prayed for general and punitive damages. ( Id . at p. 1187, 70 Cal.Rptr.2d 790 .)

On appeal, this court concluded the trial court properly sustained a demurrer to the complaint without leave to amend because the plaintiff's claims were barred by the litigation privilege. "[ Section 47(b) ] creates a privilege for the report prepared by

report unless it is proven the reporter knew the report was false or made the report with reckless disregard for the truth or falsity of the report, in which case they are liable for damages caused by the false report. ( Ibid .)

Begier agreed with the husband that "the Legislature's direction in Penal Code section 11172 that a person who knowingly makes a false report of child abuse 'is liable for any damages caused' creates a limited exception to the privilege." ( Begier , supra , 46 Cal.App.4th at p. 884, 54 Cal.Rptr.2d 158 .) The court "discern[ed] within [CANRA] a legislative effort to balance, on the one hand, the public interest in ferreting out cases of child abuse so that the child victims can be protected from harm and, on the other hand, the policy of protecting the reputations of those who might be falsely accused. [Citation.] The Legislature has struck that balance by withholding immunity from those who knowingly make false reports of child abuse." ( Begier , at p. 885, 54 Cal.Rptr.2d 158 fn. omitted.) Application of the litigation privilege to knowingly made false reports of child sexual abuse, the court noted, "would essentially nullify the Legislature's determination that liability should attach." ( Ibid . ) Mindful of its duty "to read statutes with reference to the whole system of law and to avoid rendering a statute meaningless and ineffective," the Begier court held "that the statutory privilege of Civil Code section 47, subdivision (b), does not immunize a party who would otherwise be liable under Penal Code section 11172, subdivision (a)." ( Begier , at p. 885, 54 Cal.Rptr.2d 158 ; see Siam v. Kizilbash (2005) 130 Cal.App.4th 1563 , 1577, 31 Cal.Rptr.3d 368 [reaffirming the Begier holding that liability under CANRA for false reports of child sexual abuse preempts litigation privilege].)

In Action Apartment , the plaintiff argued a tenant harassment ordinance enacted by the City of Santa Monica, which established criminal and civil liability for maliciously serving an eviction notice or filing an unlawful detainer action without a reasonable factual or legal basis, was preempted by the litigation privilege. ( Action Apartment , supra , 41 Cal.4th at pp. 1239-1240, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .) Although our Supreme Court stated the litigation privilege is broad, the court acknowledged the privilege "is not without limit[s]" and cited claims for malicious

( Id . at p. 1246, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .) Because local governments lack the authority to create their own exceptions to general state laws, the court declined to find an exception to the litigation privilege for the city's ordinance. ( Id . at p. 1247, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .)

The plaintiff in Komarova v. National Credit Acceptance , Inc. (2009) 175 Cal.App.4th 324 , 95 Cal.Rptr.3d 880 ( Komarova ) sued alleging the defendant engaged in harassing and illegal debt collection practices in violation of the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act; § 1788 et seq.), when it tried to collect a debt the plaintiff never incurred. ( Komarova , at pp. 330-335, 95 Cal.Rptr.3d 880 .) On appeal, the defendant argued its conduct in attempting to collect the debt was privileged under section 47(b). ( Komarova , at p. 337, 95 Cal.Rptr.3d 880 .) The Court of Appeal held "the privilege cannot be used to shield violations of the [Rosenthal] Act." ( Ibid . )

Citing Action Apartment , supra , 41 Cal.4th 1232 , 63 Cal.Rptr.3d 398 , 163 P.3d 89 , Komarova stated our Supreme Court had already recognized exceptions to the litigation privilege for "statutes that (1) are 'more specific' than the privilege, and (2) would be 'significantly or wholly inoperable' if the privilege applied." ( Komarova , supra , 175 Cal.App.4th at p. 339, 95 Cal.Rptr.3d 880 , citing Action Apartment , at p. 1246, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .) The defendant argued, however, that the litigation privilege was more specific than the Rosenthal Act "because the privilege 'only applies to communications related to litigation,' while the [Rosenthal] Act 'prohibits a broad range of practices in the context of debt collection,' 'whether in litigation or not.' " ( Komarova , at p. 339, 95 Cal.Rptr.3d 880 .) The court was not persuaded. "[T]he privilege is implicated in all judicial and quasi-judicial proceedings and the [Rosenthal] Act is implicated in only the small subset of those proceedings that involve collection of consumer debts. We note that the Legislature specifically prohibited certain litigation related activity when it passed the Rosenthal Act in 1977, presumably aware of the extant broad litigation privilege in section 47." ( Komarova , at pp. 339-340, 95 Cal.Rptr.3d 880 .)

The court recognized, however, that whether application of the litigation privilege would render the Rosenthal Act significantly inoperable was "a closer question." ( Komarova , supra , 175 Cal.App.4th at p. 340, 95 Cal.Rptr.3d 880 .) The defendant argued there was no need to find an exception to the litigation privilege for Rosenthal Act claims because " '[t]he majority of debt collection attempts have nothing to do with litigation,' " " '[o]nly a small percentage of debts are ever litigated,' [and] the [Rosenthal] Act 'will still provide

McNair v. City and County of San Francisco (2016) 5 Cal.App.5th 1154 , 210 Cal.Rptr.3d 267 ( McNair ) had a commercial driver's license and was employed as a bus driver. A physician employed by the San Francisco

immunized by [the official proceeding privilege under] section 47, subdivision (b)(3).' " ( McNair , at p. 1166, 210 Cal.Rptr.3d 267 , quoting Shaddox , at p. 1418, 2 Cal.Rptr.3d 808 .)

"[A] voluntary disclosure of confidential medical information falls within the reach of [section 56.10,] subdivision (c)(14) if a public policy exists encouraging such disclosure; the disclosure involves issues of public safety; and it is a communication which would otherwise be immunized by the litigation privilege. In this case, California clearly has a policy of encouraging, and sometimes even mandating, reports regarding suspected unsafe drivers. ... The [DMV's] proposed decision to revoke or suspend a person's driver's license is subject to an evidentiary hearing and decision

Whereas in McNair application of the litigation privilege supported the public policy of encouraging unfettered disclosures of confidential medical information in the interest of public safety ( McNair , supra , 5 Cal.App.5th at pp. 1167-1168, 210 Cal.Rptr.3d 267 ), applying the privilege to fraudulent communications made in support of or in opposition to a claim for insurance benefits would frustrate the remedial purpose of the IFPA. Civil statutes enacted for the protection of the public are to be construed broadly in favor of their protective purpose. ( Pineda v. Williams-Sonoma Stores , Inc . (2011) 51 Cal.4th 524 , 530, 120 Cal.Rptr.3d 531 , 246 P.3d 612 ; People ex rel . Lungren v. Superior Court (1996) 14 Cal.4th 294 , 313, 58 Cal.Rptr.2d 855 , 926 P.2d 1042 .) The Legislature was "presumably aware of the extant broad litigation privilege in section 47" ( Komarova , supra , 175 Cal.App.4th at p. 340, 95 Cal.Rptr.3d 880 ) when it enacted the IFPA to provide civil liability for fraudulent communications related to claims for insurance benefits, including liability for communications that are otherwise at the core of the privilege. This strongly suggests the Legislature balanced the public interest in preventing insurance fraud with the interest in encouraging free and unfettered communications in litigation, and "struck that balance" in favor of preventing insurance fraud. ( Begier , supra , 46 Cal.App.4th at p. 885, 54 Cal.Rptr.2d 158 .) Applying the privilege here would "encour[age] rather than suppress[ ]" ( Banuelos , supra , 219 Cal.App.4th at p. 332, 161 Cal.Rptr.3d 772 ) the type of fraud the IFPA was designed to

the IFPA are not barred by the litigation privilege, and the trial court erred by granting judgment for defendants based on the privilege.

C. The Workers' Compensation Exclusivity Rule Does Not Apply to Alzayat 's Claims Under the IFPA .

In their cross-appeal, defendants argue the trial court should have granted judgment on the pleadings on the alternative theory that Alzayat's IFPA lawsuit is barred by the workers' compensation exclusivity rule. According to defendants, Thompson , supra , 136 Cal.App.4th 24 , 38 Cal.Rptr.3d 677 , on which the trial court relied when rejecting defendant's alternative theory, does not apply to an IFPA claim filed by an employee. We conclude the trial court correctly rejected defendant's alternative argument.

The WCA " 'provides an employee's exclusive remedy against his or her employer for injuries arising out of and in the course of employment.' [Citation.] The exclusive remedy provision of the act provides, in part, that ' "[w]here the conditions of compensation set forth in Section 3600 concur, the right to recover compensation is ... the sole and exclusive remedy of the employee or his or her dependents against the employer" ( Lab. Code, § 3602, subd. (a) ), and that "[i]n all cases where the conditions of compensation set forth in Section 3600 do not concur, the liability of the employer shall be the same as if this division had not been enacted" ( Lab. Code, § 3602, subd. (c) ). The legal theory supporting this exclusive remedy provision "is a presumed 'compensation bargain,' pursuant to which the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort." [Citations.]' " ( Melendrez , supra , 240 Cal.App.4th at pp. 638-639, 193 Cal.Rptr.3d 23 .)

In Thompson , supra , 136 Cal.App.4th 24 , 38 Cal.Rptr.3d 677 , a self-insured employer

forth in subdivision (d) may be imposed 'in addition to any other penalties that may be prescribed by law.' And in subdivision (a) of Labor Code section 3820 the Legislature expressly recognized 'that the conduct prohibited by this section is, for the most part, already subject to criminal penalties pursuant to other provisions of law.' " ( Thompson , at pp. 28-29, 38 Cal.Rptr.3d 677 fn. omitted.)

With respect to the IFPA, the court noted the Act "was intended to encompass fraudulent claims for workers' compensation benefits" and "specifically provides for civil penalties for claims for compensation under Labor Code section 3207, which is part of the WCA." ( Thompson , supra , 136 Cal.App.4th at p. 30, 38 Cal.Rptr.3d 677 .) "Lest there be any residual confusion over the authority to proceed," the court noted, " Insurance Code section 1871.7, subdivision (k), makes it clear that the remedies it provides are 'in addition to any other remedies provided by existing law.' " ( Ibid . ) "The express inclusion of workers' compensation claims thus demonstrates the Legislature's intention to allow civil actions under Insurance Code section 1871.7 arising from fraudulent acts made unlawful by Penal Code section 550, notwithstanding applicability of the WCA." ( Id. at p. 31, 38 Cal.Rptr.3d 677 .)

Defendants contend Thompson is limited to the facts in that case, and the holding there has no application to an IFPA claim filed by an employee . We need not decide whether Thompson is so limited. The workers' compensation exclusivity rule only limits liability "against an employer for any injury sustained by his or her employees arising out of and in the course of the employment ...." ( Lab. Code, § 3600, subd. (a), italics added.) Because this lawsuit is based on an injury allegedly suffered by the People of the State of California, and was not filed for the purpose of remedying an injury suffered by Alzayat , the exclusivity rule simply does not apply.

By definition, a qui tam lawsuit vindicates an injury to the government, not an injury to the relator. "A qui tam statute effectively assigns part of the government's interest to a relator so that the relator has standing to assert an injury suffered by the government. [Citation.]" ( Stalley U.S. v. Catholic Health Initiatives (8th Cir. 2007) 509 F.3d 517 , 521, second italics added.) " 'A qui tam relator is essentially a self-appointed private attorney general, and his recovery is analogous to a lawyer's contingent fee. The relator has no personal stake in the damages sought-all of which, by definition, were suffered by the government.' [Citation.] A qui tam action 'is a type of private attorney general lawsuit' [citation], in which 'the qui tam plaintiff stands in the shoes of the state or political subdivision' [citation]. '[A]lthough qui tam actions allow individual citizens to initiate enforcement against wrongdoers who cause injury to the public at large, the

DISPOSITION

The judgment is reversed. Mahmoud Alzayat shall recover his costs on appeal.

We concur:

CODRINGTON, J.

SLOUGH, J.

provision prevails over a general one. ( Civ. Code, § 3534 ;

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

substantial justice among the parties." [Citation.] "Our primary task is to determine whether the facts alleged provide the basis for a cause of action against defendants under any theory." ' [Citation.] 'An appellate court independently reviews a trial court's order on such a motion.' [Citation.]" ( Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248 , 272, 219 Cal.Rptr.3d 859 , 397 P.3d 210 .)

Interpretation of Civil Code section 47, subdivision (b), and of the IFPA is a pure question of law that we review de novo. ( Goodman v. Lozano (2010) 47 Cal.4th 1327 , 1332, 104 Cal.Rptr.3d 219 , 223 P.3d 77 .) When the facts are not in dispute, the question of whether a cause of action is barred by the workers' compensation

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." ( Ins. Code, § 1871.7, subd. (b), hereafter Ins. Code, § 1871.7(b).)

Insurance Code section 1871.7, subdivision (a), makes it unlawful to use runners and cappers to procure clients or patients for the purpose of filing claims for insurance services or benefits. Penal Code section 549 makes it a crime to knowingly, or with reckless disregard for the truth, solicit, accept, or refer a client who intends to file a fraudulent claim for insurance benefits. Among other things, Penal Code section 550, subdivisions (a) and (b), criminalize making false claims for compensation or benefits and presenting or preparing false statements in support of or in opposition to a claim for compensation or benefits. Relevant here, Penal Code section 550, subdivision (b)(1), provides it is unlawful to "[p]resent or cause to be presented any written or oral statement as part of, or in support of or opposition to , a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact." (Italics added.) Subdivision (b)(2) of the same section makes it a crime to knowingly "[p]repare or make" a false or misleading statement "to be presented to any insurer or any insurance claimant in connection with, or in support of or opposition to , any claim or payment or other benefit pursuant to an insurance policy." (Italics added.) Assisting or conspiring with another person to present or prepare such a false statement in support of or in opposition to a claim for compensation or benefits is also a crime. ( Pen. Code, § 550, subd. (b).) Finally, Penal Code section 551 criminalizes paying consideration for the referral of clients to automotive repair shops for repairs covered by automobile insurance.

The IFPA's civil penalties are intended to be remedial and not punitive ( Ins. Code, § 1871.7, subd. (c) ), and they are not the exclusive remedies available for insurance fraud ( id ., subd. (k)). An action to recover civil penalties under the IFPA may be initiated by the district attorney or the insurance commissioner. ( Ins. Code, § 1871.7, subd. (d).) In addition, any "interested person," including an insurance company, may file such an action in the name of the People of the State of California. ( Id ., subd. (e)(1).) A lawsuit filed on behalf of the state is called a qui tam action, and the interested person is called a relator. ( People ex rel . Strathmann v. Acacia Research Corp . (2012) 210 Cal.App.4th 487 , 500, 148 Cal.Rptr.3d 361

"These provisions might apply, for example, to a doctor who submits false documentation in support of an employee's claim for benefits under a workers' compensation policy, or an employer who makes a false statement in opposition to such a claim , or to a person who files a false statement in support of an insured's claim under a disability policy, and extends as well to anyone who knowingly assists or conspires to do any of these things." ( Nee , at p. 450, 44 Cal.Rptr.3d 491 , italics added; see Metz , at p. 1070, 67 Cal.Rptr.3d 842 .)

We conclude the latter bit of dicta from Nee is well considered and persuasive. (Cf. PGA West Residential Assn ., Inc . v. Hulven Internat ., Inc . (2017) 14 Cal.App.5th 156 , 171, 221 Cal.Rptr.3d 353 .) A false report submitted by or prepared to be submitted by an employer in response to a claim for workers' compensation insurance benefits, fraudulently disputing liability for the claimed injury, is a false oral or written statement "in support of or opposition to" a claim for benefits within the meaning of Penal Code section 550, subdivision (b)(1) and (b)(2). That is exactly what Alzayat alleged in his complaint. Therefore, we conclude Alzayat pleaded predicate offenses under Penal Code section 550, subdivision (b)(1) and/or (b)(2).

Finally, relying on State ex rel. Wilson v. Superior Court (2014) 227 Cal.App.4th 579 , 174 Cal.Rptr.3d 317 ( Wilson ), defendants argued for the first time at oral argument that civil penalties under Insurance Code section 1871.7(b) are only available to remedy the filing of fraudulent claims for compensation. Arguments made for the first time at oral argument are generally waived. ( Bonfigli v. Strachan (2011) 192 Cal.App.4th 1302 , 1311, fn. 4, 122 Cal.Rptr.3d 447 .) In any event, we do not agree with such a cabined reading of the statute.

in the first sentence may only be assessed once per underlying claim for compensation regardless of how many predicate violations occurred, and the equitable and injunctive remedies mentioned in the second sentence are supplementary to the civil penalty. In other words, rather than limiting the IFPA's statutory penalties to one type of predicate violation, the most reasonable reading of Insurance Code section 1871.7(b) is that it limits the number of penalties that can be imposed for insurance fraud violations related to a single claim.

If the Legislature had intended the IFPA's civil penalties to be limited to defendants who present false claims to insurance companies, as defendants contend, it could have made the point more clearly by amending the first sentence of Insurance Code section 1871.7(b) to only incorporate the predicate offense of filing a fraudulent claim in violation of Penal Code section 550, subdivision (a). Other changes to the statute that would more clearly express an intent to limit penalties to fraudulent claims would include: (1) amending the second sentence of

An early version of the bill to amend the IFPA would have added a new subdivision (g)(1)(B) to Insurance Code section 1871.7, to provide that insurance company relators would be entitled to "receive at least 75 percent

as defendants suggest. Therefore, we respectfully disagree with the court in Wilson , which held the addition of the third sentence to section 1871.7(b), did limit penalties to persons who file fraudulent claims with insurance companies. ( Wilson , supra , 227 Cal.App.4th at pp. 595-597, 174 Cal.Rptr.3d 317 .)

2. The litigation privilege .

Defendants contend that, even if Alzayat pleaded predicate offenses under Penal Code section 550 for purposes of civil liability under the IFPA, those offenses were based on communications that are absolutely privileged under Civil Code section 47(b).

"The litigation privilege, codified at Civil Code section 47, subdivision (b), provides that a 'publication or broadcast' made as part of a 'judicial proceeding' is privileged. This privilege is absolute in nature, applying 'to all publications, irrespective of their maliciousness.' ( Silberg v. Anderson (1990) 50 Cal.3d 205 , 216 [ 266 Cal.Rptr. 638 , 786 P.2d 365 ]....) 'The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that [has] some connection or logical relation to the action.' ( Id . at p. 212 [ 266 Cal.Rptr. 638 , 786 P.2d 365 ].) The privilege 'is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.' ( Rusheen v. Cohen (2006) 37 Cal.4th 1048 , 1057 [ 39 Cal.Rptr.3d 516 , 128 P.3d 713 ]....)" ( Action Apartment , supra , 41 Cal.4th at p. 1241, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .)

" 'The principal purpose of [Civil Code] section [47, subdivision (b) ] is to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions.' ( Silberg v. Anderson (1990) 50 Cal.3d 205 , 213 [ 266 Cal.Rptr. 638 , 786 P.2d 365 ]....) Additionally, the privilege promotes effective judicial proceedings by encouraging ' "open channels of communication and the presentation of evidence" ' without the external threat of liability ( ibid . ), and 'by encouraging attorneys to zealously protect their clients' interests.' ( Id . at p. 214 [ 266 Cal.Rptr. 638 , 786 P.2d 365 ].) 'Finally, in immunizing participants from liability for torts arising from communications made during judicial proceedings, the law places upon litigants the burden of exposing during trial the bias of witnesses and the falsity of evidence, thereby enhancing the finality of judgments and avoiding an unending roundelay of litigation, an evil far worse than an occasional unfair result.' ( Ibid . )" ( Flatley v. Mauro (2006) 39 Cal.4th 299 , 321-322, 46 Cal.Rptr.3d 606 , 139 P.3d 2 .)

his former wife for malicious prosecution and intentional infliction of emotional distress, and the wife successfully demurred to the emotional distress claim contending it was based on privileged communications and was, therefore, barred by section 47(b). ( Begier , at p. 881, 54 Cal.Rptr.2d 158 .) On appeal, the husband conceded the wife's false accusations made in the context of the dissolution proceeding were privileged, but he argued the false police report was not privileged. ( Id . at p. 882, 54 Cal.Rptr.2d 158 .) Without deciding whether false police reports are absolutely privileged, the court held the litigation privilege was preempted in that case by the Child Abuse and Neglect Reporting Act (CANRA; Pen. Code, § 11164 et seq. ). ( Begier , at pp. 882-883, 54 Cal.Rptr.2d 158 .)

The purpose of CANRA is to protect children from abuse or neglect, and to that end it requires certain classes of individuals (mandatory reporters) to report known or suspected child abuse or neglect to a child protective agency. ( Pen. Code, § 11166.) Failure to report known or suspected child abuse or neglect by a mandatory reporter is a misdemeanor. ( Id ., subd. (c).) Mandatory reporters are absolutely immune from criminal or civil liability for making a false report of child abuse or neglect. ( Pen. Code, § 11172, subd. (a).) Nonmandatory reporters are entitled to qualified immunity for making a false

prosecution, certain criminal prosecutions and regulatory enforcement proceedings, as examples of actions that are exempt from the litigation privilege. ( Id . at pp. 1242, 1245-1246, 63 Cal.Rptr.3d 398 , 163 P.3d 89 .) Those exceptions "involved suits brought under state laws, each of which makes clear that the Legislature did not intend its enforcement to be barred by the litigation privilege." ( Id . at p. 1245, 63 Cal.Rptr.3d 398 , 163 P.3d 89 ; see id . at p. 1247, 63 Cal.Rptr.3d 398 , 163 P.3d 89 ["the Legislature remains free to create exceptions to the litigation privilege"].) "[R]ecognition of these exceptions to the litigation privilege," the court continued, "has been guided by the 'rule of statutory construction that particular provisions will prevail over general provisions.' [Citations.] [¶] Each of the above mentioned statutes is more specific than the litigation privilege and would be significantly or wholly inoperable if its enforcement were barred when in conflict with the privilege."

broad protection to consumers from improper attempts to collect debts even if all litigation related communications are excluded from [its] reach ....' " ( Komarova , at p. 340, 95 Cal.Rptr.3d 880 .) Assuming for purposes of its decision that a significant percentage of debts are not litigated, the court nonetheless concluded application of the litigation privilege would render the Rosenthal Act significantly inoperable. "We must ... be mindful of the ease with which the [Rosenthal] Act could be

for a tenant's exercise

Department of Public Health sent a letter to the Department of Motor Vehicles (DMV) expressing her concern that, due to the plaintiff's medical history and cognitive deficits, he posed a risk to public safety. In response, the DMV revoked the plaintiff's commercial driver's license. ( Id . at pp. 1157-1160, 210 Cal.Rptr.3d 267 .) In his lawsuit, the plaintiff alleged a cause of action for breach of contract and tort claims based on violation of the Confidentiality of Medical Information Act (CMIA; § 52 et seq.). The defendants successfully argued in the trial court that the tort claims were barred by the litigation privilege. ( McNair , at pp. 1160-1161, 210 Cal.Rptr.3d 267 .)

The Court of Appeal easily concluded the plaintiff's tort claims, based on the physician's letter to the DMV, were barred by the litigation privilege. ( McNair , supra , 5 Cal.App.5th at pp. 1163-1164, 210 Cal.Rptr.3d 267 .) The plaintiff, however, relied on a number of the cases discussed, ante , for the proposition that the general litigation privilege does not apply when it conflicts with a more specific statute. "Under [that] line of cases, application of the litigation privilege has been deemed inappropriate where the specific statute 'would be significantly or wholly inoperable if its enforcement were barred when in conflict with the privilege.' " ( Id . at p. 1164, 210 Cal.Rptr.3d 267 , citing Action Apartment , Komarova , Begier , & Siam v. Kizilbash .) The McNair court rejected the assertion that application of the litigation privilege "would eliminate safeguards governing disclosures of medical information that the Legislature sought to protect in the CMIA and would therefore render the CMIA 'significantly or wholly inoperable.' " ( McNair , at p. 1165, 210 Cal.Rptr.3d 267 .)

"The CMIA 'was originally enacted ... "to provide for the confidentiality of individually identifiable medical information, while permitting certain reasonable and limited uses of that information." [Citation.]' " ( McNair , supra , 5 Cal.App.5th at p. 1165, 210 Cal.Rptr.3d 267 , quoting Heller v. Norcal Mutual Ins . Co . (1994) 8 Cal.4th 30 , 38, 32 Cal.Rptr.2d 200 , 876 P.2d 999 .) Section 56.10, subdivision (c)(14), part of the CMIA, is a "catchall provision," which permits disclosure of confidential medical information when specifically authorized by law. ( McNair , at p. 1165, 210 Cal.Rptr.3d 267 , quoting Shaddox v. Bertani (2003) 110 Cal.App.4th 1406 , 1414, 2 Cal.Rptr.3d 808 ( Shaddox ).) " 'It legitimizes a myriad of situations the Legislature may not have cared to spell out, by establishing the principle of permissive disclosure when specifically authorized by law.' " ( McNair , at p. 1165, 210 Cal.Rptr.3d 267 , quoting Shaddox , at p. 1414, 2 Cal.Rptr.3d 808 .) "[B]ecause California has a policy of encouraging reports regarding suspected unsafe drivers," the McNair court concluded the catchall provision of section 56.10, subdivision (c)(14), "must be construed in a way that will not impede voluntary reports of the type generated by [a doctor], 'reports whose importance is already recognized and

combat and would upset the legislative balance enshrined in the Act.

Last, we conclude application of the litigation privilege would render the IFPA significantly inoperable. In its ruling, the trial court cited two examples of automobile insurance fraud that would not necessarily involve contemplated litigation and, therefore, would not trigger the litigation privilege. We agree there may be various ways of violating Penal Code section 550, and incurring liability under the IFPA, that do not involve actual or contemplated litigation. But we need not conclude that the litigation privilege would render the IFPA wholly inoperable before finding an exception to the privilege. A significant amount of fraud governed by the IFPA will occur during or in contemplation of litigation. Relevant here, false statements made by an employer, witness, or physician, casting doubt on the validity of a legitimate claim for workers' compensation benefits, are made in the context of a quasi-judicial proceeding and absent an exception would be subject to the litigation privilege. ( Harris , supra , 60 Cal.App.4th at pp. 1187-1188, 70 Cal.Rptr.2d 790 .) It is not difficult to imagine other types of insurance fraud that would potentially trigger the protections of the litigation privilege. Applying the privilege to such acts of fraud, in a remedial action under the IFPA, "would effectively render the protections afforded by [the Act] meaningless." ( Persolve , supra , 218 Cal.App.4th at p. 1277, 160 Cal.Rptr.3d 841 .) Therefore, we conclude Alzayat's claims under

filed a relator action alleging various physicians participated in a scheme to file false claims for workers' compensation benefits on behalf of the relator's employees, in violation of the IFPA. ( Thompson , at p. 27, 38 Cal.Rptr.3d 677 .) On appeal from a judgment finding them liable, the defendants argued the relator's claims were barred by the workers' compensation exclusivity rule. ( Thompson , at pp. 27-28, 38 Cal.Rptr.3d 677 .) The defendants argued the relator's claim was basically a complaint of overbilling, and that Labor Code section 3820 already provided civil penalties for fraudulent practices. ( Thompson , at p. 29, 38 Cal.Rptr.3d 677 .) The court was not persuaded. "[I]n [ Labor Code section 3820 ] the Legislature expressly acknowledged that other penalties may exist, and it stated that the penalty set

Government