Wednesday, December 23, 2020
Court of Appeal:
Presiding Justice Gilbert Says Contract Between Insurer and Health Care Provider Doesn’t Come Into Play Where Insurer Brings Action Under Which It Stands in Shoes of State
By a MetNews Staff Writer
An insurer suing a provider of medical services for fraudulent bills is not bound by an arbitration clause in its contract with the defendant where it has brought a qui tam action, the Court of Appeal for this district has held.
Affirming an order denying a petition by defendant Pain Management Specialist Medical Group and others to compel arbitration of a dispute, Presiding Justice Arthur Gilbert of Div. Six said, in an opinion filed Monday:
“Here we decide the qui tam action is not subject to arbitration because it is brought on behalf of the state which is not a party to the contract between the insurance company and the surgical center.”
Wording of Statute
Insurance Code §1871.7(e)(1), contained in the Insurance Fraud Protection Act (“IFPA”), Gilbert noted, provides:
“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 person bringing the qui tam action, the relator, stands in the shoes of the People of the State of California, who are deemed to be the real party in interest….The relator in a section 1871.7 qui tam action does not personally recover damages, but if successful, receives a substantial percentage of the recovery as a bounty….
“The procedural requirements of IFPA reflect that the State retains primacy of a qui tam action. The State can dismiss the action, intervene in the action, or permit the relator to continue….IFPA also permits the State to oppose any settlement or bounty.”
Gilbert went on to explain:
“Here the State cannot be compelled to arbitrate this qui tam IFPA action because it is not a signatory to the contracts….[A] party cannot be required to submit to arbitration a dispute that he has not agreed to submit.”
The case is State of California v. Pain Management Specialist Medical Group, 2020 S.O.S. 6098.
Gilbert’s opinion affirms an order by San Luis Obispo Superior Court Judge Ginger E. Garrett.
Arguing for the defendants were Andrew H. Selesnick and Christopher L. Dacus of Buchalter’s Los Angeles office and Robert M. Dato of its Irvine office. Curtis Stanfield Leavitt and Lance M. Martin of the Sacramento firm of Kennaday Leavitt Owensby PC represented Aetna.
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