People ex rel. Alzayat v. Hebb
18 Cal. App. 5th 801
| Cal. Ct. App. 5th | 2017Background
- Mahmoud Alzayat, a Sunline Transit employee, alleged his supervisor Gerald Hebb knowingly made false statements in a workplace incident report and in a deposition during a workers' compensation claim investigation, causing denial of his claim.
- Alzayat filed a qui tam action under the Insurance Frauds Prevention Act (IFPA), asserting Penal Code § 550 predicate offenses and seeking civil penalties on behalf of the People of California.
- Defendants moved for judgment on the pleadings, arguing (1) the litigation privilege (Civ. Code § 47(b)) bars Alzayat's claims and (2) the workers' compensation exclusivity rule bars the suit.
- The trial court rejected the exclusivity argument but granted judgment dismissing the case on the ground that the litigation privilege barred the IFPA claim; Alzayat appealed and defendants cross-appealed the exclusivity ruling.
- The Court of Appeal reversed: it held the litigation privilege does not bar IFPA claims because IFPA is a more specific statute that would be significantly inoperable if the privilege applied; it also held the workers' compensation exclusivity rule does not apply to a qui tam action brought on behalf of the People.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the litigation privilege (Civ. Code §47(b)) bars an IFPA qui tam claim based on false statements made in connection with a workers' compensation proceeding | Alzayat: IFPA is a specific remedial statute intended to combat insurance/workers' comp fraud and thus creates an exception to the general litigation privilege; applying the privilege would nullify IFPA | Defendants: Privilege is absolute for communications made in quasi‑judicial proceedings (including workers' comp), so it bars the IFPA claim | Court: Held IFPA is more specific; applying the litigation privilege would significantly impair IFPA enforcement, so the privilege does not bar the IFPA claim |
| Whether the workers' compensation exclusivity rule bars Alzayat's IFPA qui tam action | Alzayat: Qui tam action vindicates injuries to the People, not to the relator, so exclusivity does not apply | Defendants: IFPA claim arises from workplace injury and should be limited by the WCA exclusivity regime | Court: Held exclusivity does not apply because a qui tam relator sues for the People (government’s injury), not to recover the employee’s exclusive remedy under the WCA |
| Whether Penal Code §550 predicates can include employer/witness statements opposing a claim (scope of predicate offenses for IFPA) | Alzayat: §550(b)(1)/(b)(2) cover oral/written statements made in support or opposition to claims; employer or witness statements fall within those predicates | Defendants: §550 primarily targets those who present fraudulent claims (employees/payors), not employers/opponents | Court: Held §550(b)(1)/(b)(2) plausibly apply to false employer/witness statements opposing benefits; complaint adequately pleaded predicate offenses |
| Whether application of legislative history and statutory construction supports broader IFPA remedies (penalty triggers and scope) | Alzayat: Statutory text and history support reading IFPA civil penalties to cover various predicate violations related to claims, not only filing the claim itself | Defendants: Third sentence of Ins. Code §1871.7(b) confines civil penalties to fraudulent claims only | Court: Held harmonized reading and legislative history indicate penalties are tied to each fraudulent claim (limiting multiplicity), not limited to a single predicate; IFPA remedies encompass predicate violations tied to claims |
Key Cases Cited
- Action Apartment Assn., Inc. v. City of Santa Monica, 41 Cal.4th 1232 (Cal. 2007) (general rule that specific statutory schemes prevail over broad litigation privilege when privilege would render the specific scheme inoperable)
- Begier v. Strom, 46 Cal.App.4th 877 (Cal. Ct. App. 1996) (statute creating liability for knowingly false child abuse reports preempts litigation privilege)
- Komarova v. National Credit Acceptance, Inc., 175 Cal.App.4th 324 (Cal. Ct. App. 2009) (Rosenthal Act claims are not barred by litigation privilege when privilege would let litigants evade consumer‑protection statute)
- Harris v. King, 60 Cal.App.4th 1185 (Cal. Ct. App. 1998) (litigation privilege barred tort claims based on medical reports in workers' comp context)
- People ex rel. Monterey Mushrooms, Inc. v. Thompson, 136 Cal.App.4th 24 (Cal. Ct. App. 2006) (IFPA actions not barred by workers' compensation exclusivity where legislative scheme contemplates civil penalties for fraud tied to claims)
- People v. Persolve, LLC, 218 Cal.App.4th 1267 (Cal. Ct. App. 2013) (litigation privilege can be preempted where application would nullify specific statutory protections)
- McNair v. City & County of San Francisco, 5 Cal.App.5th 1154 (Cal. Ct. App. 2016) (litigation privilege may coexist with specific statutes where immunity does not frustrate statutory purpose)