Opinion
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 tire 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)
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,
In this case, California Insurance Guarantee Association (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 *469 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 defendants 1 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, title 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 *470 insurance companies, and other entities. 2 All are defendants in the consolidated workers’ compensation cases in which lien claims have been filed by 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 anticompetitive 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, title 18 United States Code sections 1961, 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 *471 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 tiie basis of the complaint 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 acted with the ulterior motive of damaging or destroying the lawful business of Plaintiffs in order to maximize profits.
The complaint alleges that the defendants engaged in this conduct with malice. Plaintiffs seek $15,000,000 in compensatory damages and restitution, as well as punitive damages, injunctive relief, costs, and fees.
Some of the defendants filed joint demurrers, motions to strike portions of the complaint, and a special motion to strike. 3 Others joined in the special motion to strike. In the end, 10 of the 21 defendants joined in that motion. 4 We refer to this group of defendants collectively as the moving defendants. They argued that the complaint is an anti-SLAPP lawsuit because it is based entirely on the defendants’ constitutional right to petition the WCAB. In support of their motion, defendants filed declarations and exhibits relating to the consolidation petitions. Plaintiffs opposed the special motion to strike, submitting their own declarations and exhibits.
*472 The trial court denied the special motion to strike. It concluded that the first five causes of action “do not satisfy the first prong of the SLAPP analysis because they are not based on any communication made in anticipation of litigation.” Although the trial court found the sixth cause of action for abuse of process satisfied the first prong of the statute, it concluded that Plaintiffs had submitted sufficient evidence to satisfy the second prong, by showing a probability of success on the merits. The moving defendants filed a timely appeal from this order.
DISCUSSION
I
An anti-SLAPP motion “requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. ... If the court finds that such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.”
(Equilon Enterprises v. Consumer Cause, Inc.
(2002)
The moving defendant must demonstrate that the conduct on which the plaintiff’s complaint is based falls within one of the four categories described in section 425.16, subdivision (e), which defines acts “ ‘in furtherance of a person’s right of petition or free speech under the United States or California Constitution ....’”
(Equilon, supra,
Subdivision (e) of section 425.16 provides in relevant part that, as used in that statute, “ ‘act in furtherance of a person’s right of petition or free speech *473 under the United States or California Constitution in connection with a public issue’ includes: (1) any written or oral statement. . . made before a legislative [or] executive . .. proceeding . . . ; (2) any written or oral statement.. . made in connection with an issue under consideration or review by a legislative [or] executive . . . body . .. ; (3) any written or oral statement. .. made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of . . . free speech in connection with a public issue or an issue of public interest.”
The moving defendants argue that the entire complaint is an anti-SLAPP suit, subject to a special motion to strike. This is so because the complaint “wholly arises from, and is predicated upon, [defendants’] acts and communications in connection with or in proceedings before the [WCAB].” Defendants argue that the entire process of submitting bills and lien claims for medical services in pending WCAB cases is inherently part of the WCAB litigation process.
In support of that proposition, they rely on
Vacanti, supra,
The moving defendants reason that they were sued because they exercised their statutory right to object to Plaintiffs’ bills and liens claims. They also observe that Plaintiffs pursued payment in workers’ compensation litigation. The moving defendants invoke the rule that communications preparatory to litigation are included within the ambit of the anti-SLAPP law.
The Premier plaintiffs argue that the entire complaint does not come within section 425.16, citing allegations that the defendants conspired to delay, avoid, and obstruct payment on bills and lien claims. These activities, they contend, had nothing to do with petitioning the WCAB. Plaintiffs cite paragraph 40 of their complaint, which alleges that defendants combined to “contest, object to, litigate, delay payment on and/or not pay at all on Plaintiffs’ valid and proper bills and lien claims for medical treatment and/or services provided to Employers’ Applicants.”
*474 Paragraph 40 further alleges defendants conspired to:
“(b) limit or reduce the amount Defendants would pay on valid and proper bills and lien claims for Employers’ Applicants who Physicians had provided medical services to; [f] . . . [1]
“(e) agree to only pay a certain price, unilaterally agreed upon by Defendants, on Plaintiffs’ valid and proper bills and lien claims for Employers’ Applicants who Physicians had provided medical services to;
“(f) establish or settle, between each Defendant, the payment for valid and proper bills and lien claims for Employers’ Applicants who Physicians had provided medical services to, so as to directly or indirectly affect free and unrestricted competition between Plaintiffs and, among others, those medical treatment and service providers, other than Physicians, which Defendants preferred treat and provide medical services to Employers’ Applicants.”
Plaintiffs argue that none of these allegations refer to petitioning the WCAB, but instead address delay and avoidance of payment to Premier, activity which is not protected and therefore does not fall within the ambit of section 425.16.
The moving defendants have the better argument. In the context of determining whether a case comes within section 425.16, the Supreme Court has held that the constitutional right to petition includes the basic act of seeking administrative action.
(Briggs v. Eden Council for Hope & Opportunity, supra,
We held the action fell within the ambit of the anti-SLAPP statute because the defendant’s communication “raised a question of public interest: whether money designated for charities was being received by those charities. The communication was made in connection with an official proceeding authorized by law, a proposed complaint to the Attorney General seeking an investigation. ‘The constitutional right to petition . .. includes the basic act of filing litigation or otherwise seeking administrative action.’ [Citation.] Just as
*475
communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege[,] we hold that such statements are equally entitled to the benefits of section 425.16. [Citation.]”
(Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, supra,
In
Dickens
v.
Provident Life & Accident Ins. Co.
(2004)
In their brief and at oral argument, Plaintiffs argued that the complaint was not based on defendants’ handling of liens and claims through the workers’ compensation system. Instead, they contended it is based on anticompetitive activity that occurred outside the normal claims handling process. Plaintiffs cited declarations to the effect that Lynn Devine, who represented defendants CIGA, ICW, and Elite Personnel Services before the WCAB, encouraged third parties to refuse to honor settlements reached with Plaintiffs in cases not covered by the stay.
The problem with this contention is that there is no allegation in the complaint that defendants conspired to stop third parties from honoring settlements of Plaintiffs’ liens and claims. For example, paragraph 36 alleges that in an effort to gain an economic advantage over Plaintiffs, and to impede their business, “Defendants, in a concerted conspiracy with each other, *476 banded together to contest, object to, litigate, delay payment on and/or not pay at all on valid, proper and lawful billings and lien claims. Said conspiratorial acts by Defendants were perpetrated with the knowledge that such concerted activity would result in an overwhelmingly negative effect on Plaintiffs’ ability to collect on services rendered to Employers’ Applicants, thereby resulting in extreme pressure on Plaintiffs to concede to Defendants wrongful and unlawful attempts to lower Plaintiffs’ billings and lien claims for Employers’ Applicants.”
Paragraph 40 alleges that defendants acted in combination to “object to, litigate, delay payment on and/or not pay at all on Plaintiffs’ valid and proper bills and lien claims.” Seven subparagraphs detail defendants’ allegedly improper behavior, but do not allege that defendants improperly persuaded third parties to refuse to pay settlements which had previously been agreed upon.
If we were reviewing a ruling on a demurrer, the rules of liberal construction might suggest that Plaintiffs be allowed to amend their complaint to allege the claims regarding the impact of defendants’ conspiracy on third-party settlement payments. On review of an anti-SLAPP motion to strike however, the standard is akin to that for summary judgment or judgment on the pleadings. We must take the complaint as it is.
“In order to establish a probability of prevailing on the claim (§ 425.16, subd. (b)(1)), a plaintiff responding to an anti-SLAPP motion must ‘
“state[]
and substantiate[] a legally sufficient claim.” ’
(Briggs v. Eden Council for Hope & Opportunity[, supra,]
Applying these principles and confining our review to the conduct alleged in the complaint, we are satisfied that the gravamen of Plaintiffs’ action arises from the activity of defendants in litigating lien claims through the workers’ compensation process. This includes communications preceding the filing of the petitions for consolidation. The entire complaint falls within the scope of section 425.16. Section 425.16, subdivision (e) states that an “ ‘act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes: (1) . . . (2) any written or oral statement or writing made in connection with an issue under consideration or review by [an] executive . . . body, or any other official proceeding authorized by law.” (Italics added.) All of the acts alleged fall within this category. The moving defendants satisfied their initial burden under section 425.16, taking us to the second step of the analysis.
II
The second step usually requires that Plaintiffs “ ‘ “demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.” ’ [Citations.]”
(Navellier v. Sletten
(2002)
Plaintiffs argue that because their complaint is not directed at protected activity, defendants cannot demonstrate a probability of prevailing on the merits of their affirmative defenses. They rely on
Mann, supra,
Here, however, defendants invoke affirmative defenses which apply to all of Plaintiffs’ claims. Defendants bear the burden of establishing a probability of prevailing on those defenses. We turn to an examination of the affirmative defenses.
Ill
Moving defendants argue that all of Plaintiffs’ causes of action are barred either by the absolute litigation privilege of Civil Code section 47, subdivision (b), or by the broader Noerr-Pennington 5 doctrine. Because we conclude that the Noerr-Pennington issue is dispositive, we do not reach the Civil Code section 47 issue.
The
Noerr-Pennington
doctrine, which arose in the context of antitrust law, holds that “[t]hose who petition government for redress are generally immune from antitrust liability.”
(Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc.
(1993)
The
Noerr-Pennington
doctrine was extended by the Supreme Court in
California Transport v. Trucking Unlimited
(1972)
Defendants argue the Noerr-Pennington doctrine applies to their alleged conduct before the WCAB. They point out that this action was filed after they objected to and successfully petitioned for consolidation of Plaintiffs’ lien claims before the WCAB. All of the actions which form the basis for the complaint took place in anticipation of, or during, proceedings before the WCAB. Each of Plaintiffs’ causes of action incorporates the allegations of the previous causes of action. As we have discussed, these allegations are based on the moving defendants’ exercise of their right to petition the WCAB to stay all claims involving Plaintiffs in order to obtain an adjudication of the defendants’ claims against Plaintiffs. We conclude that the defendants have demonstrated that the Noerr-Pennington immunity applies to each cause of action.
There is an exception to
Noerr-Pennington
immunity: it does not apply to sham activities.
(Wilson v. Parker, Covert & Chidester, supra,
As we have discussed, the gravamen of the complaint is defendants’ successful activity in petitioning the WCAB to stay processing of workers’ compensation bills and lien claims by Plaintiffs. Defendants have established that these activities were taken in the exercise of their First Amendment right to petition and so fall within the Noerr-Pennington doctrine. Plaintiffs have not addressed this defense and have not invoked the sham activity exception. We conclude the moving defendants established a probability of prevailing on this defense and that the trial court erred in denying the moving defendants’ special motion to strike under section 425.16. Moving defendants are entitled to their reasonable attorney fees on appeal. (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, supra, 47 Cal.App.4th 777, 785.)
*480 DISPOSITION
The order of the trial court denying the special motion to strike is reversed. Moving defendants are to have their costs and fees on appeal.
Hastings J., and Curry, J., concurred.
A petition for a rehearing was denied February 22, 2006, and respondents’ petition for review by the Supreme Court was denied May 10, 2006, S142038. George, C. J., did not participate therein.
Notes
Select Personnel Services and CAN, Intercare and American All-Risk Loss Administrators.
American Casualty Company of Reading, Pennsylvania (erroneously sued as CNA Insurance Company, Inc.; we refer to it as American Casualty); Pacific Secured Equities, Inc., (doing business as InterCare Insurance Services); Insurance Company of the West; Explorer; American All-Risk Loss Administrators; Elite Personnel Services, Inc.; Headway Corporate Staffing; USA Biomass Corporation; Good Nite Inn, Inc.; Abbey Party Rents; Southwest Trails; Lehman Foods, Inc.; San Femando Valley Association; Terry Hinge Hardware Co.; Select Personnel Services; Encore Painting; King Wire Partitions; HMI Associates; Kodiak Construction, Inc.; Basement Clothing, Inc.
On appeal, CIGA argues that the trial court’s ruling on the special motion to strike also should be reversed because it is immune from suit under state and federal law. Those grounds were raised in CIGA’s demurrer, which was overruled by the trial court except as to the RICO cause of action, but were not raised in the special motion to strike. Our conclusion that the special motion to strike should have been granted renders the issues raised on the demurrer moot.
The parties moving to strike the complaint under the anti-SLAPP statute are: CIGA, American Casualty, Pacific Secured Equities, Inc., Insurance Company of the West, Explorer, American All-Risk Loss Administrators, Elite Personnel Services, Inc., Lehman Foods, Inc., Select Personnel Services, and HMI Associates.
Eastern R. Conf.
v.
Noerr Motor
(1961)