Opinion
B295815
08-12-2020
THE PEOPLE ex rel. ALISON TONTI, Plaintiff and Appellant, v. LIVING REBOS, LLC, et al., Defendants and Respondents.
Medvei Law Group and Sebastian M. Medvei for Plaintiff and Appellant. Nelson Hardiman, Zachary E. Rothenberg, Jonathan W. Radke, and Sarvnaz R. Mackin for Defendants and Respondents Living Rebos, LLC, M-Brace Treatment, Inc., Sobertec, LLC and Upfront Labs, LLC. Kirkland & Ellis, Sierra Elizabeth and James R.P. Hileman for Defendant and Respondent Avee Laboratories, Inc. Polsinelli, Jonathan Buck and J. Alan Warfield for Defendant and Respondent Millennium Health, LLC.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC674091) APPEAL from orders of the Superior Court of Los Angeles County, Michael P. Linfield, Judge. Dismissed and remanded with directions. Medvei Law Group and Sebastian M. Medvei for Plaintiff and Appellant. Nelson Hardiman, Zachary E. Rothenberg, Jonathan W. Radke, and Sarvnaz R. Mackin for Defendants and Respondents Living Rebos, LLC, M-Brace Treatment, Inc., Sobertec, LLC and Upfront Labs, LLC. Kirkland & Ellis, Sierra Elizabeth and James R.P. Hileman for Defendant and Respondent Avee Laboratories, Inc. Polsinelli, Jonathan Buck and J. Alan Warfield for Defendant and Respondent Millennium Health, LLC.
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This case is before us following procedural steps taken below by plaintiff and appellant Alison Tonti (Appellant) apparently designed to generate immediate appellate jurisdiction when it has not been authorized by the Legislature. We conclude that we do not have appellate jurisdiction in this matter and dismiss the appeal on that ground. Further, because we find that the voluntary dismissal on which Appellant sought to base appellate jurisdiction was not legally effective, we remand for further proceedings as described below.
BACKGROUND
Appellant filed this qui tam action under Insurance Code section 1871.7, subdivision (e)(1), as part of the Insurance Frauds Prevention Act (IFPA). Named as defendants were Living Rebos, LLC, a Texas limited liability company; H & H Testing, Inc., a California corporation; Avee Laboratories, Inc., a Florida corporation; M-Brace Treatment, Inc., a Texas corporation; Sobertec, LLC, a California limited liability company; Millennium Health, LLC, a California limited liability company; Upfront Labs, LLC, a California limited liability company; Gloriosa Management, LLC, a California limited liability company; Gregory Van Dyke, an individual; UB Laboratories, Inc., a California corporation; Cordova Medical & Diagnostic Group, Inc., a California corporation; Genesis Molecular Diagnostics, LLC., a California limited liability company; and Zen Recovery, LLC, a Florida limited liability company. The complaint alleges that the defendants engaged in fraudulent billing practices in connection with treatment programs for substance addiction.
These party names are derived from the first amended complaint filed on March 28, 2018.
The trial court record indicates that Genesis Molecular Diagnostics, LLC was dismissed with prejudice from the case on December 13, 2018, with consent of the Department of Insurance.
The complaint was filed under seal on August 29, 2017. Following the statutory 60-day waiting period, neither the Insurance Commissioner nor the district attorney elected to participate in the case (Ins. Code, § 1871.7, subd. (e)(2) & (f)(3)) and the complaint was unsealed by the trial court on December 20, 2017. Appellant then proceeded to prosecute the complaint in her capacity as relator.
Nearly a year later, on November 9, 2018, defendant Avee Laboratories, Inc. (Avee) filed a motion for summary judgment with a hearing date of January 25, 2019. On November 14, 2018, defendant Millennium Health, LLC (Millennium) filed a motion for summary judgment with a hearing date of January 28, 2019. On November 30, 2018, defendants Living Rebos, LLC and M-Brace Treatment, Inc. filed a motion for summary judgment with a hearing date of February 13, 2019. On December 3, 2018, defendants Sobertec LLC and Upfront Labs LLC filed a motion for summary judgment with the same hearing date of February 13, 2019.
Appellant has not included any of the moving papers for the February 13, 2019 motions in the record.
On January 11, 2019, Appellant filed opposition papers directed to the Avee summary judgment motion set for January 25, 2019. These papers included declarations from Appellant, an expert named Charles Hill, and Appellant's counsel, as well as certain documentary evidence. On January 14, 2019, Appellant filed similar opposition papers directed to the Millennium summary judgment motion. Appellant objected to the evidence submitted by both Avee and Millennium.
On January 18, 2019, Avee filed its reply papers in support of its January 25, 2019 summary judgment motion, along with objections to Appellant's submitted evidence. In addition to objecting to substantially all of Appellant's documentary evidence, Avee objected to consideration of the declaration from Hill on the grounds that he had not been disclosed by Appellant in compliance with Code of Civil Procedure section 2034. Millennium filed its reply papers for the January 28, 2019 summary judgment motion on January 23, 2019, including objections to substantially all of Appellant's documentary evidence and the declaration from Hill.
The trial court's tentative ruling in advance of the January 25, 2019 hearing on Avee's motion was to deny the motion. Appellant's counsel chose to submit on the tentative ruling and did not appear at the hearing. Following the hearing, the trial court took the matter under submission, then later issued its ruling granting the motion. With respect to Millennium's motion set for hearing on January 28, 2019, the trial court's initial tentative ruling had been to deny the motion, but after the Avee motion was granted, the trial court revised its tentative ruling to grant the Millennium motion and notified the parties of this change in the tentative. Appellant's counsel made no appearance at the January 28, 2019 hearing. The trial court's tentative ruling granting Millennium's summary judgment motion became the order of the court.
The next day, on January 29, 2019, Appellant's counsel abruptly filed a request for dismissal with prejudice of the entire action. So far as the record shows, no consent from the trial court or from any government entity was obtained prior to filing this request for dismissal. Appellant never filed any opposition to the summary judgment motions set for hearing on February 13, 2019, which opposition papers would have been due about the same time as the dismissal. The record reflects that the superior court clerk entered the dismissal the same day it was filed, January 29, 2019. However, the trial court—apparently unaware that the dismissal had actually been entered—held further proceedings on February 4, 2019, denying Appellant leave to bring in additional defendants related to Avee by Doe amendment.
On February 14, 2019, Appellant filed a notice of appeal stating: "Plaintiff and Appellant PEOPLE OF THE STATE OF CALIFORNIA ex rel. ALISON TONTI ("Plaintiff") and Objector and Appellant SEBASTIAN MEDVEI ("Objector") hereby appeal from the final judgment in this matter and all orders that are separately appealable, including but not limited to the dismissal entered on January 29, 2019, Austin v. Valverde (2012) 211 Cal.App.4th 546, 550-551, and all prior appealable orders, as well as the subsequent order granting the motion to quash entered on February 4, 2019."
On September 27, 2019, respondents Living Rebos, LLC, M-Brace Treatment, Inc., Sobertec, LLC, and Upfront Labs, LLC filed a motion to dismiss the appeal in this court on the grounds that Appellant's voluntary dismissal was not an appealable order and there is no appellate jurisdiction. On October 11, 2019, Millennium filed a motion to dismiss the appeal on similar grounds, as well as a joinder in the September 27 motion to dismiss. On October 18, 2019, Avee filed a motion to dismiss the appeal, citing the same grounds, as well as a joinder in Millennium's motion to dismiss. Following opposition and reply briefing, this court on November 7, 2019, filed an order deferring ruling on the motions to this panel.
Our task now is to determine whether we do, in fact, have jurisdiction to hear this appeal after the unconventional manner in which it has reached us and, if not, how to deal with what is before us.
DISCUSSION
Even without the impetus of the various motions to dismiss filed by respondents, we would be examining the existence of jurisdiction of this court to hear this appeal, as this is always a threshold issue. The unusual posture of the case before us makes this especially important.
"A reviewing court has jurisdiction over a direct appeal only when there is (1) an appealable order or (2) an appealable judgment." ( Griset v . Fair Political Practices Com. (2001) 25 Cal.4th 688, 696.)
Appellant contends that appellate jurisdiction here flows from her voluntary dismissal with prejudice of this action. She states in her opening brief, under the heading "Appealability": "A voluntary dismissal with or without prejudice, filed without any concurrent agreements to reinstate the dismissed claims after conclusion of the appeal (absent a reversal), creates sufficient finality under the one judgment rule to support an appeal of the orders entered prior to the dismissal. [(Kurwa v. Kislinger (2013) 57 Cal.4th 1097, 1105-1106; Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650, 654, 665.)]"
We are not persuaded that the holdings in Kurwa v. Kislinger, supra, 57 Cal.4th 1097 or Abatti v. Imperial Irrigation Dist., supra, 205 Cal.App.4th 650 would support Appellant's novel theory of appellate jurisdiction. (See Yancey v. Fink (1991) 226 Cal.App.3d 1334, 1343 [dismissal with prejudice divests appellate court of jurisdiction].) But even if Appellant's theory might have merit in other circumstances, it would be unavailing here. That is because the very act by which Appellant has sought to create jurisdiction—namely, her voluntary dismissal with prejudice of the entire action—was unauthorized and therefore not valid under the statute governing her qui tam action.
Specifically, Insurance Code section 1871.7, subdivision (e)(1), 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 action may be dismissed only if the court and the district attorney or the commissioner, whichever is participating, give written consent to the dismissal and their reasons for consenting." (Italics added.)
Although not addressed by the parties' initial briefing, we have been troubled by Appellant's precipitate action in dismissing the entire qui tam case with prejudice without some form of prior judicial scrutiny, particularly where there was no settlement of the case. After all, this statute empowers private plaintiffs to bring an action in the name and interest of the State of California, and as the italicized language above indicates, the statute clearly requires a plaintiff who takes on this responsibility to obtain consent before dismissing the action. It is evident from the record that no such consent was either sought or obtained here.
We invited the parties to submit further briefing on the questions of (a) whether an individual plaintiff had the power to dismiss an action under Insurance Code section 1871.7, subdivision (e)(1), without first obtaining consent from the court and/or the Insurance Commissioner or district attorney, and (b) what was the effect of a unilateral request for dismissal filed without obtaining such consent?
The supplemental briefing from respondents can be summarized as taking the view that consent from the Insurance Commissioner or district attorney is not required where, as in this case, neither has opted to participate in the case. Left unaddressed by respondents was the question whether the trial court itself had to grant such consent.
Appellant, by contrast, is unequivocal in stating that advance consent from both the relevant government agency and the trial court is required before an IFPA qui tam action may be dismissed. Appellant further states, "[a] dismissal entered by the clerk after a request from an individual plaintiff who has not obtained consent from the court and/or the related government entities is a 'void' act, subject to set aside at any time, because the court lacks jurisdiction or authority to enter dismissals of IFPA lawsuits prior to the individual plaintiff obtaining the requisite statutory consent."
We have concluded that Appellant is correct. The statutory language could not be clearer: "The action may be dismissed only if the court and the district attorney or the commissioner, whichever is participating, give written consent to the dismissal and their reasons for consenting." (Ins. Code, § 1871.7, subd. (e)(1), italics added.) Similar language appears in the California False Claims Act qui tam provisions, and the qui tam provisions of the federal False Claims Act on which California's statutes were modeled.
We need not address the question whether consent from the Insurance Commissioner or district attorney is also required in these circumstances, where neither has elected to participate in the action. As discussed below, the absence of consent from the trial court is sufficient to invalidate the purported dismissal by Appellant here.
"Once filed, the action may be dismissed only with the written consent of the court and the Attorney General or prosecuting authority of a political subdivision, or both, as appropriate under the allegations of the civil action, taking into account the best interests of the parties involved and the public purposes behind this act." (Gov. Code, § 12652, subd. (c)(1).)
"The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting." (31 U.S.C. § 3730(b)(1).)
The rationale for this kind of requirement is self-evident. A qui tam private action is not the same as an ordinary civil lawsuit: "A qui tam action is one brought under a statute that allows a private person to sue as a private attorney general to recover damages or penalties, all or part of which will be paid to the government. (People ex rel. Allstate Ins. Co. v. Weitzman (2003) 107 Cal.App.4th 534, 538 . . . .) Under California law, a qui tam action is brought on behalf of the People of the State of California, and the People are ' "[t]he real party in interest." ' (Ibid.; see U.S. ex rel. Killingsworth v. Northrop Corp. (9th Cir. 1994) 25 F.3d 715, 720.)" (People ex rel. Strathmann v. Acacia Research Corp. (2012) 210 Cal.App.4th 487, 491-492, fn. omitted.)
Thus, a qui tam plaintiff takes on responsibilities beyond those of a private civil litigant. The requirement that any dismissal of a qui tam action receive advance court approval protects the public interest against the possibility of a collusive or improper settlement that might be reached between the relator and the defendant. It partakes of the same reasoning requiring court approval of the dismissal of a class action. (Marcarelli v. Cabell (1976) 58 Cal.App.3d 51, 53 [holding that "a class action, once filed, may not be dismissed without court approval"], citing La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 871.) The qui tam plaintiff owes a responsibility to the citizens on whose behalf the action is commenced, and the requirement for court approval of any dismissal helps to guarantee a level of accountability for such a step.
No approval of dismissal under Insurance Code section 1871.7, subdivision (e)(1) was either sought or obtained here, in evident violation of the statutory requirements. This requirement is mandatory and jurisdictional under the analysis in Kabran v. Sharp Memorial Hospital (2017) 2 Cal.5th 330, 343 and the cases cited therein. Even Appellant now takes the position that her dismissal of the entire action is void. Thus, the only basis on which Appellant has premised jurisdiction for this appeal—her voluntary dismissal of the action with prejudice—fails. Hence, we have concluded that we lack jurisdiction to hear this appeal, and dismiss the appeal on that basis. We have further concluded that we must remand the case with instructions to set aside the unauthorized dismissal and restore the matter to the trial calendar.
According to the trial court records, additional summary judgment motions were on calendar for February 13, 2019. Instead of filing opposition papers addressed to these motions, Appellant chose to dismiss the entire case and file this purported appeal. On remand, absent a motion seeking the trial court's approval of dismissing the qui tam claims herein, the trial court should restore the case to its trial calendar and set a hearing date for the summary judgment motions that were previously pending for a hearing on February 13, 2019.
DISPOSITION
The appeal is dismissed for lack of jurisdiction. The case is remanded to the trial court with instructions to vacate the unauthorized dismissal, and, absent a motion seeking the trial court's consent to dismissing the qui tam claims herein, restore the case, and particularly the summary judgment motions previously set for February 13, 2019, to the trial court's calendar.
By reason of the foregoing disposition, the pending motions to dismiss are denied as moot. Respondents shall recover their costs on appeal.
NOT TO BE PUBLISHED
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
ROTHSCHILD, P. J.
BENDIX, J.