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( '

FILED S rior Court of California

unty ofLos Angeles

SEP 'l. :-t 2013 John A. Clarke, Executive Officer/ Clerk

By G~ , Deputy R A

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

THE STATE OF CALIFORNIA ex rei. MICHAEL WILSON, LUCIUS ALLEN, AND EVE ALLEN, Relators,

Plaintiffs,

v.

LASC Case No: BC367873

COURT'S RULING AND ORDER RE: BRISTOL MYERS SQUIBB'S MOTION FO SUMMARY ADJUDICATION

Hearing Date: September 12, 2013

BRISTOL MYERS SQUIBB, INC.; AND 16 JOHN DOES 1-10,

I 7 Defendants.

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I.

BACKGROUND

Plaintiffs, Relators Michael Wilson, Lucius Allen, and Even Allen ("Relators,"

collectively), have brought this suit on behalf of the People of the State of California against

Bristol Myers Squibb, Inc. ("BMS"), alleging that BMS "engaged in a course of illegal and

fraudulent conduct aimed at doctors, health care providers, pharmacists, and insurance

companies" in marketing several drugs.' In particular, Relators allege that BMS unlawfully

2 provided high-prescribing doctors with lavish gifts, expensive meals, speaking honoraria, trips,

3 and hotel stays, both in order to induce them to prescribe BMS drugs and in order to reward them

4 for doing so? The Relators are all former employees of BMS.

5 Relators have alleged two claims against BMS for violation of Insurance Code

6 § 1871.7(a) & (b)- the California Insurance Frauds Prevention Act ("IFPA"). Defendant BMS

7 has moved for summary adjudication of the following two issues pursuant to CCP §437c(s):

8 A. If:

9 i. BMS provided or promised to provide an item or service of value to a physician;

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B. If:

ii. one purpose of BMS providing or promising to provide the item or service of value to the physician was to try to influence the physician to prescribe BMS drugs; and

iii. subsequent to BMS providing or promising to provide the item or service of value to the physician, the physician prescribed a medically appropriate BMS drug;

can there be a violation of Insurance Code Section 1871.7(a) or (b) without proof that the item or service of value is what caused the physician to prescribe the drug?

i. BMS provided or promised to provide an item or service of value to a physician

ii. one purpose of BMS providing or promising to provide the item or service of value to the physician was to try to influence the physician to prescribe BMS drugs; and

iii. subsequent to BMS providing or promising to provide the item or service of value to the physician, the physician prescribed a medically appropriate BMS drug;

1 Second Amended Complaint ("SAC"), ~2.

2 SAC, ~2.

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"no."

iv. the express factual assertions on the claim for payment submitted to a third party for payment of the health care benefit were not misstated; and

v. the claim does not disclose the item or service of value provided or promised to be provided to the physician;

can there be a violation of Cal. Ins. Code Section 1871.7(a) or (b)?

For the reasons discussed infra, the Court determines the answer to both questions is

II.

REQUEST FOR JUDICIAL NOTICE

The Plaintiffs/Relators request judicial notice of the following pursuant to Evidence Code

§452(c):

1. Letter from Manning, Marder & Wolfe to Stan Diorio, dated April 15, 1999, which is contained in the Legislative history of Cal. Ins. Code § 1871.7, as amended by Statutes of 1999, Chapter 885, §2, Assembly Bill1050;

2. AB 1300, Assembly Ways and Means Committee Republican Analysis, Apr. 13, 1993, which is contained in the Legislative History of Cal. Ins. Code §1871.7, as added by Statutes of 1993, Chapter 120, §3.3, Assembly Bill1300; and

3. Letter to the Members of the Assembly Finance, Insurance, and Public Investment Committee from the Alliance of American Insurers dated Apr. 9, 1993, which is contained in the Legislative History of Cal. Ins. Code §1871.7, as added by Statutes of 1993, Chapter 120, §3.3, Assembly Bill1300- Brown.

The request is granted as to Exhibit 2. See People v. Allen (2001) 88 Cal.App.4th 986

995, fn. 16; Golden Day Schools, Inc. v. Department of Education (1999) 69 Cal.App.4th 681,

691-692; Forty-Niner Truck Plaza, Inc. v. Union Oil Co. (1997) 58 Cal.App.4th 1261,1273.

The request is denied as to Exhibits 1 and 3, as the letters do not constitute cognizable

legislative history subject to judicial notice under §452(c). Quintana v. Mercury Casualty Co.

(1995) 11 Cal.4th 1049, 1062, fn. 5; Heavenly Valley v. ElDorado County Bd of Equalization

(2000) 84 Cal.App.4th 1323, 1327, fn. 2.

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III.

MOTION FOR SUMMARY ADJUDICATION

1. Standards under a motion for summary adjudication under CCP §437c(s)

CCP §437c(s) provides as follows:

(s) (1) Notwithstanding subdivision (f)3, a party may move for summary

adjudication of a legal issue or a claim for damages other than punitive damages that does not completely dispose of a cause of action, an affirmative defense, or an issue of duty.

(2) This motion may be brought only upon the stipulation of the parties whose claims or defenses are put at issue by the motion and a prior determination and order by the court that the motion will further the interests of judicial economy, by reducing the time to be consumed in trial, or significantly increase the ability of the parties to resolve the case by settlement.

(7) A motion for summary adjudication brought pursuant to this subdivision may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.

Since a CCP §437c(s) motion is to proceed in "all procedural respects" as a motion for

summary judgment, the general burdens on motions for summary judgment and summary

3 CCP §437c(t) provides:

(f) (1) A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.

(2) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. However, a party may not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court, unless that party establishes to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.

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adjudication would also apply. The parties, with the Court's approval, previously had stipulated

2 to the Court hearing the two issues under the CCP §437c(s) procedure.

3 2. Issue 1

4 a. Standards on statutory interpretation

5 In order to resolve both Issue 1 above (and Issue 2, discussed infra), the Court must

6 examine the canons of statutory interpretation. Statutory interpretation is a legal question.

7 Creditors Collection Service v. Hanzel! Vineyards, Ltd (1992) 5 Cal.App.41h Supp. 1, 4; Spanish

8 Speaking Citizens Found. v. Low (2000) 85 Cal.App.41h 1179, 1214. It is long settled that

9 courts read the statute as a whole to give the words their proper context, meaning, and effect.

10 Vasquez de Mercado v. Superior Court (McClung) (2007) 148 Cal.App.4th 711, 715 ("[t]he

11 words of the statute should be given their ordinary and usual meaning and should be construed in

12 their statutory context. These canons generally preclude judicial construction that renders part o

13 the statute 'meaningless' or 'inoperative[]"').

14 "In construing statutory language, [courts] must 'apply reason, practicality, and common

15 sense ... .Ifpossible, the words should be interpreted to make them workable and reasonable ... in

16 accord with common sense andjustice .... ' [Citation.]" Eckertv. Sup. Ct. (1999) 69 Cal.App.41h

17 262,266.

18 "In the construction of a statute ... the office of the Judge is simply to ascertain and

19 declare what is in terms or in substance contained therein, not to insert what has been omitted, or

20 to omit what has been inserted; and where there are several provisions or particulars, such a

21 construction is, if possible, to be adopted as will give effect to all." CCP § 1858; Cal. Fed. Sav.

22 & Loan Ass 'n. v. City of Los Angeles (1995) 11 Cal.41h 342, 351; Mfrs. Life Ins. Co. v. Sup. Ct.

23 (1995) 10 Cal.41h 257,274. See also CCP §1859 (Legislature's intent is to be pursued, if

24 possible; a particular intent will control a general one that is inconsistent with it).

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"When there is no ambiguity or absurdity on the face of the statute, [a court] may not

manufacture one by resort to the legislative history." Kelly v. CB&I Constructors, Inc. (2009)

179 Cal.App.4th 442, 463.

b. Discussion of Issue 1

With these standards in mind, California Insurance Code § 1871.7 (part of the Califomi

Insurance Frauds Prevention Act, or "IFP A") provides in pertinent part as follows:

(a) It is unlawful to knowingly employ runners, cappers, steerers, or other persons to procure clients or patients to perform or obtain services or benefits pursuant to Division 4 (commencing with Section 3200) of the Labor Code or to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.

(b) Every person who violates any provision of this section or Section 5494, 5505,

4 Penal Code §549 provides in applicable part:

Any firm, corporation, partnership, or association, or any person acting in his or her individual capacity, or in his or her capacity as a public or private employee, who solicits, accepts, or refers any business to or from any individual or entity with the knowledge that, or with reckless disregard for whether, the individual or entity for or from whom the solicitation or referral is made, or the individual or entity who is solicited or referred, intends to violate Section 550 of this code or Section 1871.4 of the Insurance Code is guilty of a crime, punishable upon a first conviction by imprisonment in the county jail for not more than one year or by imprisonment in the state prison for 16 months, two years, or three years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, or by both that imprisonment and fine.

5 Penal Code §550 provides in pertinent part:

(a) It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following:

(1) Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury, including payment of a loss or injury under a contract of insurance.

(2) Knowingly present multiple claims for the same loss or injury, including presentation of multiple claims to more than one insurer, with an intent to defraud.

(3) Knowingly cause or participate in a vehicular collision, or any other vehicular accident, for the purpose of presenting any false or fraudulent claim.

( 4) Knowingly present a false or fraudulent claim for the payments of a loss for theft, destruction, damage, or conversion of a motor vehicle, a motor vehicle part, or contents of a motor vehicle.

(5) Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to

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or 551 6 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 ($1 0,000), plus an assessment of not more than three times the amount of each claim for compensation, as defined in Section 3207 of the Labor Code or pursuant to a contract of 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

allow it to be presented, in support of any false or fraudulent claim.

( 6) Knowingly make or cause to be made any false or fraudulent claim for payment of a health care benefit.

(7) Knowingly submit a claim for a health care benefit that was not used by, or on behalf of, the claimant.

(8) Knowingly present multiple claims for payment of the same health care benefit with an intent to defraud.

(9) Knowingly present for payment any undercharges for health care benefits on behalf of a specific claimant unless any known overcharges for health care benefits for that claimant are presented for reconciliation at that same time.

(1 0) For purposes of paragraphs ( 6) to (9), inclusive, a claim or a claim for payment of a health care benefit also means a claim or claim for payment submitted by or on the behalf of a provider of any workers' compensation health benefits under the Labor Code.

(b) It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:

( 1) Present 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.

(2) Prepare or make any written or oral statement that is intended 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, knowing that the statement contains any false or misleading information concerning any material fact.

(3) Conceal, or knowingly fail to disclose the occurrence of, an event that affects any person's initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled.

(4) Prepare or make any written or oral statement, intended to be presented to any insurer or producer for the purpose of obtaining a motor vehicle insurance policy, that the person to be the insured resides or is domiciled in this state when, in fact, that person resides or is domiciled in a state other than this state.

6 Penal Code §551 is inapplicable to this litigation, as it deals with automotive repair dealers, contractors, agents or

employees thereof.

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this paragraph shall be assessed for each fraudulent claim presented to an insurance company by a defendant and not for each violation.

(c) The penalties set forth in subdivision (b) are intended to be remedial rather than punitive, and shall not preclude, nor be precluded by, a criminal prosecution for the same conduct. If the court finds, after considering the goals of disgorging unlawful profit, restitution, compensating the state for the costs of investigation and prosecution, and alleviating the social costs of increased insurance rates due to fraud, that such a penalty would be punitive and would preclude, or be precluded by, a criminal prosecution, the court shall reduce that penalty appropriately. (Emphasis added.)

The critical question at the heart oflssue 1 is whether §1871.7(a) imposes a requirement

that the Relators prove causation, or instead, whether that section permits Relators to ignore the

effect of doctors' independent medical judgment and the reasons why doctors made particular

prescription decisions for particular patients. In other words, must the Relators demonstrate at

trial that BMS 's promise of some benefit or incentive to a physician (or the physician's actual

receipt of some benefit or incentive) caused the physician to prescribe a BMS drug (which, for

purposes of the stipulated issue, was a "medically appropriate" drug)? Put another way, is the

"taint" enough? Can the Court assume fraud, notwithstanding the prescriptions of medically

appropriate drugs? In the Commissioner's words, is a claim affected by unlawful payments

inherently fraudulent under the statute? Unfortunately, the Legislature has not given much

guidance on the meaning of the statute or its application to the practices of the pharmaceutical

industry.

Section 1871. 7(b) speaks in terms of imposing liability "for each fraudulent claim

presented to an insurance company by a defendant and not for each violation[.]" (Emphasis

added.) Breaking down the statutory language, Plaintiffs must demonstrate that the claim was

"fraudulent" in order for liability to attach under the statute. The statute goes a step further,

however, and requires that this fraudulent claim be "presented" to the insurer. While the statute

does not use the term "causation," the only way the statute makes sense is to find a causation

requirement is necessarily implied therein. The monetary relief set forth under § 1871. 7(b) is

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specifically tied to each fraudulent claim presented. Without a fraudulent claim being presented

to the insurer, liability does not attach under the statute. As such, the Court cannot interpret

§ 1871.7(a) to allow monetary relief under the statute without a showing of a fraudulent claim

having been presented.

Relators invoke the concept of the "substantial factor" test, spelled out under CACI 430.

CACI 430 provides:

A substantial factor in causing harm is a factor that a reasonable person would consider to have contributed to the harm. It must be more than a remote or trivial factor. It does not have to be the only cause of the harm.

Again, pursuant to stipulated issue A, and for purposes of analyzing the instant motion,

the Court must assume that the drugs prescribed by the physicians are medically appropriate.

Under that assumption, the mere prescription of a BMS medically-appropriate drug could not be

the result of harm under the statute, without a showing that the item of value promised to the

physician was what caused the prescription (and led to the reimbursement claim). Under these

circun1stances, the "but-for" test of causation would control. Viner v. Sweet (2003) 30 Cal.41h

1232, 1240 & n.3. As in Viner, (and again, given the stipulation of"medically appropriate

drugs" having been prescribed), these would not be "concurrent independent causes" of the

harm, which are defined as "multiple forces operating at the same time and independently, each

of which would have been sufficient by itselfto bring about the harm." Id. at 1240 (emphasis

added).

The only way under the statutory scheme to assess whether BMS violated the statute is to

examine the reasons a given physician wrote a prescription for a BMS drug. If the reasons

amounted to a quid pro quo arrangement, then this may violate the statute. If, instead, the reason

was attributed to the physician's independent medical judgment, regardless of whether an item o

value was promised, then this would not violate the statute. If the drugs were not medically

appropriate (contrary to the stipulated facts), the result may be different.

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The cases upon which Plaintiffs rely do not support their interpretation of the statute. In

2 re Neurontin Marketing and Sales Practices Litigation (2013) 712 F.3d 21 was a case brought

3 under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. The Court

4 determined that the plaintiffs in that case could rely on evidence of aggregate data and statistical

5 approaches in assessing liability under the Act. Here, however, the lawsuit was brought under

6 IFPA (an entirely different statutory scheme). As such, In re Neurontin is not helpful to the

7 analysis.

8 In People ex rei. Allstate Ins. Co. v. Muhyeldin (2003) 112 Cal.App.4th 604, the Plaintiff

9 insurer alleged that defendant doctors committed widespread fraud by submitting hundreds of

I 0 false claims (through the use of improper billing codes and by using improper billing codes), and

11 that they had therefore violated Cal. Penal Code§ 550 and were liable under Cal. Ins. Code

12 § 1871.7 for civil penalties and assessments. A jury found in the plaintiff insurer's favor.

13 The Court of Appeal affirmed, and rejected the doctors' argument that §1871.7(a)

14 required the insurer to show the doctors employed cappers to procure clients. The Court noted,

15 however, that the trial was presented to the jury on 40 claims that were a representative cross-

16 section of the 318 false claims upon which the insurer sued. This, in the Court's view, lends

17 support to the notion that there is an individual causation requirement for purposes of proving

18 statutory violations.

19 Finally, US. v. Rogan (7th Cir. 2008) 517 F.3d 449 is inapposite. That case dealt with

20 violations under the federal Anti-Kickback Act and its application to illegal referrals (and

21 corresponding illegal kickbacks). It does not have any application to the issue presented here.

22 At some level, the Commissioner's argument that "[t]he clear intention of IFPA is to

23 prevent the payment of money from affecting decisions regarding healthcare choices"7 has some

24 appeal. However, that is precisely why the Court finds there is a causation requirement under th

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7 Commissioner's Brief at 2:12-13.

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statute. If there is a hypothetical quid pro quo arrangement between BMS and a given physician,

that arrangement would be grounds for the monetary relief spelled out under § 1871. 7(b ).

However, Plaintiffs would have to demonstrate that the arrangement caused the fraudulent claim

to be presented. The Court cannot make that assumption to impose liability. In other words,

liability under the statute cannot be inferred, based on the stipulated factual scenario under

Question 1.

The Plaintiffs' assertions regarding the Legislature's intent in enacting §1871.7 as

prohibiting "kickbacks" under B&P Code §650 are not persuasive. This section provides in

pertinent part:

(a) Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code, the offer, delivery, receipt, or acceptance by any person licensed under this division or the Chiropractic Initiative Act of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients, clients, or customers are referred is unlawful.

Significantly, the only remedy spelled out under §650 is penal in nature. Section 650(g)

states that "[a] violation of this section is a public offense and is punishable upon a first

conviction by imprisonment in a county jail for not more than one year, or by imprisonment

pursuant to subdivision (h) of Section 1170 of the Penal Code, or by a fine not exceeding fifty

thousand dollars ($50,000), or by both that imprisonment and fine. A second or subsequent

conviction is punishable by imprisonment pursuant to subdivision (h) of Section 1170 of the

Penal Code, or by that imprisonment and a fine of fifty thousand dollars ($50,000)."

Judge Carl West previously granted BMS's motion to strike the references to B&P Code

§650 on the ground that this provision was penal in nature (as opposed to providing a civil

remedy). Importantly, B&P Code §650 is not one of the statutes referenced in Insurance Code

§ 1871.7. There is nothing else which indicates the Legislature intended that §650 could serve as

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a precursor to liability under IFP A. As such, Relators' arguments and references to B&P Code

2 §650 are not persuasive.

3 For these reasons, the Court determines that the answer to Question 1 is "no."

4 C. Issue 2

5 At the outset, the Court is not persuaded by Plaintiffs' assertion that Judge West's order

6 overruling the demurrer operates as "res judicata" with respect to Issue 2 on the motion for

7 summary adjudication. The Court had merely determined that a cause of action was stated. The

8 Court had viewed the pleading only, and was not presented with the stipulated factual scenario

9 relating to the instant motion for summary adjudication.

10 With that said, the question surrounding Issue 2 is the statute's use ofthe term

I I "fraudulent claim." Plaintiffs assert that §1871.7(a) does not require a claim to be factually false

12 to impose liability, while Defendant contends that an insurance claim containing only truthful,

13 accurate information is not fraudulent, and is thus not actionable under IFP A.

14 On the face ofthe statute, and applying its plain meaning, the Court determines that a

I 5 claim would have to be false before liability could attach. Merriam-Webster defines

16 "fraudulent" as "characterized by, based on, or done by fraud: deceitful[.]" See www.m-w.com,

17 definition of"fraudulent" (site checked September 20, 2013). "Fraud," in turn, is defined as

18 follows:

19 1 a : deceit, trickery; specifically : intentional perversion of truth in order to

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induce another to part with something of value or to surrender a legal right

b : an act of deceiving or misrepresenting : trick[.] See www.m-w.com, definition of"fraud" (site checked September 20, 2013)

If the express factual assertions on the claim were not misstated, then the claim would not

be a "fraudulent" one subjecting the presenter ofthe claim to liability under §1871.7(b)-

notwithstanding the nondisclosure of the item or service of value promised to the prescribing

physician. The statute speaks in terms of imposing liability based on "each fraudulent claim

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presented[.]" Again, if there is no fraudulent claim presented, there would be no liability under

the statute. On the face of the statute, therefore, the Court finds that the assertions on the claim

would have to be untrue in order for civil liability to attach under the statute.

People ex rei. Monterey Mushrooms, Inc. v. Thompson (2006) 136 Cal.App.4th 24

suggests that the claim would have to be "fraudulent" to impose liability under §1871.7(b). In

that case, the Court of Appeal affirmed a trial court's finding that the defendants and the

corporations they formed violated § 1871. 7(b) by submitting fraudulent claims for compensation

proscribed by Penal Code §550. Significantly, the evidence presented at trial was that the

defendants, in billing for treatment of Monterey Mushrooms' employees, "prepared fraudulent

claims for workers' compensation payments for unnecessary and excessive chiropractic

treatment, frequently submitting 'at least two, and often three' separate claim forms for a single

patient visit." Monterey Mushrooms, 136 Cal.App.4th at 27. Here again, pursuant to the

stipulated issue under CCP §437c(s), the factual assertions on the claim for payment, for

purposes of the analysis, are true. This is a very different scenario than the underlying claims in

Monterey Mushrooms.

Plaintiffs rely in large part on the Federal Anti-Kickback Statute and a "false

certification" theory. In the federal context, the Court in Ebeid ex rel. US. v. Lungwitz (9th Cir.

2010) 616 F.3d 993, 998 set forth the definitions of"express" and "implied" certification, as

follows:

Express certification simply means that the entity seeking payment certifies compliance with a law, rule or regulation as part of the process through which the claim for payment is submitted. Implied false certification occurs when an entity has previously undertaken to expressly comply with a law, rule, or regulation, and that obligation is implicated by submitting a claim for payment even though a certification of compliance is not required in the process of submitting the claim. Under both theories, "[i]t is the false certification of compliance which creates. liability when certification is a prerequisite to obtaining a government benefit." [Citation.] Likewise, materiality is satisfied under both theories only where compliance is "a sine qua non of receipt of state funding." [Citation.]

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However, the applicability of the federal False Claims Act ("FCA") cases and the "false

2 certification" theory with respect to the analysis on Issue 2 is questionable. IFP A refers only to

3 the specific act of presenting a "fraudulent claim" to an insurer and imposing liability on a

4 defendant which employs a "runner, capper, steerer, or other person" to achieve that end.

5 Rightly or wrongly, there is nothing under IFP A which purports to impose a "false certification"

6 standard as a precursor to liability (or which otherwise establishes separate regulations forming

7 the predicate for a "false certification" violation). As discussed supra, B&P Code §650 cannot

8 stand as a basis for the Plaintiffs' "false certification" theory since it is not incorporated by

9 reference into IFP A, and in any event, is a criminal statute imposing criminal penalties.

10 Further, the "false certification" cases do not appear to apply to fraudulent claims

11 presented to private insurers. They apply to fraudulent claims made to the federal government.

12 As such, this stands as a separate basis for finding that the "false certification" theory does not

13 apply to IFP A specifically. The Court is not persuaded by the "materiality" standard referred to

14 by Relators (i.e., "if a claim would not have been paid had the payer known the truth about why

15 the claim was made - even if the claim was for legitimate services - and the truth was hidden

16 from the payer when the claim was made, then this claim is 'false"'). 8 While such a provision,

17 as a policy matter, may very well serve a public benefit, there is no analogous "materiality"

18 standard in IFP A. Similarly, while the Plaintiffs' "fraudulent scheme" theory would have appeal

19 (i.e., that a truthful claim may be construed as fraudulent if it is the result of a fraudulent process

20 that compromises the claim), this is also not part of IFP A. Until the Legislature includes such

21 provisions and amends the statute accordingly, it is not the Court's role to impose this standard

22 under the current scheme.

23 For these reasons, the Court answers Issue 2 "no."

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8 Plaintiffs'/Relators' Opposition at 18:10-11.

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IV.

2 RULING AND ORDER

3 For the foregoing reasons, the Court answers both Questions A and B "no." The issues

4 addressed in the Court's Ruling and Order present controlling questions oflaw as to which there

5 are substantial grounds for difference of opinion. Pursuant to Code of Civil Procedure § 166.1,

6 the Court finds that appellate resolution of these issues may materially assist in the resolution of

7 the litigation.

8 The Court sets a further status conference for Tuesday, November 5 at 9 a.m. The parties

9 are to meet and confer on a proposed Case Management Order in the interim, and shall submit a

10 joint statement no later than November 1, 2013 addressing 1) the progress on the proposed

11 CMO; and 2) a proposed going-forward plan for future events in this litigation, in light of the

12 Court's Ruling and Order on the motion for summary adjudication.

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14 Dated: September 23, 2013

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16 Judge of the Superior Court

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