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2. Almost one and a half years ago, Defendants claimed they were interested in

buying Plaintiff's practice. In good faith, Plaintiff opened its books and records to Defendants,

and entered into negotiations with them.

3. In reality, Defendants did not intend to buy Plaintiff's practice at a fair market

value. Instead, they set out to destroy a family-focused medical practice that treated the

underserved, primarily Latino community, with complete disregard for patient needs.

4. On information and belief, Defendants encouraged Plaintiff's employed physicians

to leave Plaintiff and join Defendants' laborist physician panel, as well as directed Defendants'

contracted physicians to terminate their coverage of Plaintiff's patients and instead, provide

coverage only to Defendants. All of these actions were to the detriment of Plaintiff's practice and

patients.

5. As a result, Plaintiff was deprived of adequate staff to care for its patients, which

caused two major health centers to terminate their referral relationship with Plaintiff. Plaintiff was

forced to close shortly after that, and Plaintiff's patients had to then use Defendants' facilities and

staff, both of which were new and unfamiliar to them during a vulnerable time of their lives.

6. Accordingly, Plaintiff seeks at least $5,000,000 in compensatory damages, as well

as treble damages, punitive damages, injunctive relief, attorney's fees, litigation costs, and any and

all other relief ordered by the Court.

THE PARTIES

7. Plaintiff Citrus Obstetrics & Gynecology Medical Associates, Inc. ("Plaintiff') is a

California corporation whose principal place of business is in this County.

8. Defendant Citrus Valley Health Partners, Inc. ("CV Health Partners") is a


9. Defendant Citrus Valley Medical Center, Inc. ("CV Medical Center") is a


10. Defendant Citrus Valley Physician Partners, Inc. ("CV Physician Partners") is a


- 2 -Complaint

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11. Plaintiff has no knowledge of the true names and capacities of the defendants sued

herein as Does 1-25, inclusive (the "Doe Defendants"), and therefore, pursuant C.C.P. § 474, sues

these Doe Defendants by such fictitious names. Plaintiff shall seek leave to amend this Complaint

to allege the true names and capacities of said Doe Defendants if and when their identities and

roles are ascertained. Each of said fictitiously named Doe Defendants are legally responsible in

some manner for the occurrences and damages alleged herein, and Plaintiff's damages as herein

alleged were proximately caused by the acts of these Doe Defendants.

12. At all times herein mentioned, all Defendants were the agents, servants, employees,

instrumentalities, representatives, co-venturers, partners, and/or alter egos of the other Defendants.

In doing the things hereafter alleged, such Defendants were acting in the scope of their authority

as agents, servants, employees, instrumentalities, representatives, co-venturers, partners, and/or

alter egos, and with the permission and consent of all other Defendants, and as such share liability

with each other in respect to the matters complained of herein.

JURISDICTION AND VENUE

13. The Court has personal jurisdiction over all Defendants because they are all citizens

of California.

14. Pursuant to C.C.P. § 395.5, venue is proper as to all Defendants because their

principal places of business are in this County and judicial district, and their liability to Plaintiff

arises in this County and judicial district.

COMMON ALLEGATIONS

15. Plaintiff is a medical practice that provided birth delivery and other medical

services in obstetrics and gynecology ("OB/GYN") for sixteen years.

16. Defendants CV Health Partners and CV Medical Center operate, among other

things, Queen of the Valley Hospital, also referred to as Citrus Valley Medical Center - Queen of

the Valley Campus (the "Hospital").

17. Defendant CV Physician Partners is a "captive" medical group of physicians

consisting of the Hospital's acquired medical practices. Defendant CV Physician Partners

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provides referred patients and related services to CV Health Partners, CV Medical Center, and the

Hospital.

18. Plaintiff employed or had independent contractor agreements with the following

physicians: Dr. Jason Begley; Dr. Arthur Escamillo; Dr. Ann Terai (a.k.a. Ann Terai Escamillo);

and Dr. Zaid Chaudry. Due to its number of patients, Plaintiff also depended on Defendants to

allow five of Defendants' contracted laborist physicians to provide OB/GYN services and

coverage for Plaintiff's patients, which Defendants had agreed to provide and did provide.

19. Plaintiff had contracts to provide OB/GYN services to two major health centers:

AltaMed Health Services ("AltaMed") and Central City Community I-Tealth Center, Inc. ("Central

City"). Plaintiff's annual revenues from its contracts with AltaMed and Central City averaged at

least $1,400,000.

20. Plaintiff paid Defendants' affiliated physicians at agreed-to sums each time they

provided services to Plaintiff and its patients. Defendants benefitted because their affiliated

physicians would get extra work and more pay than they would have otherwise received for

performing services only for Defendants.

21. Beginning in December 2016, as a part of Defendants' physician practice

acquisition strategy and development of hospital based clinics, Defendants expressed interest in

purchasing Plaintiff's practice and merging it with their in-house OB/GYN laborist group.

22. To facilitate that process, Plaintiff and Defendants entered into a Confidentiality

Agreement on or about January 5, 2017. After entering that agreement, Plaintiff disclosed to

Defendants its financial performance and business model as part of good faith negotiations.

23. In May 2017, Defendants obtained a purported fair market valuation of Plaintiff's

practice at $595,000 to $727,000. Plaintiff informed Defendants that the valuation was too low,

and Defendants stated that they were amenable to a higher range of prices.

24. In about late July 2017, Defendants obtained from its own consultants another fair

market valuation of Plaintiff's practice, this time at $950,000 to $968,000, and informed Plaintiff

of such valuation. That amount was about one-fifth of the true market value of Plaintiff's practice.

Nevertheless, given this increased valuation by Defendants, Plaintiff continued negotiating with

- 4 -Compl aint

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Defendants for a higher price as well as other consideration, including Defendants' employment of

Plaintiffs principal Carlos Beharie, M.D. for at least six months at similar compensation as

Defendants chief medical officer.

25. However, Defendants did not actually intend to buy Plaintiff s practice for

approximately $968,000 and other, related consideration. Rather, Defendants were stringing

Plaintiff along with sham discussions.

26. In reality, Defendants decided to and did formulate a plan to obtain those benefits

for nothing — Plaintiffs patients, its contracts with AltaMed and Central City, and Plaintiffs other

HMO and independent practice association revenue streams, such as Blue Cross, Blue Shield,

Aetna, United Health, Champus, MediCal, and Medicare. As such, Defendants would save

themselves millions and avoid the obligation to employ Dr. Beharie for at least six months.

27. Accordingly, Defendants embarked on an unlawful scheme to drive Plaintiff out of

business, bring Plaintiffs business in-house, and take over and divert Plaintiffs contracts,

patients, and revenues for themselves.

28. It was far from a coincidence that in approximately August 2017, shortly after

Defendants decided not to acquire Plaintiffs practice through legitimate means and at a valuation

acceptable to Plaintiff, two physicians affiliated with Defendants who previously covered for

Plaintiff— Dr. Bill Tang and Dr. Daniel Barajas — informed Plaintiff that they would no longer

provide patient coverage to Plaintiff. On information and belief, Dr. Tang and Dr. Daniel Barajas

did so on the instruction of Defendants' managing agents, particularly Dr. Anna Leung, the head

of Defendants' laborist program. (The "laborist" program provides for one or more OB/GYN

physicians to be on-site 24 hours a day, 7 days a week, so that if an expectant mother came to the

Hospital in labor and would give birth within minutes, a physician could support her even if the

mother's regular OB/GYN physician was off-site).

29. On information and belief, Dr. Leung and other managing agents of Defendants

directed Dr. Tang and Dr. Daniel Barajas to stop taking shifts to cover Plaintiff and its patients,

and Dr. Tang and Dr. Daniel Barajas complied with such orders to preserve their relationships and

working arrangements with Defendants. Dr. Tang and Dr. Daniel Barajas now

Complaint

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provide the same coverage to the OB/GYN practice owned by Defendants, which coverage was

denied to Plaintiff.

30. Beginning in August 2017 and continuing through November 2017, Plaintiff

repeatedly sought help from Defendants to provide laborist physicians to cover Plaintiff's patients,

but Defendants failed to provide such support. On the contrary, Defendants instructed its affiliated

laborist physicians to withhold support from Plaintiff, and did so with the intention of hurting

Plaintiff's ability to practice and driving Plaintiff out of business so that they could take over

Plaintiff's patients and the revenue streams from them.

31. In particular, Plaintiff was the only physician group in the geographic area who

could provide the services required by AltaMed and Central City, including treating high risk

obstetric patients who were likely to deliver premature babies who would then be cared for at

Defendants' neonatal intensive care unit. Thus, Defendants were aware that if they drove Plaintiff

out of business by taking its physicians and contracts, a significant proportion of the patients who

would have been treated by Plaintiff would come instead to Defendants, thereby increasing

Defendants' income base.

32. On information and belief, during approximately October 2017, Defendants

induced Plaintiff's physicians Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann Terai to

breach their employment and contractor agreements with Plaintiff so that they can be employed by

or enter into services contracts with Defendants. Defendants also later hired Plaintiff's physician

Dr. Zaid Chaudry, who started working with Defendants after the failure of Plaintiff's practice.

33. On or about November 30, 2017, due to Defendant's unlawful interference, Dr.

Begley, Dr. Escamillo, and Dr. Terai tendered their resignations to Plaintiff effective January 1,

2018; i.e. , with barely over 30 days' notice. They did this despite the fact that (a) Dr. Begley's

contract automatically renewed for two years as of November 1, 2017, and allowed him to

terminate only 90 days before the end of the current term (or no earlier than August 2019); (b) Dr.

Escamillo's contract required 120 days' notice; and (c) Dr. Terai's contract required 90 days'

notification. Defendants also induced Dr. Begley and Dr. Escamillo (and later Dr. Chaudry) to

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abandon Plaintiff by agreeing to pay for their "tail" malpractice insurance coverage, worth almost

$150,000 in premiums.

34. If only one of Dr. Begley, Dr. Escamillo, and Dr. Terai had left Plaintiff, or if all

three left but over a more prolonged period, Plaintiff would have been able to continue its practice.

However, the departure of all of them on the same day crippled Plaintiff and made it virtually

impossible for Plaintiff to continue servicing its contracts and patients.

35. Defendants had now taken several of Plaintiff's employed physicians and hired

these physicians themselves, and directed their own physicians to refrain from providing coverage

to Plaintiff. Defendants' scheme ensured Plaintiff did not have the capability to treat all of its

patients.

36. During about the same period, Defendants intervened with Plaintiff's clients

AltaMed and Central City and signed contracts to provide OB/GYN services in place of Plaintiff,

including through Plaintiff's former physicians Dr. Begley, Dr. Escamillo, and Dr. Terai whom

Defendants had wrongfully induced to abandon Plaintiff.

37. During that period, Plaintiff attempted to save its contracts with AltaMed and

Central City. For instance, Plaintiff informed AltaMed that it was attempting to hire new

physicians to service AltaMed's patients, and that Plaintiff was also negotiating with Defendants

to obtain coverage from their laborist OB/GYN physicians. However, Defendants misled Plaintiff

by falsely representing that they were attempting to seek coverage of Plaintiff's patients by

Defendants' physicians, when in truth Defendants were doing the opposite — directing their

physicians to discontinue lending any services to Plaintiff.

38. AltaMed informed Plaintiff that because Dr. Begley, Dr. Escamillo, and Dr. Terai,

who had been hired by Defendants, had already received credentials from AltaMed and admission

privileges at the Hospital (when they worked for Plaintiff), whereas any new permanent or locum

tenens physicians hired by Plaintiff would require three or four months to be credentialed by

AltaMed, AltaMed would engage Defendants so that it could serve Plaintiff's patients right away.

39. Due to the sudden and simultaneous departures of Dr. Begley, Dr. Escamillo, and

Dr. Terai, Plaintiff was unable to recruit additional physicians in time. During this same

- 7 -Complaint

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approximate period, Plaintiff interviewed six physicians. Although at least two of those

physicians were amenable to the terms of employment offered by Plaintiff, including their

compensation packages, all six individuals declined to work with Plaintiff, specifically citing the

elimination of Plaintiff's physician group structure due to the simultaneous departures of Dr.

Begley, Dr, Escamillo, and Dr. Terai that was induced by Defendants.

40. Central City informed Plaintiff on or about November 15, 2017, and AltaMed

informed Plaintiff on or about December 7, 2017, that they would terminate their services

contracts with Plaintiff, and instead engage Defendants to provide OB/GYN services. AltaMed

and Central City also refused Plaintiff's offer to provide locums tenens physicians to replace Dr.

Begley, Dr. Escamillo, and Dr. Terai, since Defendants had already acquired the services of those

physicians to treat AltaMed and Central City's referred patients.

41. During the same approximate period, Plaintiff was offered the opportunity to

provide OB/GYN services to patients referred by a different health care facility, Regal Medical

Group / Greater Covina Medical Group. If Plaintiff had been able to service those patients,

Plaintiff would have realized significant additional revenues per year. However, since Defendants

destroyed Plaintiff's ability to hire new doctors, it could not take advantage of that opportunity.

42. On or about January 26, 2018, Plaintiff's practice failed due to Defendants' raiding

of its physicians, Defendants' refusal to provide Plaintiff coverage by its own physicians, the loss

of AltaMed and Central City as clients, the loss of other revenue sources, and the inability to

safely service patients with the physicians who were still affiliated with Plaintiff.

43. This is not the first time that Defendants have done something like this. In an

action entitled Hunter Donaldson, LLC v. Citrus Valley Health Partners, Los Angeles Superior

Court, Case No. BC48974 (filed Aug. 7, 2012), it was alleged that after entering a contract with

plaintiff vendor to obtain a patient claims resolution service, defendant Citrus Valley

misappropriated the vendor's proprietary system and business methods by copying and creating

one in-house.

- 8 -Complaint

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FIRST CAUSE OF ACTION

INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS

44. Plaintiff incorporates by reference paragraphs 1 to 43 above as though they were

fully stated here.

45. There were separate contracts between Plaintiff and each of the following parties:

AltaMed; Central City; Dr. Jason Begley; Dr. Arthur Escamillo; and Dr. Ann Terai.

46. Defendants knew about the foregoing contracts between Plaintiff and AltaMed,

Central City, Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann Terai.

47. Defendants' conduct prevented performance of the foregoing contracts or made

their performance more expensive or difficult.

48. Defendants intended to disrupt the performance of the foregoing contracts, and/or

knew that disruption of performance was certain or substantially certain to occur.

49. Plaintiff was harmed by Defendants' conduct, in that, among other things, Plaintiff

lost the revenues and income that it would have realized from providing OB/GYN services to

AltaMed, Central City, and other patient sources.

50. Defendants' conduct was a substantial factor in causing Plaintiff's harm.

SECOND CAUSE OF ACTION

INDUCING BREACH OF CONTRACT


fully stated here.

52. There were separate contracts between Plaintiff and each of the following parties:

Dr. Jason Begley; Dr. Arthur Escamillo; and Dr. Ann Terai.

53. Defendants knew about the foregoing contracts between Plaintiff and Dr. Jason

Begley, Dr. Arthur Escamillo, and Dr. Ann Terai.

54. Defendants intended to cause Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann

Terai to breach their respective contracts with Plaintiff.

55. Defendants' conduct caused Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann

Terai to breach their respective contracts with Plaintiff.

- 9 -Complaint

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56. Plaintiff was harmed by Defendants' conduct, in that, among other things, without

the medical services of Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann Terai, Plaintiff was

unable to service and lost the revenues and income that it would have realized from providing

OB/GYN services to AltaMed, Central City, and other patient sources.


THIRD CAUSE OF ACTION

INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS


fully stated here.

59. Plaintiff and the following parties were in an economic relationship that probably

would have resulted in economic benefits to Plaintiff: AltaMed; Central City; Dr. Jason Begley;

Dr. Arthur Escamillo; and Dr. Ann Terai.

60. Defendants knew of the foregoing economic relationship between Plaintiff and

AltaMed, Central City, Dr. Jason Begley, Dr. Arthur Escamillo, and Dr. Ann Terai.

61. Defendants engaged in conduct that was wrongful, including but not limited to

encouraging its affiliated physicians to discontinue providing coverage to Plaintiff; inducing Dr.

Jason Begley, Dr. Arthur Escamillo, and Dr. Ann Terai to abandon Plaintiff in violation of their

contractual obligations; and misleading Plaintiff that Defendants were trying to find physicians

who could service Plaintiff's patients, when in fact Defendants were doing the opposite.

62. By engaging in the foregoing conduct, Defendants intended to disrupt the economic

relationship between Plaintiff and the aforementioned parties, and/or knew that disruption of the

relationship was certain or substantially certain to occur.

63. The foregoing economic relationship was disrupted, and Plaintiff was harmed

thereby.


- 10 -Complaint

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FOURTH CAUSE OF ACTION

UNFAIR BUSINESS PRACTICES

BUSINESS AND PROFESSIONS CODE 17200, ET SEQ.


fully stated here.

66. Defendants' acts and omissions as alleged herein constitute unlawful and/or unfair

business practices prohibited by Business & Professions Code § 17200, et seq. Such conduct by

Defendants caused actual harm to Plaintiff, including its loss of the contracts with AltaMed and

Central City and the revenues from its medical practice.

67. Unless Defendants are restrained from such conduct, they will continue to engage

in the same,

68. Accordingly, Plaintiff seeks a permanent injunction against such conduct by

Defendants, and any and all other relief provided for under Business & Professions Code § 17200,

et seq.

FIFTH CAUSE OF ACTION

VIOLATION OF CART WRIGHT ACT

BUSINESS AND PROFESSIONS CODE 16700, ET SEQ.


fully stated here.

70. Although Defendants CV Health Partners, CV Medical Center, and CV Physician

Partners are affiliated with one another, they are separate and distinct entities.

71. Defendants, in concert with one another as well as with other co-participants,

agreed and conspired not to deal with Plaintiff so that they can drive it out of business.

72. Specifically, Defendants and other co-participants agreed not to provide OB/GYN

physician coverage to Plaintiffs patients although they knew that Plaintiff would be unable to

service all of its patients without such coverage and support. Moreover, Defendants disguised

their actions so that by the time that Plaintiff realized what they were doing, it was too late for

Plaintiff to recruit sufficient physicians and obtain credentials and admission privileges for them.

- 11-Complaint

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73. The foregoing refusal to deal by Defendants constitutes a violation of California's

Cartwright Act, Business & Professions Code § 16700, et seq.

74. Plaintiff was harmed by Defendants' acts of refusal to deal.


SIXTH CAUSE OF ACTION

AIDING AND ABETTING


fully stated here.

77. One or more of Defendants knew that certain tortious, wrongful acts were being

committed or would be committed by other Defendants against Plaintiff; namely, intentional

interference with Plaintiff's contractual relations; inducing breach of contract; intentional

interference with Plaintiff's prospective economic relations, unfair business practices; and

violation of the Cartwright Act.

78. One or more Defendants gave substantial assistance or encouragement to the other

Defendants in engaging in such tortious, wrongful acts against Plaintiff.


PRAYER FOR RELIEF

80. Whereas, based on the foregoing factual allegations and causes of action asserted

here, Plaintiff Citrus Obstetrics & Gynecology Medical Associates, Inc. prays for the following

relief against Defendants, jointly and severally.

81. Plaintiff prays for compensatory damages in an amount to be proven at trial, but no

less than $5,000,000.

82. By reason of Defendants' violation of the Cartwright Act, Plaintiff is entitled to

treble damages in an amount to be proven at trial.

83. Defendants engaged in the above alleged conduct with malice, oppression, or fraud.

Such conduct constituting malice, oppression, or fraud was committed by one or more officers,

directors, or managing agents of Defendants, who acted on behalf of Defendants; was authorized

by one or more officers, directors, or managing agents of Defendants; and/or one or more officers,

- 12 -Complaint

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directors, or managing agents of Defendants knew of the conduct constituting malice, oppression,

or fraud and adopted or approved that conduct after it occurred.

84. Additionally, Defendants acted with intent to cause injury to Plaintiff, and/or

Defendants' conduct was despicable and was done with a willful and knowing disregard of the

rights or safety of Plaintiff and Plaintiff's patients. Accordingly, Plaintiff is entitled to an award

of punitive damages in an amount to be proven at trial up to the Constitutional limits.

85. Plaintiff prays for an award of litigation costs

86. Plaintiff prays for an award of attorneys' fees to the extent allowable by law,

including but not limited to the Cartwright Act.

87. Plaintiff pleads for injunctive relief against Defendants.

88. Plaintiff further pleads for any and all other relief that the Court may deem

appropriate.

Dated: June 19, 2018 CALLAHAN & BLAINE,

By: dward SusolikRaphael Cung

Attorneys for Plaintiff CITRUS OBSTETRICS& GYNECOLOGY MEDICAL ASSOCIATES,INC.

- 13 -Complaint

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DEMAND FOR JURY TRIAL

Pursuant to the Seventh Amendment of the United States Constitution, the Constitution of

California, and any and all other applicable law, Plaintiff Citrus Obstetrics & Gynecology Medical

Associates, Inc. hereby requests a jury trial in this action for all claims so triable.

Dated: June 19, 2018 CALLAHAN & BLAINE, AP

By:Edward SusolikRaphael Cung

Attorneys for Plaintiff CITRUS OBSTETRICS& GYNECOLOGY MEDICAL ASSOCIATES,INC.

- 14 -Complaint

pom - the truth about citrus valley medical center · 2018. 6. 19. · callahan & blaine z00 0z...

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