SANTA ANA, Calif. (Legal Newsline) – A California appeals court has upheld a lower court’s order in a whistleblower case regarding alleged Medicare fraud.

In a March 12 ruling, 4th District Court of Appeal, Division Three Judge Raymond J. Ikola found that the Superior Court of Orange County “did not err” and affirmed the order. Presiding Judge Kathleen E. O’Leary and Judge David A. Thompson concurred. 

The case stems from a lawsuit filed by MMM Holdings Inc. and MSO of Puerto Rico Inc. against Marc Reich, the attorney who represented former MSO President Jose “Josh” Valdez. Valdez served as president from April 2010 until his December 2010 termination. The plaintiffs claim he was fired “because he was incompetent and failed to perform his job duties,” the opinion states.

But Valdez claims he was terminated “for his vocal opposition” to the plaintiffs’ alleged fraudulent practices, according to the opinion. After he was terminated, Valdez allegedly took around 26,000 electronically stored documents. 

In their complaint, the plaintiffs accused Reich of receiving, wrongfully possessing and refusing to turn over the documents. He is also accused of sharing some of the documents with a third party to assist that party with litigation against MMM.

The plaintiffs requested damages of at least $100,000.

In response, Reich filed a January 2016 motion to strike the complaint under the anti-strategic lawsuit against participation (SLAPP) statute

The Superior Court of Orange County granted the motion, saying the plaintiff’s claims “against Reich involved Reich’s petitioning activity protected by the anti-SLAPP statute.” The Superior Court found that his use of the documents was done in connection with an issue of public interest. 

In this case, the issue is in regard to his client’s claim that MMM overbilled the government and underpaid medical providers. The claim states that the “plaintiffs overcharged Medicare by more than $1 billion between 2007 and 2010,” the opinion states.

The court also found that the plaintiffs “had not shown, and could not show, a probability they would prevail on any of their claims.” 

The plaintiffs appealed, but the appeals court agreed with the Superior Court’s decision. The court said Reich’s use of company documents were “protected by litigation privilege” because they were “reasonably relevant” to pending or contemplated litigation.




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