LOS ANGELES (Legal Newsline) - Defendants facing accusations they defrauded California's workers' compensation system through medical insurance fraud can't take an exit ramp to dismissal after the case failed to proceed to trial within five years.
That's because, the state's Second Appellate District ruled Feb. 27, plaintiff Anna Maria Christina Sills was forced to wait more than 900 days while state agencies determined whether they wanted to join her qui tam case.
Under the California False Claims Act, qui tam plaintiffs suing on behalf of state programs must file their complaints under seal and not serve defendants with a copy. They must, however, provide the complaint to relevant state agencies so those agencies can figure out if they want to join the cause.
In Sills' case, she complied with the CFCA and gave the complaint to the state Attorney General's Office and the Insurance Commissioner.
So the complaint remained under seal in Los Angeles Superior Court for 962 days before the state agencies decided not to join in 2015. The seal was lifted, and Sills' attorneys served the defendants with copies of the complaints.
Using a rule that says lawsuits must proceed to trial within five years, the defendants sought dismissal. The trial court agreed, counting the nearly 1,000-day delay while the complaint was under seal.
The Second District reversed, finding those years constituted a stay.
"(B)ecause the defendants could not be served and thus did not file pleadings in response to the complaint, there could be no resolution of legal challenges to the complaint, such as demurrers," the decision says.
"Any litigation activity that typically occurs after discovery and challenges to the pleadings, such as a motion for summary judgment and trial, also could not occur while the action was under seal.
"Defendants do not identify any step in the litigation that Sills could have taken while the case was under seal for purposes of the government's intervention decision, nor can we."
The case concerns chiropractor Bahar Gharib-Danesh and other defendants who allegedly inflated medical bills by treating unhurt body parts.