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THERESA J.BARTA (State Bar No. 150995)
BARTA LAW
404l MacArthur Blvd, Suite 280
Newport Beach, California 92660
Tel. (949) 833-3383
Fax (949) 209-2530
Attorney for Plaintiff.
Diana Pi Blum, M.D.
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
DIANA P. BLUM. MD" Case No. llS-CV-277582
Plaintiff- PLAINTIFF’S OPPOSITION T0
DEFENDANTS’ JOINT MOTION IN
VS. LIMINE TO EXCLUDE EVIDENCE
REGARDING PLAINTIFF’S CLAIMS
SUTTER HEALTH, a California corporation;
FOR INTERFERENCE WITH THIRD
PARTY PAYORS
PALO ALTO FOUNDATION MEDICAL Vvvvvvvvvvvvvvvvv
GROUP, a California corporation; PALO
ALTO MEDICAL FOUNDATION, a Trial Date: January 8, 2018
California corporation; and DOES through
I
1’24””
20,
Defendants.
3325.2
Hon. Drew C.
BY FAX
Judge: Takaichi
Plaintiff hereby opposes Defendants’ Motion in Limine to Exclude Evidence Regarding
Plaintiff’s claims for Interference with Third Party Payers. The “integrated" medical system
implemented and utilized by Defendants assured that Plaintiffs provision of medical services
would be compensated by payments received from third-party payers (e,g..insurers). When
Defendants engaged in their wrongful conduct, itinterfered with Plaintiff ability to obtain that
economic compensation, which provides a basis for interference with economic expectancies.
l
PLAINTIFF'S OPPOSITION TO DEFENDANTS' JOINT MOTION IN LIMINE
TO EXCLUDE PLAINTIFF‘S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION
Defendants' joint Motion in Limine asserts that allevidence relating to Plaintiffs damages
under her interference claims resulting from payments by insurers or third-party payers
(collectively "payers”) should be excluded. Defendants reach this remarkable result by isolating
its transactions with the payers from its transactions with the medical group and pretending that
one has nothing to do with the other. But that effort fails in lightofthe fact that Defendants‘
contract with, and payments to, the Plaintiff were expressly tied to payments from the payers.
Thus, in interfering with Plaintiff’s status as a Sutter Health/PAFMG doctor, Defendants
necessarily interfered with her ability to practice medicine and obtain those reimbursements.
II.
DEFENDANTS’ ARGUMENTS REGARDING PLAINTIFF’S
INTERFEENCE CLAIMS IGNORE THE ACTUAL LANGUAGE
OF THE CONTRACTS AT ISSUE
Defendants’ argument that Plaintiff cannot demonstrate any economic expectancy from
payments for medical care services from insurers or third-party payers is predicated on itsassertion
that PAMF — an entity wholly owned and controlled by Sutter Health — contracts with payers to
obtain financial payments in exchange for the promise to provide health care services to the
payers' members. Defendants then assert that PAMF. in turn. “independently" contracts with
doctors to actually provide those very same health care services. Defendants argue that because
PAMF gets money with one hand. but pays it out with the other, there isno actual connection
between the two and, as such, Plaintiff cannot establish that Defendants‘ misconduct resulted in
any interference with her economic interests in obtaining funds from the payers. Defendants‘
2
PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE
TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
argument. however, is not only unreasonably simplistic, itis in direct contradiction with the terms
and provisions of Plaintiff‘s contract with PAMF.
What Defendants argument completely ignores is that Plaintiffentered into a Shareholder-
Employment Agreement that contained the following provisions:
“Shareholder-Employee hereby assigns his/her right to
receive all fee, income, accounts receivable and the
proceeds thereof generated by him/her in connection with
his/her performance of professional services, including but
not limited to payments received from . .. HMOS, PPOS,
IPAs, and payers under managed care contracts."
(Declaration of Theresa Bana (“Bana Decl.“), Exhibit K
[Shareholder- Employment Agreement §l.3].)
10
As Michael Weatherford, PAMF’s Vice President of Finance. explained
ll
“lfa physician is not seeing patients, they’re not generating
12 any work. and so not getting any pay."
(Barta Decl.. Exibit L [Depo. Michael Weatherford. pp,
l3 39:24-40:l].)
l4
Dr. Lacy, the Chairman ofthe Board of Directors of PAFMG, further explained:
“When services are provided [by PAFMG physician]. those
services are paid for by payer to PAMF, [because] the
physicians have assigned their right to receive their
payment over to PAMF." (Barta Decl.. Exhibit M [Depo
Dr, Joseph Lacy, p. 60:2-12].)
Thus. the only reason PAMF even has the right to obtain the payments from the payers is
because the agreement with the doctors assigns them the right to do so. But that means. in turn,
that PAMF has the obligation to pay the doctors for the services they provide. Essentially PAMF
is afiduciary intermediary between the payers and the doctors.
..
3
PLAINTIFF'S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE
TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
Moreover, the third party payers (Blue Cross. Aetna. Cigna. Blue Shield and Health Net)
entered into contracts that specifically provide that Sutter Health enters into the contract "on
behaIfo/the providers listed in Exhibit 1” and Exhibit 1 includes PAFMG. which are the
physicians (including the Plaintiff). (Barta Decl.,1ll5.) Because Defendants are paid “on behalf
of” the medical providers (i.e.. the doctors, like Plaintiff), Defendants are the agents ofthe medical
providers. (Civil Code section 2295 [defining an agent as “one who represents another, called the
principal, indealings with third persons. Such representation is called an agency.”].) Furthermore.
“[a]n agency relationship isa fiduciary one, obliging the agent to act in the interest ofthe principal.
[Citation.]" (Engalla v. Permanent Medical Group, Inc. (1997) 15 Cal.4th 951, 977.)
10 Thus, with respect to payment for services, while PAMF may have been the nominal party
ll in the contracts with payers, it was, in reality the agent for the doctors and the doctors were the
12 actual beneficiaries ofthe payer contracts’ payment provisions. That is directly contrary to
13 defendants’ claims in its Motion that “Plaintiffis not a signatory or intended beneficiary" ofthe
contracts with the insurance companies. (Motion p. 3:15-16.) To the contrary. all the medical
providers who are shareholders of PAFMG, like Plaintiff, were directly intended to be benefitted
by the contracts with the payers and Defendants owe those medical providers the fiduciary
obligation of paying the medical providers.
Thus, when Plaintiff was terminated, her “economic expectancy” or “economic
relationship ” with the insurance companies and third party payers was also necessarily
terminated. As such, Defendants’ actions in tortiously violating section 2056 and wrongfully
terminating Plaintiffnot only breached Defendants’ own fiduciary duties owed to Plaintiff. it also
interfered with Plaintiff’s relationship with the payers. Thus, the evidence relating to the damages
suffered by Plaintiffas the result of Defendants’ interference with those contractual relations is
4
PLAINTIFF'S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE
T0 EXCLUDE PLAINTIFF‘S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
wholly admissible. Furthermore. because the evidence is directly relevant to damages. its
probative value is direct and substantial and there is no prejudice — undue or otherwise — in
permitting Plaintiff to prove those damages.
Accordingly, Defendants’ motion should be denied.
Dated: January 6, 2018
Theresa J. B rta
Attorney for Plaintiff, Dr. Diana Blum
5
PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE
TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
FlLED
PROOFOF SERVICE 231)? 111.1115 F}..-b.
STATE OF CALIFORNIA, COUNTY OF ORANGE 06
1 am employed In the county of Orange State of California lgyprover' the and a
' ’agefiiJAS
not a party to the Within action; my business address is 5160 Catfipu
California 92660.
On January 8, 2018.1 served the foregoing document(s) de cribed as
OPPOSITION TO DEFENDANTS’ JOINT MOTION IN LIM NE T0 EX U
EVIDENCE REGARDING PLAINTIFF’ S CLAIMS FOR IN
PARTY PAYORS on allinterested parties in this action by placi a‘true copy thereof enclosed
in a sealed envelope addressed as follows:
Attorneys for Sutter Health and Palo Alto Attorneys for Palo Alto Foundation Medical
Medical Foundation: Group, Inc.:
Lindbergh Porter. Esq. Marcie lson Fitzsimmons, Esq.
Maiko Nakarai-Kanivas, Esq. Gordon Rees LLP
Littler Mendelson, PC. 275 Battery 51., #2000
333 Bush Street, 34‘h Floor San Francisco, CA 941 11
10 San Francisco, CA 94104 Tel: (415) 986-5900
Tel: (415) 433-1940 Fax: (415) 986-8054
11 Fax: (415) 399—8490 Email: Mlsom@vordourees.c0m
Email: mnakaraikanivas@littlercom
X (BY PERSONAL SERVICE)
A By
1
personally
caused to be
delivering copies to the
delivered such envelope
person
by
served.
hand to the offices of the addressee pursuant
C..P § 1011.
(BY MAIL) — 1deposited such envelope in the mail at Newport Beach, California. The
15 envelope was mailed with postage thereon fully prepaid. 1 am “readily familiar” with the firm’s
practice of collection and processing correspondence for mailing. Under that practice itwould be
16 deposited with U.S. Postal Service on that same day with postage thereon fully prepaid at Newport
Beach. California in the ordinary course of business. 1 am aware that on motion of the party
17 served. service is presumed invalid if postal cancellation date or postage meter date isor than one
18 _
(1) day after date ofdeposit for mailing
by
(BY
electronic
ELECTRONIC
mail on
in affidavit.
TRANSMISSION)
to the party(s)
—
identified
l transmitted
on the
a PDF
attached
version
service
of this
list using
document
the e-mail
I9 address(es) indicated.
20 Ideclare under penalty of perjury under the laws ofthe State of California that the above is
true and correct.
21
Q! Q :
Theresa I. Barta
23
24
6
PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE
TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS
Preview
THERESA J.BARTA (State Bar No. 150995) BARTA LAW 404l MacArthur Blvd, Suite 280 Newport Beach, California 92660 Tel. (949) 833-3383 Fax (949) 209-2530 Attorney for Plaintiff. Diana Pi Blum, M.D. SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA DIANA P. BLUM. MD" Case No. llS-CV-277582 Plaintiff- PLAINTIFF’S OPPOSITION T0 DEFENDANTS’ JOINT MOTION IN VS. LIMINE TO EXCLUDE EVIDENCE REGARDING PLAINTIFF’S CLAIMS SUTTER HEALTH, a California corporation; FOR INTERFERENCE WITH THIRD PARTY PAYORS PALO ALTO FOUNDATION MEDICAL Vvvvvvvvvvvvvvvvv GROUP, a California corporation; PALO ALTO MEDICAL FOUNDATION, a Trial Date: January 8, 2018 California corporation; and DOES through I 1’24”” 20, Defendants. 3325.2 Hon. Drew C. BY FAX Judge: Takaichi Plaintiff hereby opposes Defendants’ Motion in Limine to Exclude Evidence Regarding Plaintiff’s claims for Interference with Third Party Payers. The “integrated" medical system implemented and utilized by Defendants assured that Plaintiffs provision of medical services would be compensated by payments received from third-party payers (e,g..insurers). When Defendants engaged in their wrongful conduct, itinterfered with Plaintiff ability to obtain that economic compensation, which provides a basis for interference with economic expectancies. l PLAINTIFF'S OPPOSITION TO DEFENDANTS' JOINT MOTION IN LIMINE TO EXCLUDE PLAINTIFF‘S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendants' joint Motion in Limine asserts that allevidence relating to Plaintiffs damages under her interference claims resulting from payments by insurers or third-party payers (collectively "payers”) should be excluded. Defendants reach this remarkable result by isolating its transactions with the payers from its transactions with the medical group and pretending that one has nothing to do with the other. But that effort fails in lightofthe fact that Defendants‘ contract with, and payments to, the Plaintiff were expressly tied to payments from the payers. Thus, in interfering with Plaintiff’s status as a Sutter Health/PAFMG doctor, Defendants necessarily interfered with her ability to practice medicine and obtain those reimbursements. II. DEFENDANTS’ ARGUMENTS REGARDING PLAINTIFF’S INTERFEENCE CLAIMS IGNORE THE ACTUAL LANGUAGE OF THE CONTRACTS AT ISSUE Defendants’ argument that Plaintiff cannot demonstrate any economic expectancy from payments for medical care services from insurers or third-party payers is predicated on itsassertion that PAMF — an entity wholly owned and controlled by Sutter Health — contracts with payers to obtain financial payments in exchange for the promise to provide health care services to the payers' members. Defendants then assert that PAMF. in turn. “independently" contracts with doctors to actually provide those very same health care services. Defendants argue that because PAMF gets money with one hand. but pays it out with the other, there isno actual connection between the two and, as such, Plaintiff cannot establish that Defendants‘ misconduct resulted in any interference with her economic interests in obtaining funds from the payers. Defendants‘ 2 PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS argument. however, is not only unreasonably simplistic, itis in direct contradiction with the terms and provisions of Plaintiff‘s contract with PAMF. What Defendants argument completely ignores is that Plaintiffentered into a Shareholder- Employment Agreement that contained the following provisions: “Shareholder-Employee hereby assigns his/her right to receive all fee, income, accounts receivable and the proceeds thereof generated by him/her in connection with his/her performance of professional services, including but not limited to payments received from . .. HMOS, PPOS, IPAs, and payers under managed care contracts." (Declaration of Theresa Bana (“Bana Decl.“), Exhibit K [Shareholder- Employment Agreement §l.3].) 10 As Michael Weatherford, PAMF’s Vice President of Finance. explained ll “lfa physician is not seeing patients, they’re not generating 12 any work. and so not getting any pay." (Barta Decl.. Exibit L [Depo. Michael Weatherford. pp, l3 39:24-40:l].) l4 Dr. Lacy, the Chairman ofthe Board of Directors of PAFMG, further explained: “When services are provided [by PAFMG physician]. those services are paid for by payer to PAMF, [because] the physicians have assigned their right to receive their payment over to PAMF." (Barta Decl.. Exhibit M [Depo Dr, Joseph Lacy, p. 60:2-12].) Thus. the only reason PAMF even has the right to obtain the payments from the payers is because the agreement with the doctors assigns them the right to do so. But that means. in turn, that PAMF has the obligation to pay the doctors for the services they provide. Essentially PAMF is afiduciary intermediary between the payers and the doctors. .. 3 PLAINTIFF'S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS Moreover, the third party payers (Blue Cross. Aetna. Cigna. Blue Shield and Health Net) entered into contracts that specifically provide that Sutter Health enters into the contract "on behaIfo/the providers listed in Exhibit 1” and Exhibit 1 includes PAFMG. which are the physicians (including the Plaintiff). (Barta Decl.,1ll5.) Because Defendants are paid “on behalf of” the medical providers (i.e.. the doctors, like Plaintiff), Defendants are the agents ofthe medical providers. (Civil Code section 2295 [defining an agent as “one who represents another, called the principal, indealings with third persons. Such representation is called an agency.”].) Furthermore. “[a]n agency relationship isa fiduciary one, obliging the agent to act in the interest ofthe principal. [Citation.]" (Engalla v. Permanent Medical Group, Inc. (1997) 15 Cal.4th 951, 977.) 10 Thus, with respect to payment for services, while PAMF may have been the nominal party ll in the contracts with payers, it was, in reality the agent for the doctors and the doctors were the 12 actual beneficiaries ofthe payer contracts’ payment provisions. That is directly contrary to 13 defendants’ claims in its Motion that “Plaintiffis not a signatory or intended beneficiary" ofthe contracts with the insurance companies. (Motion p. 3:15-16.) To the contrary. all the medical providers who are shareholders of PAFMG, like Plaintiff, were directly intended to be benefitted by the contracts with the payers and Defendants owe those medical providers the fiduciary obligation of paying the medical providers. Thus, when Plaintiff was terminated, her “economic expectancy” or “economic relationship ” with the insurance companies and third party payers was also necessarily terminated. As such, Defendants’ actions in tortiously violating section 2056 and wrongfully terminating Plaintiffnot only breached Defendants’ own fiduciary duties owed to Plaintiff. it also interfered with Plaintiff’s relationship with the payers. Thus, the evidence relating to the damages suffered by Plaintiffas the result of Defendants’ interference with those contractual relations is 4 PLAINTIFF'S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE T0 EXCLUDE PLAINTIFF‘S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS wholly admissible. Furthermore. because the evidence is directly relevant to damages. its probative value is direct and substantial and there is no prejudice — undue or otherwise — in permitting Plaintiff to prove those damages. Accordingly, Defendants’ motion should be denied. Dated: January 6, 2018 Theresa J. B rta Attorney for Plaintiff, Dr. Diana Blum 5 PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS FlLED PROOFOF SERVICE 231)? 111.1115 F}..-b. STATE OF CALIFORNIA, COUNTY OF ORANGE 06 1 am employed In the county of Orange State of California lgyprover' the and a ' ’agefiiJAS not a party to the Within action; my business address is 5160 Catfipu California 92660. On January 8, 2018.1 served the foregoing document(s) de cribed as OPPOSITION TO DEFENDANTS’ JOINT MOTION IN LIM NE T0 EX U EVIDENCE REGARDING PLAINTIFF’ S CLAIMS FOR IN PARTY PAYORS on allinterested parties in this action by placi a‘true copy thereof enclosed in a sealed envelope addressed as follows: Attorneys for Sutter Health and Palo Alto Attorneys for Palo Alto Foundation Medical Medical Foundation: Group, Inc.: Lindbergh Porter. Esq. Marcie lson Fitzsimmons, Esq. Maiko Nakarai-Kanivas, Esq. Gordon Rees LLP Littler Mendelson, PC. 275 Battery 51., #2000 333 Bush Street, 34‘h Floor San Francisco, CA 941 11 10 San Francisco, CA 94104 Tel: (415) 986-5900 Tel: (415) 433-1940 Fax: (415) 986-8054 11 Fax: (415) 399—8490 Email: Mlsom@vordourees.c0m Email: mnakaraikanivas@littlercom X (BY PERSONAL SERVICE) A By 1 personally caused to be delivering copies to the delivered such envelope person by served. hand to the offices of the addressee pursuant C..P § 1011. (BY MAIL) — 1deposited such envelope in the mail at Newport Beach, California. The 15 envelope was mailed with postage thereon fully prepaid. 1 am “readily familiar” with the firm’s practice of collection and processing correspondence for mailing. Under that practice itwould be 16 deposited with U.S. Postal Service on that same day with postage thereon fully prepaid at Newport Beach. California in the ordinary course of business. 1 am aware that on motion of the party 17 served. service is presumed invalid if postal cancellation date or postage meter date isor than one 18 _ (1) day after date ofdeposit for mailing by (BY electronic ELECTRONIC mail on in affidavit. TRANSMISSION) to the party(s) — identified l transmitted on the a PDF attached version service of this list using document the e-mail I9 address(es) indicated. 20 Ideclare under penalty of perjury under the laws ofthe State of California that the above is true and correct. 21 Q! Q : Theresa I. Barta 23 24 6 PLAINTIFF’S OPPOSITION TO DEFENDANTS‘ JOINT MOTION IN LIMINE TO EXCLUDE PLAINTIFF'S CLAIMS FOR INTERFERENCE WITH THIRD PARTY PAYORS