Motion in Limine Evidentiary in Diana Blum, MD vs Sutter Health et al| Trellis.Law

On March 04, 2015 a Motion,Ex Parte was filed involving a dispute between Diana P. Blum, and Palo Alto Foundation Medical Group, Inc., Palo Alto Medical Foundation, Sutter Health, for Wrongful Termination Unlimited(36) in the District Court of Santa Clara County.

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MARCIE ISOM FITZSIMMONS (SBN: 226906) FILED 83:9

j.
N
HIEU T. WILLIAMS
GORDON REES
275 Battery Street,
San Francisco,
Telephone:
Facsimile:
MIsom@grsm.com
(SBN: 280585)
SCULLY MANSUKHANI,
Suite 2000
CA 94111
(415) 986-5900
(415) 986-8054
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THE COURFA
ERIOR counro
OF SANTAL CID

HWilliams@grsm.com -;~
9
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Attorneys for Defendant
PALO ALTO FOUNDATION MEDICAL GROUP, INC.
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LINDBERGH PORTER (SBN: 100091)
LITTLER MENDELSON, P. C.
333 Bush Street, 34 Floor
San Francisco, CA 94104
Telephone: (415) 433-1940
10 Facsimile: (415) 399-8490
LPorter@littler.com
11
MAIKO NAKARAI-KANIVAS (SBN: 271710)
2000
12 LITTLER MENDERLS 0N, RC.
94111
1255 Treat Blvd., Suite 600
LLP
Suite 13 Walnut Creek, CA 94597
CA
Telephone: (925) 932-2468
Recs

Street,
14 Facsimile: (925) 946-9809
& MNakaraikanivas@littler.com
Francisco,

15
Gordon
Battery Attorneys for Defendants
16 SUTTER HEALTH and PALO ALTO MEDICAL FOUNDATION
San

275
17 SUPERIOR COURT OF CALIFORNIA

18 COUNTY OF SANTA CLARA ’

1‘9 DIANA P. BLUM, M.D., ) CASE NO. 115CV277582
)
20 Plaintiff, ) DEFENDAN TS’ JOINT MOTION IN
)
LIMINE T0 EXCLUDE EVIDENCE
21 vs. REGARDING AND TO HAVE COURT
) DECIDE PLAINTIFF’S BUSINESS
22 SUTTER HEALTH, a California corporation; ) AND PROFESSIONS CODE SECTION
PALO ALTO FOUNDATION MEDICAL ) 17200 ET SEQ. CLAIM
23 GROUP, INC., a California corporation; )
PALO ALTO MEDICAL FOUNDATION, a ) No. 3 of 16
24 California corporation; and DOES 1 through

20, ;
25 ) Trial Date: January 8, 2018
Defendants. ) Time: 8:45 am. Dept.' 16
26 )
) Complaint Filed: March 4, 2015
27
)
FAC Filed: August 7, 2015

28
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DEFENDANTS’ JOINT MOTION IN LIMINE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF’S
BUS. & PROF. CODE § 17200 CLAIM
I. INTRODUCTION
In her First Amended Complaint (“FAC”), Plaintiff DIANA BLUM, M.D. (“Plaintiff”)

alleges that Defendants SUTTER HEALTH, PALO ALTO MEDICAL FOUNDATION, and

PALO ALTO FOUNDATION MEDICAL GROUP (collectively, “Defendants”) engaged in both

unlawful and unfair business practices in violation of Business and Professions Code section
WﬂCﬁm-PWN

17200, et seq. (“UCL”). However, for all but one of the alleged 1% business practices,
Plaintiff lacks standing because she was neither a consumer affected by the alleged practice nor a

competitor of any of the Defendants, and she did not suffer any economic injury as a result of the

\O alleged unfair business practices. Defendants therefore request that any evidence related to

10 unfair business practices that Plaintiff lacks standing to challenge be excluded at trial, as such

11 evidence is irrelevant, and would result in confusion of the issues, misleading of the jury, undue

12 prejudice to Defendants, and a waste of time. To the extent the Court determines Plaintiff has
2000

94111

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Suite 13 standing, and as to Plaintiff‘s allegation that Defendants engaged in unlawful business practices,
CA
Rees
14 Defendants request that Plaintiff s UCL claim be tried by the Court because it is an equitable
Street,

& Francisco,

15 claim for which there is no right to ajury trial.
Gordon
Battery

16 I. RELEVANT FACTUAL BACKGROUND
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17 Plaintiff is a neurologist who was employed by the Palo Alto Foundation Medical Group

1s (“the Physician Group”), and treated patients at Palo Alto Medical Foundation’s (“PAMF”)

19 clinics, from 2008 to 2013. Plaintiff alleges that Defendants violated the Unfair Competition

20 Law (“UCL”), Business and Professions Code section 17200, et seq., by engaging in unlawful

21 and unfair business practices. (See First Amended Complaint [“FAC”] 1189, Ex. 1 to Declaration

22 of Marcie I. Fitzsimmons in Support of Defendants’ Motions in Limine [“Fitzsimmons Decl.”]).

23 Plaintiffs claim for unlawful business practices is premised on her ﬁrst through third causes of

24 action for wrongful termination, retaliation in violation of Business and Professions Code section

25 2056, and breach of contract. (FAC 1H} 89(a)—(g)). As for Plaintiff s Lian business practices

26 claim, Plaintiff alleges that Defendants committed mair competition by engaging in the
27 following business practices:

28
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DEFENDANT S’ JOINT MOTION IN LDvﬂNE N0. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF’S
BUS. & PROF. CODE § 17200 CLAIM
l. Threatening to destroy Plaintiff’s career;
Threatening to destroy the careers of other physicians;
3. Pressuring Plaintiff to engage in coding practices intended to
increase the amount Sutter Health and PAMF could charge
third party payers;
UI-PWN

4. Imposing policies and practices intended to deter referrals
outside of the Sutter network;
5. Imposing policies and practices intended to deter prescription
of brand name medications; and
6. Imposing policies and practices whereby invoices submitted to
third party payers listed someone other than the physician who
actually provided the service.
\DOOQON

(PAC, 1“] 89(h)—(m)). Following her resignation, Plaintiff went on to open a private neurology

10 practice, which is a concierge practice that does not accept any insurance. (See Declaration of
11 Maiko Nakarai- Kanivas in Support of Defendants’ Motions in Limine [“Nakarai Decl.”] 112,

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12 Exh. A, Deposition of Plaintiff [“Pl. Depo.”] 176:6-7).
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Suite 13 II. LEGAL ARGUMENT
CA
Rees

Street,
14 A. Evidence Relating To Plaintiff’s Unfair Business Practices Claim Should Be
& Excluded
Francisco,

15
Gordon
Battery 1. Plaintiff Lacks Standing To Challenge The Alleged Unfair Business
16 Practices
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275
17 Defendants anticipate that Plaintiff will attempt to introduce evidence at trial relating to

18 her claim that the policies and practices she allegedly complained about (i.e., related to coding,

19 referrals, prescription drugs, billings, etc.) were unfair business practices that violated the UCL.

20 However, except for the claim that Defendants threatened to destroy Plaintiff’s career, Plaintiff

21 does not have standing to challenge the alleged unfair business practices because she was neither
22 a consumer affected by the alleged practices nor a competitor of any of the defendants. “A

23 litigant’s standing to sue is a threshold issue to be resolved before the matter can be reached on

24 the merits.” Blumhorst v. Jewish Family Servs. ofLos Angeles (2005) 126 Cal. App. 4th 993,

25 1000. To satisfy the standing requirement under the UCL, Plaintiff must establish that she

26 “suffered injury in fact and has lost money or property as a result of the unfair competition.”
27 Bus. & Prof. Code § 17204. The economic injury must be “(a) concrete and particularized, and

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DEFENDANTS’ JOINT MOTION IN LIMINE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF ’S
BUS. & PROF. CODE § 17200 CLAIM
(b) actual or imminent, not conj ectural or hypothetical,” and there must be a causal connection

between the unfair competition and the economic injury. Kwikset Corp. v. Superior Court

(2011) 51 Cal. 4th 310, 322, 326 (citations and quotations omitted).

Here, Plaintiff lacks standing to challenge Defendants’ policies and practices as unfair

business practices. Her FAC makes clear that her claimed economic injury is the loss of her
employment with the Physician Group. That economic injury (i.e., loss of employment) was
\OOOQONUI-b

allegedly caused by retaliation for complaining about certain policies and practices. There is

nothing about the underlying policies and practices themselves that Plaintiff identiﬁes as causing

her economic harm. For example, Plaintiff does not allege that because of Defendants’ coding,

10 referral or generic prescription policies, she earned less money than she could have. Nor does

11 Plaintiff allege that she was a consumer (i. e., patient) who suffered economic injury as a result of

2000
12 Defendants" policies and practices. Notably, in her FAC, Plaintiff does not allege she suffered
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Suite 13 any economic injury as a result of the alleged unfair business practices. (See PAC 1} 94
CA
compare with 1111 65, 76, 106 (expressly alleging
Rees

Street,
14 (alleging no economic injury); 87, 101,
& Francisco,

15 economic injury in excess of $10 million due to wrongful termination, retaliation, breach of
Gordon
Battery

16 contract, and interference with prospective economic advantage), Ex. 1 to Fitzsimmons Decl.).
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275
17 Judge Armstrong’s holding in Tanner v. Kaiser Foundation Health Plan, Inc. (N .D. Cal.

1s Aug. 1, 2016) 2016 WL 4076116, is instructive. There, a pharmacist sued his purported former

19 employers, alleging, in part, that they engaged in unlawﬁil business practices by earning proﬁts

2o through a 501(c)(3) tax—exempt entity and funneling those proﬁts to its related for-proﬁt entities,

21 which in turn inured to the beneﬁt of private individuals. Id. at *1, 8. The only economic injury

22 the plaintiff alleged was failure to pay wages. The Court dismissed the plaintiffs UCL claim,

23 reasoning that even if the defendants had engaged in the alleged unlawful business practices, the
24 plaintiff lacked standing because he failed to establish “a causal connection between Defendants’

25 purported [Internal Revenue Code] violations (i.e., siphoning proﬁts to private entities) and his

26 economic injury (i.e., unpaid compensation).” Id. at 8.

27 l//
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DEFENDANTS’ JOINT MOTION IN LIMINE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF’S
BUS. & PROF. CODE § 17200 CLAIM
Similarly, like the plaintiff in Tanner, Plaintiff alleges that Defendants imposed various
policies and practices in order to increase revenues at the expense of patient care, but she wholly
fails to establish how any of the policies or practices caused her economic injury. Because there
4>~UJN

is no causal connection between the alleged unfair business practices and Plaintiffs economic

injury of loss of employment, Plaintiff cannot establish standing under the UCL to challenge the
alleged unfair policies and practices. Kwikset Corp. , 51 Cal. 4th at 326 (“[P]1aintift’s economic

injury [must]
OKDOONQVJI
come ‘as a result of the unfair competition . . . [which] requires a showing of a

causal connection .. ..” (quotations omitted».

2. Evidence Related To The Alleged Unfair Business Practices Is
Irrelevant

As discussed above, Plaintiff lacks standing under the UCL to challenge Defendants’

2000
12 policies and practices as unfair business practices. Evidence relating to such policies and
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Suite

CA
Rees

Street,
14 irrelevant and should be excluded. Evid. Code § 350 (“no evidence is admissible except relevant
& Francisco,

15 evidence”); Id. § 210 (“‘Relevant evidence’ means evidence .. .having any tendency in reason
Gordan
Battery

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16 to prove or disprove any disputed fact that is of consequence to the determination of the action”).
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17 Defendants recognize that many of the policies and practices Plaintiff seeks to challenge
18 under the UCL are policies and/or practices Plaintiff claims she complained about in connection

19 with her Business and Professions Code section 2056 retaliation claim. However, the focus of a

20 Section 2056 claim is whether Plaintiff protested policies and practices she reasonably believed

21 impaired her ability to provide medically appropriate healthcare, and whether she was retaliated

22 against as a result of those protests. Bus. & Prof. Code §§ 2056(b)—(c). It is not whether the
23 policies and practices in fact impaired her ability to provide medically appropriate healthcare,

24 much less whether the policies and practices were unfair business practices. Indeed, the

25 determination of whether a policy or practice constitutes an “unfair” business practice for

26 purposes of the UCL is very different from whether the policy or practice was one that a
27 physician reasonably believed impaired her ability to provide medically appropriate healthcare.

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DEFENDANTS’ JOINT MOTION IN LIMINE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF’S
BUS. & PROF. CODE § 17200 CLAIM
A» ,4’ ~.J

The standard under the UCL is whether the policy or practice threatens to Violate antitrust law or

public policy, or is “immoral, unethical, oppressive, unscrupulous or substantially injurious to

consumers.” Cal-Tech Comm ’ns v. Los Angeles Cellular Telephone Co. (1999) 20 Cal. 4th 163,
I

186-87; Smith v. State Farm Mutual Automobile Ins.
Lh-FWN

Co. (2001) 93 Cal. App. 4th 700, 719.

Evidence relating to whether Defendants’ policies and practices were unfair business practices

because they prioritized revenue over patient care can therefore be excluded as irrelevant without

infringing on any of the parties’ abilities to prosecute or defend against Plaintiff’s retaliation
\DOOQON

claim.

3. Evidence Related To The Alleged Unfair Business Practices Should Be
Excluded Under Evidence Code Section 352
10

11 Evidence relating to alleged unfair business practices that Plaintiff lacks standing to

2000
12 challenge should also be excluded pursuant to Evidence Code section 352, as its probative value
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Suite 13 is substantially outweighed by the risk that its admission will necessitate an undue consumption
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Rees

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14 of time, create a danger of undue prejudice, confuse the issues, and mislead the jury. Evid. Code
& Francisco,

15 § 352. Litigating the issue of whether each of Defendants’ policies and practices that Plaintiff
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Battery

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16 challenges is, in fact, an unfair business practice is a waste of time if Plaintiff lacks standing
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17 under the UCL. Moreover, evidence relating to and argument about how Defendants’ policies

18 and practices are improper and intended to increase revenue at the expense of patient care is
19 likely to prejudice the jury against Defendants. Indeed, there is no easier way for Plaintiff to

2o prejudice a jury against Defendants than to attempt to portray them as greedy healthcare

21 organizations that have no regard for the welfare of their patients. If the Court permits Plaintiff
22 to introduce evidence regarding the alleged unfair business practices, it is more likely that the

23 jury will unfairly hold Defendants liable for retaliation or on the other claims, even if it is not
24 supported by the evidence. Finally, given that many of the same policies and practices are

25 implicated by Plaintiff’s retaliation and UCL claims, but there are different elements and legal

26 standards for each claim, permitting evidence relating to the UCL claim for unfair business
27 practices is likely to confuse the issues and mislead thejury. Plaintiff and her counsel should be
28
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DEFENDANTS’ JOINT MOTION IN LIIVHNE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF ’S
BUS. & PROF. CODE § 17200 CLAIM
ordered not to introduce any evidence regarding, or make any reference to, the alleged unfair

N business practices that Plaintiff does not have standing under the UCL to challenge.

B. The Court — And Not The Jury — Must Rule 0n Plaintiffs UCL Claim
To the extent the Court determines Plaintiff has standing to challenge Defendants’

policies and practices as Lian business practices, and as to Plaintiff’s allegation that Defendants

engaged in unlawful business practices, Defendants request that Plaintiff’s‘UCL claim be tried
\OOOVONUI-k

by the Court because it is an equitable claim for which there is no right to a jury trial.

While parties have the right to a jury trial in civil cases as to legal claims, they have no

such right as to equitable claims. C & K Eng’g Contractors v. Amber Steel Co. (1978) 23 Cal.3d

10 1, 8. Claims under the UCL are equitable in nature, not legal. Bus. & Prof. Code § 17203

11 (describing injunctive relief available for violations of the UCL); see also In re Tobacco 11 Cases

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12 (2009) 46 Cal. 4th 298, 312 (“A UCL action is equitable in nature; damages cannot be
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Suite 13 recovered.” (citing Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1144)).
CA
Rees

Street,
14 California courts have therefore found that there is no entitlement to ajury trial on UCL claims.
& Francisco,

15 C & K Eng'g Contractors, 23 Cal.3d at 11; see also Hodge v. Superior Court (2006) 145 Cal.
Gordon
Battery

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16 App. 4th 278, 284-85 (no right to jury trial on UCL claim because “[p]laintiffs seek relief from
275
17 alleged unfair competition, not to enforce the Labor Code .. .[and] those remedies are solely

18 equitable”); People v.First Federal Credit Corp. (2002) 104 Cal. App. 4th 721, 732—33 (“in

19 UCL cases there is no right to a jUry trial”).
. . . The Court, and not the jury, must make its own

2o independent ﬁndings about the facts and law regarding Plaintiff’s claim under the UCL. A—C Co.

21 V.See. Pac. Nat. Bank (1985) 173 Cal.App.3d 462, 474 (reversible error to permit jury to decide

22 equitable issue); Raedeke v. Gilbraltar Savings & Loan Ass ’n (1974) 10 Cal. 3d 665, 671 (1974)

23 (court may try equitable issues, while jury tries legal issues); Estate of Fincher (1981) 199 Cal.

24 App. 3d 343, 352 (“a trial court may try equitable issues separately even when legal issues in the

25 case are tried to the jury”). Any ruling on Plaintiff’s UCL cause of action must be made by the
26 Court, and not a jury, as a matter of law.
27 Ill
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DEFENDANTS’ JOINT MOTION IN LIMINE NO. 3
T0 EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE PLAINTIFF'S
BUS. & PROF. CODE § 17200 CLAIM
III. CONCLUSION

N For the foregoing reasons, Defendants respectfully request that the Court grant their

motion in limine to exclude any evidence relating to unfair business practices that Plaintiff lacks

standing to challenge under the UCL. Speciﬁcally, Defendants request that the Court exclude

evidence relating to the following alleged unfair business practices:

\oooﬂOxUI-bw
1. Threatening to destroy the careers of other physicians;
2. Pressuring Plaintiff to engage in coding practices intended to
increase the amount Sutter Health and PAMF could charge
third party payers;
3. Imposing policies and practices intended to deter referrals
outside of the Sutter network;
4. Imposing policies and practices intended to deter prescription
10
of brand name medications; and
11 5. Imposing policies and practices whereby 1nvoices submitted to
third party payers listed someone other than the physician who
2000
12 actually provided the service.

Defendants also request that the Court, and not the jury, decide Plaintiff‘s UCL claim
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14 both as to her allegation that Defendants engaged in unlawful business practices, and as to any
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&
Francisco,

15 policies and practices of Defendants that the Court determines Plaintiff has standing to challenge
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16 as unfair business practices — as it is an equitable claim that must be tried by the Court.
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l7
Dated: January 5, 2018 GORDON REES SCULLY MANSUKHANI, LLP
18

19 By:
MARCIE ISOM FITZSIMMONS
20 HIEU T. WILLIAMS
Attorneys for Defendant
21 PALO ALTO FOUNDATION MEDICAL
GROUP, INC.
22

26
Dated: January 5, 2018 LITTLER MENDELSON,

By: 4' z A
INDBERGH PORTER
»

MAIKO NAKARAI-KANIVAS
Attorneys for Defendants
P.C.

I;
PALO ALTO MEDICAL FOUNDATION and
27 SUTTER HEALTH

28
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DEFENDANTS’ JOINT MOTION EN LEVINE NO. 3
TO EXCLUDE EVIDENCE REGARDING & TO HAVE COURT DECIDE‘PLAINTIFF’S
BUS. & PROF. CODE § 17200 CLAIM

Case Info

Judge

Drew C. Takaichi Track Judge’s New Case

Case No.

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Document Filed Date

January 05, 2018

Case Filing Date

March 04, 2015

County

Parties

Christine A. Lawler Attorney For The Defendant
Diana P. Blum Plaintiff
Lindbergh Porter Attorney For The Defendant
Palo Alto Foundation Medical Group, Inc. Defendant
Palo Alto Medical Foundation Defendant
Sutter Health Defendant
Maiko Nakarai-Kanivas Attorneys for Defendants
Theresa Barta-Vavrock Attorney
James Barber Attorney
Jeffrey Wertheimer Attorney
Charles Louderback Attorneys for Plaintiffs
Hieu Tran Attorney
Stacey Pratt Attorneys for Plaintiffs
Marcie Fitzsimmons Attorneys for Defendants
Sean Piers Attorneys for Defendants
Hieu Williams Attorney
Nicole Williams Attorneys for Defendants
Theresa Barta Attorney

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Motion,Ex Parte: Diana Blum, MD vs Sutter Health et al

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