State of Cal. ex. rel. Sills v. Gharib-Danesh ( 2023 )

Filed 2/27/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA ex rel. B312459
ANNA MARIA CHRISTINA SILLS,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC603624)
v.
BAHAR GHARIB-DANESH et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Maureen Duffy-Lewis, Judge. Reversed.
Cotchett, Pitre & McCarthy, Justin T. Berger, Robert B.
Hutchinson, Carlos Urzua and Theresa Vitale for Plaintiff and
Appellant.
Rob Bonta, Attorney General, Martin H. Goyette, Assistant
Attorney General, Jacqueline Dale, Maria Ellinikos and Brendan
Ruddy, Deputy Attorneys General, as Amicus Curiae on behalf of
Plaintiff and Appellant.
Heather B. Hoesterey, Antonio A. Celaya and Michelle
Perz, Department of Insurance Attorneys, for Ricardo Lara,
Insurance Commissioner, as Amicus Curiae on behalf of Plaintiff
and Appellant.
Kettellaw and David A. Kettel for Defendants and
Respondents Lana Elizabeth Montes, United Health Services,
Charles Michael Boyer, Na Young Eoh, Pain Free Management
Co., Inc., Tushar Ramnik Doshi, Anthony Danesh and Joanna
Munguia.
Novian & Novian, Farhad Novian and Andrew B. Goodman
for Defendant and Respondent Behnoush Zarrini.
Zhong Lun Law Firm and Leodis C. Matthews for
Defendant and Respondent John Terrence.
Law Offices of Rob D. Cucher and Rob D. Cucher for
Defendants and Respondents Nira Hariri and Encino Care
Pharmacy, Inc.
Leech Tishman Fuscaldo & Lampl, Fadi K. Rasheed and
Azin G. Valafar for Defendants and Respondents Rodrigo T.
Sanchez and Sanchez Chiropractic, Inc.
Green & Associates and Tracy Green for Defendants and
Respondents Bahar Gharib-Danesh, Bahar Gharib-Danesh
Chiropractic, Inc., Pain Relief Health Center, LLC, and Pain Free
Diagnostics.
_________________________
INTRODUCTION
Plaintiff and appellant Anna Maria Christina Sills brings
this qui tam case on behalf of the State of California alleging
defendant and respondent Bahar Gharib-Danesh, D.C. and other
defendants and respondents engaged in medical insurance
2
fraud.1 Sills asserts the alleged fraud victimized the state
workers’ compensation system, including the State Compensation
Insurance Fund, as well as Medi-Cal, and brought her action
under the California False Claims Act (CFCA; Gov. Code, § 12650
et seq.) and the California Insurance Frauds Prevention Act
(IFPA; Ins. Code, § 1871 et seq.). Under both of these acts, an
individual may bring an action on behalf of the state to recover
for fraud committed against the government. However, she must
first file the action under seal and in camera. Only specified
government entities initially receive a copy of the complaint: the
Attorney General in the case of the CFCA, and the Insurance
Commissioner (Commissioner) and the local district attorney in
the case of the IFPA. This process gives the relevant government
entities an opportunity before the existence of the complaint
becomes public to investigate the claims of fraud, to notify any
additional government agencies with a potential interest in the
matter, to consider whether to bring charges other than what is
contained in the complaint, and to decide whether the agencies
themselves will intervene and prosecute the civil action.
While the action is under seal for these purposes, no one
may serve the complaint on the defendant(s). Only when the
1 A “qui tam” plaintiff is a private party who litigates a case
on behalf of the state. “ ‘Qui tam is short for the Latin phrase qui
tam pro domino rege quam pro se ipso in hac parte sequitur,
which means “who pursues this action on our Lord the King’s
behalf as well as his own.” ’ ” (San Francisco Unified School Dist.
ex rel. Contreras v. Laidlaw Transit, Inc. (2010) 182 Cal.App.4th
438, 442, fn. 2; see also Vermont Agency of Natural Resources v.
United States ex rel. Stevens (2000) 529 U.S. 765, 768, fn. 1 [120
S.Ct. 1858, 146 L.Ed.2d 836].)
3
relevant government agency notifies the court of its decision
regarding whether it will intervene in the action can the seal be
lifted. And only when the court lifts the seal in connection with
this intervention decision can the summons and complaint be
served on the defendant(s) and litigation of the action begin.
Prior to that time, the qui tam plaintiff is not allowed to take any
steps to prosecute the case.
In this matter, Sills filed her qui tam complaint under seal
and in camera as statutorily required. It remained under seal for
962 days, until the court was informed the state had decided not
to intervene, and the court issued an order lifting the seal. After
the complaint was unsealed and Sills was permitted to prosecute
the action, service was effected on defendants. Discovery and
motion practice proceeded except for periods when the case was
stayed because of pending criminal prosecutions of certain
defendants named in the qui tam complaint.
Before the matter reached trial, however, the trial court
dismissed the action pursuant to the “five-year rule” set out in
Code of Civil Procedure2 section 583.310. That section provides
that “[a]n action shall be brought to trial within five years after
the action is commenced against the defendant.” (Ibid.) In
computing the five-year period, the court included the 962 days
during which the case had been kept under seal and in camera.
As we explain below, this was error. The court should have
excluded the time during which the action was kept under seal
for purposes of the government’s intervention decision from
computation of the five-year period under section 583.340,
2Unspecified statutory references are to the Code of Civil
Procedure, unless otherwise indicated.
4
subdivision (b) (section 583.340(b)), which provides that the time
during which an action is “stayed” is to be excluded in
computation of the five-year period. Excluding the 962 days
during which the action was under seal, as well as other periods
the parties agree should be excluded in the computation of the
five-year period, the case had not reached the five-year mark
when the court granted the motion to dismiss. Accordingly, we
reverse the judgment of dismissal, reinstate the action, and
remand the case to the trial court for further proceedings.
THE CFCA AND IFPA
A. The CFCA
The CFCA’s purpose “ ‘is to protect the public fisc.’ ” (State
of California v. Altus Financial, S.A. (2005) 36 Cal.4th 1284,
1297, quoting City of Hawthorne ex rel. Wohlner v. H & C
Disposal Co. (2003) 109 Cal.App.4th 1668, 1677.) The
Legislature enacted the CFCA in 1987 “ ‘to supplement
governmental efforts to identify and prosecute fraudulent claims
made against state and local governmental entities. [Citation.]
As relevant here, the [CFCA] permits the recovery of civil
penalties and treble damages from any person who “[k]nowingly
presents or causes to be presented [to the state or any political
subdivision] . . . a false claim for payment or approval.”
[Citation.] . . . [¶] The [CFCA] authorizes the Attorney General
(in the case of alleged violations involving state funds) or the
prosecuting authority of a political subdivision (in the case of
alleged violations relating to funds of the political subdivision) to
bring a civil action for violations of its provisions. [Citation.]
Subject to certain limitations, the [CFCA] permits a private
person (referred to as a “qui tam plaintiff” or a “relator”) to bring
such an action on behalf of a governmental agency. [Citation.]’ ”
5
(San Francisco Unified School Dist. ex rel. Contreras v. First
Student, Inc. (2014) 224 Cal.App.4th 627, 637, quoting Rothschild
v. Tyco Internat. (US), Inc. (2000) 83 Cal.App.4th 488, 494-495.)
When a qui tam plaintiff brings a CFCA action, they must
file the complaint in camera and the complaint “may remain
under seal for up to 60 days.” (Gov. Code, § 12652, subd. (c)(2).)
The qui tam plaintiff is prohibited from serving the complaint on
any defendant “until after the complaint is unsealed.” (Ibid.)
Instead, the qui tam plaintiff must serve the complaint on the
Attorney General along with “a written disclosure of
substantially all material evidence and information the person
possesses.” (Id., subd. (c)(3).)
If the complaint alleges “violations that involve state funds
but not political subdivision funds, the Attorney General may
elect to intervene and proceed with the action.” (Gov. Code,
§ 12652, subd. (c)(4).) The Attorney General must make this
election within 60 days of receiving the complaint and written
disclosure (ibid), although it “may, for good cause shown, move
the court for extensions of the time during which the complaint
remains under seal,” which also extend the deadline for the
Attorney General to notify the court of its election regarding
intervention. (Id., subd. (c)(5-6).) Motions requesting an
extension of the sealing period “may be supported by affidavits or
other submissions in camera.” (Id., subd. (c)(5).) The court then
approves, disapproves, or limits such requested extensions based
on the showing made to protect against unwarranted delays.
If the Attorney General elects to intervene, then “the seal
shall be lifted,” and the state is made a party to the action with
“the primary responsibility for prosecuting the action” through
the Attorney General. (Gov. Code, § 12652, subds. (c)(6)(A),
6
(e)(1).) If the Attorney General elects not to intervene, then “the
seal shall be lifted and the qui tam plaintiff shall have the right
to conduct the action.” (Id., subd. (c)(6)(B).)3 When the state
declines to intervene, “the qui tam plaintiff shall have the same
right to conduct the action as the Attorney General or
prosecuting authority would have had if it had chosen to
proceed.” (Id., subd. (f)(1).) Regardless of whether any
government entity intervenes, the qui tam plaintiff is entitled to
a percentage of any recovery obtained on behalf of the
government, although her share will be higher if she prosecutes
the action and lower if the state and/or a political subdivision
prosecute the action. (Id., subd. (g)(2).)
B. The IFPA
The IFPA, originally enacted in 1993,4 is codified in
Insurance Code sections 1871 through 1879.8. The legislative
findings and declarations regarding the IFPA state, in part, that
the Legislature “intended to permit the full utilization of the
expertise of the [C]ommissioner and the [Department of
Insurance] so that they may more effectively investigate and
discover insurance frauds, halt fraudulent activities, and assist
and receive assistance from federal, state, local, and
3 The CFCA also sets forth the procedures to be followed if
the complaint alleges violations involving “political subdivision
funds.” (Gov. Code, § 12652, subd. (c)(7-8).) Those procedures
are largely similar except that in addition to the Attorney
General and the qui tam plaintiff, the appropriate prosecuting
authorities for the political subdivisions are involved in the
notification process and the intervention decision.
4Statutes 1993, chapter 120, section 3.3 (Assem. Bill
No. 1300), effective July 16, 1993.
7
administrative law enforcement agencies in the prosecution of
persons who are parties in insurance frauds.” (Ins. Code, § 1871,
subd. (a).)
The complaint at issue here asserts several causes of action
under Insurance Code section 1871.7, subdivisions (a) and (b),
which provide, in relevant part, “(a) It is unlawful to knowingly
employ runners, cappers, steerers, or other persons to procure
clients or patients to perform or obtain services or benefits
pursuant to Division 4 (commencing with Section 3200) of the
Labor Code [relating to worker’s compensation insurance] or to
procure clients or patients to perform or obtain services or
benefits under a contract of insurance or that will be the basis for
a claim against an insured individual or his or her insurer. [¶]
(b) Every person who violates any provision of this section or
Section 549, 550, or 551 of the Penal Code shall be subject, in
addition to any other penalties that may be prescribed by law, to
a civil penalty of not less than five thousand dollars ($5,000) nor
more than ten thousand dollars ($10,000), plus an assessment of
not more than three times the amount of each claim for
compensation, as defined in Section 3207 of the Labor Code or
pursuant to a contract of insurance.” (Ibid.)
The Commissioner or a district attorney “may bring a civil
action” under Insurance Code section 1871.7.5 (Id., subd. (d).)
Relevant to this case, an “interested person[ ]” can also “bring a
5Before the Commissioner can bring an action, he or she
must present their evidence “to the appropriate local district
attorney for possible criminal or civil filing,” and the
Commissioner “may proceed with the action” only “[i]f the district
attorney elects not to pursue the matter due to insufficient
resources.” (Ins. Code, § 1871.7, subd. (d).)
8
civil action for a violation” of Insurance Code section 1871.7 “in
the name of the state.” (Id., subd. (e)(1).) The procedures
governing such an IFPA action are similar to the procedures
governing a qui tam action under the CFCA. First, “[a] copy of
the complaint and written disclosure of substantially all material
evidence and information the person possesses shall be served on
the district attorney and [C]ommissioner. The complaint shall be
filed in camera, shall remain under seal for at least 60 days, and
shall not be served on the defendant until the court so orders.
The local district attorney or [C]ommissioner may elect to
intervene and proceed with the action within 60 days after he or
she receives both the complaint and the material evidence and
information. If more than one governmental entity elects to
intervene, the district attorney shall have precedence.” (Ins.
Code, § 1871.7, subd. (e)(2).)
“The district attorney or [C]ommissioner may, for good
cause shown, move the court for extensions of the time during
which the complaint remains under seal” which extend the
deadline for the district attorney or Commissioner to notify the
court of its election regarding intervention. (Ins. Code, § 1871.7,
subd. (e)(3-4).) As is true for the CFCA, motions to extend the
sealing period for further investigation under the IFPA “may be
supported by affidavits or other submissions in camera” (ibid.),
and the court must approve, disapprove, or limit such requested
extensions based on the showing made to protect against
unwarranted delays. Before the expiration of the seal period,
“the district attorney or [C]ommissioner shall either: [¶]
(A) Proceed with the action, in which case the action shall be
conducted by the district attorney or [C]ommissioner[;] [¶] [or]
(B) Notify the court that it declines to take over the action, in
9
which case the person bringing the action shall have the right to
conduct the action.” (Id., subd. (e)(4); see also id., subd. (f)(3) [“If
the district attorney or [C]ommissioner elects not to proceed with
the action, the person who initiated the action shall have the
right to conduct the action”].)
The IFPA also contains provisions concerning parallel
criminal actions. As relevant here, if a civil action under
Insurance Code section 1871.7 “and a criminal action are pending
against a defendant for substantially the same conduct . . . the
civil action shall be stayed until the criminal action has been
concluded at the trial court level.” (Id., subd. (f)(4).)
If the IFPA claims are brought by an interested person,
that interested person is entitled to a share of any recovery,
based on various factors set out in Insurance Code section 1871.7,
subdivision (g). The interested person’s share of a recovery will
generally be higher where the district attorney and
Commissioner have declined to prosecute the action, and the
interested person therefore has pursued it herself. (Id., subd.
(g)(1)(A)(i), (iii) & (g)(2).) Any share of a recovery that is not
allocated to the interested person or to reimburse attorney’s fees
or costs is to “be paid to the General Fund of the state” and,
where a district attorney prosecuted the action, to both the
General Fund and the “treasurer of the appropriate county.” (Id.,
subd. (g)(1)(A)(iv) & (g)(3).)
FACTUAL AND PROCEDURAL BACKGROUND
A. The Lawsuit Is Filed in July 2012 and Remains
Under Seal Until March 2015
Sills filed her complaint against defendants on July 13,
10
2012, in Sacramento County Superior Court.6 The complaint
asserts five causes of action under the IFPA7 and three causes of
action under the CFCA.8
6 Defendants filed an unopposed motion requesting that we
take judicial notice of nine documents filed while the case was
pending in the Sacramento County Superior Court. We grant the
request but note that six of those documents are already in the
record. “Pursuant to Evidence Code section 452, subdivision (d),
we take judicial notice of these documents as ‘[r]ecords of . . . any
court of this state.’ (Evid. Code, § 452, subd. (d)(1).) However, we
do not take judicial notice of the truth of any factual assertions
appearing in the documents.” (Arce v. Kaiser Foundation Health
Plan, Inc. (2010) 181 Cal.App.4th 471, 483.)
7 These five causes of action are for (1) employing runners,
cappers and steerers (Ins. Code, § 1871.7, subd. (a));
(2) presenting or causing to be presented false or fraudulent
claims for the payment of an injury under a contract of insurance
(id., subd. (b)); (3) knowingly preparing or making writings in
support of a false or fraudulent claim (ibid.); (4) knowingly
making or causing to be made false or fraudulent claims for
payment of a health care benefit (ibid.); and (5) soliciting,
accepting, and referring business to or from an individual or
entity that intends to violate section 550 of the Penal Code or
section 1871.4 of the Insurance Code (Ins. Code, § 1871.7, subd.
(b)). For the second through fifth of these causes of action, the
complaint refers to Insurance Code section 1871.1, subdivision
(b). It is evident this is a typographical mistake. The relevant
section is 1871.7, subdivision (b).
8 These three causes of action are for (1) presentation of
false claims to Medi-Cal (Gov. Code, § 12651, subd. (a)(1));
(2) making, using, or causing to be made or used, a false record or
statement material to a false or fraudulent claim to Medi-Cal (id.,
11
In accordance with the requirements of the CFCA and
IFPA, Sills filed the complaint under seal and in camera, and
served it only on the Attorney General, the Commissioner, and
the Sacramento County District Attorney. At that point, under
both the CFCA and IFPA, the seal was to remain in place for 60
days, until September 11, 2012. (Gov. Code, § 12652, subd. (c)(2),
(5)-(8); Ins. Code, § 1871.7, subd. (e)(2).)
Although the relevant documents are not in the record, the
parties agree that the court extended the seal until March 15,
2013, pursuant to a stipulation between Sills and the
Commissioner, and that on March 11, 2013, the Commissioner
filed an ex parte application to have the seal further extended
until June 30, 2013, which the court granted.9
On or about June 5, 2013, the Commissioner filed a motion
to have the seal extended through December 30, 2013. The
motion indicated that detectives from the Fraud Division of the
Department of Insurance were working alongside other law
enforcement agencies to investigate Sills’s allegations, and if the
court was to unseal the complaint the defendants would be able
to “deduce” the existence of the criminal investigation, which in
subd. (a)(2)); and (3) conspiracy to commit false claims to Medi-
Cal (id., subd. (a)(3)).
9 Sills’s counsel described this sequence of events in a
declaration filed in opposition to a motion, discussed below, which
the Commissioner later filed to further extend the seal. Sills’s
counsel stated in the declaration that Sills had agreed to a second
extension of the seal until May 2013 on the condition there would
be no further extensions, but the Commissioner rejected this
condition and thus filed the ex parte application.
12
turn would “adversely affect[ ]” the investigation.10 The motion
explained, with more specificity, that if the defendants became
aware of the investigation, they might destroy or conceal
documents and other evidence. The motion was supported by a
declaration from the deputy commissioner of investigations at the
Department of Insurance, but this declaration was not served on
Sills because it contained “highly confidential information
regarding the criminal investigation.”11 Sills opposed this
motion. The trial court extended the stay over her opposition
until December 30, 2013, as requested by the Commissioner.
Sills later signed a stipulation with the Commissioner, the
Attorney General and the Sacramento County District Attorney
to extend the seal until May 31, 2014; the stipulation stated that
the requested extension “is required in order to permit the
California Department of Insurance to complete a criminal
investigation of the allegations of the [c]omplaint” and that
“[m]aking public the existence of this lawsuit and the allegation
10 Defendants suggest it was somehow improper for the
Commissioner to conduct this criminal investigation without
alerting them of its existence. They posit that Sills should have
served them with the complaint, followed by the Commissioner
seeking a stay under Insurance Code section 1871.7, subdivision
(f)(4). We disagree. Such a sequence of events is contrary to the
provisions of the IFPA set forth above, as the Commissioner’s
filings made clear the criminal investigation was related to the
allegations of Sills’s complaint. The relevant government
authorities were entitled to consider whether to pursue those
allegations criminally, civilly, or not at all in connection with
coming to judgment on the intervention decision during the
sealing period.
11 This declaration is likewise not in the appellate record.
13
[sic] of the [c]omplaint is likely to give the [d]efendants an
opportunity to take actions that will impede the criminal
investigation.” The stipulation further stated, “[t]he law
enforcement agencies involved in the investigation have already
expended thousands of hours on the case. The Insurance
Commissioner’s investigation of the allegations of the [c]omplaint
requires further time to obtain evidence. The facts are complex
and involve a large number of claims.” The court found good
cause and approved the stipulation on December 16, 2013,
extending the seal period to May 31, 2014.
Sills later signed one more, similarly-worded stipulation
with the government agencies to extend the seal period to
January 1, 2015; the stipulation was filed along with a
memorandum of points and authorities from the Commissioner,
which stated that the Department of Insurance had not yet
completed its investigation and that unsealing the case would
“impede[ ]” the investigation because it would alert the
defendants that they were being investigated. The court found
good cause and approved the stipulation on June 4, 2014,
extending the seal to January 1, 2015.
On March 2, 2015, the court was informed through a
stipulation that the “State of California” had decided not to
intervene in the CFCA causes of action. The stipulation was
silent as to the IFPA claims, but was signed by the Commissioner
and the Sacramento County District Attorney’s Office, and
provided that the entire complaint would be unsealed. In
connection with being informed of the intervention decision, the
court approved a stipulated order unsealing the complaint and
14
“all other matters occurring in this action after the date of this
[o]rder.”12
B. Proceedings in the Superior Court After the Seal Is
Lifted
Following unsealing, Sills began prosecuting the action.
On November 5, 2015, the case was transferred to Los Angeles
County Superior Court based on Sills’s motion.
On April 7, 2016, at the initial status conference in Los
Angeles County Superior Court, the court stayed the entire action
pursuant to Insurance Code section 1871.7, subdivision (f)(4),
because a criminal case was proceeding in federal court against
Bahar Gharib-Danesh and other defendants named in the qui
tam complaint. At the time the stay was imposed, none of the
defendants named in the qui tam complaint had filed an answer
or other responsive pleading.
The case remained completely stayed for 712 days until
March 20, 2018, when the trial court lifted the stay as to written
discovery only.
On February 21, 2019, the court again stayed the entire
action after criminal charges were filed against Bahar Gharib-
Danesh in Orange County Superior Court. Although those
criminal proceedings did not involve other defendants named in
the qui tam action, the court imposed the stay as “to all parties
12 There are two orders approving the same stipulation.
One order was signed by Hon. Robert C. Hight on March 2, 2015,
and the other was signed by Hon. David I. Brown on March 6,
2015. The action was apparently in the process of being
transferred from Judge Brown to Judge Hight at this time and
this likely explains why there were two orders. We conclude that
the case was unsealed as a result of the first order.
15
and discovery.” The court extended the stay on March 27, 2019,
and it remained in place until October 15, 2019; the stay was in
place for a total of 236 days.
On October 15, 2019, the court set a trial date of
November 30, 2020, on Sills’s causes of action.
The first answer was filed on October 31, 2019.
Following the outbreak of COVID-19 in March 2020, the
Judicial Council of California adopted an emergency rule that
extended the deadline to bring a civil action to trial under section
583.310. Specifically, emergency rule 10(a), effective April 6,
2020, provides that “Notwithstanding any other law, including
. . . section 583.310, for all civil actions filed on or before April 6,
2020, the time in which to bring the action to trial is extended by
six months for a total time of five years and six months.” (Cal.
Rules of Court, appen. I, emergency rule 10(a); see Ables v. A.
Ghazale Brothers, Inc. (2022) 74 Cal.App.5th 823, 825
[emergency rule 10(a) extended five-year rule to five years and
six months for cases filed on or before April 6, 2020].)
On September 8, 2020, in response to an order to show
cause issued by the trial court, Sills posited her time to bring the
matter to trial would expire on April 12, 2023. Sills attached a
communication received from counsel for defendants Nira Hariri
and Encino Care Pharmacy, Inc. agreeing to her proposed date of
April 12, 2023. Also on September 8, 2019, defendants Charles
Michael Boyer, Anthony Danesh, Tushar Ramnik Doshi, Na
Young Eoh, Arman Gharib, Mohammed Gharib, Lana Elizabeth
Montes, Joanna Munguia, Pain Free Management Company,
LLC and United Health Services filed a response to the order to
show cause which disagreed with Sills and stated the case was
“well beyond” the five-year mark, although they did not specify
16
their contended expiration date. Defendants Bahar Gharib-
Danesh, Pain Relief Health Center LLC, Pain Free Diagnostic,
Bahar Gharib-Danesh Chiropractic, Inc., John T. Terrence and
Mindwaves Psychological Services, Inc. joined in this response.
On September 9, 2020, the court continued the trial date to
February 8, 2021, on its own motion.
On December 24, 2020, defendants Bahar Gharib-Danesh,
Pain Relief Health Center LLC, Pain Free Diagnostic, and Bahar
Gharib-Danesh Chiropractic, Inc. filed an ex parte application to
continue the trial and all related dates due to their counsel’s
health condition. On December 28, the trial court granted the
application, moving the trial date to August 2, 2021.
C. The Motion to Dismiss and Pertinent Provisions of
the Code of Civil Procedure
Also on December 28, 2020, certain defendants13 filed a
motion to dismiss the entire action for Sills’s failure to bring the
matter to trial within five years, as required by section 583.310.
Before describing this motion or the trial court proceedings
related to it, we pause to discuss provisions of the Code of Civil
Procedure pertinent to the five-year rule’s application to this
matter. As noted above, section 583.310 requires that “[a]n
action shall be brought to trial within five years after the action
is commenced against the defendant.” The five-year period
begins to run when the initial complaint is filed in the action.
13The motion was filed by defendants Montes, United
Health Services, Boyer, Eoh, Pain Free Management Co., Inc.,
Doshi, Anthony Danesh and Munguia. Respondents Terrence,
Mindwaves Psychological Services, Inc., Zarrini, Hariri, and
Encino Care Pharmacy, Inc. joined in the motion.
17
(Bruns v. E-Commerce Exchange, Inc. (2011) 51 Cal.4th 717, 723
(Bruns).) Cases not brought to trial within the five-year time
limit are subject to dismissal; any such dismissal first requires a
noticed motion either by a defendant or the court on its own
initiative. (§ 583.360, subd. (a).)
The five-year rule is “mandatory” and is “not subject to
extension, excuse, or exception except as expressly provided by
statute.” (§ 583.360, subd. (b).) As pertinent here, section
583.340 provides that certain periods of time “shall be excluded”
from the five-year period, in effect tolling the running of the five-
year period, including that “[i]n computing the time within which
an action must be brought to trial pursuant to this article, there
shall be excluded the time during which . . . [p]rosecution or trial
of the action was stayed or enjoined.” (§ 583.340, subd. (b).)
In their motion to dismiss, defendants argued the clock for
the five-year rule started ticking when the complaint was first
filed. They acknowledged the two court ordered stays related to
criminal prosecutions of certain defendants tolled the five-year
statute, and that Judicial Council emergency rule 10(a) related to
the COVID-19 pandemic provided Sills an extra six months on
top of the five years to bring the matter to trial. Defendants
argued no other tolling or extension applied, such that the
deadline to bring the action to trial expired on August 20, 2020.
Sills opposed the motion. She agreed the periods identified
by defendants related to the criminal case stays did not count
towards the five-year time limit, and Judicial Council emergency
rule 10(a) afforded her an additional six months. She argued,
among other things, that pursuant to section 583.340(b) the
period the case was under seal did not count toward the five-year
statute because the action was stayed during that time. Sills
18
accordingly calculated that the five years under section 583.310
expired on April 12, 2023.
After requesting supplemental briefing, and hearing
argument, the court held “that the time [the complaint was]
under seal does not stay the matter nor provide any other reason
to extend the [five-]year statute” and ordered the case dismissed
because including the sealing period in the computation meant
more than five years and six months had elapsed since the filing
of the complaint.
The court entered a judgment of dismissal on March 8,
2021. Sills timely appealed on April 19, 2021.
DISCUSSION
On appeal, Sills argues the trial court should have excluded
the period during which the case was under seal from the five-
year period under section 583.340(b).14 She contends that by
requiring the action be filed and kept under seal until the
relevant government agencies indicate whether they will
intervene, the CFCA and IFPA impose a stay on the action
within the meaning of section 583.340(b). Both the Attorney
General and the Commissioner, in their respective amicus briefs,
advocate a similar view.
14 Sills and defendants also have briefed whether tolling is
appropriate under section 583.340, subdivision (c), which
excludes any time during which “[b]ringing the action to trial, for
any other reason, was impossible, impracticable, or futile,” and
whether defendants are estopped from seeking dismissal based
on their conduct before the trial court (including discovery
violations that led to motions to compel). Because we find section
583.340(b) dispositive, we do not address those arguments.
19
Defendants counter that the five-year deadline started to
run when the matter was filed, that “[t]here is no exclusion for
the mere sealing of a complaint in [section] 583.340,” and that
Sills could have asked the trial court to issue a stay during the
seal period, but no such stay was ever requested or granted.
A. Standard of Review
We review the trial court’s construction of the CFCA, the
IFPA, and the applicable provisions of the Code of Civil
Procedure de novo because it involves statutory interpretation.
(Gaines v. Fidelity National Title Ins. Co. (2016) 62 Cal.4th 1081,
1092 [issue whether a trial court order “stayed” prosecution of an
action under § 583.340(b) is reviewed de novo “because it does not
hinge on the resolution of factual questions concerning credibility
of extrinsic evidence”] (Gaines); see also Bruns, supra, 51 Cal.4th
at p. 724.)
B. The 962 Days the Action Was Kept Under Seal Should
Have Been Excluded from the Five-year Period
Pursuant to Section 583.340(b)
Sills filed her complaint on July 13, 2012, and the seal was
lifted on March 2, 2015; we calculate this period (including the
day the complaint was filed but not the day the seal was lifted) to
total 962 days. The five-year period set forth in section 583.310
began to run when Sills filed her complaint. (Bruns, supra, 51
Cal.4th at p. 723.) As explained below, we conclude that
prosecution of the action was “stayed,” as this term is used in
section 583.340(b), during those 962 days. Under both the CFCA
and the IFPA, Sills could not take litigative action of any kind
until the government made its intervention decision at the
expiration of the sealing period. During this period, Sills was not
allowed to serve the summons and complaint on any defendant or
20
take any other steps to use the tools and procedures available to
a civil litigant.
Our Supreme Court has construed section 583.340(b) twice
in recent years, in Bruns and Gaines. In Bruns, the issue before
the court was whether a partial stay, such as a stay on discovery,
would trigger section 583.340(b)’s tolling provision. (Bruns,
supra, 51 Cal.4th at pp. 721-722, 730.) The court noted that
“[t]he term ‘stay,’ by itself, could refer to either a partial or a
complete cessation of proceedings.” (Id. at p. 724.) It also noted
that “[o]nly when the ‘prosecution’ or ‘the trial’ of the ‘action’ is
stayed does running of the five-year period halt under [section]
583.340(b).” (Id. at p. 725.) The court then reviewed various
definitions of “prosecution” which collectively indicated that the
term referred to carrying out or pursuing all proceedings or steps
in a lawsuit until its final determination. (Ibid.)
Applying this analysis to the question before it, the court
held that section 583.340(b) “contemplates a bright-line,
nondiscretionary rule that excludes from the time in which a
plaintiff must bring a case to trial only that time during which all
the proceedings in an action are stayed.” (Bruns, supra, 51
Cal.4th at p. 726, italics added.) Thus, partial stays imposed by
the trial court, which halted “specific proceedings, such as a stay
of discovery,” are not to be excluded from the five-year period
under section 583.340(b). (Id. at pp. 721-722, 730.)
In Gaines, supra, 62 Cal.4th 1081, the court considered
whether section 583.340(b) was triggered by a trial court order
which struck a scheduled trial date and “ ‘stayed [the case] for a
period of 120 days except that [the] parties are to respond to all
previously served and outstanding written discovery’ and ‘are
directed to participate in good faith in a mediation of all claims in
21
this case within the next 90 days.’ ” (Id. at p. 1091.) The court
first analyzed whether the order effected a stay of the trial,
explaining that “[t]o decide whether section 583.340(b) applies,
we must distinguish between a stay of the trial and a
continuance. Under section 583.340(b), a stay of the trial halts
the running of the five-year period. [Citation.] By contrast, a
continuance generally does not.” (Id. at pp. 1091-1092.) The
court held that “[t]he label the trial court uses is not dispositive
of the inquiry. [Citation.] What matters is whether the order is
functionally in the nature of a stay, which implicates the
legislative purposes behind tolling the five-year period, or
whether it is functionally in the nature of a continuance, which
does not.” (Id. at p. 1092.)
The court concluded that “[t]he long-standing judicial
understanding of the term ‘stay’ in the context of the five-year
statute is that it refers to those postponements that freeze a
proceeding for an indefinite period, until the occurrence of an
event that is usually extrinsic to the litigation and beyond the
plaintiff’s control.” (Gaines, supra, 62 Cal.4th at p. 1092.) Based
on this principle, the court held the stipulated trial postponement
at issue was “agreed to by the parties and not occasioned by an
extrinsic proceeding, court order, or law barring action” and
therefore did “not qualify for automatic tolling.” (Id. at p. 1094.)
The court then considered whether other aspects of the
trial court’s order distinct from the trial postponement “stayed”
prosecution of the action as contemplated by section 583.340(b).
It again noted that “the label used in the trial court’s order is not
dispositive. [Citation.]” (Gaines, supra, 62 Cal.4th at p. 1094.) It
stated, “ ‘The term “prosecution” is sufficiently comprehensive to
include every step in an action from its commencement to its
22
final determination.’ ” (Id. at p. 1094, quoting Ray Wong v. Earle
C. Anthony, Inc. (1926) 199 Cal. 15, 18.) The court concluded
that both discovery and mediation constituted a “step” in the
action, and thus the trial court’s order effected only a partial stay
of the action which, under Bruns, did not trigger tolling under
section 583.340(b). (Gaines, supra, at pp. 1094-1095.)
Applying these principles to the case before us, we conclude
that prosecution of the qui tam action was “stayed” as that term
is used in section 583.340(b) because the CFCA and IFPA barred
Sills from making use of any of the procedures and tools typically
available to a civil litigant while the case was under seal for
purposes of the government’s intervention decision. (Gaines,
supra, 62 Cal.4th at p. 1094 [laws barring any prosecutive action
qualify for tolling under § 583.340(b)].) The prohibitions in the
CFCA and IFPA on any prosecutive action during the sealing
period were automatic, non-discretionary, and unconditional.
Under both the CFCA and the IFPA, the complaint could not be
served on any defendant during the seal period. (Gov. Code,
§ 12652, subd. (c)(2); Ins. Code, § 1871.7, subd. (e)(2).) The
matter was required to be maintained under seal and in camera,
meaning Sills could not conduct any discovery.15 During the
15 Indeed, the sealing requirement mandates the qui tam
plaintiff not take independent action to alert a defendant about
the under-seal complaint. Cases interpreting the federal false
claims statute (FCA; 31 U.S.C. § 3729 et seq.), upon which the
CFCA was modeled, have recognized that one purpose of the seal
is to keep the fact that a qui tam plaintiff has filed an action a
secret from the defendant(s). (See U.S. ex rel. Lujan v. Hughes
Aircraft Co. (9th Cir. 1995) 67 F.3d 242, 244 [concluding qui tam
plaintiff violated the seal provisions of the FCA by making
23
court-supervised sealing period, the government investigated
Sills’s allegations; that investigation (similar to the type of pre-
filing investigation the government undertakes in a non-qui tam
case) is distinct from the prosecution of the civil action, which did
not commence until after the appropriate prosecuting authority
decided whether to intervene. Furthermore, because 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. 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.16
statements about the action to a newspaper]; Pilon v. Martin
Marietta Corp. (2d Cir. 1995) 60 F.3d 995, 998 [legislative history
of FCA reveals that “[t]he government was concerned . . . that qui
tam claims might overlap with or tip a defendant off to pending
criminal investigations” (italics omitted)].)
16 Defendants suggest in passing that Sills could have
potentially shortened the length of the seal period by opposing all
requested extensions by the government instead of stipulating to
some of them. This is entirely speculative, as when Sills did
oppose or not accede in such requests, the government sought
and obtained the requested extension anyway. In any event, the
qui tam plaintiff’s role under the CFCA and IFPA is to provide
the complaint and the information on which it is based to the
relevant government authorities and then wait for the
government to make its intervention decision. Sills did not
participate in that decision, and she lacked information such as
24
Defendants make two primary arguments that section
583.340(b) does not apply to the pre-intervention decision sealing
period. We find neither of them persuasive. Defendants first
claim “[t]here is no exclusion for the mere sealing of a complaint.”
But what is at issue here is not the mere sealing of a complaint
without more, because the sealing provisions of the CFCA and
the IFPA also prevent any litigation activity by the qui tam
plaintiff until the government makes its intervention decision
and the complaint is then unsealed. Defendants provide no
authority suggesting that a seal which results in such a complete
stay of the action does not trigger the tolling period.17
what investigation and analysis remained for the government to
perform before the intervention decision was ripe. Until that
decision was made, the law barred her from prosecuting any
aspect of the case. Accordingly, whether Sills opposed, agreed, or
remained silent as to government requests for extension of the
sealing period under Government Code section 12652,
subdivision (c)(5) or Insurance Code section 1871.7, subdivision
(e)(3) is immaterial to analyzing whether the case was stayed for
purposes of section 583.340(b). Defendants themselves recognize
this, saying “[e]ven if every extension of the seal was ordered over
[Sills]’s objection, which is not the case, it would nevertheless be
of no consequence” to computing the five-year period.
17 We recognize one court, in the context of applying
provisions of section 583.240 that toll the three-year period
during which a complaint must be served after filing, suggested
the seal at issue in that case was not equivalent to a stay. (State
ex rel. Edelweiss Fund, LLC v. JP Morgan Chase & Co. (2020) 58
Cal.App.5th 1113, 1120, fn. 2.) Edelweiss, however, involved a
very different “seal” than the one before us. The parties there
agreed, and the court found, that the sealing period from the
25
Second, defendants argue Sills could have moved for a stay
but did not. But section 583.340(b) does not require that
prosecution of the action be “stayed” by a court order. As Gaines
recognizes, a stay of prosecution for purposes of section
583.340(b) can be “occasioned by . . . [a] law barring action.”
(Gaines, supra, 62 Cal.4th at p. 1094.) A stay, for example, can
result from the operation of a statute. (See, e.g., 11 U.S.C.
§ 362(a) [automatic stay of litigation against debtor upon filing of
bankruptcy petition].) As explained above, the CFCA and IFPA
operate to stay any prosecution of the action by the qui tam
plaintiff during the sealing period for the government’s
intervention decision.18 Given that Sills was statutorily barred
filing of the qui tam complaint until the Attorney General’s
intervention decision tolled the time limits of the statute at issue
because service was impossible. (Id. at pp. 1121, 1123.) The
court’s statement about sealing and stays, therefore, was not
directed to the sealing period we address. Instead, after the
Attorney General filed its notice of non-intervention, the qui tam
plaintiff in Edelweiss sought and received additional extensions
to keep the complaint under seal despite being able at that point
to prosecute the action. (Id. at pp. 1118-1119.) The qui tam
plaintiff acknowledged, and the court understandably found, that
this post-intervention decision sealing period did not involve a
stay and was not equivalent to a stay. (Id. at p. 1120, fn. 2.)
18 Defendants relatedly point out that under Insurance
Code section 1871.7, subdivision (f)(4), an IFPA action “shall be
stayed” if that action “and a criminal action are pending against
a defendant for substantially the same conduct.” They argue that
this shows the seal required under the IFPA is not a “stay,”
because the Legislature did not use the word “stay” to describe it,
and Sills therefore should have separately moved for a stay
26
from taking any litigative action to prosecute the case, it would
have been an idle act to seek a court order imposing the very
same stay the CFCA and IFPA already required at that stage of
the proceedings. (Civ. Code, § 3532 [“The law neither does nor
requires idle acts”].)
The Legislature has directed that the CFCA “be liberally
construed and applied to promote the public interest.” (Gov.
Code, § 12655, subd. (c).) As the Attorney General points out,
adopting defendants’ position that a CFCA action is not stayed
while the action is sealed is contrary to this directive. It might
force government agencies to choose between an adequate
investigation before intervening and having enough time to
properly litigate a case to trial once the case is unsealed. It
would also likely lessen the appeal to a qui tam plaintiff in filing
a CFCA action, as she would face the possibility of being left in
charge of litigating the action without having sufficient time to do
so properly once the government investigation concludes and the
matter is unsealed. It would further have the perverse result of
the largest and most complicated allegations of fraud requiring
the greatest amount of investigation being afforded the least
amount of time to get to trial once the intervention decision is
made. These same concerns apply with equal force to cases
brought by interested persons under the IFPA.
during the sealing period. As discussed above, resolution of
whether an action was “stayed” does not turn on the label
applied. (Gaines, supra, 62 Cal.4th at pp. 1092, 1094.) Thus,
whether the IFPA uses the word “stay” elsewhere does not aid
our analysis of whether the statute permits any prosecution by
the qui tam plaintiff while the case is under seal for purposes of
the government’s intervention decision.
27
C. The Five-year Period Had Not Expired At the Time
the Court Dismissed the Action
There is no dispute the trial court stayed the entire action
twice due to related criminal matters involving some of the
defendants in the qui tam action and that these two stay periods
are properly excluded from computation of the five-year period.
The first such stay lasted for 712 days from April 7, 2016, until
March 20, 2018 (the stay continued after that time but only as to
discovery, and thus was only a partial stay that we do not count
for five-year rule purposes). The second such stay lasted 236
days from February 19, 2019, to October 15, 2019.
A five-year period totals 1,825 days.19 Adding to that
period the 962 days during which the action was under seal, the
712 days of the first stay and the 236 days of the second stay,
totals 3,735 days. The date 3,735 days from the date Sills filed
her complaint (July 13, 2012) is October 3, 2022. Adding six
months due to the COVID-19 emergency rule extends the period
to April 3, 2023. Therefore, the trial court erred in prematurely
dismissing Sills’s action on February 24, 2021.
19 We recognize that one leap year occurred during the five
years after July 2012, but under the Government Code the extra
day in a leap year is not to be included when computing in years.
(Gov. Code, § 6803 [defining “ ‘[y]ear’ ” as “a period of 365 days”
and stating “[t]he added day of a leap year, and the day
immediately preceding, if they occur in any such period, shall be
reckoned together as one day”].)
28
DISPOSITION
We reverse the trial court’s judgment of dismissal, order
the action reinstated, and remand for further proceedings. Sills
is awarded her costs on appeal.
CERTIFIED FOR PUBLICATION
WEINGART, J.
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
29