Filed 8/15/23

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

THE PEOPLE ex rel. ALLSTATE 

INSURANCE COMPANY et al.,

Plaintiffs and Appellants,

v.

DISCOVERY RADIOLOGY

PHYSICIANS, P.C., et al.,

Defendants and Respondents.

B315264

(Los Angeles County

Super. Ct. Nos. 20STCV45151

& 20STCV42672)

THE PEOPLE ex rel. ALLSTATE 

INSURANCE COMPANY et al.,

Plaintiffs and Appellants,

v.

ONESOURCE MEDICAL 

DIAGNOSTICS, LLC, et al.,

Defendants and Respondents.
2

APPEALS from judgments of the Superior Court of 

Los Angeles County, William F. Fahey, Judge. Reversed with 

directions.

Knox Ricksen, Thomas E. Fraysse, and Maisie C. Sokolove

for Plaintiffs and Appellants.

Katten Muchin Rosenman, Ryan M. Fawaz, and 

Christopher B. Maciel for The Coalition Against Insurance Fraud 

as Amicus Curiae on behalf of Plaintiffs and Appellants.

Hanson Bridgett, Katherine A. Bowles, and Adam Hoffman

for Defendant and Respondent Discovery Radiology Physicians, 

P.C.

Proskauer Rose, Vinay Kohli, and Mark D. Harris, for 

Defendants and Respondents Sattar Mir, 1st Source Capital, 

LLC, and OneSource Medical Diagnostics, LLC.

Law Offices of Vatche Chorbajian and Vatche Chorbajian 

for Defendants and Respondents Expert MRI, P.C., Sana Khan, 

M.D., and Adil Mazhar, M.D.

 ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳

Allstate Insurance Company and several of its affiliates 

(collectively, Allstate) brought qui tam actions on behalf of the 

State of California alleging insurance fraud under the California 

Insurance Frauds Prevention Act (IFPA) (Ins. Code, § 1871 

et seq.) and the Unfair Competition Law (UCL) (Bus. & Prof. 

Code, § 17000 et seq.)1 against three medical corporations, a 

medical management company and its parent company, 

four physicians, and Sattar Mir, an individual. The operative 

1 Subsequent undesignated statutory references are to the 

Business and Professions Code.
3

complaints allege that while the medical corporations hold 

themselves out as providers of radiology services, they in fact act 

as radiology “brokers,” sending patients to radiology facilities and 

radiologists with which the purported medical corporations have 

contracted. The complaints further allege that although the 

medical corporations appear to be owned and controlled by 

licensed physicians, as state law requires, they are in fact 

controlled by Mir, who is not a physician, and/or by his medical 

management company. Finally, the complaints allege that these

facts were not disclosed on bills submitted to Allstate under 

contracts of insurance, and Allstate would not have paid the 

claims submitted by the medical corporations had it known the 

true facts.

The trial court found the complaints failed to state causes 

of action under the IFPA and the UCL because they were not 

pled with requisite specificity, the business models alleged were 

lawful, and one of the actions was time-barred. We conclude that 

the operative complaints adequately plead causes of action under 

both statutes, and thus we will reverse the orders sustaining the 

demurrers and judgments of dismissal.2

FACTUAL AND PROCEDURAL BACKGROUND

I. Allstate’s fraud actions; the initial demurrers.

Allstate Insurance Company is an insurance company 

licensed to issue automobile insurance policies in California. In 

2020, Allstate filed two qui tam actions alleging insurance fraud

in violation of the IFPA and the UCL. The first action (the 

2 The Coalition Against Insurance Fraud submitted an

amicus brief in support of Allstate, to which defendants have filed

responses. 
4

Discovery action) was filed against Discovery Radiology 

Physicians, P.C. (Discovery Radiology), a professional medical 

corporation; Mir; and radiologists Drs. Safvi and Feske. The 

second action (the OneSource action) was filed against Mir;

OneSource Medical Diagnostics, LLC (OneSource), a medical 

management company owned by Mir; 1st Source Capital, LLC 

(1st Source), OneSource’s parent company; Safvi Medical 

Corporation (Safvi Medical) and Expert MRI, P.C. (Expert MRI), 

professional medical corporations; and radiologists Drs. Safvi, 

Mazhar, and Khan.

3 In brief, the complaints alleged that the 

three medical corporations—Discovery Radiology, Expert MRI, 

and Safvi Medical—were formed and controlled by Mir, who is 

not a physician, to broker radiology services. The medical 

corporations solicited patients, referred the patients to MRI 

facilities and radiologists with whom Mir had contracted, and 

then billed Allstate for the MRIs. The bills represented that the 

MRIs had been performed by the defendant medical corporations, 

but the MRIs actually were performed at MRI facilities whose 

identities were not disclosed, and were read by radiologists under 

contract with the medical corporations. The resulting bills falsely 

identified the technical and professional services as having been 

provided by one of the three defendant medical corporations and 

grossly inflated the fees for the services provided. Allstate 

alleged it would not have paid the claims for services purportedly 

rendered by the three professional corporations had it known of 

the false statements and fraudulent markups.

Defendants demurred to Allstate’s initial complaint in the 

Discovery action, and Allstate then filed a first amended 

3 All defendants except Dr. Safvi, Dr. Feske, and Safvi 

Medical are respondents in this appeal.
5

complaint, to which defendants again demurred. Separately, 

defendants demurred to the complaint in the OneSource action.

The trial court sustained the demurrer in the OneSource 

action, finding that the complaint did not plead fraud with 

sufficient specificity. The court granted Allstate “one 

opportunity” to amend its complaint, ordering that as to all 

named defendants, the amended complaint “shall allege specific 

facts as to how each of the 2,300 billing statements was 

fraudulent. These allegations shall be backed up by an attached 

spreadsheet exhibit which contains seven columns listing: (1) the 

dates, in chronological order, of each alleged false bill; (2) the 

corresponding billing or claim number; (3) the person or entity 

who prepared the bill; (4) the name of the MRI facility involved; 

(5) the total charge on each bill; (6) the person or entity 

transmitting the billing statement to Allstate; and (7) the alleged 

false statement made on that bill.”

On May 17, 2021, the court ordered the Discovery action 

and the OneSource action related and sustained the demurrer to 

the first amended complaint in the Discovery action for the same 

reasons set forth in its order sustaining the demurrer in the 

OneSource action.

II. The amended complaints.

A. The Discovery action.

Allstate filed a second amended complaint in the Discovery 

action on June 1, 2021. It alleged as follows:

In about May 2015, Mir created Discovery Radiology as a 

professional medical corporation. Fictitious name permits filed 

with the Medical Board of California described Dr. Feske, and 

later Dr. Safvi, as the president and sole shareholder of Discovery
6

Radiology. In fact, however, Discovery Radiology was owned, 

operated, and controlled by Mir, who is not a doctor and has no 

medical training. Further, although documents filed with the 

California Secretary of State and the Medical Board of California 

represented that Discovery Radiology was a diagnostic radiology 

practice, Discovery Radiology did not administer or interpret 

MRIs. Instead, Mir, through Discovery Radiology, solicited and 

accepted referrals of individuals with personal injury claims, 

entered into contracts with diagnostic radiology facilities to 

administer the MRIs and with radiologists to interpret the MRI 

images, referred patients to contract facilities and radiologists in 

exchange for kickbacks or a fee-split, and then prepared false, 

fraudulent or misleading bills that significantly marked up the 

costs of medical services for submission to insurers, including 

Allstate. Had Allstate known of these facts, it would not have 

paid the claims.

Allstate alleged that these referral and billing practices 

gave rise to causes of action for violations of the IFPA because 

Mir steered patients to diagnostic radiology facilities and 

radiologists, and presented or caused to be presented insurance 

claims containing false or fraudulent statements, including that 

radiology services had been provided by Discovery Radiology, in 

violation of Insurance Code section 1871.7, subdivisions (a) and 

(b) of the IFPA. Allstate further alleged that these actions 

constituted unlawful, unfair, or fraudulent business acts or 

practices within the meaning of the UCL. 

Attached to the complaint was a spreadsheet identifying 

238 allegedly false claims submitted to Allstate by Discovery 

Radiology. For each claim, the spreadsheet identified the 
7

treatment date, claim number, provider name, billed amount,

and name of the attorney who submitted the claim. 

B. The OneSource action.

Allstate filed a first amended complaint in the OneSource 

action on May 14, 2021. It alleged as follows:

Mir is not a doctor and has no medical training. In about 

January 2017, Mir formed OneSource (initially called Injury MRI 

Network, LLC), which was owned, operated, and controlled solely 

by Mir through 1st Source, another LLC he owns, operates, and 

controls. OneSource holds itself out as providing management 

services for medical practices, but in fact OneSource enters into 

written contracts with diagnostic radiology facilities and 

radiologists to refer patients for radiology services. These 

contracts give Mir complete control over the selection of 

diagnostic radiology facilities to which patients are sent, the 

selection of physicians to read and interpret MRIs, the 

preparation of billing statements, including determining the 

amount billed for the services rendered and the billing codes 

used, and the distribution of profits. By selecting radiology sites 

and radiologists, and controlling billing and collection, Mir and 

his management company engage in the unlawful practice of 

medicine. 

Additionally, Mir incorporated two purported professional 

medical corporations, Expert MRI and Safvi Medical. On paper,

it appears that Drs. Mazhar and Khan own, operate and control 

Expert MRI, which holds itself out to the public as a diagnostic 

radiology practice that performs and interprets MRIs at 

18 locations in Southern California. Likewise, it appears that 

Dr. Safvi owns, operates, and controls Safvi Medical, which holds 

itself out as performing MRI interpretation and analysis from an 
8

office in Bellflower, California. In reality, however, Mir, through 

OneSource and 1st Source, “controls all aspects of” Expert MRI 

and Safvi Medical.

“The scheme . . . is relatively simple. . . . [Mir] market[s] 

the comprehensive diagnostic radiology services purportedly 

provided by OneSource, Expert, or [Safvi Medical] primarily to 

workers’ compensation and automobile-accident personal injury 

attorneys, including those whose clients have claims for personal 

injury against [Allstate policies]. After receiving patient referrals 

as a result of the marketing, Mir steers the patients to one of 

approximately 18 diagnostic imaging facilities located across

Southern California that OneSource, [Safvi Medical], or Expert 

holds out as [their] own but which, in reality, are independent 

diagnostic radiology facilities with which Mir, through 

OneSource, contracts to perform the technical component of 

MRI[s] for roughly $150 per scan. For example, the address for 

‘Expert Beverly Hills’ is actually the location of a business known 

as ‘Dynamic Upright MRI,’ and ‘Expert MRI Bakersfield’ is 

actually a business known as ‘Bakersfield Upright MRI.’ One 

facility located in Bellflower, California, which Expert holds out 

as its own, is actually owned by Mir, via OneSource, with Mir 

contracting with Expert to allow the use of the facility on a nonexclusive basis. After the MRI is performed by the diagnostic 

radiology facility, Mir uses his contracted radiologists, including 

Safvi and Mazhar, to interpret the images and prepare reports of 

their findings on Expert and [Safvi Medical] letterhead, for 

roughly $25 per region of the body scanned.”

“With zero oversight, control or review by the contracted 

providers, Mir, through OneSource, prepares and provides to the 

attorneys who referred patients to him false, fraudulent, or 
9

misleading billing statements containing grossly inflated ‘global’ 

[fn. omitted] fees for the MRI services on OneSource, Expert or 

[Safvi Medical] letterhead, with the intent that they be used in 

support of bodily injury and other claims. In addition to making 

it appear as though the company on whose letterhead the bill 

and/or report are documented rendered the service, Mir 

knowingly conceals the true costs of the services rendered and 

charges roughly ten times the amounts actually incurred by Mir 

as the broker of the services, usually pricing a single study at 

approximately $1,750. Mir’s $1,500+ mark-up of the charges is 

not intended by Mir or the co-conspirator Defendant physicians to 

cover the cost of so-called ‘administrative’ or ‘management’ 

services, if any, provided by OneSource to Expert and/or [Safvi 

Medical]. To the contrary, the mark-up serves two purposes: to 

ensure Mir makes an enormous profit for doing nothing more 

than acting as ‘middleman’, brokering MRIs and referring 

patients to providers, and to fraudulently increase the value of 

the claim for personal injury made on behalf of claimants by the 

referring attorneys . . . .”

As in the Discovery action, Allstate attached to the 

complaint in the OneSource action a spreadsheet that identified 

2,300 allegedly false claims presented to Allstate by treatment 

date, claim number, provider name, name of MRI facility, amount 

billed, and the name of the attorney who submitted the claim.

III. The demurrers to the amended complaints.

Defendants demurred to the amended complaints. 

Collectively, they asserted that (1) the amended complaints 

lacked the specificity required to plead fraud claims, 

(2) allegations that defendants are engaged in the unlawful 

practice of medicine cannot form the basis for IFPA or UCL 
10

claims, and (3) the claims in the Discovery action were timebarred.

Allstate opposed the demurrers. It asserted that the MRI 

brokering scheme alleged in the amended complaints resulted in 

false claims actionable under the IFPA and the UCL, the causes 

of action were pled with sufficient particularity, and the 

Discovery action was not time-barred.

The trial court sustained the demurrers without leave to 

amend. It found, first, that Allstate did not comply with the 

court’s prior order because it did not identify the dates of each 

allegedly false bill, the persons or entities who prepared the bills, 

the persons or entities who transmitted the bills to Allstate, or 

which defendants made each alleged false statement. Second, 

the court found the complaints “woefully lacking in the required 

specificity”: “While the body of the FAC makes a number of 

inflammatory and conclusory assertions, largely based on 

‘information and belief,’ the gravamen is that ‘defendants’ 

presented . . . inflated claims which Allstate paid. But when 

specifically ordered to provide the details of these false claims, 

Allstate had not done so.” Third, the court said, it was 

insufficient for Allstate to “invoke the mantra of ‘structural 

fraud.’ Importantly, Allstate makes no claim here that: (1) MRIs 

were not administered; (2) MRIs were not medically necessary; or 

(3) qualified radiologists did not read the MRIs. . . . [¶] . . . 

[Instead, Allstate argues] that this case involves the unlawful 

corporate practice of medicine and that ‘Mir engaged in the 

unlawful practice of medicine.’ But what the oppositions focus 

on, and the [complaints] allege, is that Mir handled the nonmedical elements for the radiology [practices], e.g., he picked the 

sites and the MRI machines, selected the radiologists and 
11

handled the finances, including billing and collection. This 

structure is not unlawful.” Fourth, the court said the Discovery 

action was untimely. Finally, the court concluded that leave to 

amend was not warranted.

The trial court entered judgments of dismissal in the 

Discovery and OneSource actions on August 16, 2021. Allstate 

timely appealed.

DISCUSSION

This appeal presents four basic issues: (1) Are the business 

models alleged in the amended complaints unlawful? (2) If the 

alleged business models are unlawful, do they give rise to causes 

of action under the IFPA and the UCL? (3) Do the amended 

complaints plead fraud with sufficient particularity? (4) Does the

Discovery action adequately allege delayed discovery to survive 

demurrer on statute of limitations grounds? 

As we discuss more fully below, the answer to each of these 

questions is “yes.” First, the operative complaints allege the 

unlicensed practice of medicine in violation of the Medical 

Practice Act (§ 2000 et seq.) and related statutes. Second, claims 

submitted to an insurer for medical services rendered in violation 

of the Medical Practice Act may give rise to causes of action 

under the IFPA and the UCL. Third, Allstate’s claims are pled 

with adequate specificity. Finally, as alleged, the claims asserted 

in the Discovery action are not time-barred as a matter of law. 

I. Standard of review.

“ ‘On appeal from an order of dismissal after an order 

sustaining a demurrer, the standard of review is de novo: we 

exercise our independent judgment about whether the complaint 

states a cause of action as a matter of law. [Citation.] First, we 
12

give the complaint a reasonable interpretation, reading it as a 

whole and its parts in their context. Next, we treat the demurrer 

as admitting all material facts properly pleaded. Then we 

determine whether the complaint states facts sufficient to 

constitute a cause of action. [Citations.] [¶] We do not, however, 

assume the truth of contentions, deductions, or conclusions of 

law. [Citation.]’ (Stearn v. County of San Bernardino (2009) 

170 Cal.App.4th 434, 439–440.)

“When a demurrer is sustained without leave to amend, 

‘ “ ‘we decide whether there is a reasonable possibility that the 

defect can be cured by amendment: if it can be, the trial court has 

abused its discretion and we reverse; if not, there has been no 

abuse of discretion and we affirm. [Citations.] The burden of 

proving such reasonable possibility is squarely on the plaintiff.’

[Citation.]” ’ (State of California ex rel. Bowen v. Bank of America

Corp. (2005) 126 Cal.App.4th 225, 239.)” (State of California ex 

rel. McCann v. Bank of America, N.A. (2011) 191 Cal.App.4th 

897, 906 (McCann).)

II. The operative complaints allege the unlicensed 

practice of medicine in violation of the Medical 

Practice Act.

Defendants asserted below, and the trial court concluded, 

that the business practices alleged in the complaints were lawful 

because Mir and OneSource allegedly provided only managerial

and/or administrative services, not medical care, and thus did not 

engage in the unlicensed practice of medicine. For the reasons 

that follow, we disagree.
13

A. The Medical Practice Act and the unlicensedpractice-of-medicine doctrine.

The Medical Practice Act (sometimes referred to as the Act) 

and related provisions regulate the practice of medicine in 

California. Among other things, the Medical Practice Act

prohibits unlicensed persons from practicing, advertising, or 

holding themselves out as practicing “any system or mode of 

treating the sick or afflicted” or “diagnos[ing], treat[ing], 

operat[ing] for, or prescrib[ing] for any ailment, blemish, 

deformity, disease, disfigurement, disorder, injury, or other 

physical or mental condition of any person.” (§ 2052, subd. (a).) 

The Act also prohibits physicians from employing, aiding, or 

abetting any unlicensed person “to engage in the practice of 

medicine or any other mode of treating the sick or afflicted which 

requires a license to practice.” (§ 2264; see also § 125 [physician 

who allows his or her license to be used by a non-physician, or 

who acts as the agent or partner of a non-physician with the 

intent to aid or assist the non-physician in the unlicensed 

practice of medicine, is guilty of a misdemeanor and subject to 

discipline].)4

1. Prohibition on lay ownership of medical 

corporations and partnerships.

Historically, the Medical Practice Act prohibited physicians 

from practicing through for-profit corporations or artificial legal 

entities of any kind. (See Lathrop v. HealthCare Partners 

Medical Group (2004) 114 Cal.App.4th 1412, 1420.) More 

4 Contrary to the assertions of Drs. Khan and Mazhar, a duly 

licensed physician may, under these sections, be liable for aiding 

and abetting the unlicensed practice of medicine.
14

recently, the Act has been amended to permit physicians to 

conduct their medical practices through medical corporations or 

partnerships so long as all the entities’ shareholders or partners, 

as well as all employees rendering professional services, are 

themselves licensed. (Id. at pp. 1420–1421, citing §§ 2402, 2406, 

2415, 2416; Corp. Code, §§ 13401, 13405.) However, the Act 

continues to prohibit what is sometimes referred to as the 

corporate practice of medicine (see, e.g., Markow v. Rosner (2016) 

3 Cal.App.5th 1027, 1033)—that is, it “generally precludes forprofit corporations—other than licensed medical corporations—

from providing medical care through either salaried employees or 

independent contractors.” (People v. Cole (2006) 38 Cal.4th 964, 

970–971, italics added; see also Steinsmith v. Medical Board

(2000) 85 Cal.App.4th 458, 460 (Steinsmith) [“[m]edicine may be 

practiced in a partnership or group of physicians (§ 2416), but 

‘[c]orporations and other artificial legal entities . . . have no 

professional rights, privileges, or powers’ (§ 2400), and a 

‘fictitious-name’ permit to operate a facility called a ‘ “medical 

clinic” ’ can be issued only if the clinic is wholly owned by licensed 

physicians (§ 2415, subd. (b))”].) 

Applying this principle, the Court of Appeal found a 

violation of the Medical Practice Act in Steinsmith, supra,

85 Cal.App.4th 458. There, the plaintiff was a licensed physician 

who performed disability evaluations as an independent 

contractor of a clinic owned in part by non-physicians. (Id. at 

p. 460.) The physician was cited by the Medical Board of 

California for aiding in the unlicensed practice of medicine, a 

finding that the Court of Appeal upheld. (Id. at pp. 460–464.) In 

so finding, the court rejected the physician’s contention that the 

non-physician owners did not practice medicine because they 
15

merely owned the clinic and administered its business affairs. 

The court explained: “A similar argument was rejected long ago 

in Painless Parker v. Board of Dental Exam. (1932) 216 Cal. 285. 

In that case, a licensed dentist was found to have aided and 

abetted the unlicensed practice of dentistry by a corporation he 

formed to own and operate dental offices. (Id. at pp. 289, 298.) 

The dentist argued, as Steinsmith does here, that the licensing 

requirements for the provision of professional services did not 

apply to ‘the purely business side of the practice.’ (Id. at p. 295.) 

Our Supreme Court rejected that argument . . . . [¶] . . . The 

unlicensed practitioner in Painless Parker was a corporation, but 

it has long been ‘well settled’ that ‘any other unlicensed person or 

entity’ is subject to the same sanctions for unlawful practice as an 

unlicensed corporation. [Citation.] Accordingly, the Painless 

Parker case disposes of Steinsmith’s argument that there was no 

unlicensed practice he could have aided.” (Id. at pp. 465–466.)

The Attorney General similarly opined in a 1982 opinion 

addressing whether an entity not licensed as a medical 

corporation could lawfully engage physicians to treat 

employment-related injuries sustained by employees of another 

corporate entity. (65 Ops.Cal.Atty.Gen. 223 (1982).) The 

Attorney General noted that, as general rule, a corporation “may 

neither engage in the practice of medicine directly, nor may it do 

so indirectly by ‘engaging [physicians] to perform professional 

services for those with whom the corporation contracts to furnish 

such services.’ ” (Id. at p. 224.) This is so, the Attorney General

explained, because “it has been said ‘to be against public policy to 

permit a ‘middleman’ to intervene for profit in establishing the 

professional relationship between members of said profession and 

members of the public.’ [Citation.] . . . [T]he reasons underlying 
16

the proscription are two: first, that the presence of a corporate 

entity is incongruous in the workings of a professional regulatory 

licensing scheme which is based on personal qualification, 

responsibility and sanction, and second, that the interposition of 

a lay commercial entity between the professional and his/her 

patients would give rise to divided loyalties on the part of the 

professional and would destroy the professional relationship into 

which it was cast.” (Ibid.) The Attorney General therefore 

concluded that the proposed arrangement was unlawful because 

the non-medical corporation at issue “is a lay commercial 

enterprise that is organized for profit which it expects to derive 

from creating and administering the professional relationship 

between physicians whom it engages and their patients who are 

employees of entities with whom it contracts to furnish medical 

services. It actively solicits corporations to permit it to become 

the ‘middleman’ in establishing that professional relationship 

and to thereafter ‘administer’ it (e.g., billings, etc.). The activity 

thus described, albeit a variation on the theme, clearly is of the 

type that has consistently been assailed as constituting the 

corporate practice of medicine.” (Id. at pp. 228–229.)

2. Prohibition on non-physicians exercising 

undue control or discretion over a 

medical practice.

Although non-physicians may not own corporations that 

engage in the practice of medicine, they may manage some nonmedical/business aspects of a physician’s practice without 

violating the Medical Practice Act. (Epic Medical Management, 

LLC v. Paquette (2015) 244 Cal.App.4th 504, 517–518 (Epic).) 

Cases have noted, however, that “[i]n a professional corporation, 

it is not always possible to divide the ‘business’ side of the 
17

corporation from the part which renders professional services”

(Marik v. Superior Court (1987) 191 Cal.App.3d 1136, 1140), and 

a violation of the Act occurs if a non-physician exercises “control 

or discretion” over a medical practice (Epic, at p. 517; People v. 

Superior Court (Cardillo) (2013) 218 Cal.App.4th 492, 498 

(Cardillo)). 

The Court of Appeal considered the extent to which a nonphysician may lawfully be involved in the running of a medical 

practice in Epic, supra, 244 Cal.App.4th 504. There, a 

management company contracted with a physician to lease him 

office space and medical equipment, provide non-physician 

personnel, and manage the physician’s marketing, billing, 

collections, and accounting. In exchange, the physician agreed to 

pay the management company 50 percent of his professional 

revenues and 25 percent of his surgical revenues. (Id. at p. 508.) 

After the physician terminated the management contract, the 

management company sued to recover unpaid management fees. 

The management company prevailed before an arbitrator, and 

the trial court affirmed the award. (Id. at pp. 509–511.)

On appeal, the physician urged that the management 

contract was illegal because the management company engaged 

in the unlicensed practice of medicine. (Epic, supra, 

244 Cal.App.4th at pp. 511, 517–518.) The Court of Appeal 

disagreed and affirmed. It explained: “Determining whether the 

contractual relationship between a physician and a non-licensee 

results in the non-licensee’s unlicensed practice of medicine 

requires a legal interpretation of the substantive provisions of the 

agreement. (55 Ops.Cal.Atty.Gen. 103 (1972).) The issue turns 

on whether the non-licensee exercises or has retained the right to 

exercise control or discretion over the physician’s practice. 
18

[Citations.] Our review of the terms of the Management Services 

Agreement shows a strict delineation between the medical 

elements of the practice which the doctor controls, and the nonmedical elements which the doctor has retained the management 

company to handle. The management company is not the doctor’s 

employer nor his partner, and exercises no control over the 

doctor’s practice.” (Id. at pp. 517–518, italics added.)5 

Accordingly, the court said, there was no violation of the 

prohibition against the unlicensed practice of medicine. (Id. at 

p. 517.)

The court considered a similar issue in Cardillo, supra,

218 Cal.App.4th 492. There, two non-physician owners of a 

corporation that operated Kush Dr., a medical marijuana clinic, 

were charged with practicing medicine without a license. (Id. at 

p. 494.) They moved to dismiss the charges, urging that they had 

not engaged in the unlicensed practice of medicine because they 

did not treat patients, but instead provided only management 

services for the physicians who operated out of the clinic and 

wrote medical marijuana prescriptions. (Id. at pp. 495–496.) 

The trial court dismissed the charges, but the Court of 

Appeal reinstated them, explaining that the evidence presented 

at the preliminary hearing indicated that the clinic’s owners 

5 Mir’s respondents’ brief asserts that under Epic, 

arrangements between a physician and management company 

are lawful as long as laypersons do not “ ‘exercise control or 

discretion over . . . the medical elements of the practice.’ ” In fact, 

as quoted above, Epic holds that whether a non-physician has 

engaged in the unlicensed practice of medicine turns on “whether 

the non-licensee exercises or has retained the right to exercise 

control or discretion over the physician’s practice.” (Epic, supra, 

244 Cal.App.4th at p. 517, italics added.)
19

“controlled the operations of the clinics by employing licensed 

physicians to issue recommendations for medical marijuana, 

setting the physicians’ hours, soliciting and scheduling patients, 

collecting fees from the patients, and paying the physicians a 

percentage of those fees. In short, defendants set up a system or 

mode for treating the sick or afflicted in violation of section 2052. 

The fact that neither [non-physician] actually examined any 

patients or prescribed medical marijuana to them does not 

absolve them of criminal liability for practicing medicine without 

a license.” (Id. at p. 498.)

Synthesizing relevant legal authority, the California 

Medical Board6 provides the following guidance for practitioners

regarding the delegation of practice management to nonphysicians: “[T]he following ‘business’ or ‘management’ decisions 

and activities, resulting in control over the physician’s practice of 

medicine, should be made by a licensed California physician and 

not by an unlicensed person or entity: . . .

“● Selection, hiring/firing (as it relates to clinical 

competency or proficiency) of physicians, allied health staff and 

medical assistants; 

“● Setting the parameters under which the physician 

will enter into contractual relationships with third-party payers; 

“● Decisions regarding coding and billing procedures for 

patient care services; and 

“● Approving of the selection of medical equipment and 

medical supplies for the medical practice.” 

(<https://www.mbc.ca.gov/Licensing/Physicians-and-Surgeons/

6 The California Medical Board has a variety of 

responsibilities, including the enforcement of the disciplinary and 

criminal provisions of the Medical Practice Act. (§ 2004.) 
20

Practice-Information/> [as of Aug. 15, 2023], archived at 

<https://perma.cc/G9CT-BXT9>.)

According to the Medical Board, the above decisions and 

activities “cannot be delegated to an unlicensed person, including 

(for example) management service organizations. While a 

physician may consult with unlicensed persons in making the 

‘business’ or ‘management’ decisions described above, the 

physician must retain the ultimate responsibility for, or approval 

of, those decisions.” 

(<https://www.mbc.ca.gov/Licensing/Physicians-and-Surgeons/

Practice-Information/> [as of Aug. 15, 2023].)

The Medical Board further states that a non-physician may 

not “own[] or operat[e] a business that offers patient evaluation, 

diagnosis, care and/or treatment,” and a management service 

organization may not “arrang[e] for, advertis[e], or provid[e]

medical services rather than only provid[e] administrative staff 

and services for a physician’s medical practice (non-physician 

exercising controls over a physician’s medical practice, even 

where physicians own and operate the business).” It explains: 

“In the examples above, non-physicians would be engaged in the 

unlicensed practice of medicine, and the physician may be aiding 

and abetting the unlicensed practice of medicine.” 

(<https://www.mbc.ca.gov/Licensing/Physicians-andSurgeons/Practice-Information/> [as of Aug. 15, 2023].) 

3. Radiology referrals as the unlicensed 

practice of medicine.

We are not aware of any appellate decisions that have 

discussed the unlicensed practice of medicine in the specific 

context of referrals for radiology services. However, the Attorney 

General has twice opined that selecting a radiology provider 
21

involves the practice of medicine.7 In an opinion issued in 2000, 

the Attorney General stated that a management services 

organization may not, for a fee, select, schedule, secure, and pay 

for radiology diagnostic services ordered by a physician because 

that would constitute the unlicensed practice of medicine. The 

opinion explained: “[T]he selection of a radiology site with 

appropriate equipment and operational personnel best suited for 

the performance of a diagnostic radiology study of a patient’s 

particular physical disorder, as well as the selection of a qualified 

radiologist to view and interpret the films, would involve the 

exercise of professional judgment and evaluation as part of the 

practice of medicine.” (83 Ops.Cal.Atty.Gen. 170 (2000).)8 

Subsequently, in a 2009 opinion the Attorney General 

“reiterate[d] [its] view that professional radiology services—

7 “ ‘Opinions of the Attorney General, while not binding, are 

entitled to great weight. [Citations.] In the absence of 

controlling authority, these opinions are persuasive “since the 

Legislature is presumed to be cognizant of that construction of 

the statute,” ’ ” and we presume the interpretation “ ‘has come to 

the attention of the Legislature, and if it were contrary to the 

legislative intent that some corrective measure would have been 

adopted . . . .’ ” (California Assn. of Psychology Providers v. Rank

(1990) 51 Cal.3d 1, 17 (Rank); Almond Alliance of California v. 

Fish & Game Com. (2022) 79 Cal.App.5th 337 [quoting Rank].)

8 Discovery Radiology asserts that this opinion “may be 

relevant to Allstate’s claims against OneSource, but it has no 

relevance to Discovery’s operations.” We do not agree. Both 

cases allege radiology referrals by a non-physician: by Mir in the 

Discovery action, and by OneSource in the OneSource action. 

The fact that the Discovery Radiology action does not allege the 

existence of a management company is not relevant to the 

analysis. 
22

specifically including the selection of a suitable radiologist, and 

the selection of a suitable radiology facility with appropriate 

equipment and personnel, as well as preparing and interpreting 

radiological images—involve the exercise of professional 

judgment as part of the practice of medicine.” 

(92 Ops.Cal.Atty.Gen. 56 (2009).) 

B. Analysis.

The authorities discussed above make clear that a nonlicensed individual need not examine a patient or render a 

medical diagnosis to engage in the unlicensed practice of 

medicine—to the contrary, a non-physician unlawfully practices 

medicine if he or she exercises undue control over a medical 

practice. A non-physician undoubtedly exercises undue control 

by owning a medical practice, but may also exercise such control 

in a variety of other ways, including by choosing physicians to 

provide medical services, selecting medical equipment, 

determining the parameters of physicians’ employment, including 

case load and compensation, and making billing decisions.

The amended complaints state claims against each 

defendant for engaging in or assisting in the unlicensed practice 

of medicine because they allege an unlawful degree of control by 

non-physicians over the medical corporations’ provision of 

diagnostic radiology services. The operative complaint in the 

Discovery Radiology action alleges that although Discovery 

Radiology was licensed as a professional medical corporation 

owned by Drs. Feske and Safvi, it actually was “owned, operated, 

or controlled” by Mir, who is not a physician and is not licensed to 

practice medicine. Specifically, Mir is alleged to have “created 

[Discovery Radiology] as a professional medical corporation,” filed 

documents on Discovery Radiology’s behalf with the California 
23

Secretary of State, the Medical Board of California, and the 

Center for Medicare and Medicaid Services, “recruited . . . 

patients from personal injury attorneys,” “recruited physicians, 

including physician-Defendants Feske and Safvi, to appear on 

paper as the owners of [Discovery Radiology],” “entered into 

contracts with diagnostic radiology facilities to perform the 

technical component of the MRI scans (i.e., administer the MRIs) 

and with radiologists to perform the professional component of 

the MRI scan (i.e., interpret the MRI images),” selected the 

facilities and radiologists to whom patients would be referred,

and prepared bills and reports for submission to insurance 

companies. Further, Drs. Feske and Safvi, the purported owners 

of Discovery Radiology, are alleged to have “exercised no control, 

supervision or management of the corporation,” but instead to 

have ceded control over referrals, billing, collections, and 

distribution of profits to Mir.

Similarly, the operative complaint in the OneSource action 

alleges that Mir created OneSource, 1st Source, Expert MRI, and 

Safvi Medical, and that although Expert MRI and Safvi Medical 

are licensed as professional medical corporations owned at 

various times by Drs. Mazhar, Kahn, and Safvi, they in fact are 

owned and controlled by Mir through OneSource. Through 

OneSource, Mir allegedly markets the professional corporations

to workers’ compensation and personal injury attorneys, selects 

the diagnostic imaging facilities and radiologists to which 

patients are referred, and controls the professional corporations’ 

billing, collections, and distribution of profits. Further, 

Drs. Mazhar, Kahn, and Safvi are alleged to provide “zero 

oversight, control or review,” having agreed to allow Mir to have 

“complete control over the selection of the diagnostic radiology 
24

practices to which patients were sent; the selection of physicians 

who read and interpreted the MRI studies; the preparation of 

billing statements that [will] ultimately be presented to 

insurance companies, including determining the amount billed 

for the services rendered and billing codes used, if any; the 

collection of payment for the services from insurance companies; 

the banking of the insurance payments; and the distribution of 

profit[s].”

Defendants contend the complaints do not allege the 

unlicensed practice of medicine because they describe “nothing 

more than a permissible business model” in which a management 

services organization or layperson enters into contracts with 

professional corporations that “delegate[d] to the [management 

services organization] or layperson some level of control over the 

business management and administration of the [professional 

corporation] without ceding control or discretion over the 

physicians’ practice of medicine.” It is dispositive, defendants

suggest, that “Mir and OneSource did not decide whether a 

patient needed MRI services, did not decide what MRI images 

needed to be taken, did not take the images, did not interpret the 

images, and did not form medical opinions based on those images. 

All of those tasks were performed by licensed professionals at 

their own discretion. Moreover, Allstate does not allege that the 

medical services rendered were excessive, not medically 

necessary, or inappropriate in any way, or that the billed-for 

services were not rendered.”

It is true, as defendants assert, that the amended 

complaints do not allege that non-physicians ordered or 

interpreted the MRIs, or that the radiology services provided 

were excessive or not medically necessary. But that was equally 
25

true in Cardillo and Steinsmith: In neither case was it alleged 

that non-physicians interfered with the physicians’ practice of 

medicine by dictating diagnosis or treatment, or that the services 

provided were not medically necessary. Instead, the violation in 

those cases was a non-physician’s partial ownership of the 

practice (Steinsmith) and control over the operations of the 

medical practice by, among other things, selecting the physicians 

who would perform medical services, setting the physician’s 

hours, and soliciting and scheduling patients (Cardillo). A 

similar degree of control over the medical corporations by Mir is 

alleged in the present cases.

Contrary to defendants’ contentions, therefore, the facts as 

alleged in the Discovery Radiology and OneSource actions are not 

“nearly identical” to those established in Epic. In Epic, although 

the management company had a significant role in managing the 

physician’s practice, there was no suggestion there that the 

management company formed the physician’s medical 

corporation, submitted required filings on his behalf to the 

Medical Board or Secretary of State, solicited patients, or 

determined to which physician those patients would be referred. 

Further, although the management company supplied the 

physician’s medical equipment and support staff, the physician 

selected the medical equipment with which his office would be 

outfitted and trained and supervised the nursing staff. (Epic, 

supra, 244 Cal.App.4th at p. 508.) In short, while the 

management company’s role was significant, the physician—not 

the management company—controlled the practice in a 

meaningful way. In the present case, in contrast, Mir and/or his 

management company, OneSource, are alleged to control the 

radiology practices: As noted above, Mir and/or OneSource are 
26

alleged to have formed the medical corporations, filed licensing

documents with federal and state authorities, contracted with 

MRI providers and radiologists, selected the MRI facilities to 

which patients would be directed, and determined which and how 

many patients would be referred to the contract radiologists. In 

short, Mir and OneSource are alleged to control the radiology 

practices at issue in this case to a far greater degree than was 

established in Epic.

9

For all the foregoing reasons, we conclude that the 

operative complaints allege the unlicensed practice of medicine in 

violation of the Medical Practice Act. We therefore turn to the 

question of whether such allegations may give rise to claims 

under the IFPA and UCL.

III. The unlicensed practice of medicine may give rise to 

claims under the IFPA and UCL.

Defendants contend that even if the amended complaints 

allege the unlicensed practice of medicine in violation of the 

Medical Practice Act, those allegations do not give rise to causes

of action under the IFPA or UCL. For the reasons that follow, we 

disagree.

A. The operative complaints state claims under 

the IFPA.

9 Discovery Radiology cites an additional case, Blank v. Palo 

Alto-Stanford Hospital Center (1965) 234 Cal.App.2d 377, 390, 

which it asserts holds that there is no unlicensed practice of 

medicine so long as physicians retain “freedom to practice.” 

Blank concerned an alleged fee split between a medical group and 

a hospital for radiology services; it has no relevance to the 

present case.
27

1. Overview of the IFPA.

The IFPA was enacted to prevent automobile and workers’ 

compensation insurance fraud in order to, among other things, 

“significantly reduce the incidence of severity and automobile 

insurance claim payments and . . . therefore produce a 

commensurate reduction in automobile insurance premiums.” 

(Ins. Code, § 1871, subd. (c).) To permit “the full utilization of the 

expertise of the [insurance] commissioner and the department [of 

insurance] so that they may more effectively investigate and 

discover insurance frauds” (id., § 1871, subd. (a)), the IFPA

contains a qui tam provision that allows any interested person to 

bring an action for damages and penalties for fraudulent 

insurance claims on behalf of the individual and the State of 

California (id., § 1871.7, subd. (e)(1)). The person bringing the 

qui tam action, referred to as the “relator,” stands in the shoes of 

the State of California, which is deemed to be the real party in 

interest. (State ex rel. Aetna Health of California, Inc. v. Pain 

Management Specialist Medical Group (2020) 58 Cal.App.5th 

1064, 1069–1070 (Aetna); People ex rel. Strathmann v. Acacia 

Research Corp. (2012) 210 Cal.App.4th 487, 500 (Strathmann).) 

The relator in an Insurance Code section 1871.7 qui tam action 

does not personally recover damages, but if successful receives a 

substantial percentage of the recovery as a bounty. (§ 1871.7, 

subd. (g); Aetna, at p. 1070; Strathmann, at p. 500.)

The complaints at issue here assert causes of action under 

the IFPA, Insurance Code section 1871.7, subdivision (b).

10 That 

10 The complaints also allege violations of Insurance Code 

section 1871.7, subdivision (a). Because we conclude that the 

complaints state claims under section 1871.7, subdivision (b), we 

do not address subdivision (a). 
28

section prescribes civil penalties for violations of Penal Code 

sections 549, 550, or 551, which target insurance fraud. As

relevant here, Penal Code section 550 prohibits knowingly 

preparing, presenting, or causing to be presented (1) “any false or 

fraudulent claim for the payment of a loss or injury, including 

payment of a loss or injury under a contract of insurance,” or 

(2) “any writing, with the intent to . . . allow it to be presented . . . 

in support of any false or fraudulent claim.” (Pen. Code, § 550, 

subd. (a)(1), (5).) 

A claim need not contain an express misstatement of fact to 

be actionable under Penal Code section 550 and Insurance Code 

section 1871.7, subdivision (b). (State ex rel. Wilson v. Superior 

Court (2014) 227 Cal.App.4th 579, 601 (Wilson); People ex rel. 

Allstate Ins. Co. v. Suh (2019) 37 Cal.App.5th 253, 260 (Suh).) 

Instead, these sections require only that a person knowingly, and 

with intent to defraud, “(1) present a claim that is false or 

fraudulent in some respect, (2) present, prepare, or make a 

statement containing false or misleading information about a 

material fact, or (3) conceal an event that affects a person’s right 

or entitlement to insurance benefits.” (Suh, at p. 260.) In other 

words, “[a]n insurance claim is fraudulent under [Penal Code]

section 550 and [Insurance Code] section 1871.7, subdivision (b), 

when it is ‘characterized in any way by deceit’ ” (ibid.) or 

“result[s] from deceit or conduct that is done with an intention to 

gain unfair or dishonest advantage.” (Wilson, at p. 602.) 
29

2. The unlicensed practice of medicine as 

the basis for an IFPA claim.

Defendants urge that as a matter of law, the unlicensed 

practice of medicine cannot form the basis for an IFPA claim

because “[t]he IFPA by its terms does not prohibit the [unlicensed 

practice of medicine] . . . [n]or does it incorporate Business and 

Professions Code § 2400, which ‘embodies [California’s] ban on 

the corporate practice of medicine’ . . . [or] any of the other 

provisions of the Medical Practice Act . . . that govern the 

unlicensed practice of medicine.” Further, defendants suggest, 

because the IFPA “enumerates specific prohibited acts and 

incorporates those prohibited acts listed in California Penal Code 

§§ 549–551,” it presumably “intended for that list to be 

exclusive.”

We do not agree. Penal Code sections 549 to 551 

criminalize the submission of false or fraudulent insurance 

claims, but do not detail the circumstances that will render 

particular claims “false” or “fraudulent.” Accordingly, courts 

have held, the “clear import” of these sections “is to criminalize 

the making of false or fraudulent claims the ultimate objective of 

which is to obtain benefits to which the offender is not entitled.” 

(People v. Blick (2007) 153 Cal.App.4th 759, 772–773.)

Moreover, as Allstate notes, prior appellate decisions have 

held that the unlicensed practice of medicine can form the basis 

for an IFPA claim. The court considered this issue in People ex 

rel. Monterey Mushrooms, Inc. v. Thompson (2006) 

136 Cal.App.4th 24 (Monterey Mushrooms), one of two cases 

addressing the unlicensed practice of medicine by chiropractors 

Steven Thompson and Aster Kifle-Thompson (the Thompsons). 

In brief, those cases concerned the Thompsons’s creation of
30

medical corporations to provide both chiropractic and medical 

services, as well as a management company to provide 

nonprofessional employees, payroll services, and management 

services to the medical corporations. Because state law required 

the medical corporations to be owned by a licensed physician, the 

Thompsons arranged for an out-of-state physician to be the 

absentee owner, and hired a licensed physician to work part-time 

at the medical corporations’ clinics. (Kifle-Thompson v. State Bd. 

of Chiropractic Examiners (2012) 208 Cal.App.4th 518, 521, 524–

526 (Kifle-Thompson).)11 

A self-insured employer sued the Thompsons for insurance 

fraud, asserting that they and their medical and management 

corporations had violated the IFPA by submitting false claims for 

workers’ compensation payments. (Monterey Mushrooms, supra, 

136 Cal.App.4th at p. 27.) The case was tried to the court, which 

found the Thompsons and the corporations liable for “having ‘set 

up sham corporations, with medical doctors as ostensible owners, 

that presented to the public as full-service medical clinics. In 

reality, the medical doctors were essentially a series of absentee 

figureheads who gave no consideration for their ownership 

interests and, for the most part, had no meaningful role in the 

direction of patient care or general clinic operation.’ The purpose 

of these corporations was to allow these defendants to ‘acquire 

patients and refer them for chiropractic treatment and to present 

fraudulent claims for services to third-party payors.’ The result 

was that patients were ‘inevitably being directed to chiropractic 

“treatment,” where they were grossly over[-]treated. Bills were 

generated for these patient visits, and in some cases more than 

11 Kifle-Thompson was a related appeal from the revocation of 

Kifle-Thompson’s chiropractic license.
31

one claim was made for a single session.’ ” (Id. at p. 28, italics 

omitted.) The trial court found that the insurance claims 

submitted by the Thompsons and their corporations thus violated 

the IFPA, and it awarded the plaintiff more than $1 million in 

civil penalties and attorney fees. (Ibid.)

The Thompsons appealed, contending, among other things,

that Kifle-Thompson and one of her medical corporations, IFMG, 

should have been dismissed because they were not alleged to 

have treated any of the patients identified in the complaint. The 

Court of Appeal disagreed and affirmed. It explained that the 

case “was not merely about the submission of false or excessive 

treatment claims regarding specific employees; it embraced an 

entire scheme in which Kifle-Thompson, on her own and through 

IFMG, helped defraud [the employer], the workers’ compensation 

system, and the public. The trial testimony and documentary 

evidence convinced the trial court as fact finder that KifleThompson and her husband had set up illegal corporate medical 

practices, ‘affecting not just a single patient or employer or even 

solely patients with industrial injuries.’ They gave physicians 

ostensible ownership of these corporations while retaining full 

control over the structure, finances, and operation of each 

corporation, including patient care. . . . [¶] . . . Kifle-Thompson 

was an active part of the conspiracy enabling them to achieve 

these objectives through [the medical corporations] [and] . . . their 

‘management service’ or ‘shell’ corporation.” (Monterey 

Mushrooms, supra, 136 Cal.App.4th at pp. 36–37.) Thus, the 

Court of Appeal said, the trial court properly found KifleThompson and IFMG liable for violations of Insurance Code 

section 1871.7. (Monterey Mushrooms, at pp. 39–40.)
32

The Court of Appeal reached a similar conclusion in a 

related context in Suh, supra, 37 Cal.App.5th 253, an IFPA case 

involving the unlicensed practice of law. There, evidence 

introduced at trial demonstrated that defendants, who were not 

attorneys, set up eight sham law firms, paid several attorneys a 

monthly fee to use their names and state bar numbers, and filed 

insurance claims on behalf of Allstate’s insureds. At trial, 

Allstate did not contend that the insurance claims submitted by 

defendants contained false or fraudulent statements about the 

insureds, but rather that obtaining insurance proceeds by posing 

as law firms was actionable under the IFPA. (Id. at pp. 255–

256.) The jury found for Allstate, and defendants appealed.

On appeal, the defendants urged that as a matter of law, 

they did not violate Penal Code section 550 or submit fraudulent 

claims within the meaning of Insurance Code section 1871.7, 

subdivision (b) because although the insureds were not actually 

represented by attorneys, the information in the claim forms was 

accurate—i.e., “ ‘[t]here was no allegation of staged accidents, nor 

any claim that injuries were inflated or that treatment was not 

provided.’ ” (Suh, supra, 37 Cal.App.5th at pp. 255, 259.) The 

Court of Appeal disagreed, concluding that the defendants “read 

the insurance fraud statutes too narrowly.” (Id. at p. 260.) It 

explained: “[Defendants] perpetrated a deceitful insurance 

scheme designed to acquire insurance proceeds illegally for 

personal gain. [Defendants] deceived Allstate into believing the 

attorneys whose names they were using actually and lawfully 

represented its insureds. (See Cal. Code Regs., tit. 10, § 2695.2(c) 

[only attorneys, family members, adjusters, or other persons 

authorized by law may represent insureds].) In their 

communications with Allstate, [defendants] misrepresented that 
33

attorneys represented the insureds. They concealed the fact they 

were masquerading as attorneys when they filed the insurance 

claims. And the misrepresentations were material: Allstate 

would not have released settlement proceeds to [defendants] or 

their sham law firms had Allstate known the truth. The conduct 

of [defendants] constituted insurance fraud under [Penal Code] 

section 550 and [Insurance Code] section 1871.7.” (Id. at p. 260.)

3. Analysis.

Plainly, both Monterey Mushrooms and Suh support the 

proposition that the unlicensed practice of medicine (or law) can 

give rise to IFPA claims. Defendants nonetheless contend that

because of factual differences between the present case, on the 

one hand, and Monterey Mushrooms and Suh, on the other, those 

cases are irrelevant here. We do not agree.

Defendants contend that Monterey Mushrooms is 

fundamentally different from the present cases because there the 

physicians who acted as the professional corporations’ medical 

directors “ ‘had no meaningful role in the direction of patient care 

or general clinic operation,’ ” and patients were alleged to have 

been “ ‘grossly over-treated.’ ” In the present cases, defendants 

assert, “[n]o remotely similar facts have been alleged.” 

Defendants undoubtedly are correct that Monterey 

Mushrooms concerned some facts not alleged in the present 

cases—namely, that patients were over-treated and, in some 

cases, multiple bills were submitted for the same sessions. 

(Monterey Mushrooms, supra, 136 Cal.App.4th at p. 28.) The 

Monterey Mushrooms court made clear, however, that the case 

“was not merely about the submission of false or excessive 

treatment claims regarding specific [patients],” but also

“embraced an entire scheme” in which the non-physician 
34

defendants set up corporate medical practices that were 

ostensibly controlled by physicians, but over which the nonphysician defendants had “full control” of the “structure, finances, 

and operation.” (Id. at p. 36.) In other words, Monterey 

Mushrooms stands for the proposition that claims submitted by a 

corporation engaging in the unlicensed practice of medicine may, 

without more, give rise to IFPA claims, a conclusion of obvious 

relevance to the present case. 

Defendants also contend that Suh is distinguishable 

because in that case, the defendant “ ‘masquerad[ed]’ ” as an 

attorney, “procured clients she was not ‘authorized to represent,’ 

and submitted insurance claims on behalf of those clients without 

the consent of actual attorneys.” Unquestionably, there are 

factual differences between Suh and the present cases. Suh

nonetheless is relevant because there was no allegation in that 

case that accidents were staged, injuries were inflated, or 

treatment was not provided. (Suh, supra, 37 Cal.App.5th at 

p. 259.) In other words, the insurer neither alleged nor proved 

that the policyholders were not entitled to recover under their

automobile insurance policies in the amounts of the claims they 

submitted. Instead, the sole basis for the IFPA claim was the 

organizational structure of the purported law firms that 

submitted the claims on behalf of the policyholders—that is, that 

the firms were controlled by laypersons, not by attorneys. 

Allstate’s allegations in the present cases are similar: It alleges 

that the claims submitted to it for services allegedly rendered by 

the defendants are fraudulent because the entities that 

submitted them are not what they purport to be—that is, 

although the entities hold themselves out as professional 

corporations, they actually are controlled by a layperson or 
35

management company. Suh thus supports the proposition that 

an allegation of this kind can support a claim under the IFPA.

Defendants contend that Ebeid ex rel. United States v. 

Lungwitz (9th Cir. 2010) 616 F.3d 993 (Ebeid) holds that an 

unlicensed practice of medicine claim cannot serve as predicate to 

a federal False Claims Act case, which defendants urge is 

persuasive here. Not so. Ebeid concerned an allegation that 

claims submitted by the defendant for Medicare reimbursement 

were fraudulent because the defendants engaged in the unlawful 

corporate practice of medicine. (Id. at p. 995.) The Ninth Circuit 

affirmed the district court’s dismissal of the complaint for failure 

to allege fraud with sufficient particularity. (Id. at p. 1001.) It 

noted that under the federal False Claims Act, a plaintiff must 

establish that an alleged false statement was material to the 

government’s decision to make a payment to the claimant. (Id. at 

p. 997.) In the case before it, however, the plaintiff did not “refer 

to any statute, rule, regulation, or contract that condition[ed] 

payment on compliance with state law governing the corporate 

practice of medicine”; instead, plaintiff “baldly assert[ed] that had 

[claimant] ‘not concealed or failed to disclose information 

affecting the right to payment, the United States would not have 

paid the claims.’ ” (Id. at pp. 999–1000.) The Ninth Circuit 

concluded that this conclusory allegation was insufficient under 

Rule 9(b) of the Federal Rules of Civil Procedure. (Ebeid, at 

p. 1000.)

Ebeid is not relevant to our analysis of the present case. It 

does not hold that the unlicensed practice of medicine could never

support a claim under the False Claims Act, but only that the 

operative complaint had not pled such a claim with the requisite 

specificity. (Ebeid, supra, 616 F.3d at p. 1000.) Moreover, 
36

because Ebeid alleged fraudulent Medicare claims, the claimant’s 

right to reimbursement necessarily was governed by federal 

Medicare laws and regulations. In contrast, the present case 

alleges false claims under the IFPA, and thus defendants’ rights

to reimbursement are governed by private contracts of insurance

and state law, not federal law. The plaintiff’s failure to state a 

claim in Ebeid, therefore, is irrelevant to the demurrers in the 

present case.

Defendants also urge that California Physicians’ Service v. 

Aoki Diabetes Research Institute (2008) 163 Cal.App.4th 1506

(Aoki) holds that an insurance company may not use an 

unlicensed practice of medicine claim “as an excuse not to pay for 

services rendered to its insureds.” Aoki is inapposite. The issue 

in that breach of contract action was whether a medical 

provider’s organization as a nonprofit corporation, rather than a 

professional medical corporation, rendered its provider contract 

with a medical insurer unenforceable so that the provider could 

not recover under the contract. (Id. at pp. 1513, 1516–1517.) The 

Court of Appeal held the provider contract was enforceable

because “a contract for the provision of medical services by 

licensed professionals is plainly not malum in se.” (Id. at 

p. 1517.) The present case, in contrast, does not arise out of a 

contract between an insurer and a provider; it is instead a fraud 

action brought in the name of, and on behalf of, the state of 

California. Nor does Allstate seek to “avoid paying for” services 

rendered under an insurance contract, as defendants suggest; 

Allstate has already paid for those services, and seeks through 

this action to recover a statutory penalty that, if recovered, will 

be shared by the state. (Ins. Code, § 1871.7, subd. (g)(2)(A).) 
37

For all of these reasons, we conclude that the complaints 

allege claims under the IFPA.

B. The operative complaints state claims under 

the UCL.

The UCL prohibits “any unlawful, unfair or fraudulent 

business act or practice and unfair, deceptive, untrue or 

misleading advertising.” (§ 17200.) “ ‘By proscribing “any 

unlawful” business practice, “section 17200 ‘borrows’ violations of 

other laws and treats them as unlawful practices” that the unfair 

competition law makes independently actionable.’ (Cel-Tech

[Communications, Inc. v. Los Angeles Cellular Telephone Co. 

(1999)] 20 Cal.4th [163,] 180.) ‘To prevail on a claim under the 

unlawful prong of the unfair competition law, the plaintiff must 

show that a challenged advertisement or practice violates any 

federal or California “statute or regulation.” ’ ” (Beasley v. Tootsie 

Roll Industries, Inc. (2022) 85 Cal.App.5th 901, 911–912.)

All parties agree that Allstate’s UCL claims are derivative 

of its IFPA claims, and thus that the UCL claims rise or fall with 

the IFPA claims. Because the complaints adequately plead 

violations of the IFPA, they also adequately plead violations of 

the UCL. 

IV. The amended complaints were pled with adequate 

specificity.

Defendants urged in their demurrers, and the trial court 

concluded, that the complaints did not plead the IFPA claims 

with adequate specificity. For the reasons that follow, we 

disagree. 

As in any action sounding in fraud, an IFPA action must be 

pleaded with particularity. “In California, fraud must be pled 
38

specifically; general and conclusory allegations do not suffice. 

[Citations.] . . . ‘This particularity requirement necessitates 

pleading facts which “show how, when, where, to whom, and by 

what means the representations were tendered.” ’ ” (Lazar v. 

Superior Court (1996) 12 Cal.4th 631, 645.)

“ ‘The specificity requirement serves two purposes. The 

first is notice to the defendant, to “furnish the defendant with 

certain definite charges which can be intelligently met.”

[Citations.] The pleading of fraud, however, is also the last 

remaining habitat of the common law notion that a complaint 

should be sufficiently specific that the court can weed out 

nonmeritorious actions on the basis of the pleadings. Thus, the 

pleading should be sufficient “ ‘to enable the court to determine 

whether, on the facts pleaded, there is any foundation, prima 

facie at least, for the charge of fraud.’ ” ’ (Committee on 

Children’s Television, Inc. v. General Foods Corp. (1983) 

35 Cal.3d 197, 216–217.)” (JPMorgan Chase Bank, N.A. v. 

Superior Court (2022) 85 Cal.App.5th 477, 494.) 

We conclude that both amended complaints are pled with 

adequate specificity. The amended complaint in the Discovery 

action identifies the role each defendant allegedly played in the 

fraudulent scheme. Specifically, it alleges that Mir “owned, 

operated, or controlled” Discovery Radiology, entered into 

contracts with diagnostic radiology facilities to perform MRI 

scans and with radiologists to interpret MRI images, recruited 

patients from personal injury attorneys, selected the radiology 

facilities and radiologists to which patients were sent, and 

provided bills and reports on Discovery Radiology letterhead to 

attorneys, with knowledge that the attorneys would present the 

bills and reports to Allstate in support of insurance claims. The 
39

amended complaint further alleges that Drs. Feske and Safvi 

agreed to “appear on paper as the owners of” Discovery 

Radiology, but “exercised no significant control over” its operation 

and “surrender[ed] control of billing, collection, banking and the 

distribution of profits” to Mir, knowing that Mir intended to bill 

the insurer for the services. Finally, the attachment to the 

amended complaint identifies each allegedly false insurance 

claim by claim number, and additionally provides, for each claim,

the date of treatment, the provider name that appeared on the 

claim, the amount billed, and the name of the attorney who 

submitted the claim. 

Similarly, the amended complaint in the OneSource action 

alleges that Mir owns, operates, and controls OneSource, Expert 

MRI, and Safvi Medical, entered into contracts with radiology 

facilities and radiologists to provide services at fixed fees,

markets radiology services to workers’ compensation and 

personal injury attorneys, steers patients to radiologists and 

diagnostic radiology providers with which he has contracted, and 

prepares bills for the services provided without any supervision 

by a licensed radiologist. The complaint further alleges that Mir 

and OneSource “entered into contracts with the Defendant 

radiologists or their purported professional corporations, 

including [Safvi Medical] and [Expert MRI], to read and interpret 

MRI studies and to prepare written reports of their findings and 

diagnoses, to falsely appear on paper as owners and operators of 

professional medical corporations utilizing OneSource, and to 

grant absolute control to Mir and OneSource”; that Drs. Safvi, 

Mazhar, and Khan agreed to read MRIs, x-rays, and scans at 

negotiated rates and to allow Mir complete control over billing; 

that the physicians billed Mir and OneSource directly through 
40

monthly billing statements that were submitted only to Mir and 

OneSource; that Safvi Medical entered into a written contract to 

allow Mir and his company to “have the sole and exclusive right 

to direct and oversee bill[ing] and collections . . . [and to] bill and 

collect on a global basis, under [Safvi Medical’s] provider 

number,” and agreed that it would have “no claims . . . for any 

compensation or other amounts from third-party payors”; that 

Dr. Mazhar allowed Mir to use his name and license number to 

register Expert MRI with the California Secretary of State and 

the California Medical Board, but never was a true owner of 

Expert MRI; that Dr. Khan agreed to replace Dr. Mazhar as the 

purported owner of Expert MRI, but never exercised any 

operational control over the business; and that Dr. Khan “in 

entering into the agreement to falsely appear as the owner of 

[Expert MRI], [knew] that the fraudulent scheme involved the 

preparation and presentation of false, fraudulent, and/or 

misleading billing statements to insurance companies.” Finally, 

the attachment to the complaint identifies each allegedly false 

insurance claim by claim number, and additionally provides the 

date of treatment, the provider name that appeared on the claim, 

the amount billed, and the name of the attorney who submitted 

the claim. 

Defendants contend that the complaints were not pled with 

adequate specificity because the attached spreadsheets did not 

allege “ ‘the dates . . . of each alleged false bill,’ ‘the person or 

entity who prepared the bill,’ [or] ‘the person or entity 

transmitting the billing statement to’ Allstate.’ ” But defendants 

cite no authority for the proposition that these particular details 

are necessary to meet the pleading requirements. Moreover, 

even if these details were required, they were substantially 
41

provided. The bills were submitted on behalf of the providers,

whose names are identified, and through attorneys, whose names 

are also identified. And although the complaints do not 

specifically identify the dates the claims were submitted to 

Allstate, they did state for each claim the dates of treatment and 

the claim numbers, from which the allegedly false claims may be 

readily identified. Defendants cite no authority to suggest that 

more is required.

Defendants also suggest that the complaints are

inadequate because they do not allege “what [the claims] said 

that was false.” Not so. As we have described, the complaints

allege, among other things, that the claims were deceitful 

because the defendant medical corporations on whose behalf the 

claims were submitted were controlled by a non-physician, and 

because the claims falsely represented that the MRIs were 

performed and read by the defendant medical corporations, 

rather than by third parties with whom the medical corporations 

contracted.

Defendants further suggest that this case is analogous to 

McCann, supra, 191 Cal.App.4th at p. 908, a California False 

Claim Act case in which the relators alleged that the defendant 

bank defrauded the state by failing to pay over to it unidentified 

credits subject to escheat as unclaimed property. (Id. at p. 902.) 

The Court of Appeal concluded that the relators had not pled 

their claims with sufficient particularity because while they 

identified an allegedly fraudulent practice (the failure to 

investigate unidentified credits and to then credit them to 

presenting banks), they did not identify any particular property 

that should have escheated. In other words, they failed “to 

directly identify an amount or account—a liquidated and certain 
42

obligation—due to any specified presenting bank (in California or 

elsewhere) that would be subject to escheat under the [unclaimed 

property law].” (Id. at p. 910.) The present case is 

distinguishable because Allstate has pled not only an allegedly 

fraudulent practice, but also identified each of the allegedly false 

claims submitted as a result of that practice. 

For the foregoing reasons, we conclude that the complaints 

are pled with adequate specificity.

V. Allstate’s claims against Discovery Radiology cannot 

be resolved on demurrer.

An action under the IFPA “may not be filed more than 

three years after the discovery of the facts constituting the 

grounds for commencing the action.” (Ins. Code, § 1871.7, 

subd. (l)(1).) The statute of limitations under this section is 

triggered by inquiry notice (State of California ex rel. Metz v. CCC 

Information Services, Inc. (2007) 149 Cal.App.4th 402, 415–

417)—that is, the statute begins to run “once the plaintiff ‘ “ ‘has 

notice or information of circumstances to put a reasonable person 

on inquiry. . . .’ ” ’ ” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 

1110–1111). 

It is undisputed that the Discovery action was filed more 

than three years after Discovery Radiology’s bills were submitted

to Allstate. The operative complaint alleges that the action 

nonetheless was timely filed because Allstate was not on inquiry 

notice of the claims until January 2018, when it “discovered that 

the facility address identified on the [Discovery Radiology] billing 

statements as the location of the service provided was a post 

office box at The UPS Store in Glendale, not an MRI facility, as 

represented by [Discovery Radiology]. Allstate then attempted to 

determine the physical location [of Discovery Radiology’s] MRI 
43

machines, . . . the identity of the person or entities that owned, 

operated or controlled [Discovery Radiology], the identity of 

[Discovery Radiology’s] MRI technicians involved in the 

performance of scans, and where the [Discovery Radiology] 

records and actual diagnostic studies were stored. In June 2019, 

Allstate also discovered that [Discovery Radiology’s] La Palma, 

California address, which it had represented to the California 

Secretary of State as its corporate address on multiple occasions, 

was a shared Regus office suite and answering service, not an 

MRI facility or medical practice. Allstate identified all open and 

closed files involving bills and reports from [Discovery Radiology] 

that were presented in support of or in connection with claims, 

finding that the service location listed on such documents was the 

Glendale address, that the reports appeared to be templated, that 

there were multiple MRI scans performed on patients, and that 

the actual location where the MRI scan was performed was not 

identified on the bills or reports.”

Defendants contend that these allegations do not save the 

Discovery action because Allstate “necessarily had possession of 

the so-called ‘templated’ bills long before 2018. Indeed, Allstate 

alleges that it began receiving the allegedly fraudulent bills as 

early as November 2015.” Additionally, because each bill 

included the Glendale address, “from the date that the first bill 

was submitted—and well into 2015, 2016, and 2017—Allstate 

would have been in possession of facts necessary to bring these 

claims.”

When a plaintiff reasonably should have discovered facts 

for purposes of the accrual of a cause of action or application of 

the delayed discovery rule is generally a question of fact, properly 

decided as a matter of law only if the evidence (or, in the case of a 
44

demurrer, the allegations in the complaint and facts properly 

subject to judicial notice) can support only one reasonable 

conclusion. (Stella v. Asset Management Consultants, Inc. (2017) 

8 Cal.App.5th 181, 193; Jolly v. Eli Lilly & Co., supra, 44 Cal.3d 

at p. 1112.) Similarly, “ ‘ “[w]hether reliance [on a 

misrepresentation] was reasonable is a question of fact for the 

jury, and may be decided as a matter of law only if the facts 

permit reasonable minds to come to just one conclusion.” ’ 

(Grisham v. Philip Morris U.S.A., Inc. [(2007]) 40 Cal.4th [623,]

638; accord, Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 

1226, 1239 [‘ “Except in the rare case where the undisputed facts 

leave no room for a reasonable difference of opinion, the question 

of whether a plaintiff’s reliance is reasonable is a question of 

fact.” ’].)” (Broberg v. The Guardian Life Ins. Co. of America

(2009) 171 Cal.App.4th 912, 921.) “ ‘Whether a party has notice 

of “circumstances sufficient to put a prudent man upon inquiry as 

to a particular fact,” and whether “by prosecuting such inquiry, 

he might have learned such fact” [citation], are themselves 

questions of fact to be determined by the jury or the trial court.’

(Northwestern P. C. Co. v. Atlantic P. C. Co. (1917) 174 Cal. 308, 

312; accord, Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 

440.)” (Vasquez v. LBS Financial Credit Union (2020) 

52 Cal.App.5th 97, 109.) 

Contrary to the trial court, we do not believe that the 

timeliness of the Discovery action can be decided on demurrer. 

This is not a case where the allegations of the complaint can 

support only one reasonable conclusion: The claims submitted to 

Allstate by Discovery Radiology are not alleged to have contained 

any obviously false or fraudulent information, and we cannot say 

that the only reasonable inference to be drawn from the facts 
45

alleged in the operative complaint in the Discovery action is that 

Allstate should have discovered the alleged unlicensed practice of 

medicine by Mir and Discovery Radiology prior to November 

2017. (See, e.g., Alexander v. Exxon Mobil (2013) 

219 Cal.App.4th 1236, 1255–1256 [“We agree with appellants 

that the allegations set forth in the complaint . . . do not lead to a 

single ‘reasonable conclusion’ as to whether” notices advising the 

plaintiffs of environmental contamination should have caused 

them to suspect that such contamination posed a risk to their 

health]; Broberg v. The Guardian Life Ins. Co. of America, supra, 

171 Cal.App.4th at p. 922 [alleged unreasonableness of insured’s 

reliance on insurer’s alleged misrepresentations was a fact issue 

not suitable for resolution on demurrer].) Accordingly, at this 

juncture we cannot conclude that the Discovery action is timebarred as a matter of law.
46

DISPOSITION

The judgments of dismissal are reversed with directions to 

the trial court to vacate the orders sustaining the demurrers, 

enter new orders overruling the demurrers, and reinstate the 

amended complaints. Allstate shall recover its appellate costs.

CERTIFIED FOR PUBLICATION

EDMON, P. J.

We concur:

EGERTON, J.

HEIDEL, J.*

*

 Judge of the Los Angeles Superior Court, assigned by the 

Chief Justice pursuant to article VI, section 6 of the California 

Constitution.