1

Filed 7/18/16 Edalati v. Kaiser Found. H ealth Plan CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

NAZILA EDALATI, Plaintiff and Appellant,

v. KAISER FOUNDATION HEALTH PLAN, INC., et al., Defendants and Respondents. A144758
(Solano County Super. Ct. No. FCS044289)

Kaiser Foundation Health Plan, Inc. (Kaiser) provides prescr ibed medications for
Medicare and Medicaid patients of Nazila Edalati , D.D.S . Kaiser erroneously notified

som e of Edalati ’s patients that she was on a federal list of excluded providers suspected
of fraud

. Edalati sued for defamation, and Kaiser moved to dismiss, alleging its communications with the patients was protected activity within the meaning of the anti

SLAPP law 1 ( Code Civ

. Proc ., § 425.16 )

. 2 The trial court held Kaiser’s conduct was “in
furtherance of the exercise of the .

. . constitutional right of free speech in connection with a public issue or an issue of public in terest” ( id. , subd. (e)(4) ), namely Medicare funding and fraud. We reverse

.

1 “SLAPP” is an acronym for “strategic lawsuit against public participation.” ( Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57 & fn. 1.)

2 Undesignated statutory references are to the Code of Civil Procedure.2 I. B ACKGROUND In October 2014, Edalati sued Kaiser for defam ation and invasion of privacy

– false light. She alleged that Kaiser sent an unsolicited letter to some of her patients falsely stating she had been excluded from participation in all federal health care programs as of
October 4, 2013 , and referring the patients to a website of the Office of Inspector
General. Edalati alleged that Kaiser made the statement knowing of its falsity or in
reckle ss disregard for its truth and without undertaking an adequate investigation into its
truth. Kaiser moved to strike the complaint , arguing the alleged defamatory statements

were protected activity under section 425.16

. 3 “Here, Kaiser sent out the written
member

- notifications at issue in connection with its responsibilities as a Medicare Part D Sponsor” pursuant to guidelines promulgated by the federal Centers for Medicare & Medicaid Services (CMS). Specifically, CMS guidelines require d Part D Sponsor s to review lists of excluded providers on a monthly basis and to notify those providers’ patients that federal law prohibits Kaiser from using federal funds to cover the cost of any drugs prescribed by those providers.
Kaiser acknowledged the e xclusion lette rs were erroneous, but presented evidence
the letters were sent as a result of simple negligence. A Kaiser employee mis read a

3 Section 425.16 provides in relevant part: “A cause of action against a person arising from any act of that person in furtherance of the person’s r ight of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plainti ff will prevail on the claim. [¶] .

. . [¶] .

. . [An] ‘act in furtherance of a person’s right of petition or free speech

. . . ’ include s : (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official pro ceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” (§ 425.16, subd s . (b)(1) , (e) .)3

similar name on the list of excluded providers and mistakenly concluded that Edalati had
been excluded. Kaiser consequently sent letters informing Edalati’s Medicare patients that Kaiser “ [could] no longer cover prescription medications .

. . that are prescribed by [Edalati] .

. . because she has been excluded from participation in all federal health care programs.” After Edalati complained in late December 2013 , Kaiser discovered its error
and sent retraction letters to the same patients in January 2014, again pursuant to CMS guidelines

. Edalati opposed the anti

- SLAPP motion, arguing “a private letter to 38 patients of a dentist, speaking solely to a matter affecting only those persons, not addressed to any ‘issue,’ and not calling for the recipients to take action of any type, is not speech on an issue of public interest.” The court granted Kaiser’s motion to strike. “The sendi ng of the letters that
misidentified [Edalati] as an excluded health care provider under the Medicare Part D program constitutes protected activity

. . . in that it involved the exercise of the right of free speech in connection with a public issue or an is sue of public interest. Broadly construing the statute, the court finds that the continuous dissemination of information about the eligibility of health care providers in the Medicare Part D program represents an ‘ongoing discussion’ about an issue of sig nificance to the public, namely, the expenditure of Medicare funds. (See Cross v. Cooper (2011) 197 Cal.App.4th 357, 382

– 383 ; Hecimovich v. Encinal School Parent Teacher Organization (2012) 203 Cal.App.4th
450

. ) In this regard, the case is distinguishabl e from the case of Du Charme v. International Brotherhood of Electrical Workers (2003) 110 Cal.App.4th 107 relied on by [Edalati] .” The court also found that Edalati had not established a probabi lity of prevailing on her claim, finding that “[t] he letters upon which [her] claims are based are privileged under Civil Code Section 47(c) as communications made, without malice, to an interested person by another interested person. ” 4 The court dismissed the action and

4 Civil Code s ection 47, subdivision (c) provides a conditional privilege for communications made “w ithout malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to4

ruled that Kaiser was entitled to recover i ts attorney fees pursuant to section 425.16,
subdivision (c)(1).
II. D ISCUSSION Edalati argues the trial court erred in ruling that Kaiser’s conduct was protected activity within the meaning of the anti

- SLAPP statute. She argues that unquestionably false statements of fact are not constitutionally protected, and that private correspondence
to 38 individuals about their health care coverage is not a matter of public interest. We reject the first argument but agree with the second. Because we find no protected activity

was at issue, the anti

- SLAPP statute has no application and the trial court’s determination
that the statements were privileged need not be addressed

. A. Standard of Review “In ruling on an anti

- SLAPP motion, the trial court engages in a two

- step process. ‘First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which th e plaintiff complains were taken “in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,” as defined in the statute. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.’ [Citations.] .

. . [¶] On appeal, we review the motion de novo and independently determine whether the parties have met their resp ective burdens.” ( Cross v. Cooper
, supra, 197 Cal.App.4th at pp. 370

– 371 ( Cooper ).)
B. False Statements of Fact
Edalati first asserts that “ [i] t is black letter law that false statements have no constitutional protection whatsoever.” She draws this prin ciple from cases that discuss when defamation may be punished or enjoined consistent with the First Amendment of

afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) wh o is requested by the person interested to give the information.”5

the United States Constitution. (See Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323,
339

– 340 [distinguishing statements of fact and opinion] ; Baker v. Los Angeles Herald
Examiner (1986) 42 Cal.3d 254, 260 [same]; Sanders v. Walsh (2013) 219 Cal.App.4th 855, 862 ; Copp v. Paxton (1996) 45 Cal.App.4th 829, 839 [same] ; Ashcroft v. Free Speech Coalition (2 002) 535 U.S. 234, 245

– 246 [“ freedom of spe ech has its limits; it does not embrace certain categories of spee ch, including defamation ”]; Beauharnais v.
Illinois (1952) 343 U.S. 250, 266 [“[l] ibelous utterances [are not] within the area of

co nstitutionally protected speech ”]. ) Those cases are relev ant to the second prong of
anti

- SLAPP analysis, which addresses whether a plaintiff can prevail on her claims against the defendant. They do not address the first prong of the analysis as to whether a claim arises from protected activity within the meanin g of the anti

- SLAPP statute. As an example of the distinction , a n allegedly false and defamatory news article unquestionably
arise s from an act in furtherance of the First Amendment rights

. (S ee Balzaga v. Fox News Network, LLC (2009) 173 Cal.App.4th 132 5, 1336 ; Carver v. Bonds (2005)
135 Cal.App.4th 328, 342

– 344

. ) However , the publisher of such an article may still be subject to civil liability. ( S ee , e.g., Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 747 [false statements about private person and not about matter of public interest are actionable if defendant was at fault]; Time, Inc. v. Hill (1967) 385 U.S. 374, 387 [false statements about public figure are actionable if defe nda nt acted with actual malice]

. )
That is , even when the anti

- SLAPP law applies as an initial matter, the plaintiff might
nevertheless be able to prevail on the claim

. ( Cf. Balzaga , at pp. 1339

– 1343 ; Carver , at
pp. 344

– 360

. ) D efamation claims arising from protected activity are prime examples of
anti

- SLAPP cases ( Hecimovich v. Encinal School Parent Teacher Organization , supra, 203 Cal.App.4th at p. 464), but the defamation may nevertheless be actionable

. Edalati cites Lefebvre v. Lefebvre (2011) 199 Cal.Ap p.4th 696 ( Lefebvre ) in

su pport of her argument, but the case is inapposite. The defendant in Lefebvre had falsely accused her ex

- husband of crimes to gain advantage in her divorce proceeding. The husband was charged and tried, found not guilty by a jury, and found factually innocent by the court. He then sued his ex

- wife for malicious prosecution among other6

causes of action , and the ex

- wife responded with an anti

- SLAPP motion . ( Id. at pp. 700

– 701.) The court held the wife’s conduct was not protected activity under the anti

- SLAPP
law even though false reports of crimes are absolutely privile ged under C ivil Code
section 47

. ( See Hagberg v. California Federal Bank (2004) 32 Cal.4th 350 , 355 .) In our view, Lefebvre follows the rule of Flatley v. Mauro , which held that conceded or clearly established illegal behavior is not protected activity under the an ti

- SLAPP statute even if it otherwise arises from activity in furtherance of the constitutional rights of free speech or petition

. ( See Flatley v. Mauro (2006) 39 Cal.4th 299, 305 ; Lefebvre , at p. 704 [citing Flatley ] .) Other courts have similarly interp reted Lefebvre. (See Kenne v. Stennis (2014) 230 Cal.App.4th 953, 966

– 967 [“the court in Lefebvre held that because the wife’s report to the police was admittedly false and therefore illegal, it did not constitute conduct
in furtherance of her constitutional rights”; citing distinguishable cases]; Comstock v.
Aber (2012) 212 Cal.App.4th 931, 951

– 952 [no evidence of protected activity in Lefebvre because “ ‘the record “conclusively” established that [the] statements to the police were “illegal ac tivity” under Penal Code se ction 148.5’ ”].) Edalati quotes a passage from Lefebvre suggesting that a court assessing whether conduct is protected activity under section 425.16 , subdivision (e)(4) , must determine whether the particular conduct at issue wa s constitutionally protected

. 5 To the extent Lefebvre can be read to suggest that the merits of a plaintiff’s claim must be determined as part of the first

- prong anti

- SLAPP analysis, we disagree. The merits assessment clearly takes place under the second prong of the analysis except in the rare case , such as Lefebvre , where the conduct at issue is admittedly illegal

. (See Dwight R. v. Christy B. (2013) 212 Cal.App.4th 697, 711

– 712.) “Illegal” for purposes of this rule means criminal, not unlawful under civil law. ( Fremont Reorganizing Corp. v. Faigin (2011)

5 “ Because [defendant’s] act of making a false police report was not an act in furtherance of her constitutional rights of petition or free speech, the anti

- SLAPP statute simply never comes into play in this case. Neither the federal nor the state constitutional rights of petition or free speech encompass a right to file a false crime report. ” ( Lefebvre, supra, 199 Cal.App.4th at p. 703.)7

198 Cal.App.4th 1153, 1169 [reviewing cases] ; see Price v. Operating Engineers Local
Union No. 3 (2011) 195 Cal.App.4th 962, 971 [defamation is not “illegal” within the meaning of Flatley v. Mauro ].) In any event , Kaiser argues its conduct here was not unlawful because it was protected by the common interest privilege of Civil Code
section 47, subdivision (c)

. C

. Broad and Amorphous Public Interest is Insufficient
Edalat i also argues Kaiser’s con duct did not qualify as protected activity because it was not connected to a matter of pub l ic interest within the meaning of the statute. Kaiser
maintains its conduct was in furtherance of the public ’s interest in Medicare expenditures

. We find Edalati ’s argument more persuasive

.

“ ‘The fact that “ a broa d and amorphous public interest” can be connected to a specific dispute is not sufficient to meet the statutory requirements’ of the anti

- SLAPP

statute. [Citation.] By fo cusing on society’ s general inte rest in the subject matter of the dispute instead of the specific speech or conduct upon which the complaint is based, [some] defendants resort to the oft

- rejected, so

- called ‘ synecdoche theory of public issue
in the anti

- SLAPP sta tute,’ where ‘ [t]he part [is considered] syn onymous with the greater whole.’ [Citation.] In evaluating the first prong of the anti

- S LAPP statute, we must focus on ‘ the specific nature of the speech rather than the generalities that might be
abstracted from it. ’ ” ( World Financial Group, Inc. v. HBW Ins. & Financial Services,
Inc. (2009) 172 Cal.App.4th 1561, 1570 ( World Financial ) .)
T he defendants in World Financial , who were the plaintiff’s direct competitors, allegedly used misappropriated trade secrets and confidentia l information to solicit the plaintiff’s employees to come work for them. ( World Financial, supra, 172 Cal.App.4th

at p p. 1564, 1566.) The defendants contended their communications involved matters of public interest: “ ‘ the pursuit of lawful employment p ursuant to Bus. & Prof. § 16600’ and ‘ workforc e mobility and free competition.’ ” ( World Financial, at p. 1572.) The appellate court was not persuaded. “ Though couche d in noble language, defendants’ communications were not ‘about’ these broad topics, nor were they designed to inform the public of an issue of public interest. They were merely solicitations of a competitor’ s8

employees

. . . undertaken for the sole purpose of furthering a business interest. While we do not dispute that employee mobility and competition are issues of p ublic interest and importance, ‘ the focus of the anti

- SLAPP statute must be on the specific nature of the speech rather than on generalities that might be abstracted from it. [Citation.]’ [Citation.] Otherwise, every case alleging the breach of a noncompetition agreement or the related misappropriation of trade secrets would be categorically subject to the anti

SLAPP statute. Applying the statute in this manner would effectively ‘ eviscerate the
unfai r business practices laws,’ a result the Legislature plainly did not intend. ” ( World
Financial , at p. 1572.) Analogously, Kaiser’s communications with Edalati’s patients were not “a bout” Medicare funding and were not designed to inform the public about t he policy issue of Medicare funding. Kaiser sent the exclusion letters to its members in purported compliance with federal regulations so that it could co ntinue to operat e as a Medicare
S ponsor. If this conduct were protected under the anti

- SLAPP law, th e statute would apply to any act of regulatory compliance by the hundreds of hospitals and tens of thousands of health care providers who care for the more than 5 million Medicare patients in this state

. 6 Such sweeping application would be far removed fro m the Legislature’s intent of encouraging participation in matters of public signifi cance. (§ 425.16, subd. (a); s ee Consumer Justice Center v. Trimedica International, Inc. (2003) 107 Cal.App.4th 595, 601 [advertising about an herbal supplement was not s peech on matter of public interest because “ nearly any claim [based on federal regulation of such supplements] could be sufficiently abstracted to fall within the anti

- SLAPP statute”].) We hold that Kaiser cannot bring its conduct within the coverage of t he anti

- SLAPP statute through such an attenuated link to a general matter of public interest.

6 See Centers for Medicare & Medicaid Services, MDCR PROVIDERS 4 and 5
< https://www.cms.gov/Research

- Statistics

- Data

- and

- Systems/Statistics

- Trends

- and

Reports/CMSProgramStatistics/2013/Providers.html > (as of July 12, 2016); id. , MDCR ENROLL AB 2 < https://www.cms.gov/Research

- Statistics

- Data

- and

- Systems/Stat istics

Trends

- and

- Reports/CMSProgramStatistics/2013/EnrollAB.html > (as of July 12, 2016).9

Kaiser further argues the “existence of legislative or regulatory schemes pertaining to the underlying subject matter can be indicative of the existence of a matter of public interest.” The cases it cites for this principle, howev er, are readily distinguish able

. In Dam on v. Ocean Hills Journalism Clu b (2000) 85 Cal.App.4th 468 , the former manager of a homeowners association brought a defamation action against association
members and directors based on their criticisms of his performance as manager. The controversy abou t the manager’s performance eventually led to an unsuccessful recall
election of certain directors and a vote to switch to professional management. ( Id. at
pp. 472

– 473.) The appellate court held that in this context

— the statutorily

- regulated quasi

- govern mental and democratic operation of a home owner s association

— the
statements were made in a public forum such that the alleged defamatory statements were protected under section 425.16 , subdivision (e)(3). ( Damon , at pp. 475

– 476.) Kaiser does not argue its statements were made in a public forum , and Damon does not assist Kaiser by analogy because the regulatory scheme was cited simply to describe the quasi

g overnmental nature of homeowner s associations, not to link the challenged
communications to issues of public interest. ( Id. at p. 475.)
In Cross , a homeowner sued her tenants for informing (or threatening to inform) prospective home buyers that a registered sex offender lived nearby. ( Cross, supra,
197 Cal.App.4th at pp. 365

– 366.) The reviewin g court held the tenants’ communications

were protected activity because the y “ involved the location of a registered sex offender, a subject specifically and directly related to an issue of com pelling and widespread
interest. ” ( I

d. at p. 379

. ) T he court noted that the Legislature specifically required home
sale contracts to advise prospective buyers o f a public database show ing the locati on of
sex offenders : “This requirement reflects not only the general public interest in the dissemination of information about registered sex offenders but also the specific public
interest in making sure that prospective

. . . buyers know where to find this information

. . . . [¶] Here, [the tenants’] conversation

. . . was closely and directly related to specific
issues of great interest to the general public.” ( Id. at p. 377 , italics added ; see i d. at
p p

. 375

– 377 [reviewing sex offende r registration statutes and Legislature ’s statements of10

intent in enacting those statutes] .) In other words , the act or threatened act of informing prospective buyers of the nearby residence of a sex offender was at the core of the conduct protected and encouraged by the statute.
Kaiser also cites Cross and similar cases for the principle that “even statements which at first blush seem to hold importance to only a small segment of the population, and which were only communicated to a select group of people, [may be] made ‘in
connection with

. . . an [] issue of public interest’ ” as required by section 425.16 , subdivision (e)(4). However, in such contexts “ the constitutionally protected activity must, at a minimum, occur in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of publ ic significance.” Du Charme v. International Brotherhood of Electrical Workers , supra, 110 Cal.App.4th at p. 119 , fn. omitted ; see,
e.g., Terry v. Davis Community Church (2005) 131 Cal.App.4th 1534, 1539, 1547

– 1548 [ church leaders ’ and members ’ allegation s of sexually inappropriate conduct by two youth leaders were protected because the statements pertained to a matter o f controversy
within the church and lead to internal in vestigation and police report ]; Hecimovich v. Encinal School Parent Teacher Organiz ation , supra, 203 Cal.App.4th at pp. 455

– 456,
465

– 468 [ statements by volunteers and a parent

- teacher organization about a coach’s disciplinary policy were protected because t he policy became a matter of controversy
within the afterschool program and the coach was later barred from coaching].)
Kaiser also ci tes a decision of this Division in which we held an insurance claims adjuster’s statements about possible fraudulent conduct of a chiropractor were protected activity

. ( Hui v. Sturbaum (2014) 222 Cal.App.4th 1109, 1112.) The published portion
of that opinion, however, did not include our analysis on that issue , and that case’s facts
differ starkly from this one. The claims adjuster had obtained information about the allegedly fraudule nt practices from non governmental investigative re ports, cooperated in a separate government investigation of the chiropractor, and made the allege d actionable statements (to the chiropractor and a law firm represent ing the chiropractor’s patients ) in
the context of resolving insurance claims in which they were all involved

. ( Id. at11

pp. 1112

– 1113.) In other words, there was an ongoing controversy about whether this particular chiropractor was engaging in fraud and the insurance claims representative was
p laying an active role in that controversy

. In Du Charme v. International Brotherhood of
Electrical Workers
, supra, 110 Cal.App.4th 107 , by contrast, a statement that a union officer had been removed for financial mismanagement was not related to an ongoing controversy because the officer had already been terminated and the members were not being asked to take a position on the issue. ( Id. at p. 118.) Similarly here, there was no ongoing controversy about Edalati’s fraudulent practices, and Kaiser’s statements were
not whistleblower

- type statements about alleged or possible fraud that contributed to a debate on a matter of public interest. Instead, Ka iser’s communications were connected to the broader issue of Medicare funding and fraud only because they occurred in the
context of a highly

- regulated industry. As several courts have acknowledged, it can be difficult to draw lines between protected and unprotected activity in cases where the speech or conduct at issue involves only a small number of persons and occurs in a non public forum. ( See Cross, supra,
197 Cal.App.4th at pp. 372

– 374 [reviewing cases]; cf. All One God Faith, Inc. v. Organic
& Susta inable Industry Standards, Inc. (2010) 183 Cal.App.4th 1186, 1200

– 1210 [holding trade association’s “organic” labeling was not protected speech on issue of public interest]; id. at pp. 1219

– 1228 ( dis

. opn., of Simons, J. ) [ arguing the labeling was protecte d speech under anti

- SLAPP statute].) We find Kaiser’s activities here unprotected by the anti

- SLAPP statute because they involve only a n administrative error in the context of regulatory compliance, rather than an affirmative effort to participat e in a controversy related to an issue of public interest. Because we hold that Kaiser’s conduct did not arise from protected activity, we do not reach the second prong of the anti

- SLAPP analysis, which evaluates Edalati’s probability of prevailing on her claims. “[Kaiser] may have a valid privilege

- based defense which [it] may present in another procedural context, but such a defense may not be presented by way of an anti

- SLAPP motion.” ( Lefebvre, supra, 199 Cal.App.4th at
p. 705; Flatley v. Mauro, supra
, 39 Cal.4th at p. 32 5 [Civ. Code, § 47 may limit a party’s12

liability, but that “does not mean [an allegedly defamatory communication] is also a protected communication for purposes of section 425.16”].)
III. D ISPOSITION The order granting Kaiser’s anti

- S LAPP motion and granting Kaiser attorney fees pursuant to section 425.16, subdivision (c)(1) are reversed. Kaiser shall bear Edalati’s costs on appeal.

_________________________ BRUINIERS, J.

WE CONCUR:

_________________________ SIM ONS, Acting P. J.

_________________________ NEEDHAM, J.