Filed 9/15/16

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 Respondents,

v.

DANIEL H. DAHAN et al.,

Defendants and Appellants.

B259799

(Los Angeles County

Super. Ct. No. BC397695)

APPEAL from an order of the Superior Court of Los Angeles County, Ernest M. 

Hiroshige, Judge. Appeal dismissed.

Lerner & McDonald and Kenneth E. McDonald for Defendants and Appellants.

Knox Ricksen, Thomas E. Fraysse, Reid M. Miller and Ryan G. Jacobson for 

Plaintiffs and Respondents.

_________________________
2

INTRODUCTION

A private party who brings a qui tam1action for insurance fraud under Insurance 

Code section 1871.7,2 where the district attorney and the Insurance Commissioner

decline to intervene, is entitled to a portion of the proceeds of the action plus fees and 

costs. (Id., subd. (g)(2)(A).) In this case we are confronted with the novel question 

whether the judgment-debtor defendants in such an action have standing to challenge the 

trial court’s post-judgment order allocating the judgment amount between the prevailing 

plaintiffs, i.e., the private party and the State. We hold that judgment-debtor defendants 

in qui tam insurance fraud actions are not aggrieved by such allocation orders under 

section 1871.7, subdivision (g)(2)(A), with the result that they do not have standing to 

appeal. Accordingly, we dismiss their appeal.

FACTUAL AND PROCEDURAL BACKGROUND

Allstate Insurance Company, et al. (Allstate)3as private-party plaintiff or 

“relator,”4brought a qui tam action on behalf of itself and the State of California 

(together plaintiffs), against defendants Daniel H. Dahan and his affiliated corporation, 

Progressive Diagnostic Imaging, Inc. (together defendants), pursuant to the California 

Insurance Frauds Prevention Act (§ 1871.7 (IFPA)). Neither the district attorney nor the 

 

1

The term “qui tam” is short for the expression “ ‘qui tam pro domino rege quam 

pro se ipso in hac parte sequitur,’ ” which in Latin means, “ ‘ “who pursues this action on 

our Lord the King’s behalf as well as his own”.’ [Citations.]” (People ex rel. Allstate 

Ins. Co. v. Weitzman (2003) 107 Cal.App.4th 534, 538, italics added (Weitzman).)

2 All further statutory references are to the Insurance Code, unless otherwise noted.

3

The private-party plaintiffs are Allstate Insurance Company, Allstate Indemnity 

Company, Allstate Property and Casualty Insurance Company, Deerbrook Insurance 

Company, Allstate County Mutual Insurance Company, and Allstate Fire and Casualty 

Insurance Company.

4

“A ‘relator’ has been described thus: ‘The real party in interest in whose name a 

state or an attorney general brings a lawsuit. . . . A person who furnishes information on 

which a civil or criminal case is based; an informer.’ ” (Weitzman, supra, 

107 Cal.App.4th at p. 538, quoting from Black’s Law Dict. (7th ed. 1999) p. 1292, col. 1 

& In re Veterans’ Industries, Inc. (1970) 8 Cal.App.3d 902, 925.)
3

Insurance Commissioner opted to take over the lawsuit. The trial court entered judgment 

against defendants, finding that plaintiffs had proven 487 claims for violation of Penal 

Code section 550 by defendants, and awarding a total of $7,010,668.40, comprised of 

$5,788,516.78 in civil penalties and assessments, and $1,222,151.62 in attorney fees, 

costs, and expenses of investigation. (The qui tam judgment). 

Following entry of the qui tam judgment, Allstate began efforts to collect it. 

During its investigation, Allstate learned of a series of real estate transactions conducted 

by defendants designed to transfer away their assets. Allstate, on behalf of the State, filed 

an action to set aside the fraudulent transfers of real and personal property. (Case No. 

BC527960.) 

Defendants demurred to the operative complaint on the ground that Allstate lacked 

standing to proceed with the fraudulent transfer suit, in part because the judgment in the 

qui tam action was never allocated between Allstate and the People pursuant to section 

1871.7, subdivision (g)(2)(A), with the result that Allstate had no stake in the qui tam 

judgment or authority to pursue collection of that judgment from defendants. Defendants 

argued that section 1871.7, subdivision (g)(2)(A) requires that the court determine the 

amount of the qui tam judgment the relator may collect, and the relator may only enforce 

the judgment up to that allocated amount, because the remainder of the proceeds belongs 

to the State. 

Allstate obtained a stay of the fraudulent conveyance action and returned to the 

qui tam court where it filed a motion for an order allocating the qui tam judgment 

proceeds. The motion was based on a stipulation entered into between the People and 

Allstate allocating to Allstate 50 percent of the civil penalties and assessments 

($2,894,258.39), plus the reasonable attorney fees and costs the court had awarded 

($1,222,151.62), for a total of $4,116,410.01. (§ 1871.7, subd. (g)(2)(A).) The People 

agreed to receive the remaining 50 percent of the civil penalties and assessments.

Defendants opposed the allocation motion. They argued, inter alia, that the trial 

court lacked jurisdiction to enter the order because the qui tam judgment had long since 

become final depriving the court of power to “ ‘materially vary[]’ ” it. Allstate responded 
4

that the allocation order did not “ ‘materially vary the judgment,’ ” which remained 

intact. Rather, Allstate argued that the allocation order simply apportioned the judgment 

proceeds between judgment creditors and thus had no impact on either the rights of the 

People and Allstate as plaintiffs and judgment creditors on the one hand, or the 

obligations of defendants as judgment debtors, on the other hand. Regardless of the 

outcome of the allocation motion, Allstate argued, defendants remain obligated to pay the 

$7,010,668.40 judgment. 

The trial court in the instant qui tam action granted Allstate’s allocation motion

and entered the stipulation as the judgment. Defendants filed their timely appeal.

We requested supplemental briefing from the parties (Gov. Code, § 68081) to 

address whether defendants were aggrieved by the allocation order such that they would 

have standing to appeal it. 

DISCUSSION

The right to appeal is statutory. (Conservatorship of Gregory D. (2013) 

214 Cal.App.4th 62, 67.) Code of Civil Procedure section 902 provides that “[a]ny party 

aggrieved may appeal” from a judgment. (Italics added.) “ ‘ “One is considered 

‘aggrieved’ whose rights or interests are injuriously affected by the judgment.” 

[Citation.]’ ” (Conservatorship of Gregory D., at p. 67.) The appellant’s “interest

‘ “must be immediate, pecuniary, and substantial and not nominal or a remote 

consequence of the judgment.” ’ [Citation.]” (County of Alameda v. Carleson (1971) 

5 Cal.3d 730, 737.) Conversely, “ ‘A party who is not aggrieved by an order or judgment 

has no standing to attack it on appeal.” [Citation.]’ [Citation.]” (Conservatorship of 

Gregory D., at p. 67.) “Thus, notwithstanding an appealable judgment or order, ‘[a]n 

appeal may be taken only by a party who has standing to appeal. [Citation.] This rule is 

jurisdictional. [Citation.]’ [Citation.] It cannot be waived. [Citation.]” (Ibid.) 

1. The Qui Tam procedure

Anyone engaging in insurance fraud in violation of Penal Code sections 549, 550, 

or 551 is subject to penalties and assessments. (§ 1871.7, subd. (b).) Section 1871.7 

provides for civil penalties of not less than $5,000 to $10,000 for each fraudulent claim 
5

presented to an insurance company, plus assessments of not more than three times the 

amount of each claim for compensation, and equitable relief. (Id., subd. (b).) 

Section 1871.7 authorizes “any interested persons, including an insurer” to bring a 

qui tam civil action “for the person and for the State of California” to recover penalties 

and equitable relief for fraudulent insurance claims. (Id., subds. (b) & (e)(1), italics 

added.) Procedurally, the interested person or relator files a complaint and serves it on 

the district attorney and the Insurance Commissioner. (Id., subd. (e)(2).) The complaint 

is sealed in camera for at least 60 days, during which time the district attorney and the 

Insurance Commissioner may elect to intervene (ibid.) and conduct the action 

themselves.

When the district attorney intervenes in the qui tam insurance fraud action, 

subdivision (g)(1) of section 1871.7 entitles the private-party relator to a “bounty” of 

between 30 and 40 percent “of the proceeds of the action or settlement of the claim, 

depending upon the extent to which the person substantially contributed to the 

prosecution of the action.” (Ibid.; see also Weitzman, supra, 107 Cal.App.4th at p. 547.) 

When the state declines to intervene, as in this case, the relator tries the action and

is entitled by subdivision (g)(2)(A) of section 1871.7 to a “bounty” of between 40 and 50 

percent of the proceeds of the action “for collecting the civil penalty and damages”

(ibid.), along with “an amount for reasonable expenses that the court finds to have been 

necessarily incurred, plus reasonable attorney’s fees and costs” which fees and costs are 

imposed against the defendant. (Ibid.)

5

 

5

Section 1871.7, subdivision (g)(2)(A) reads: “If the district attorney or 

commissioner does not proceed with an action under this section, the person bringing the 

action or settling the claim shall receive an amount that the court decides is reasonable 

for collecting the civil penalty and damages. Except as provided in subparagraph (B), the 

amount shall not be less than 40 percent and not more than 50 percent of the proceeds of 

the action or settlement and shall be paid out of the proceeds. That person shall also 

receive an amount for reasonable expenses that the court finds to have been necessarily 

incurred, plus reasonable attorney’s fees and costs. All of those attorney’s fees and costs 

shall be imposed against the defendant. The parties shall serve the commissioner and the 

local district attorney with complete copies of any and all settlement agreements, and 
6

2. Defendants are not aggrieved by the order they seek to appeal.

Defendants acknowledge that “this Appeal has no effect on that [qui tam] 

Judgment” and does not alter defendants’ obligation to pay the $7 million. 

Notwithstanding their apparent concession that they are not aggrieved by the order they 

appeal, defendants construct a theory under which they have been injured by the 

allocation order: Defendants argue that the allocation order “changed the legal rights of 

Allstate to enable Allstate to arguably be able to legally collect on the judgment” because 

the allocation order “arguably legitimizes” the insurer’s collection efforts by conferring 

standing on Allstate. (Italics added.) Citing no authority, defendants argue that Allstate 

could only enforce the judgment up to the amount of the allocation order, and so until the 

court allocated the judgment between the People and Allstate, the latter had no right to 

collect any proceeds. In essence, defendants assume that an allocation is a prerequisite or 

condition precedent to enforcement of a qui tam judgment by an insurer-relator when the 

State has not intervened. 

However, based on a plain reading of section 1871.7, subdivision (g)(2)(A), the 

bounty in cases in which the People do not intervene is for trying and collecting the 

judgment. When the words of a statute are clear and unambiguous, there is no need for 

statutory construction or resort to other indicia of legislative intent, such as legislative 

history. (California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 

342, 349.) Section 1871.7, subdivision (g)(2)(A) states, “If the district attorney or 

commissioner does not proceed with an action under this section, the person bringing the 

action or settling the claim shall receive an amount that the court decides is reasonable 

for collecting the civil penalty and damages . . . [T]he amount shall not be less than 40 

percent and not more than 50 percent of the proceeds of the action . . . and shall be paid 

 

terms and conditions, for actions brought under this article at least 10 days prior to filing 

any motion for allocation with the court under this paragraph. The court may allocate the 

funds pursuant to the settlement agreement if, after the court’s ruling on objection by the 

commissioner or the local district attorney, if any, the court finds it is in the interests of 

justice to follow the settlement agreement.” (Italics added.)
7

out of the proceeds.” (Italics added.)6To “collect” is “[t]o receive payment.” [¶] “To 

collect a debt or claim is to obtain payment . . . .” (Black’s Law Dict. (6th ed. 1990) 

p. 263, col.1.) Thus, by employing the word “collecting” in section 1871.7, subdivision 

(g)(2)(A), the Legislature intended that, when the State does not intervene, the insurerrelator is the plaintiff who levies on the judgment. 

Our conclusion that the bounty for the prosecuting relator is for trying and

collecting the judgment is bolstered by a comparison of subdivisions (g)(2)(A) with 

(g)(1), in section 1871.7. (Bostick v. Flex Equipment Co., Inc. (2007) 147 Cal.App.4th 

80, 107, conc. opn. of Croskey, J. [“A court must harmonize a statute with other laws so 

as to give effect to all and avoid anomalies, if possible”].) Whereas the section 1871.7, 

subdivision (g)(2)(A) bounty is for “collecting the civil penalty and damages,” the 

recovery awarded under subdivision (g)(1)(A)(i) - when the district attorney takes over 

the case - is a percentage “of the proceeds of the action or settlement of the claim.” 

(Italics added.) Under the latter subdivision, the intervening People, not the relator, 

would collect the judgment. Thus, subdivision (g)(2)(A), relevant here because the State 

did not adopt the action, recognizes that the relator, in addition to trying the insurance 

fraud action, is the party who collects or levies on the ensuing judgment. “The remaining 

proceeds revert to the State . . . .” (58 Cal.Jur.3d (2012) State of California, § 126, italics 

added.) That is, after collecting on the judgment, Allstate would pay the excess over its 

allocation to the People. “[T]he money generated by the cause of action that the [privateparty] plaintiff recovers [in a qui tam action] is property owned by the plaintiff.” 

(11 Witkin, Summary of Cal. Law (10th ed. 2005) Community Property, § 111, p. 673, 

discussing In re Marriage of Biddle (1997) 52 Cal.App.4th 396, 399 [community 

property interests in a qui tam action].) The reading of section 1871.7, subdivision 

 

6 Also, in cases where the People opted not to intervene, subdivision (g)(2)(A) of 

section 1871.7 awards the direct-victim relator reasonable expenses, attorney’s fees, and 

costs “imposed against the defendant,” in addition to the bounty. The judgment here 

already awarded Allstate reasonable expenses, attorney fees and costs incurred by 

Allstate who has the right to collect that amount also.
8

(g)(2)(A) advocated by defendant would result in the incongruous situation in which the 

successful insurer-relator would be unable to levy on the judgment it has won through its 

own efforts until the bounty is allocated between it and the People who had abandoned 

prosecution of the action. 

The right to levy on the $7 million qui tam judgment was Allstate’s for the 

additional reason that the insurer was the direct victim of defendants’ insurance fraud. 

Unlike the federal False Claims Act (31 U.S.C. § 3730(d)) where the relators are people 

with knowledge of the fraud but not victims of that wrong, under California’s IFPA, the 

direct victims of the fraud are the relator-insurers and their insureds. (Weitzman, supra, 

107 Cal.App.4th at pp. 561-562.) Allstate, as the direct victim who prosecuted the action 

and prevailed without the People’s participation, necessarily had the right to collect the 

civil penalty and damages irrespective of an allocation order. To hold otherwise would 

be absurd given the California qui tam IFPA action is brought, not merely on behalf of 

the People, but “for the person and for the State of California” (§ 1871.7, subd. (e)(1), 

italics added), and where the qui tam judgment here, drafted by defendants, was written 

in favor of all plaintiffs, not just the People. Therefore, an allocation order is not a 

prerequisite to the Allstate’s right to enforce the judgment; it neither “changed” nor 

“legitimized” Allstate’s legal right to collect the proceeds of the action from defendants, a 

right Allstate always had as relator. 

Defendants argue, citing People ex rel. Strathmann v. Acacia Research Corp. 

(2012) 210 Cal.App.4th 487 (Strathmann) that Allstate admits that the relator is not 

entitled to any proceeds absent a court-ordered allocation. Regardless of what Allstate 

admits, addressing the legal question de novo (American Liberty Bail Bonds, Inc. v. 

Garamendi (2006) 141 Cal.App.4th 1044, 1052 [we exercise our independent 

interpretation of the Insurance Code absent disputed facts]), Strathmann does not stand 

for the proposition that an allocation order is a prerequisite to collecting the judgment. 

Strathmann stated, “[T]he ‘relator[]’ stands in the shoes of the People of the State of 

California, who are deemed to be the real party in interest. [Citations.] The relator in a 

qui tam action under section 1871.7 does not personally recover damages but, if 
9

successful, receives a substantial percentage of the recovery as a bounty.” (Strathmann,

at p. 500.) For this proposition, Strathmann cited generally to subdivision (g) of section 

1871.7, without distinguishing between the wording in subdivisions (g)(1) (Stateprosecuted actions) and (g)(2)(A) (insurer-prosecuted actions).

7

 

As the allocation order is not a prerequisite to Allstate’s ability to levy on the qui 

tam judgment under section 1871.7, subdivision (g)(2)(A), and given defendants’ 

concession that the appeal has no effect on, and does not alter their obligation to pay the 

$7 million qui tam judgment, defendants are not aggrieved by the allocation order and 

have no standing to appeal from it. (Cf. U.S. ex rel. Taxpayers Against Fraud v. Gen. 

Elec. (6th Cir. 1994) 41 F.3d 1032, 1046 [under federal False Claims Act “the Relators’-

Share Litigation did not directly involve the qui tam defendants . . . [who] had no legal 

standing or right to participate in the proceedings,” italics added]; cf. Kim v. Yi (2006) 

139 Cal.App.4th 543, 549-551 [proceeding for apportionment of damages between 

judgment creditors is a special proceeding that did not involve any defendants].)8 In the 

absence of standing by defendants as appellants, this court has no jurisdiction to hear the 

appeal. (Conservatorship of Gregory D., supra, 214 Cal.App.4th at p. 69.)

 

7 We are unpersuaded by the remaining cases cited by defendants in their letter

brief.

8 Allstate argues that the California False Claims Act (Gov. Code, § 12650 et seq.) 

was patterned after the federal False Claims Act (31 U.S.C. § 3730) and encourages us to 

look to federal cases applying the qui tam provisions of the federal statute. While the 

California IFPA in section 1871.7 differs from the federal False Claims Act in “several 

significant respects” (Weitzman, supra, 107 Cal.App.4th at p. 561), the two Acts are 

identical with respect to the bounty when the government declines to adopt the action. 

(Compare § 1871.7, subd. (g)(2)(A) [“the person bringing the action or settling the claim 

shall receive an amount that the court decides is reasonable for collecting the civil penalty 

and damages”] & 31 U.S.C. § 3730(d)(2) [“the person bringing the action or settling the 

claim shall receive an amount which the court decides is reasonable for collecting the 

civil penalty and damages”].) 
10

DISPOSITION

The appeal is dismissed. Allstate is to recover its costs of this proceeding.

CERTIFIED FOR PUBLICATION

ALDRICH, J.

We concur:

EDMON, P. J.

LAVIN, J.