Filed 2/5/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

BARRY DODD, 

Plaintiff and Respondent,

v.

MARIA FRANCESCA CRUZ,

Defendant and Appellant;

MEDICAL FINANCE, LLC,

Movant and Respondent.

B247493

(Los Angeles County

Super. Ct. No. YC066746)

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

Phrasel L. Shelton., Judge. (Retired Judge of the L.A. Super. Ct. assigned by the Chief 

Justice pursuant to art. VI, § 6 of the Cal. Const.) Reversed.

Horwitz & Levy, Robert H. Wright, Daniel J. Gonzalez, Julie L. Woods; Calendo, 

Puckett, Sheedy & DiCorrado and Richard A. Dicorrado for Defendant and Appellant.

Knapp, Petersen & Clarke, Mitchell B. Ludwig and Barbara Ciolino for Movant 

and Respondent.

Michael D. Waks; Alderlaw, C. Michael Alder and Stephen K. McElroy for 

Plaintiff and Respondent.

_____________________
2

INTRODUCTION

In this personal injury case, a third party, known as a “factor,” purchased from a 

health care provider a medical lien on the plaintiff’s recovery, if any, against the 

defendant. We must decide whether the defendant is entitled to obtain documents 

through the discovery process relating to the factor’s contractual relationship with the 

health care provider, including documents disclosing what the factor paid for the lien.

The parties to this appeal are appellant and defendant Maria Francesca Cruz, 

respondent and plaintiff Barry Dodd, and third party witness and respondent Medical 

Finance LLC (MedFi). Cruz appeals an order granting MedFi’s motion to quash Cruz’s 

subpoena and awarding MedFi $5,600 in monetary sanctions. Dodd joined MedFi’s 

motion. We conclude the superior court abused its discretion in granting the motion and 

awarding the sanctions.

FACTS

Dodd and Cruz were involved in a motor vehicle accident. In his complaint, Dodd 

alleged that Cruz’s negligent operation of a motor vehicle proximately caused Dodd to 

sustain personal injuries. 

Dodd contends he sustained a shoulder injury, specifically a torn rotator cuff. He 

received treatment for this injury at a medical center operated by Kaiser Permanente. 

Subsequently, a physician at Coast Surgery Center of South Bay (Coast) performed a 

shoulder surgery on Dodd. Cruz contends Dodd’s attorney, Michael Waks, referred 

Dodd to Coast.1

 

1 Dodd does not admit or deny this allegation. He instead contends Cruz failed to 

file admissible evidence of Waks’s alleged referral. Cruz’s attorney, Jason Bluver, 

attached to his declaration two documents he obtained from Coast in response to a 

subpoena. The first was a print-out of an email exchange between Waks and an 

employee of Coast, wherein Waks “approved” a “lien” by Coast relating to Dodd’s 

shoulder surgery. Although Dodd objected to Bluver’s characterization of the document 

as an approval of a surgical procedure, he did not object to the admissibility of the 

document itself. The second document is entitled “Scheduling Form.” It relates to 

Coast’s treatment of Dodd. The document states that Dodd was “Referred by” Waks. 
3

Before the surgery, Dodd did not know what Coast’s charges for the procedure 

would be. He did know, however, it would be on a “lien basis.” Dodd later learned 

Coast’s bill was between $40,000 and $50,000.

On the same day as Dodd’s surgery, Coast sold to MedFi its account receivable 

and lien against Dodd for payment of its charges. MedFi claims that it is in the business 

of purchasing accounts receivable from businesses, including health care providers, “at a 

discount.” According to MedFi’s vice president William Simon, MedFi “expects to be 

paid” by Dodd (and other patients) for 100 percent of the “book value” of the health care 

provider’s charges “regardless of what the court or jury decides is the reasonable costs” 

of Dodd’s medical care. Nothing in the record, however, indicates Dodd agreed that the 

amount of MedFi’s lien would be the full amount of Coast’s charges.

MedFi admits that its president is Michael Waks, Dodd’s attorney. It further 

admits that one of Coast’s limited partners, Roy Simon, M.D., is the brother of MedFi’s 

vice president, William Simon. Cruz contends that there was an arrangement among 

MedFi, Waks and Coast that was rife with the potential for collusion. MedFi and Dodd 

vigorously deny this allegation.

After this litigation commenced, Cruz’s attorney served MedFi with a deposition 

subpoena for production of business records. The subpoena sought broad categories of 

documents. In the wake of MedFi’s refusal to provide documents in response to the 

subpoena, attorneys for Cruz, Dodd and MedFi exchanged extensive correspondence in 

an effort to resolve their differences without the need for court intervention.

The dispute was narrowed to three documents identified in MedFi’s log of 

withheld documents: (1) a contract between MedFi and Coast dated about four years 

before Dodd’s surgery, (2) a redacted “Creditor’s Assignment of Claim,” and 

(3) “MedFi’s Open Lien Detail.” MedFi conceded that these documents related to its 

“lien contracts” with Coast and included evidence of the amount MedFi paid for its lien 

 

Cruz asserted no objections to the admissibility of this document. We conclude there was 

substantial evidence to support Cruz’s allegation that Waks referred Dodd to Coast.
4

on Dodd’s recovery, if any, against Cruz. It objected to the production of these 

documents, however, on the grounds that they were confidential, proprietary and

irrelevant. 

Unable to resolve this discovery dispute, MedFi filed a motion to quash Cruz’s 

subpoena. In the motion, MedFi sought $5,600 in monetary sanctions against Cruz and 

her counsel. As support for this claim, Medfi’s attorney filed a declaration, wherein she 

stated that MedFi would incur $5,600 in attorney fees in connection with the motion to 

quash. Dodd joined the motion.

On January 17, 2013, the superior court entered an order granting MedFi’s motion 

to quash on the ground that the information sought by the subpoena is irrelevant. The 

order also imposed monetary sanctions on Cruz and her counsel in the amount of $5,600. 

This appeal followed.

ISSUES

There are two main issues on appeal:

1. Can Cruz challenge the merits of the superior court’s decision to quash the 

subpoena, or is her appeal limited to the issue of monetary sanctions?

2. Did the superior court abuse its discretion in granting MedFi’s motion to 

quash?

DISCUSSION

1. The Sanctions Order is Appealable

If the superior court finds that a motion to quash a subpoena is “opposed in bad 

faith or without substantial justification,” the court has the discretion to impose monetary 

sanctions on the opposing party in the amount of the reasonable expenses the moving 

party incurred in making the motion. (Code Civ. Proc., § 1987.2, subd. (a).) 2 An order 

directing payment of monetary sanctions over $5,000 is immediately appealable. 

(§ 904.1, subd. (a)(12); Mileikowsky v. Tenet Healthsystem (2005) 128 Cal.App.4th 262, 

 

2

Except as otherwise stated, all future statutory references are to the Code of Civil 

Procedure.
5

264 (Mileikowsky).) Respondents concede that Cruz can appeal the January 17, 2013, 

order to the extent she challenges the superior court’s award of sanctions.

2. Cruz Can Challenge the Merits of the Superior Court’s Decision to Quash 

the Subpoena

Respondents contend Cruz cannot challenge on appeal the superior court’s 

underlying ruling quashing Cruz’s subpoena. We disagree.

It is true that a discovery order is ordinarily not separately appealable. (Macaluso 

v. Superior Court (2013) 219 Cal.App.4th 1042, 1049.) A superior court’s decision on a 

discovery matter, however, can be reviewed on appeal if it “necessarily affects” an 

appealable order. (§ 906.) Thus if a nonappealable substantive ruling on a discovery 

matter is “inextricably intertwined” with an appealable order directing monetary 

sanctions, the substantive ruling may be reviewed. (Mileikowsky, supra, 128 Cal.App.4th 

at p. 276.)

Here, the superior court’s ruling granting MedFi’s motion to quash was 

inextricably intertwined with its imposition of $5,600 in monetary sanctions. The amount 

of the sanctions was based solely on the amount of attorney fees MedFi incurred in 

bringing the motion. If the superior court erroneously quashed the subpoena, there was 

simply no basis for monetary sanctions. Accordingly, in this appeal of the sanctions 

award, we may review the merits of the superior court’s ruling on MedFi’s motion to 

quash.

Respondents argue the superior court could have imposed monetary sanctions 

against Cruz and her counsel even if it denied MedFi’s motion to quash, on the ground 

that the purpose of the subpoena was to embarrass and harass MedFi’s president and 

Dodd’s counsel, Michael Waks. We disagree. The superior court did not make any 

findings regarding the alleged purpose of the subpoena and there is no evidence that Cruz 

or her attorneys subjectively believed the opposition to the motion to quash was 

unjustified. Moreover, as we explain post, the three documents at issue were clearly 

discoverable and Cruz had solid and compelling reasons to seek these documents. Cruz

therefore had substantial justification to oppose the motion to quash.
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3. The Superior Court Abused Its Discretion in Granting the Motion

a. The Subpoena Seeks Discoverable Documents Relevant to Dodd’s 

Alleged Economic Damages

Under the Civil Discovery Act (§ 2016.010 et seq.), the scope of permissible 

discovery is very broad. “[A]ny party may obtain discovery regarding any matter, not 

privileged, that is relevant to the subject matter involved in the pending action or to the 

determination of any motion made in that action, if the matter either is itself admissible in 

evidence or appears reasonably calculated to lead to the discovery of admissible 

evidence.” (§ 2017.010.) “In the context of discovery, evidence is ‘relevant’ if it might 

reasonably assist a party in evaluating its case, preparing for trial, or facilitating a 

settlement. Admissibility is not the test, and it is sufficient if the information sought 

might reasonably lead to other, admissible evidence.” (Glenfed Development Corp. v. 

Superior Court (1997) 53 Cal.App.4th 1113, 1117.) “Any doubts regarding relevance are 

generally resolved in favor of allowing the discovery.” (Mercury Interactive Corp. v. 

Klein (2007) 158 Cal.App.4th 60, 98.)

Although the superior court has discretion in granting or denying discovery

motions, it is obligated to construe the discovery statutes liberally in favor of disclosure. 

(Emerson Electric Co. v. Superior Court (1997) 16 Cal.4th 1101, 1107.) In reviewing 

discovery orders, appellate courts “ ‘should not use the trial court’s discretion argument 

to defeat the liberal policies of the statute.’ ” (Ibid., citing Greyhound Corp. v. Superior 

Court (1961) 56 Cal.2d 355, 379.)

The broad scope of permissible discovery under the Civil Discovery Act “is 

equally applicable to discovery of information from a nonparty as it is to parties in the 

pending suit.” (Johnson v. Superior Court (2000) 80 Cal.App.4th 1050, 1062.) Prior to 

trial, a party may serve a deposition subpoena for the production of business records on a 

nonparty. (§ 2020.410.) Unlike a trial subpoena for documents (see § 1985, subd. (b)), a 

deposition subpoena for the production of business records “need not be accompanied by 

an affidavit or declaration showing good cause for the production of the business records 

designated in it.” (§ 2020.410, subd. (c).)
7

Turning to the subpoena in this case, we must determine whether the three 

documents at issue are discoverable. All parties to this appeal agree that the subject 

matter of the pending action includes the amount of economic damages, if any, Dodd 

may recover for his medical treatment at Coast. Cruz contends that the subpoenaed 

documents are discoverable because they are relevant to such damages or, at a minimum, 

the subpoena is reasonably calculated to lead to the discovery of admissible evidence 

relating to. MedFi and Dodd dispute these contentions.

In order to resolve this issue, we must first review the measure of damages for past 

medical expenses. “[A] plaintiff may recover as economic damages no more than the 

reasonable value of the medical services rendered and is not entitled to recover the 

reasonable value if his or her actual loss was less.” (Howell v. Hamilton Meats & 

Provisions, Inc. (2011) 52 Cal.4th 541, 555 (Howell).) In other words, “[d]amages for 

past medical expenses are limited to the lesser of (1) the amount paid or incurred for past 

medical expenses and (2) the reasonable value of the services.” (Corenbaum v. Lampkin

(2013) 215 Cal.App.4th 1308, 1325-1326 (Corenbaum).)

The amount a health care provider bills a plaintiff for its medical services is not 

relevant to the amount of the plaintiff’s economic damages for past medical services.3 

(Corenbaum, supra, 215 Cal.App.4th at pp. 1318, 1330.) This is because “ ‘a medical 

care provider’s billed price for particular services is not necessarily representative of 

 

3 As stated ante, MedFi has taken the position that the amount of its lien is the full 

amount of Coast’s bill, and that it expects to be paid by Dodd for the full amount 

regardless of what a trier of fact decides is the reasonable value of Coast’s services. This

appears to raise a conflict of interest for Dodd’s attorney. As president of MedFi and to 

the extent he has a financial stake in that company, Waks has a fiduciary duty and 

perhaps an economic interest in making sure MedFi collects the full amount of its 

claimed lien, or as much of it as possible. Conversely, as Dodd’s attorney, Waks has a 

duty to minimize the amount of MedFi’s lien. This conflict could manifest itself in a 

variety of circumstances. For instance, if Cruz makes a payment to Dodd pursuant to a 

settlement agreement and without a jury’s determination of the reasonable value of 

Coast’s medical services, it is difficult to imagine how Waks could take a position on the 

amount of MedFi’s lien without violating his duties to either Dodd or MedFi.
8

either the cost of providing those services or their market value.’ ” (Id. at p. 1326, 

quoting Howell, supra, 52 Cal.4th at p. 564.)

In Howell, a case where the plaintiff’s medical costs were paid by her insurer, our 

Supreme Court discussed the difficulty of determining the reasonable value of medical 

services. The court recognized that “there appears to be not one market for medical 

services but several, with the price of services depending on the category of payer and 

sometimes on the particular government or business entity paying for the services. Given 

this state of medical economics, how a market value other than that produced by 

negotiation between the insurer and the provider could be identified is unclear.” (Howell, 

supra, 52 Cal.4th at p. 562.)

The Howell court concluded “that when a medical care provider has, by agreement 

with the plaintiff’s private health insurer, accepted as full payment for the plaintiff’s care 

an amount less than the provider’s full bill, evidence of that amount is relevant to prove 

the plaintiff’s damages for past medical expenses and, assuming it satisfies other rules of 

evidence, is admissible at trial.” (Howell, supra, 52 Cal.4th at p. 567; accord

Corenbaum, supra, 215 Cal.App.4th at p. 1327.) This holding is consistent with earlier 

cases that held the amount paid for medical services “is some evidence of reasonable 

value.” (Dewhirst v. Leopold (1924) 194 Cal. 424, 433; accord Francis v. Sauve (1963) 

222 Cal.App.2d 102, 124; Malinson v. Black (1948) 83 Cal.App.2d 375, 379.)

The Howell opinion expressly distinguished its fact pattern from Katiuzhinsky v. 

Perry (2007) 152 Cal.App.4th 1288 (Katiuzhinsky), where the plaintiffs remained fully 

liable to a factor for the amount of the medical provider’s charges for care and treatment. 

(Howell, supra, 52 Cal.4th at p. 557, citing Katiuzhinsky, at p. 1296.) The amount paid 

by a factor for a medical lien may be different than the reasonable value of medical 

services because when a health care provider sells its lien to a factor, it “transfers the 

expense of collection and the risk of nonpayment onto someone else.” (Katiuzhinsky, at 

p. 1298.)
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Here, the subpoena is reasonably calculated to lead to the discovery of admissible 

evidence relating to the reasonable value of Coast’s services. The subpoenaed 

documents, for example, could reveal what Coast believed was the reasonable value of its 

services, apart from its calculation of the expense and risk of collection. This would be at 

least some evidence of the reasonable value of Coast’s services.

Moreover, as MedFi and Dodd concede, in order to support their respective 

arguments regarding the reasonableness of the cost of Coast’s medical services, both 

parties will submit expert testimony. A qualified expert may opine on the reasonable 

value of medical services based on matter, “whether or not admissible, that is of a type 

that reasonably may be relied upon.” (Evid. Code, § 801, subd. (b).) Conceivably, an 

expert retained by Cruz could base his or her opinion about the reasonable value of 

Coast’s medical services, at least in part, on the amount Coast accepted from MedFi as 

full payment for its services.4

The subpoena is also reasonably calculated to lead to the discovery of admissible 

evidence relating to the amount of medical expenses Dodd actually incurred. Although 

MedFi and Dodd contend that Dodd is responsible for 100 percent of Coast’s billed

amount, Cruz disputes that contention. Cruz is entitled to obtain documents relating to 

MedFi’s collection activity and policies and procedures, because they may support Cruz’s 

position that Dodd is not actually responsible for the full amount billed.

We need not decide at this point whether the subpoenaed documents—writings 

that are not in the record and that we have not reviewed—are admissible. It is clear that 

Cruz’s demand for these documents was reasonably calculated to lead to the discovery of 

admissible evidence. The superior court thus abused its discretion in granting MedFi’s 

motion to quash.

 

4 We express no opinion about whether the amount Coast accepted by agreement 

with MedFi as full payment for Dodd’s medical care is relevant and admissible at trial to 

prove Dodd’s damages for past medical expenses.
10

Respondents’ reliance on Katiuzhinsky is misplaced. There, a medical finance 

company (the factor) purchased accounts receivable from the plaintiffs’ health care 

providers. (Katiuzhinsky, supra, 152 Cal.App.4th at p. 1291.) At trial, the superior court 

forbade the plaintiffs from recovering or introducing evidence of medical expenses 

beyond the discounted rate paid by the factor to the plaintiffs’ providers. (Ibid.) The 

Court of Appeal reversed. (Id. at p. 1299.) It held, inter alia, that “there was no basis in 

law to prevent the jurors from receiving evidence of the amounts billed, as they reflected 

on the nature and extent of plaintiffs’ injuries and were therefore relevant to their 

assessment of an overall general damage award.” (Id at p. 1296.)

In this case, by contrast, we are still in the discovery stage and do not need to 

decide what evidence is admissible at trial. Except as expressly provided herein, nothing 

in this opinion prohibits Dodd from arguing and admitting evidence showing that the 

amount MedFi paid for its lien was less than the reasonable value of Coast’s medical 

services. Katiuzhinsky is distinguishable from this case because it addressed an issue we 

do not reach here, namely whether the amount a factor pays for a medical lien is, as a 

matter of law, the maximum amount the plaintiff can recover as economic damages for 

the associated medical services. Katiuzhinksy therefore does not support respondents’ 

arguments in this appeal.5

 

5 We disagree with Katiuzhinsky to the extent it held that the amount the plaintiffs’ 

health care providers “billed” or “charged” was admissible to prove the reasonable value 

of the medical services provided. (Katiuzhinsky, supra, 152 Cal.App.4th at pp. 1296, 

1298.) In Corenbaum, this court held that “evidence of the full amounts billed for 

plaintiffs’ medical care was not relevant to the amount of damages for past medical 

services.” (Corenbaum, supra, 215 Cal.App.4th at p. 1319.)
11

b. We Do Not Reach the Issue of Whether the Information Cruz Seeks 

Could Show Collusion Among Coast, MedFi and Dodd’s Attorney

Cruz argues the subpoena served on MedFi is reasonably calculated to lead to the 

discovery of admissible evidence because the subpoenaed documents could show 

collusion among Coast, MedFi and Dodd’s attorney with respect to what Coast charged 

for its services and whether Dodd was really responsible to pay MedFi for the full 

amount of the charges. Respondents dispute there was any collusion. We do not reach 

this issue because we hold the subpoenaed documents are clearly discoverable regardless 

of whether there was collusion, as Cruz contends.

c. MedFi Forfeited Its Arguments Regarding Its “Confidential and 

Proprietary” Objection

MedFi objected to the subpoena on the grounds that the documents demanded 

contained “confidential and proprietary” information. Respondents did not, however, 

make a legally cognizable, reasoned argument or cite any legal authority to support this 

objection in their joint brief. Respondents thus forfeited this issue on appeal.6 (Nielson v. 

Gibson (2009) 178 Cal.App.4th 318, 324; Sporn v. Home Depot USA, Inc. (2005) 

126 Cal.App.4th 1294, 1303).)

 

6 Nothing in this opinion prohibits the superior court from entering an appropriate 

protective order regarding alleged confidential and proprietary information found in the 

documents at issue. (See e.g. § 1987.1, subd. (a).)
12

DISPOSITION

The order granting MedFi’s motion to quash is reversed. Appellant is awarded 

costs on appeal.

CERTIFIED FOR PUBLICATION

KITCHING, J.

We concur:

CROSKEY, Acting P. J.

ALDRICH, J.