Filed 12/21/22; Modified and Certified for Pub. 1/20/23 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA ex rel.

MARY LYNN RAPIER et al.,

Plaintiffs and Appellants,

v.

ENCINO HOSPITAL MEDICAL 

CENTER et al.,

Defendants and Respondents.

 B302426, B303196

 (Los Angeles County

 Super. Ct. No. BC641254)

 

 

APPEALS from a judgment and post-judgment order of the 

Superior Court of Los Angeles County, William F. Fahey, Judge. 

Affirmed.

California Department of Insurance, J. Scott McNamara, 

Assistant Chief Counsel, Nicholas G. Campins and Sara Kim 

Danielson, Trial Attorneys, for Plaintiff and Appellant State of 

California.

Waters Kraus & Paul, Gary M. Paul, Michael L. Armitage, 

Charles S. Siegel, Kay Gunderson Reeves; Bartlett Barrow, Brian 
2

P. Barrow and Jennifer L. Bartlett for Plaintiff and Appellant 

Mary Lynn Rapier.

Knox Ricksen, Thomas E. Fraysse and Taylor T. Steele for 

Anti-Fraud Alliance as Amicus Curiae on behalf of 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.

Jacklyn DeMar; Goldberg Kohn, Roger A. Lewis, W. Kyle 

Walther; Rukin Hyland & Riggin and Valerie Brender for 

Taxpayers Against Fraud Education Fund as Amicus Curiae on 

behalf of Plaintiffs and Appellants.

King & Spalding, Peter A. Strotz, Paul R. Johnson, James 

W. Boswell and Michael E. Paulhus for Defendants and 

Respondents.

_______________

This proceeding arises out of a qui tam action against 

Prime Healthcare Services—Encino Hospital, LLC (Encino 

Hospital) and others to impose civil penalties for violation of the 

Insurance Fraud Prevention Act (IFPA), Insurance Code section 

1871 et seq. The State of California and relator Mary Lynn 

Rapier appeal from a judgment entered after a bench trial in 

which the court found insufficient evidence supported their 

allegations that defendants engaged in insurance fraud by billing 

insurers for services performed in a detox center for which they

had no appropriate license, and by employing a referral agency to 

steer patients to the center. We affirm the judgment.
3

BACKGROUND

Encino Hospital was licensed by the Department of Public 

Health (sometimes CDPH) as a general acute care hospital 

(sometimes GACH). 

SRCC Associates, LLC was formed to operate a long-term 

detox facility.

Through a management services agreement, Encino 

Hospital engaged SRCC Associates to manage and operate 

Serenity Recovery Center (Serenity) at the hospital, under the 

hospital’s direction and control, to provide acute (i.e., short-term) 

drug and alcohol detoxification services. Serenity operated at 

Encino Hospital from November 3, 2015, to January 31, 2019. 

The program provided no long-term or outpatient services. 

A. Complaint

On November 18, 2016, Mary Lynn Rapier filed this qui 

tam action1 on behalf of the People of the State of California,

alleging employment-related claims and various violations of the 

Insurance Code against 10 defendants. Rapier filed the 

complaint in the name of the State of California, under seal, as 

required by statute (Ins. Code, § 1871.7, subd. (e)), but the 

superior court unsealed it on February 5, 2018, when the 

California Department of Insurance (CDI) elected to intervene. 

1 “ ‘Qui tam is short for the Latin phrase qui tam pro 

domino rege quam pro se ipso in hac parte sequitur, which means 

“who pursues this action on our Lord the King’s behalf as well as 

his own.” ’ ” (San Francisco Unified School Dist. ex rel. Contreras 

v. Laidlaw Transit, Inc. (2010) 182 Cal.App.4th 438, 442, fn. 2; 

Vermont Agency of Natural Resources v. U.S. ex rel. Stevens 

(2000) 529 U.S. 765, 768, fn. 1.)
4

(We will refer to the CDI and the State of California 

interchangeably.) From that point forward, CDI had “the 

primary responsibility for prosecuting the action.” (Ins. Code, 

§ 1871.7, subd. (f)(l).)2

On May 2, 2018, the CDI filed a first amended complaint 

alleging employment and insurance fraud claims against 17 

defendants. The trial court ordered arbitration as to the 

employment claims but stayed arbitration pending the outcome 

at trial of the insurance fraud claims.

On November 9, 2018, CDI filed the operative second 

amended complaint, which was eventually pared down to allege a

cause of action for “illegal patient steering,” in violation of 

subdivision (a) of section 1871.7, and a cause of action for 

“submission of false claims” in violation of subdivision (b) of that 

section. CDI alleged the causes of action against six defendants: 

Encino Hospital, Prime Healthcare Services, Inc., and Prime 

Healthcare Foundation, Inc. (collectively Prime); and SRCC 

Associates, its principal, Jonathan Lasko, and JNL Management, 

LLC (collectively SRCC).

Of note in this paring down process, the trial court ruled 

that no triable issue of material fact existed as to whether Encino 

Hospital was properly licensed by the California Department of 

Public Health as a general acute care hospital.

The CDI alleged that although Encino Hospital was 

properly licensed as a general acute care hospital, it could not 

legally operate a medical detoxification facility because it had no 

separate license as a chemical dependency recovery hospital

(sometimes CDRH). The CDI alleged that in billing for detox 

2 Undesignated Statutory references will be to the 

Insurance Code.
5

services for which they had no proper license, defendants 

knowingly submitted at least 1,858 fraudulent insurance claims, 

requiring an award of damages of at least $57,678,436 before 

trebling.

CDI further alleged that Serenity employed a referring 

party to funnel patients to its program in exchange for Serenity 

discharging acute-care patients to chronic-care facilities affiliated 

with the referring party.

The parties engaged in some law and motion proceedings 

which we will describe in the discussion portion of this opinion as

they become pertinent.

B. Trial

A bench trial commenced on June 19, 2019, at which CDI 

presented the testimony of multiple witnesses and introduced 

about 50 exhibits.

Jonathan Lasko, SRCC Associates’ principal, testified that 

in 2014 he became involved in the medical detoxification business 

in Florida. He came to California in 2015, formed SRCC 

Associates, and entered into a management services agreement

with Encino Hospital. Lasko testified the management services 

agreement was a lengthy and detailed contract that “went back 

and forth” between the lawyers. Lasko deferred to his lawyers 

regarding all licensing issues. 

Lasko testified that SRCC Associates set up Serenity’s 

detox program on the third floor of Encino Hospital, and began 

operations in November 2015. The hospital made 28 beds 

available for the program. In 2016, Lasko hired Rapier as the 

director of Serenity’s clinical services.

Serenity obtained patients through an in-house marketing 

program and through referrals from such entities as Aid in 
6

Recovery, LLC (AIR), a call center. There was no written 

agreement between Serenity and AIR, and Serenity did not pay 

for referrals.

Serenity’s patients, who were admitted only with a doctor’s 

approval, were provided 24-hour inpatient care, usually staying

for three to seven days. Serenity was not a lock-down facility; its 

patients could leave at any time. Most patients preplanned their 

transfer to a long-term residential treatment facility after their 

stay at Serenity. Lasko testified that a predetermined discharge 

plan was sometimes necessary because patients undergoing acute 

detoxification were unable to make sensible long-term decisions. 

The patients’ medical expenses were covered by insurance 

companies or other providers, whom Encino Hospital billed.

Lasko testified that based on the advice of his attorneys, 

Serenity did not need its own license to operate a detox program 

at Encino Hospital. He never heard anything different from CDI 

or the Department of Public Health. Serenity closed its program 

in early 2019. He also testified that it was “very” common in the 

industry for detox patients to arrive with a predetermined 

discharge location.

Roland Santos, the Chief Nursing Officer for Sherman 

Oaks Hospital, testified as a hospital licensing expert. He stated

that Encino Hospital is licensed by the Department of Public 

Health as a general acute care hospital, and Serenity could 

operate under the hospital’s license. Santos testified this was 

confirmed by Eric Stone, a program manager for the Department 

of Public Health, who informed Santos that medical 

detoxification was an inpatient service that could be provided in a 

hospital’s general acute care beds.
7

Dr. Robert Waldman, a physician specializing in addiction 

medicine, agreed with Lasko’s testimony that the proper 

treatment plan for addicts was to start with a short-term detox 

program followed by transfer to a long-term residential program, 

usually for 30 to 60 days, followed by even longer outpatient 

treatment. However, Waldman opined that a patient should not 

start a detox program with a preplanned discharge scenario, nor 

obtain a discharge plan from any referral service, but should 

choose a long-term residential plan with the help of the acute 

care center’s “interdisciplinary team.” However, Waldman 

admitted that there was no agreed upon standard as to when a 

long-term referral plan should be made, that “there would be 

differing opinions among doctors” as to when discharge planning 

should begin, and that patients in detox ‘‘may not be willing to be 

steered” as to a proper discharge plan. 

Em Garcia, the Chief Nursing Officer and Administrator 

for Encino Hospital, testified that the hospital had provided detox 

services before its relationship with Serenity, and did so after

Serenity left. He did not believe that Serenity needed its own 

separate license, and in fact Encino Hospital had management 

agreements with other unlicensed groups which provided licensed 

professional services in the hospital, including for emergency 

treatment, rehabilitation services, anesthesiology, and 

occupational therapy.

Garcia testified that in late 2016, after the Serenity 

program had been operating for about nine or ten months, a 

surveyor from the Joint Commission, a private national 

accreditation agency which sets standards for the industry,

questioned the adequacy of SRCC’s and Encino Hospital’s 
8

licensing. In response, Garcia represented to the surveyor that 

no additional licensing was required.

In 2017, Encino Hospital was involved in a survey by the 

Department of Public Health, which raised no complaints about 

Serenity’s licensing status.

Garcia testified he worked with Rapier on policies and 

procedures after she was hired by Serenity, and neither she nor 

any other Serenity employee expressed a concern about 

Serenity’s license status, patient referrals, or the patient 

discharge process.

Garcia never received any complaint from CDI or the 

Department of Public Health about Serenity’s license status, and 

in fact the department continued to renew Encino Hospital’s 

license even after the allegations in this lawsuit were made 

public. Garcia had no knowledge of AIR until this case was filed.

Eric Stone, a licensing expert, testified that he retired from

the Department of Public Health in 2017. His job had been to 

enforce both state and federal laws and regulations, including 

those involving licensing, and over the years he had many 

conversations with the Encino Hospital management team, 

including Santos. Stone claimed not to remember the 

conversation with Santos in which, Santos testified ante, he 

stated that medical detoxification was an inpatient service that 

could be provided in a hospital’s general acute care beds. The 

trial court found Stone’s demeanor was evasive, and his claim of 

no memory unlikely. The court speculated Stone was taking a 

different position than he had while still employed by 

Department of Public Health because the CDI had changed its 

position.
9

Rapier testified that she applied for a job with Serenity and 

was granted what she described as a three-month interview 

process, during which she worked at Serenity to learn about its

operation. She was eventually offered the job, and started part 

time in March 2016 and full time on April 1, but took a medical 

leave of absence at the end of June and was terminated by Lasko 

in August 2016. Rapier admitted that prior and subsequent to 

her brief employment at Serenity she had no experience in an 

acute detox facility in a hospital setting. 

Rapier did not claim to have reported licensing or steering 

issues to anyone before she was terminated, and failed to produce 

a memorandum of “policies and procedures” that she claimed to 

have written but Serenity ignored. 

The court found that Rapier’s testimony on key issues was

not very credible, and “overall, Rapier did nothing to advance 

CDI’s case.”

Evelyn Kim, a consultant on medical practices who also 

investigates fraud claims, testified she was first approached by 

Rapier for purposes of this litigation, and was hired by Rapier’s 

attorneys to opine on a standard form used to bill insurance 

companies. Kim opined that if Encino Hospital used the form, 

SRCC would have to be listed as a healthcare provider, and its 

National Provider Identifier number furnished. However, the 

court found Kim’s testimony was rambling and difficult to 

understand, conveying the “distinct impression” that she was 

unfamiliar with the standard form, and “was making up her 

answers.” Kim gave no testimony as to what disclosures from a 

detox service insurance companies considered to be material.

Kim admitted she had never worked in a hospital nor been 

involved in hospital billings, had no experience with or 
10

background in California insurance regulations, reviewed none of 

the claim forms submitted to insurers by Encino Hospital, and 

had no opinion as to whether the hospital’s claim forms were 

accurate or whether Encino Hospital or SRCC intended to 

defraud any insurance provider. Kim admitted that she wrongly 

assumed Serenity was a long-term residential drug and alcohol 

treatment program.

The court found that no evidence supported Kim’s opinion 

that SRCC had to be specified as a healthcare provider on a claim 

form, and in any event the Serenity detox program was identified 

on Encino Hospital’s claim forms. Ultimately, the court found, 

Kim’s testimony was of no value in showing that Encino Hospital 

made material false statements or omissions on claim forms 

submitted to California insurance companies.

Jennifer Vachet, a licensed marriage and family therapist

who previously worked for Rapier but had no prior experience in 

a hospital setting or with a detox facility, testified that Rapier 

hired her to work for Serenity in 2016 as a social services 

manager. She worked there for seven months, resigning after 

another employee lodged a complaint against her. Vachet 

admitted that Serenity personnel made no medically improper 

discharge decisions.

Denise Durity, who handled Serenity’s billings, recalled 

that Encino Hospital used its National Provider Identifier

number to bill for Serenity’s services, but she was not shown any 

claim submitted by Encino Hospital to any insurance company.

CDI presented excerpts from the deposition of Dr. Joshua 

Diamond, Serenity’s medical director, who opined that it was a 

“best practice” to begin discharge planning only at the time of 

admission, not before. Dr. Diamond based this opinion on some 
11

unidentified “information that [he] researched to prepare [a]

document from insurance companies who would recommend this 

as well.” CDI introduced neither the document nor any other 

evidence to corroborate Dr. Diamond’s opinion.

Dr. Diamond testified that Serenity had daily 

interdisciplinary treatment group meetings at which discharge 

decisions would be discussed, but did not specify how often he

attended these meetings. He admitted he had no responsibility 

for discharge decisions.

Dr. Diamond testified that he accused Robert Canova, 

Serenity’s director of operations, of “fraud” in a text message, 

because Canova caused Serenity to hold patients longer than 

necessary for financial reasons. The message was not introduced 

into evidence, and neither Diamond nor CDI identified any 

patient as to which this occurred or connected any patient in this 

category to a claim made to a California insurance company.

Dr. Diamond admitted he had no knowledge of patients’ 

preplanned discharge plans, and no evidence of any financial 

arrangements between Serenity and the long-term care facilities 

to which patients would be discharged. The court found Dr. 

Diamond provided no support for CDI’s steering theory.

Finally, CDI introduced excerpts of Canova’s deposition, 

who admitted he was unaware of any insurer questioning

Serenity’s licensure, and testified that Em Garcia told him on 

several occasions that the correct licensing was in place. Canova 

testified that AIR was for a time Serenity’s largest referral 

source, and AIR-referred patients arrived at Serenity with a 

preplanned discharge strategy. Canova admitted that not all 

AIR-referred patients were discharged to an AIR-affiliated 
12

facility, and he was unaware of any payment made by Serenity 

for patient referrals.

Canova testified that on occasion, when Dr. Diamond 

believed that a patient was medically cleared but the team 

believed a safe discharge location was not then available, Dr. 

Diamond “didn’t want to wait for the available bed for a safe 

discharge location[,] so the patient [was] discharged to the 

street.” Canova testified that patients usually had a 

predetermined facility as part of their “continuity of care plan.”

Defendants rested without calling any witnesses.

C. Posttrial Proceedings

In its closing brief, CDI argued there were 4,135 false 

claims, for which “assessments” should be imposed in the amount 

of $139 million plus a penalty range of $20 to $41 million against 

all six defendants.

 In their closing brief, the Prime defendants argued that 

CDI “vastly overreached in pursuing a case beyond its limited 

jurisdiction.”

The court found that CDI’s conclusory allegations of aiding 

and abetting and conspiracy were unsupported by any evidence 

suggesting liability on the part of Prime Healthcare Foundation, 

Prime Healthcare Services, or JNL Management. The court

chided CDI for failing to dismiss these defendants either when it 

knew it would introduce no evidence of their liability or at the 

conclusion of the evidence.

The court found that CDI’s claims, which alleged conduct 

that no licensing or accrediting agency had found to be troubling, 

including the CDI itself, constituted a vast overreach as to 

parties, theories, and scope. The court also found that CDI failed 

to fulfill its ethical obligation to be scrupulously fair, in that it 
13

pursued the litigation against several defendants beyond any 

reasonably colorable claim. The court found it troubling that CDI 

appeared to have abdicated its statutory responsibility to take 

the primary role in prosecuting the action, instead ceding control 

to Rapier’s attorneys.

On the merits, the court found that CDI’s fraud theory was 

unsupported by any evidence of a false statement or omission, 

specific intent to defraud, materiality, or reliance. On the 

contrary, the undisputed evidence was that all defendants 

intended to follow the law, consulted attorneys when unsure 

about what to do, and relied on a lack of information from any 

agency, including CDI, that their practices were improper, even 

after the allegations in this case were made public. The court 

therefore concluded that CDI failed to show that defendants 

intended to defraud anyone or that any alleged false statement or

omission was material, an issue on which CDI called no witness 

except Kim, whom the court found to be unpersuasive. 

As to CDI’s steering theory, the court found CDI failed even 

to provide a clear definition of steering, and offered no evidence 

that any defendant employed anyone to steer patients to 

Serenity, as there was no evidence of payments or remuneration 

of any kind. Even if a monetary exchange was not required for 

steering to occur, the court found that no evidence suggested 

defendants exchanged any benefit with AIR for referrals. On the 

contrary, the undisputed evidence showed it was common and 

ethical for a detox facility to help a patient find a longer term 

residential facility, and there was no agreed-upon standard to 

follow in doing so.
14

The court concluded that defendants were entitled to 

judgment in their favor, and later denied CDI’s and the relator’s 

motions for new trial.3

CDI appealed from the final judgment and separately 

appealed from the order denying its motion for a new trial. We

consolidated the appeals for purposes of briefing, oral argument, 

and decision.4

DISCUSSION

CDI and the relator contend the trial court erred by 

interpreting the IFPA as applying only to fraudulent claims as 

opposed to simply false claims, and by interpreting subdivision 

(a) of section 1871.1 as requiring a cash exchange as opposed to

an exchange of any item or service of value. CDI further 

contends the trial court erred in denying it a jury trial, denying a 

continuance, and awarding an item of costs. 

A. Preliminary Considerations

The Prime defendants preliminarily argue that Rapier may 

assert no argument on appeal beyond the arguments raised by 

CDI because CDI has a statutory obligation to lead this litigation. 

3 A relator is a real party in interest in whose name a state 

or attorney general brings a lawsuit. He or she is generally the 

person who furnishes information on which the lawsuit is based. 

(People ex rel. Allstate Ins. Co. v. Weitzman (2003) 107 

Cal.App.4th 534, 538.)

4 On December 17, 2021, CDI’s appeal as to the SRCC 

defendants was dismissed without prejudice. The order denying 

CDI’s new trial motion is not itself appealable, but is reviewable 

on appeal from the underlying judgment. (Walker v. Los Angeles 

County Metropolitan Transportation Authority (2005) 35 Cal.4th 

15, 18-19; Code Civ. Proc., § 904.1, subd. (a)(2).)
15

(§ 1871.7, subd. (f)(1).) We disagree. Although the CDI 

maintains the primary responsibility for prosecuting this action, 

Rapier enjoys the “right to continue as a party to the action.” 

(§ 1871.7, subd. (f).) When independent parties join forces in 

litigation, it is not uncommon for each to take a slice of the 

available arguments on appeal. To hold otherwise would invite 

even more duplication than is already inherent in multi-party 

litigation.

After filing their opening briefs, CDI and Rapier settled 

their case against the SRCC defendants and stipulated to dismiss 

their appeal as to those defendants without prejudice. The Prime 

defendants argue that pursuant to the doctrine of collateral 

estoppel, the settlement and dismissal are “dispositive of all 

claims raised on appeal” against them, including that plaintiffs 

were entitled to a jury trial, that they were entitled to a new trial 

based on denial of a continuance, and that common finings on 

multiple elements of plaintiffs’ causes of action were incorrect. 

We disagree.

“Collateral estoppel precludes relitigation of issues argued 

and decided in prior proceedings.” (Lucido v. Superior Court

(1990) 51 Cal.3d 335, 341.) But “ ‘an appeal “is not a separate 

proceeding and has no independent existence” [citation]; it is 

merely the continuation of an action.’ ” (Zamos v. Stroud (2004) 

32 Cal.4th 958, 969.) No authority of which we have been made 

aware applies the doctrine of collateral estoppel to different 

parties in the same proceeding. If finality as to one party in a 

proceeding forestalled the appellate rights of another party, all 

appeals would have to be all-or-nothing affairs where all losing 

parties appeals or none do. That has never been the law.
16

B. Standard of Review

“In reviewing a judgment based upon a statement of 

decision following a bench trial, we review questions of law de 

novo, and we review the trial court’s findings of fact for 

substantial evidence.” (Durante v. County of Santa Clara (2018) 

29 Cal.App.5th 839, 842.) “ ‘Under this deferential standard of 

review, findings of fact are liberally construed to support the 

judgment and we consider the evidence in the light most 

favorable to the prevailing party, drawing all reasonable 

inferences in support of the findings.’ ” (RSCR Inland, Inc. v. 

State Dept. of Public Health (2019) 42 Cal.App.5th 122, 131.)

C. Violation of the IFPA

1. History and purpose of the IFPA

The IFPA, originally enacted in 1993, consists of eight 

articles concerning insurance fraud.5 Article 1 (titled False and 

Fraudulent Claims) comprises sections 1871 through 1871.9.6

Section 1871 sets forth legislative findings and states the 

Legislature’s intention is to “permit the full utilization of the 

expertise of the commissioner and the department so that they 

may more effectively investigate and discover insurance frauds, 

halt fraudulent activities, and assist and receive assistance from 

federal, state, local, and administrative law enforcement agencies 

5 Statutes 1993, chapter 120, section 3.3 (Assem. Bill No.

1300), effective July 16, 1993. 

6 The IFPA is Chapter 12 of Part 2 (The Business of 

Insurance) of Division 1 (General Rules Governing Insurance) of 

the Insurance Code, sections 1871-1879.8. Articles 2 through 8 of 

the IFPA govern various aspects of the administration of 

insurance claims and the investigation, reporting, and prevention 

of insurance fraud.
17

in the prosecution of persons who are parties in insurance 

frauds.” (§ 1871, subd. (a).)

Subdivision (h) of section 1871 explains that “[h]ealth 

insurance fraud is a particular problem for health insurance 

policyholders. Although there are no precise figures, it is 

believed that fraudulent activities account for billions of dollars 

annually in added health care costs nationally. Health care fraud 

causes losses in premium dollars and increases health care costs 

unnecessarily.”7

When section 1871.7 was originally enacted it prescribed 

civil penalties for the employment of runners, cappers, steerers or 

other persons to procure clients or patients or obtain workers’

compensation benefits, without regard to the nature of any 

insurance claim submitted for payment. (Former § 1871.7, subd. 

(a), Stats. 1993, ch. 120 (Assem. Bill No. 1300 (July 16, 1993).)

Section 1871.7 was amended in 1994, adding conduct done with 

an intention to engage in activities prohibited by Penal Code 

sections 549, 550, and 551 (which criminalize the making of false 

or fraudulent claims to insurers), and to provide civil penalties 

for that conduct. (Former § 1871.7, amended Stats. 1994, ch. 

1247, § 1 (Assem. Bill No. 1926).)

Section 1871.7 was amended in several respects in 1995. 

Notably, the amendment made it unlawful to use runners, 

cappers, steerers or others not just to obtain workers’

7 Subdivisions (b) through (g) of section 1871 deal with 

issues of fraud in automobile and workers’ compensation 

insurance. Section 1871.7 originally dealt only with workers’

compensation claims, until its scope was expanded by 

amendment in 1994 to apply also to “ ‘crimes involving 

fraudulent claims against insurers.’ ” (People ex rel. Allstate Ins. 

Co. v. Weitzman supra, 107 Cal.App.4th at p. 548.) 
18

compensation benefits, but also to procure claims to insurers.

(Former § 1871.7, amended Stats. 1995, ch. 574, § 2 (Sen. Bill No.

465).) Although the former law allowed actions arising from any 

workers’ compensation claim even if the claim was not 

fraudulent, according to the Senate Committee on Criminal 

Procedure, section 1871.7 as amended required proof that a claim 

was illegal and fraudulent. (Analysis of the Sen. Comm. on Crim. 

Proc., Sen. Bill No. 465 (1995-1996 Reg. Sess.), p. 5.) The 

committee went on to explain that the amended bill “would make 

it unlawful and provide for disgorgement of profits whenever a 

capper is used,” because, according to the bill’s sponsor (with 

respect to automobile insurance claims), “fraud is almost always 

present when cappers are used.” (Ibid.)

Section 1871.7 was amended again in 1999, by adding the 

last sentence to subdivision (b), which provided for the first time 

that penalties are to be assessed for each fraudulent claim 

presented to an insurer, instead of for each violation of 

subdivision (a). (Former § 1871.7, amended Stats. 1999, ch. 885, 

§ 2 (Assem. Bill No. 1050); see Amendments, Deering’s Ann. Ins. 

Code (2009 ed.) foll. § 1871.7, p. 274.)

2. Statutory interpretation

Our fundamental task in construing a statute is to 

ascertain the intent of the Legislature and effectuate the 

statute’s purpose. (Day v. City of Fontana (2001) 25 Cal.4th 268, 

272.) “[S]uch a construction is, if possible, to be adopted as will 

give effect to all” of the statutory language. (Code Civ. Proc., 

§ 1858.) When the language of the statute is clear and 

unambiguous, the “plain meaning” rule applies; we presume the 

Legislature meant what it said. (Day, at p. 272.)
19

D. Application

1. False claims

Subdivision (b) of section 1871.7 provides in pertinent part: 

“Every person who violates any provision of this section or 

Section 549, 550, or 551 of the Penal Code shall be subject . . . to 

a civil penalty of not less than five thousand dollars ($5,000) nor 

more than ten thousand dollars ($10,000), plus an assessment of 

not more than three times the amount of each claim for 

compensation . . . . The penalty prescribed in this paragraph 

shall be assessed for each fraudulent claim presented to an 

insurance company by a defendant . . . .” Penal Code section 550 

applies to “any false or fraudulent claim for the payment of a loss 

or injury, . . . under a contract of insurance” and “any false or 

fraudulent claim for payment of a health care benefit.” (Pen.

Code, § 550, subd. (a)(1), (6).)

Here, CDI alleged that Encino Hospital misrepresented to 

insurers that it was properly licensed to provide detox services 

when it was not. The trial court found no evidence suggesting 

that defendants presented a false claim to any insurer. We 

agree; no authority of which we are aware or to which we have 

been directed obligates Encino Hospital to hold any license other 

than its license as a general acute care hospital.

“No person . . . shall operate . . . health facility in this state, 

without first obtaining a license” from the Department of Public 

Health. (Health & Saf. Code, § 1253, subd. (a).) It is undisputed 

that Encino Hospital is licensed as a general acute care hospital 

by the Department of Public Health.

Relying on and selectively quoting from Health and Safety 

Code sections 1250.3, subdivision (a) and 1254.2, subdivision (a), 

Rapier argues that “any facility providing ‘24-hour inpatient care 
20

for persons who have a dependency on alcohol or other drugs, or 

both alcohol and other drugs’ must be licensed as a ‘chemical 

dependency recovery hospital.’ ” Neither of these statutes so 

provides, either separately or in combination.

Health and Safety Code section 1250.3, subdivision (a), 

provides: “As defined in Section 1250, ‘health facility’ includes 

the following type: ‘Chemical dependency recovery hospital’

means a health facility that provides 24-hour inpatient care for 

persons who have a dependency on alcohol or other drugs, or both 

alcohol and other drugs. This care shall include, but not be 

limited to, the following basic services: patient counseling, group 

therapy, physical conditioning, family therapy, outpatient 

services, and dietetic services. Each facility shall have a medical 

director who is a physician and surgeon licensed to practice in 

this state.” Health and Safety Code section 1254.2 simply 

provides that the Department of Public Health “shall license 

chemical dependency recovery hospitals to provide the basic 

services specified in subdivision (a) of Section 1250.3.”

Neither statute provides that a general acute care hospital 

such as Encino Hospital becomes a chemical dependency recovery 

hospital simply because it offers the same services a chemical 

dependency recovery hospital would offer. 

On the contrary, a general acute care hospital may provide 

chemical dependency recovery services “as a supplemental 

service.” (Health & Saf. Code, § 1250.3, subd. (d)(1).) When it 

does so, “the general acute care hospital . . . shall provide the 

supplemental services in a distinct part of the hospital or 

freestanding facility, if the distinct part satisfies the criteria 
21

established by law and regulation for approval as a chemical 

dependency recovery supplemental service.” (Ibid.)8

Nothing about this scheme obligates a general acute care 

hospital to obtain some different license.

Rapier acknowledges that a general acute care hospital

may provide acute detox services without an entirely new license 

but, she argues, selectively quoting from subdivision (d) of Health 

and Safety Code section 1250.3, such a hospital may do so only 

“so long as they obtain CDPH’s ‘approval’ to provide such 

services.”

The statue does not say that. Health and Safety Code 

section 1250.3, subdivision (d) provides that a general acute care 

hospital may provide acute detox services “in a distinct part of 

the hospital or freestanding facility, if the distinct part satisfies 

the criteria established by law and regulation for approval as a 

chemical dependency recovery supplemental service.” (Italics 

added.) The statute says only that the distinct part of the 

hospital must satisfy the criteria for approval as a chemical 

8 Subdivision (d) of Health and Safety Code section 1250.3 

provides in pertinent part: “Chemical dependency recovery 

services may be provided as a supplemental service in existing 

general acute care beds and acute psychiatric beds in a general 

acute care hospital or in existing acute psychiatric beds in an 

acute psychiatric hospital or in existing beds in a freestanding 

facility, as defined in subdivision (c). When providing chemical 

dependency recovery services as a supplemental service, the 

general acute care hospital, acute psychiatric hospital, or 

freestanding facility, as defined in subdivision (c), shall provide 

the supplemental services in a distinct part of the hospital or 

freestanding facility, if the distinct part satisfies the criteria 

established by law and regulation for approval as a chemical 

dependency recovery supplemental service.”
22

dependency recovery supplemental service, not that the hospital

must actually obtain a separate CDPH approval.

Department of Public Health regulations generally require 

approval for provision of supplemental services: “Any licensee 

desiring to establish or conduct . . a supplemental service, shall 

obtain prior approval from the Department . . . .” (Cal. Code 

Regs., tit. 22, § 70301, subd. (a).) The regulations then list 28 

supplemental services for which approval is required. (Id. at

§§ 70401-70657 [e.g., acute respiratory care, burn center, dental 

service, intensive care newborn, pediatric service, perinatal 

service, radiation therapy, social service, speech pathology, 

standby emergency medical service, etc.].) “Chemical dependency 

recovery services” are not among the long list of supplemental

services for which a general acute care hospital requires 

Department of Public Health approval. 

Rapier also argues that Encino Hospital was obligated but 

failed to identify Serenity as a provider on its insurance claims, a 

theory beyond CDI’s statement at trial about contested issues. In 

any event, the trial court rejected the theory because no evidence 

supported it. The only exhibit containing actual claim forms,

Exhibit 1111, showed that Serenity was disclosed to insurers. 

CDI instead relied at trial on Exhibit 1061, listing 4,484 claims, 

but the court found that this exhibit was prepared for litigation, 

and did not correlate to actual claim forms.

Because Encino Hospital needed no separate license or 

approval, and no evidence showed it concealed any provider, the 

CDI’s cause of action for false claims fails for lack of a predicate. 

We therefore need not decide whether the IFPA requires a 

showing of scienter or materiality.
23

2. Steering

CDI’s steering theory was that AIR sometimes referred an 

addiction recovery patient to Serenity in exchange for Serenity’s 

promise not to interfere with the patient’s preadmission plan to 

be discharged to an AIR-affiliated treatment center for follow-on 

care. In other words, CDI alleged, Serenity permitted patients to 

be referred to follow-on care facilities based on profit, not the 

patients’ best interests. CDI argues the trial court misconstrued 

the law applicable to this claim, and in doing so erred by finding 

the evidence weighed against it. We disagree.

Subdivision (a) of section 1871.7 provides: “It is unlawful 

to knowingly employ . . . steerers . . . to procure . . . patients to . . . 

obtain services or benefits . . . that will be the basis for a claim 

against an . . . insurer.” 

“A steerer has been held to be one who gains the confidence 

of the person intended to be fleeced [citation] and who may be 

said to steer or lead the victim to the place where the latter is to 

be robbed or swindled.” (Barron v. Board of Dental Examiners of 

Cal. (1930) 109 Cal.App. 382, 385.)

Here, the trial court found that any evidence suggesting

that Serenity employed AIR to procure patients was outweighed 

by evidence that no such employment existed. 

To begin, no evidence indicated that Serenity or Encino 

Hospital either received compensation for referring patients to 

residential treatment centers or paid for referrals to the Serenity 

program. 

Under the most liberal construction of CDI’s theory, under 

which a cash exchange is not required, Serenity “employed” AIR 

by expressly or tacitly agreeing, in exchange for referrals, to 

honor a patient’s preplanned treatment regimen, which 
24

benefitted AIR because the plan included later referral to an AIRaffiliated facility. 

But no evidence indicated that such an agreement existed. 

CDI attempted to establish an inference for such an agreement by 

establishing that it was “universally accepted” that an acute

detox facility should refuse to honor a patient’s preplanned 

treatment regimen. Serenity would fail to follow this universal 

standard, CDI theorized, only if motivated to do so by a prior 

agreement with AIR to obtain referrals.

Little to no evidence supported the theory. Dr. Waldman, 

CDI’s expert on the standards for referring acute detox patients 

to long-term facilities, stated only that preselecting a long-term 

facility in advance of detox would violate the best practices 

standard, not any universally accepted standard. He testified he 

was unaware of any professional standard specifying when 

discharge locations should be established for substance use 

disorder patients, and agreed that reasonable medical 

professionals could disagree about the timing of discharge 

planning. Lasko testified that it was “very” common for a patient 

to arrive at a detox facility with a predetermined discharge 

location for long-term care.

The evidence thus afforded no reasonable basis upon which 

to infer that Serenity declined to interfere with patients’ 

preplanned discharge locations to secure its own profits. 

Rapier argues it is irrelevant whether it was common and 

ethical to exchange a patient referral for a promise to discharge 

the patient to a facility owned by the referral source’s affiliate, 

because “[i]f conduct is made illegal by statute, ‘everybody’s doing 

it’ is not a defense.” 
25

This misses the point. The question is whether Serenity 

“employed” AIR to obtain referrals. There being no express 

agreement to that effect, nor remuneration exchanged, CDI infers 

the employment from the fact that Serenity’s discharge orders 

benefitted AIR. However, that it was common and ethical to 

discharge a patient to a facility affiliated with the referring party 

negates Rapier’s claim that the discharge orders were evidence of 

AIR’s employment.

With the employment inference negated, little to no 

evidence supported CDI’s steering theory, and substantial 

evidence weighed against it. The trial court was therefore 

justified in finding that CDI failed to prove its theory.

E. Procedural Issues

1. Jury trial

CDI demanded a jury trial but failed to deposit jury fees. 

The trial court therefore granted Prime’s motion to strike the 

demand for a jury trial, finding that jury fees were not timely 

paid, and in any event CDI’s causes of action were not subject to 

jury trial. CDI moved for relief under Code of Civil Procedure 

section 631, which the trial court denied. CDI then petitioned for 

a writ of mandate, which we denied. (State of California v. 

Superior Court (B298315, June 19, 2019) pet. denied.)

CDI argues the trial court erred in denying CDI’s right to a 

jury trial. We disagree.

A trial court’s decision whether to allow jury trial where 

there has been a waiver is reviewed for abuse of discretion. (Code 

Civ. Proc., § 631, subds. (f) & (g).)

Here, Rapier failed to pay the initial jury fee until it was 

four months late, and CDI never paid it. (See Code Civ. Proc., 
26

§ 631, subd. (f)(5).) The trial court therefore acted within its 

discretion in striking CDI’s request for a jury trial and denying 

its application for relief under Code of Civil Procedure section 

631.

On the merits, CDI was not entitled to a jury trial on its 

claims.

“ ‘[T]he right to a jury trial in a civil action may be afforded 

either by statute or by the California Constitution.’ ” 

(Nationwide Biweekly Administration, Inc. v. Superior Court of 

Alameda County (2020) 9 Cal.5th 279, 296-297 (Nationwide).)

The IFPA affords no explicit right to a jury trial on causes 

of action it creates.

Article I, section 16 of the California Constitution states in 

relevant part that “[t]rial by jury is an inviolate right and shall 

be secured to all . . . .” 

“From the outset of our state’s history, our courts have 

explained that this provision was intended to preserve the right to 

a civil jury as it existed at common law in 1850 when the jury 

trial provision was first incorporated into the California 

Constitution.” (Nationwide, supra, 9 Cal.5th at p. 315.) 

“Pursuant to this historical approach, as a general matter the 

California Constitution affords a right to a jury trial in common 

law actions at law that were triable by a jury in 1850, but not in 

suits in equity that were not triable by a jury in 1850.” (Ibid.) 

“ ‘ “In determining whether the action was one triable by a jury at 

common law, the court is not bound by the form of the action but 

rather by the nature of the rights involved and the facts of the 

particular case—the gist of the action. A jury trial must be 

granted where the gist of the action is legal, where the action is 

in reality cognizable at law.” ’ ” (Ibid.)
27

“At early common law, actions at law typically involved 

lawsuits to recover money damages for injuries caused by breach 

of contract or tortious conduct. Equitable causes of action 

typically sought relief such as injunctions, orders for specific 

performance, or the disgorgement of ill-gotten gains, which were 

unavailable in actions at law.” (LaFace v. Ralphs Grocery Co. 

(2022) 75 Cal.App.5th 388, 395.)

“The constitutional right of trial by jury is not to be 

narrowly construed. It is not limited strictly to those cases in 

which it existed before the adoption of the Constitution but is 

extended to cases of like nature as may afterwards arise. It 

embraces cases of the same class thereafter arising. . . . The 

introduction of a new subject into a class renders it amenable to 

its general rules, not to its exceptions.” (People v. One 1941 

Chevrolet Coupe (1951) 37 Cal.2d 283, 300.)

Courts determine whether there is a right to a jury trial 

under the California Constitution by looking to the statutory 

scheme as a whole to determine whether the gist of a cause of 

action under the IFPA seeking both injunctive relief and civil 

penalties is legal or equitable. (Nationwide, supra, 9 Cal.5th at 

p. 324.) Whether a jury trial right exists under the state 

constitution is an issue of law subject to de novo review. (Jogani 

v. Superior Court (2008) 165 Cal.App.4th 901, 904.)

The foremost consideration is whether the IFPA’s remedies 

are equitable in nature. (DiPirro v. Bondo Corp. (2007) 153 

Cal.App.4th 150, 181 [“ ‘Determining whether the gist of a claim 

is in law or equity “depends in large measure upon the mode of 

relief to be afforded” ’ ”].) 

The IFPA is a remedial statute intended to protect the 

public from sharp insurance practices. As noted, the 
28

Legislature’s intention in enacting it was to “permit the full 

utilization of the expertise of the commissioner and the 

department so that they may more effectively investigate and 

discover insurance frauds, halt fraudulent activities, and assist 

and receive assistance from federal, state, local, and 

administrative law enforcement agencies in the prosecution of 

persons who are parties in insurance frauds.” (§ 1871, subd. (a).)

The IFPA provides for civil penalties between $5,000 and 

$10,000, assessments of “not more than three times the amount 

of each claim for compensation,” and “other” equitable relief, 

including temporary injunctive relief. (§ 1871.7, subd. (b).) The 

penalties “are intended to be remedial rather than punitive . . . . 

If the court finds, after considering the goals of disgorging 

unlawful profit, restitution, compensating the state for the costs 

of investigation and prosecution, and alleviating the social costs 

of increased insurance rates due to fraud, that such a penalty 

would be punitive . . . , the court shall reduce that penalty 

appropriately.” (§ 1871.7, subd. (c).)

“[A]n injunction to prohibit ongoing or future misconduct or 

an order requiring a defendant to provide specific performance or 

disgorge ill-gotten gains” is equitable in nature. (Nationwide, 

supra, 9 Cal.5th at p. 293.) That the IFPA’s remedies include

injunctive relief and “other” equitable relief supports finding that 

a cause of action under the IFPA to be equitable in nature. (See 

Lutz v. Glendale Union High School (9th Cir. 2005) 403 F.3d 

1061, 1067-1068 [reference to ‘other equitable relief’ makes sense 

only if the relief previously described relief is itself equitable].) 

Even an award of civil penalties under the IFPA is 

determined based on equitable principles. Thus, if the court—not 

a jury—finds, after considering equitable factors such as
29

disgorgement, unlawful profit, restitution, costs of investigation 

and prosecution, and the social costs of increased insurance rates 

due to fraud, that civil penalties are punitive, it must adjust 

them “appropriately,” i.e., equitably. 

Further, the IFPA has a fundamentally equitable purpose: 

To investigate, discover and deter insurance frauds, not to 

compensate a plaintiff for actual damages sustained. The act 

makes no reference to compensatory damages; assessments are 

levied in relation not to damages—there need be no damages—

but to the dollar amount of claims submitted to insurers.

Finally, the primary right to bring an action for civil 

penalties pursuant to the IFPA is given to the state rather than 

individuals seeking compensation. (§ 1871.7, subd. (d) 

[commissioner or district attorney may bring a civil action].) 

Even though the IFPA authorizes a qui tam action to enforce its 

provisions, if the commissioner elects to intervene, the CDI bears 

“the primary responsibility for prosecuting the action, and shall 

not be bound by an act of the person bringing the action” 

(§ 1871.7, subd. (f)(l)).

The IFPA’s remedial purpose, the primacy given to state 

action, and statutory remedies, including civil penalties, that are 

not damages at law but constitute equitable relief appropriate 

and incidental to enforcement of the act, render a cause of action 

brought pursuant to the act more in the nature of an action to 

enforce public rights, not to vindicate individual injuries. As 

such, the gist of such a cause of action is equitable, which does 

not entitle the CDI or Rapier to a jury trial. (See DiPirro v. 

Bondo, supra, 153 Cal.App.4th at p. 184.)

A final consideration supports denial of a jury trial here. 

Stepping back from equitable elements inhering in the IFPA 
30

itself, the threshold issue with respect to plaintiffs’ false claim 

cause of action—whether a hospital’s operation of a detox facility 

requires separate approval or a separate license from the 

CDPH—is a question purely of administrative law, one the 

Legislature has relegated to the CDPH. The CDPH has at all 

relevant times been aware of Encino Hospital’s activities but has 

never required separate approval for its detox center. Plaintiffs 

purport in this action to supplant CDPH’s health licensing 

expertise. Assuming for the sake of argument this is a proper 

invocation of the IFPA, a matter we need not decide today despite 

the parties’ and amici’s extensive briefing on the issue, 

healthcare licensing is quintessentially an administrative 

endeavor. Whether a hospital’s supplemental service requires 

separate CDPH approval involves the “nuanced and qualitative”

consideration of a variety of factors and circumstances identified 

in CDPH’s administrative guidelines, and is “the type of decision 

that has traditionally been viewed as the province of courts 

rather than juries.” (Nationwide, supra, 9 Cal.5th at p. 304; see 

also McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 

348, 380 [“no jury trial right exists as to adjudication of a matter 

otherwise properly within the regulatory power of an 

administrative agency”].)

As with the Unfair Competition Law at issue in 

Nationwide, an overarching legislative concern in enacting the 

healthcare licensing scheme was doubtless to provide a 

streamlined procedure for informed and uniform regulation of 

California’s healthcare industry. Although we assume for the 

sake of argument that the CDI may properly insert itself into this 

scheme, in effect regulating the healthcare industry through a 
31

backdoor opened by the IFPA, we find no reason to permit a jury 

to do so.

Rapier cites to three IFPA cases that were tried to juries, 

but none decided the jury-trial issue. A case is no authority for 

unconsidered propositions. (In re Marriage of Cornejo (1996) 13 

Cal.4th 381, 388.)

Rapier argues that the fixed minimum for an IFPA civil 

penalty renders the action akin to one at law to recover a debt. 

But even if this is true, the IFPA still obligated the trial court 

under subdivision (c) of section 1871.7 to reduce penalties 

“appropriately” pursuant to an equitable analysis. Thus, even if 

a civil penalty was in the nature of a private debt, a point we do 

not decide, civil penalties under the IFPA are ineluctably 

equitable.

We conclude that the essential character and purpose of the 

IFPA is equitable. Therefore, CDI and Rapier had no right to a 

jury trial.9

2. Continuance

Two months before trial, CDI moved for a continuance on 

the ground that the sheer volume of documents produced would 

require more than two months of preparation. The trial court 

denied the request without prejudice. CDI never renewed the 

request. On the contrary, on the day of trial CDI answered ready 

for trial, and when the court gave it an opportunity to address 

9 The parties and amici argue at great length about 

whether the IFPA applies to preferred provider organizations 

(PPOs), Employee Retirement Income Security Act (ERISA) 

plans, plans regulated by the California Department of Managed 

Health Care, or insurance companies from other states. Given 

today’s result we need not reach those issues.
32

“anything else” before opening statements, CDI raised no concern 

about lack of time to prepare. 

By failing to seek a continuance when it had the chance, 

CDI forfeits any claim of error on appeal.

F. Costs

The trial court awarded the Prime defendants $20,291.11 

for enlargements and photocopies of exhibits. Rapier contends 

this was an inappropriate item of costs, especially so with respect 

to copies not used at trial. We disagree.

A prevailing party in civil litigation is entitled to recover 

costs incurred in the litigation “[e]xcept as otherwise expressly 

provided by statute.” (Code Civ. Proc., § 1032, subd. (b).) Code of 

Civil Procedure section 1033.51 sets forth specific items of costs

that are allowed or prohibited. (§ 1033.5, subds. (a), (b).) The 

statute also authorizes the trial court in its discretion to award or 

deny an item of costs not mentioned in this section. (§ 1033.5, 

subd. (c)(4); hereafter subdivision (c)(4).) All costs, whether 

expressly permitted under section 1033.5, subdivision (a) or 

awarded in the trial court’s discretion pursuant to subdivision 

(c)(4), must be “reasonably necessary to the conduct of the 

litigation rather than merely convenient or beneficial to its 

preparation” (§ 1033.5, subd. (c)(2)) and “reasonable in amount” 

(§ 1033.5, subd. (c)(3)).

We review a trial court’s cost award for abuse of discretion. 

(Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332.)

The trial court awarded the Prime defendants costs 

incurred in preparing photocopies of exhibits under subdivision 

(a)(13) of Code of Civil Procedure section 1033.5 (hereafter 

subdivision (a)(13)), which allows the recovery of costs for models, 

enlargements, and photocopies of exhibits “if they were 
33

reasonably helpful to aid the trier of fact,” even though the 

exhibits were not ultimately used at trial. 

Our Supreme Court recently held that costs related to 

unused photocopies of trial exhibits and demonstratives are not 

categorically recoverable under subdivision (a)(13), but may still 

be awarded in the trial court’s discretion pursuant to section 

subdivision (c)(4). (Segal v. ASICS America Corp. (2022) 12 

Cal.5th 651, 657.) Here, the trial court exercised its discretion 

under subdivision (a)(13) in determining that unused exhibits 

were reasonably helpful to aid the trier of fact. Although that 

award was ultimately mis-categorized, the same discretion 

exercised under subdivision (a)(13) supported awarding the costs 

under subdivision (c)(4).

Rapier argues that because section 1871.7, subdivision 

(g)(5) of the IFPA authorizes attorney’s fees and expenses for a 

defendant in only limited circumstances, this limitation occupies 

the field, and a defendant is not entitled to costs otherwise 

awardable in civil actions. We disagree.

Section 1871.7, subdivision (g)(5), provides: “If the district 

attorney or commissioner does not proceed with the action, and 

the person bringing the action conducts the action, the court may 

award to the defendant its reasonable attorney’s fees and 

expenses if . . . the court finds that the claim of the person 

bringing the action was clearly frivolous, clearly vexatious, or 

brought primarily for purposes of harassment.”

Because subdivision (b) of Code of Civil Procedure section 

1032 grants a prevailing party the right to recover costs “[e]xcept 

as otherwise expressly provided by statute,” we must determine 

whether section 1871.7, subdivision (g)(5) provides an “express”

exception. Although that section gives a prevailing defendant the 
34

right to recover “attorney’s fees and expenses” in a frivolous 

action in which the commissioner has declined to intervene, the 

statute makes no mention of costs awarded in other 

circumstances. In other words, it does not expressly disallow 

recovery of costs by prevailing defendants in other circumstances; 

any suggestion that prevailing defendants are prohibited from 

recovering their costs in other circumstances is at most implied. 

Accordingly, based on the plain meaning of the words of the 

statutes in question, we conclude subdivision (g)(5) of section 

1871.7 does not provide an “express” exception to the general rule 

permitting a prevailing defendant to recover its costs under Code 

of Civil Procedure section 1032. (See Murillo v. Fleetwood 

Enterprises, Inc. (1998) 17 Cal.4th 985, 991 [statute permitting 

recovery of costs in some circumstances does not express disallow 

costs in other circumstances].)

Rapier argues that because the trial court ordered an 

electronic exchange of exhibits, the award of costs for three 

photocopied sets of exhibits—as exhibit lists changed—was an 

abuse of discretion. We disagree. Even if exhibits are exchanged 

electronically, a trial court could reasonably conclude that 

photocopies of those exhibits will be necessary for trial. The court 

could further reasonably conclude that costs of re-preparing 

exhibits as exhibit lists change is reasonable considering the 

practical burdens of preparing for trial as the scope of a case 

changes.

G. Requests for Judicial Notice

Plaintiffs’ requests for judicial notice of legislative 

materials are granted. (Evid. Code, § 451, subd. (a).) Rapier’s 

requests for judicial notice of legislative materials are granted. 
35

(Ibid.) The CDI’s request for judicial notice of health care 

materials are granted. (Evid. Code, § 451, subds. (c) & (h).)

DISPOSITION

The judgment and rulings on posttrial orders are affirmed. 

The Prime defendants are to recover costs on appeal.

CHANEY, J.

We concur:

ROTHSCHILD, P. J.

BENKE, J.*

* Retired Associate Justice of the Court of Appeal, Fourth 

Appellate District, Division One, assigned by the Chief Justice 

pursuant to article VI, section 6 of the California Constitution.
Filed 1/20/23

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA ex rel.

MARY LYNN RAPIER et al.,

Plaintiffs and Appellants,

v.

ENCINO HOSPITAL MEDICAL 

CENTER et al.,

Defendants and Respondents.

 B302426, B303196

 (Los Angeles County

 Super. Ct. No. BC641254)

 

 ORDER MODIFYING OPINION

 AND DENYING REHEARING, 

 CERTIFYING OPINION FOR

 PUBLICATION

 [NO CHANGE IN JUDGMENT]

THE COURT:

It is ordered that the opinion filed herein on December 21, 

2022, be modified as follows:

1. On page 2, in the first sentence in the opening paragraph,

“Fraud” is changed to “Frauds.” 

2. On page 2, last line, the sentence “We affirm the judgment” 

is changed to “We affirm the judgment and postjudgment 

order.”

3. On page 4, footnote 2 is moved to the end of the first 

sentence in the opening paragraph on page 2.

4. On page 3, “Ins. Code,” is deleted from the statutory

reference in the last paragraph.
2

5. On page 4, “Ins. Code,” is deleted from the statutory 

reference in the first paragraph.

6. On page 15, the word “appeals” in the last line is changed 

to “appeal.”

7. On page 19, in the first line of the penultimate paragraph, 

the word “a” is inserted before “health facility.”

8. On page 22, in the penultimate sentence, “fails for lack of a 

predicate” is changed to “fails for lack of any predicate false 

claim.” 

9. On page 28, at the end of the second full paragraph, in the 

bracketed text for the citation to Lutz v. Glendale Union 

High School (9th Cir. 2005) 403 F.3d 1061, 1067-1068, the 

third use of “relief” is deleted.

10. On page 31, in the last sentence of the antepenultimate 

paragraph, “even if a civil penalty was in the nature of a 

private debt” is changed to “even if a civil penalty is in the 

nature of a private debt.”

11. On page 34, in the bracketed phrase at the end of the first 

paragraph, “express” is changed to “expressly.”

12. On page 35, first line, “The CDI’s request” is changed to 

“The CDI’s requests.”

13. On page 35, in the Disposition, the phrase “rulings on 

posttrial orders” is changed to “postjudgment order.”

These modifications effect no change in the judgment.

Relator’s petition for rehearing is denied.

The opinion in the above-entitled matter filed on December 

21, 2022, was not certified for publication in the Official Reports. 
3

For good cause it now appears that the opinion should be 

published in the Official Reports and it is so ordered.

____________________________________________________________

ROTHSCHILD, P. J. CHANEY, J. BENKE, J.*

* Retired Associate Justice of the Court of Appeal, Fourth 

Appellate District, Division One, assigned by the Chief Justice 

pursuant to article VI, section 6 of the California Constitution.