1

Filed 12/19/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

THE PEOPLE ex rel. MAHMOUD 

ALZAYAT,

Plaintiff and Appellant,

v.

GERALD HEBB et al.,

Defendants and Appellants.

E066471

(Super.Ct.No. INC1204627)

OPINION

APPEAL from the Superior Court of Riverside County. David M. Chapman, 

Judge. Reversed.

English Lloyd & Armenta and Juan M. Armenta for Plaintiff and Appellant.

Rutan & Tucker, Duke F. Wahlquist and Proud Usahacharoenporn for Defendants 

and Appellants.
2

I

INTRODUCTION

Plaintiff Mahmoud Alzayat, on behalf of the People of the State of California, 

filed this qui tam action against his employer, Sunline Transit Agency, and his 

supervisor, Gerald Hebb, alleging a violation of the Insurance Frauds Prevention Act 

(IFPA or the Act). (Ins. Code, § 1871 et seq.) Alzayat alleged Hebb made false 

statements in an incident report submitted in response to Alzayat’s claim for workers’

compensation, and Hebb repeated those false statements in a deposition taken during the 

investigation into Alzayat’s claim for compensation. Hebb’s false statements resulted in 

Alzayat’s claim being initially denied.

Defendants filed motions for judgment on the pleadings contending: (1) this

lawsuit is based on allegedly false and fraudulent statements Hebb made in connection 

with a workers’ compensation proceeding and is, therefore, barred by the litigation 

privilege under Civil Code1section 47, subdivision (b) (hereafter § 47(b)); and 

(2) Alzayat’s claim is barred by the workers’ compensation exclusivity rule. The 

superior court concluded the workers’ compensation exclusivity rule is inapplicable, but 

ruled the litigation privilege bars Alzayat’s claim. Therefore, the court granted the

motions without leave to amend and entered judgment dismissing the lawsuit.

 

1

 All additional unspecified statutory references are to the Civil Code.
3

Alzayat appeals from the judgment, contending the litigation privilege only 

applies to tort claims and not to statutory claims such as an action under the IFPA, and 

the IFPA is a specific statute that prevails over the general litigation privilege.

Defendants cross-appeal, arguing that, even if Alzayat’s lawsuit is not barred by 

the litigation privilege, the superior court erred by not granting judgment on the pleadings 

on the ground that Alzayat’s claim is barred by the workers’ compensation exclusivity 

rule.

We agree with Alzayat that his lawsuit is not barred by the litigation privilege. 

The litigation privilege is broad, but it has its limits. Like any statute, Civil Code 

section 47(b) is subject to the rule of statutory construction that a particular provision 

prevails over a general one. (Civ. Code, § 3534; Code Civ. Proc., § 1859; Action 

Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1246 (Action 

Apartment).) The courts have concluded the litigation privilege does not bar an action 

filed under a more specific statute when application of the privilege would render the 

specific provision “significantly or wholly inoperable.” (Action Apartment, at p. 1246.) 

The IFPA is a more specific statute than the litigation privilege, and application of the 

litigation privilege to claims under the IFPA—which in many cases will be based on 

communications that are otherwise privileged under Civil Code section 47(b)—would in 

large measure nullify the Act. Therefore, we conclude the litigation privilege does not 

bar Alzayat’s claim.

We also conclude this lawsuit is not barred by the workers’ compensation 

exclusivity rule. The Workers’ Compensation Act (WCA; Lab. Code, § 3200 et seq.) 
4

provides exclusive remedies for injuries to a worker arising out of his or her employment. 

Like any qui tam lawsuit, Alzayat’s claim under the IFPA is based on an injury suffered 

by the People, not based on any injury he himself suffered. Therefore, the exclusivity 

rule is inapplicable. 

The trial court erred by granting judgment on the pleadings for defendants, so we

reverse the judgment.

II.

FACTS AND PROCEDURAL BACKGROUND

In conformity with the standard of review of an order granting a motion for 

judgment on the pleadings, we accept as true the facts pleaded in the complaint. (Truong 

v. Orange County Sheriff’s Dept. (2005) 129 Cal.App.4th 1423, 1427.)

Sunline Transit Agency (Sunline) is a public entity that provides regional 

transportation services and oversight of other transportation entities such as taxi 

companies. Alzayat was employed by Sunline as a stops and zones technician, and in 

that capacity he maintained bus stop infrastructure. Hebb was Alzayat’s supervisor.

Sometime before his current injury, Alzayat suffered a work-related lumbar injury 

and was later released back to work. On the day of the current injury, Alzayat was 

working on a bus stop and needed concrete mix to anchor some posts. The only available 

bags of concrete mix weighed 90 pounds. To avoid reinjuring his lumbar, Alzayat asked 

Hebb for permission to either break down a 90-pound bag into lighter ones or to have 

another employee help him lift the 90-pound bag. Hebb refused Alzayat’s requests, and 

the two argued for about two minutes. Hebb ultimately ordered Alzayat to lift the 90-
5

pound bag by himself without breaking it down first. Alzayat complied and, immediately 

upon lifting the bag, Alzayat felt intense pain in his lumbar spine, and he partially 

collapsed. Alzayat dropped the bag and its contents spilled out. When Hebb asked 

Alzayat why he had dropped the bag, Alzayat complained he had injured his back when 

lifting the bag.

Alzayat was still in pain the next day, so he filled out a workers’ compensation 

claim form about the incident. Some time thereafter, Hebb filled out a standard Sunline 

report for work injuries that is used in determining whether to accept or deny liability for 

workers’ compensation claims. In the report, Hebb wrote he did not witness Alzayat’s 

injury. Alzayat alleged this statement was false, because Hebb was an active participant 

in the incident.

Hebb was deposed during the investigation into Alzayat’s workers’ compensation 

claim. Hebb testified under oath that he had no conversation with Alzayat about the

request to either break down the bag of concrete mix or to obtain help in lifting the bag. 

Hebb also denied having witnessed Alzayat injure himself when he lifted and then 

dropped the bag. Alzayat alleged Hebb knowingly provided false testimony because

Hebb was present and had witnessed Alzayat’s injury. In addition, Alzayat alleged

Sunline adopted and ratified Hebb’s misrepresentations, and Hebb and Sunline knew or 

should have known that Hebb’s deposition testimony would be used in determining 

whether Alzayat’s workers’ compensation claim would be granted or denied.

Sunline’s risk management authority denied Alzayat’s workers’ compensation 

claim based on Hebb’s report and deposition testimony. Alzayat alleged Hebb’s 
6

misrepresentations were material in that a reasonable insurance carrier would consider 

them important when determining whether to accept or deny liability for Alzayat’s 

injuries.2

Alzayat filed this lawsuit alleging Hebb’s false statements in relation to Alzayat’s 

claim for workers’ compensation benefits constituted violations of Penal Code 

section 550, and formed predicate offenses for liability under the IFPA.

3

 Alzayat alleged 

he is an “interested person” under the IFPA, and that he had direct and independent 

knowledge of the information on which the lawsuit was based within the meaning of 

 

2

 The parties agree that Alzayat eventually received workers’ compensation 

benefits for his back injury.

3

 In their brief, defendants contend Alzayat pleaded a predicate violation of Penal 

Code section 550, subdivision (b)(3), which provides: “It is unlawful to do, or to 

knowingly assist or conspire with any person to . . . [¶] . . . [¶] [c]onceal, or knowingly 

fail to disclose the occurrence of, an event that affects any person’s initial or continued 

right or entitlement to any insurance benefit or payment, or the amount of any benefit or 

payment to which the person is entitled.” Not so. The complaint pleaded more generally 

that Hebb’s misrepresentations in the Sunline report and in his deposition testimony were 

“in violation of Penal Code § 550, which is a predicate offense for an action under the 

Insurance Frauds Prevention Act.”

Alzayat relied on Penal Code section 550, subdivision (b)(3), in his opening brief 

in an earlier appeal and in an answer to defendants’ petition for review in that proceeding. 

Based on the parties’ briefs in that earlier appeal, this court addressed Penal Code 

section 550, subdivision (b)(3), in the context of the specific issue presented to us, viz, 

whether a self-insurance risk pool constitutes insurance for purposes of the IFPA. 

(People ex rel. Alzayat v. Hebb et al. (Dec. 17, 2015, E060593) [nonpub. opn.].) This 

court had no occasion whatsoever to decide whether Alzayat could state a claim based on 

a predicate violation of Penal Code section 550, subdivision (b)(3), or whether Alzayat’s 

IFPA lawsuit is limited to that specific predicate offense. Defendants have not argued 

Alzayat is judicially estopped from asserting other predicate offenses under Penal Code 

section 550, and we decline to find estoppel on our own motion. (Lee v. West Kern 

Water Dist. (2016) 5 Cal.App.5th 606, 630 [equitable defense of judicial estoppel is 

subject to the forfeiture doctrine].)
7

Insurance Code section 1871.7, subdivision (h)(2)(B). On behalf of the People of the 

State of California, Alzayat prayed for a civil penalty against Hebb and Sunline of no less 

than $5,000 and no more than $10,000, an assessment of no more than three times the 

amount of his workers’ compensation claim, attorney fees, and costs.

In their first motion for judgment on the pleadings, Hebb and Sunline argued selfinsured risk pools, like Sunline’s, are not considered insurance for purposes of the IFPA. 

The superior court agreed, granted the motion without leave to amend, and entered 

judgment for defendants. In an unpublished opinion, we concluded self-insured risk 

pools are subject to the IFPA and reversed the judgment. (People ex rel. Alzayat v. 

Hebb et al., supra, E060593.)

On remand, Hebb and Sunline again moved for judgment on the pleadings. In 

their separate but identical motions, defendants argued Alzayat’s lawsuit was based on 

communications Hebb made in the context of a workers’ compensation proceeding and,

therefore, the lawsuit is barred by the litigation privilege under section 47(b). Defendants 

also argued Alzayat’s lawsuit seeks damages for injuries that he incurred in the 

workplace and is, therefore, barred by the workers’ compensation exclusivity rule. In his 

opposition to Sunline’s motion, Alzayat argued his lawsuit is not barred by the litigation 

privilege. Relying on Action Apartment, supra, 41 Cal.4th 1232, Alzayat argued the 

IFPA is a specific statute designed to combat workers’ compensation fraud, and 

permitting the general litigation privilege to immunize communications the IFPA was 

designed to penalize would frustrate the purposes of the Act. Alzayat also argued his 
8

claim under the IFPA is not barred by the workers’ compensation exclusivity rule. 

Alzayat did not file an opposition to Hebb’s motion.

In its tentative ruling, which became the final ruling, the superior court agreed 

with defendants that Alzayat’s claim is barred by the litigation privilege. The court noted 

the litigation privilege is absolute, applies to quasi-judicial proceedings such as workers’

compensation actions, and immunizes communications that have some logical relation to 

the proceeding and are made to achieve the objects of the litigation. Although the court 

acknowledged that the general litigation privilege must yield when immunity would 

render a more specific statute to be significantly or wholly inoperable, the court 

concluded application of the privilege in this case would not frustrate enforcement of the 

IFPA. According to the court, Penal Code section 550, which lists the predicate offenses 

for liability under the IFPA, “prohibits a wide array of conduct related to the false 

submission of insurance claims, most of which could arise before litigation is ever 

contemplated.” The court gave two examples: causing a vehicular accident for the 

purpose of filing a false insurance claim, and misrepresenting an insured’s state of 

domicile when obtaining motor vehicle insurance. Citing People ex rel. Monterrey 

Mushrooms, Inc. v. Thompson (2006) 136 Cal.App.4th 24 (Thompson), the court 

concluded the workers’ compensation exclusivity rule does not bar an action under the 

IFPA, and rejected defendant’s alternative basis for judgment on the pleadings. The 

court granted judgment on the pleadings for defendants without leave to amend and 

entered a judgment dismissing the lawsuit.
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Alzayat timely appealed from the judgment. Defendants filed a protective crossappeal from the order denying judgment on the pleadings based on the workers’

compensation exclusivity rule.

III.

DISCUSSION

A. Standards of Review.

“A motion for judgment on the pleadings presents the question of whether ‘the 

plaintiff’s complaint state[s] facts sufficient to constitute a cause of action against the 

defendant.’ [Citation.] The trial court generally considers only the allegations of the 

complaint, but may also consider matters that are subject to judicial notice. [Citation.] 

‘“Moreover, the allegations must be liberally construed with a view to attaining 

substantial justice among the parties.” [Citation.] “Our primary task is to determine 

whether the facts alleged provide the basis for a cause of action against defendants under 

any theory.”’ [Citation.] ‘An appellate court independently reviews a trial court’s order 

on such a motion.’ [Citation.]” (Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 

272.)

Interpretation of Civil Code section 47, subdivision (b), and of the IFPA is a pure 

question of law that we review de novo. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 

1332.) When the facts are not in dispute, the question of whether a cause of action is 

barred by the workers’ compensation exclusivity rule is also a question of law we review 

de novo. (Melendrez v. Ameron Internat. Corp. (2015) 240 Cal.App.4th 632, 639 

(Melendrez).)
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B. Alzayat’s Qui Tam Claim Under the IFPA Is Not Barred by the Litigation 

Privilege.

Alzayat does not dispute that, in general, the litigation privilege bars tort liability 

for communications that are made in judicial and quasi-judicial proceedings such as a 

workers’ compensation proceeding. Rather, he argues the IFPA is an exception to the 

litigation privilege. We agree.

1. The IFPA.

The IFPA was in large measure designed to prevent workers’ compensation 

insurance fraud, and the Act includes a number of legislative findings and declarations 

that are relevant here. “Workers’ compensation fraud harms employers by contributing 

to the increasingly high cost of workers’ compensation insurance and self-insurance and 

harms employees by undermining the perceived legitimacy of all workers’ compensation 

claims.” (Ins. Code, § 1871, subd. (d).) Preventing workers’ compensation fraud “may 

reduce the number of workers’ compensation claims and claim payments thereby 

producing a commensurate reduction in workers’ compensation costs,” and “will assist in 

restoring confidence and faith in the workers’ compensation system, and will facilitate 

expedient and full compensation for employees injured at the workplace.” (Id., 

subd. (e).) In addition, “[t]he actions of employers who fraudulently underreport payroll 

or fail to report payroll for all employees to their insurance company in order to pay a 

lower workers’ compensation premium result in significant additional premium costs and 

an unfair burden to honest employers and their employees.” (Id., subd. (f).) Finally, 

“[t]he actions of employers who fraudulently fail to secure the payment of workers’ 
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compensation as required by Section 3700 of the Labor Code harm employees, cause 

unfair competition for honest employers, and increase costs to taxpayers.” (Id., 

subd. (g).)

Any person who makes a false claim for workers’ compensation benefits, or who 

presents a false or fraudulent statement in support of or in opposition to such a claim, is 

guilty of a felony wobbler. (Ins. Code, § 1871.4, subd. (b).) In addition, the IFPA 

provides for civil liability for various forms of workers’ compensation insurance fraud. 

“Every person who violates any provision of this section or Section 549, 550, or 551 of 

the Penal Code shall be subject, in addition to any other penalties that may be prescribed 

by law, 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, as defined in Section 3207 of the Labor Code[4]or 

pursuant to a contract of insurance. The court shall have the power to grant other 

equitable relief, including temporary injunctive relief, as is necessary to prevent the 

transfer, concealment, or dissipation of illegal proceeds, or to protect the public. The 

penalty prescribed in this paragraph shall be assessed for each fraudulent claim presented 

to an insurance company by a defendant and not for each violation.” (Ins. Code, 

§ 1871.7, subd. (b), hereafter Ins. Code, § 1871.7(b).)

Insurance Code section 1871.7, subdivision (a), makes it unlawful to use runners 

and cappers to procure clients or patients for the purpose of filing claims for insurance 

 

4

 Labor Code section 3207 defines the term “compensation” for purposes of the 

WCA.
12

services or benefits. Penal Code section 549 makes it a crime to knowingly, or with 

reckless disregard for the truth, solicit, accept, or refer a client who intends to file a 

fraudulent claim for insurance benefits. Among other things, Penal Code section 550, 

subdivisions (a) and (b), criminalize making false claims for compensation or benefits 

and presenting or preparing false statements in support of or in opposition to a claim for 

compensation or benefits. Relevant here, Penal Code section 550, subdivision (b)(1), 

provides it is unlawful to “[p]resent or cause to be presented any written or oral statement 

as part of, or in support of or opposition to, a claim for payment or other benefit pursuant 

to an insurance policy, knowing that the statement contains any false or misleading 

information concerning any material fact.” (Italics added.) Subdivision (b)(2) of the 

same section makes it a crime to knowingly “[p]repare or make” a false or misleading 

statement “to be presented to any insurer or any insurance claimant in connection with, 

or in support of or opposition to, any claim or payment or other benefit pursuant to an 

insurance policy.” (Italics added.) Assisting or conspiring with another person to present 

or prepare such a false statement in support of or in opposition to a claim for 

compensation or benefits is also a crime. (Pen. Code, § 550, subd. (b).) Finally, Penal 

Code section 551 criminalizes paying consideration for the referral of clients to 

automotive repair shops for repairs covered by automobile insurance.

The IFPA’s civil penalties are intended to be remedial and not punitive (Ins. Code, 

§ 1871.7, subd. (c)), and they are not the exclusive remedies available for insurance fraud 

(id., subd. (k)). An action to recover civil penalties under the IFPA may be initiated by the 

district attorney or the insurance commissioner. (Ins. Code, § 1871.7, subd. (d).) In 
13

addition, any “interested person,” including an insurance company, may file such an action 

in the name of the People of the State of California. (Id., subd. (e)(1).) A lawsuit filed on 

behalf of the state is called a qui tam action, and the interested person is called a relator. 

(People ex rel. Strathmann v. Acacia Research Corp. (2012) 210 Cal.App.4th 487, 500 

(Strathmann); People ex rel. Allstate Ins. Co. v. Weitzman (2003) 107 Cal.App.4th 534, 

538 (Weitzman).) The relator’s complaint must be served on the district attorney and the 

insurance commissioner, who have 60 days to decide whether to intervene and proceed 

with the lawsuit. (Ins. Code, § 1871.7, subd. (e)(2).) If the district attorney and the 

insurance commissioner both decline to take over the action (id., subd. (e)(4)(A)), the 

relator may proceed with the action and recover a bounty of 40 to 50 percent of the 

recovered proceeds, plus reasonable expenses and attorney fees (id., subds. (e)(4)(B), 

(g)(2)(A); Strathmann, at p. 500).

Relying on State of California ex rel. Metz v. Farmers Group, Inc. (2007) 

156 Cal.App.4th 1063 (Metz) and State of California ex rel. Nee v. Unumprovident Corp. 

(2006) 140 Cal.App.4th 442 (Nee), defendants contend the IFPA is concerned primarily 

with workers’ compensation fraud by employees, and that its limited application to 

fraudulent statements made by employers or other persons in opposition to employee 

claims has no bearing here. Although those decisions concluded the IFPA was drafted 

primarily to address fraudulent claims for workers’ compensation benefits filed by 

employees (Metz, at pp. 1068-1069; Nee, at pp. 448-449; accord, State ex rel. Metz v. 

CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 413), they did not hold the 

IFPA is only concerned with fraudulent claims. To the contrary, Insurance Code 
14

section 1871, subdivisions (f) and (g), specifically address the Legislature’s concern 

about employers who fraudulently fail to comply with their obligations under the WCA.

The Metz and Nee courts held that the defendants in those cases—insurance 

companies and insurance company agents, affiliates, and exchanges—were not subject to 

criminal liability under Penal Code section 550 and, therefore, were not proper defendants 

under Insurance Code section 1871.7, subdivision (b). (Metz, supra, 156 Cal.App.4th at 

pp. 1070-1071; Nee, supra, 140 Cal.App.4th at pp. 450-452.) Nee concluded “the class of 

persons who violate [Penal Code sections 549, 550, or 551] are those who submit false or 

fraudulent claims to insurers.” (Nee, at p. 450, fn. omitted.) By way of example, the court 

said Penal Code section 550, subdivisions (a)(1) through (a)(9) and (b)(3) and (b)(4)

“specifically refer to the presentation of false or fraudulent claims for compensation or 

benefits,” conduct the defendant insurer in that case was not alleged to have engaged in. 

(Nee, at p. 450; see Metz, at p. 1069.) At least one appellate court has concluded Nee’s 

limitation of Penal Code section 550 to the class of persons who file insurance claims is 

unpersuasive dictum.

5

 (People v. Butler (2011) 195 Cal.App.4th 535, 540.) We need not

decide whether Nee correctly interpreted the scope of Penal Code section 550. As stated, 

 

5

 A number of courts have made statements regarding the elements for a violation 

of Penal Code section 550 that, if taken out of context, might support the suggestion in 

Nee that only persons who file claims for benefits are liable under that statute. (See, e.g., 

People ex rel. Government Employees Ins. Co. v. Cruz (2016) 244 Cal.App.4th 1184, 

1193 [“The elements generally necessary to find a violation of Penal Code section 550 

are (1) the defendant’s knowing presentation of a false claim, (2) with the intent to 

defraud.”].) Those courts had no occasion to determine whether Penal Code section 550, 

subdivision (b)(3), can be violated by anyone other than a person who submits a claim for 

benefits under an insurance policy and, therefore, do not support the dictum in Nee.
15

ante, in footnote 2, we do not read Alzayat’s complaint as being limited to the predicate 

offense of concealment in violation of Penal Code section 550, subdivision (b)(3). When 

reviewing a judgment on the pleadings, it is our duty to determine whether the complaint 

states a cause of action under any theory. (Jacks v. City of Santa Barbara, supra, 

3 Cal.5th at p. 272.)

As defendants must concede, Nee concluded, albeit in dicta, that Penal Code 

section 550, subdivision (b)(1) and (b)(2), “extend liability to persons other than those 

who actually file the suspect claim” for workers’ compensation benefits. (Nee, supra, 

140 Cal.App.4th at p. 450; see Metz, supra, 156 Cal.App.4th at p. 1070.) “These 

provisions might apply, for example, to a doctor who submits false documentation in 

support of an employee’s claim for benefits under a workers’ compensation policy, or an 

employer who makes a false statement in opposition to such a claim, or to a person who 

files a false statement in support of an insured’s claim under a disability policy, and 

extends as well to anyone who knowingly assists or conspires to do any of these things.” 

(Nee, at p. 450, italics added; see Metz, at p. 1070.) 

We conclude the latter bit of dicta from Nee is well considered and persuasive. 

(Cf. PGA West Residential Assn., Inc. v. Hulven Internat., Inc. (2017) 14 Cal.App.5th 

156, 171.) A false report submitted by or prepared to be submitted by an employer in 

response to a claim for workers’ compensation insurance benefits, fraudulently disputing 

liability for the claimed injury, is a false oral or written statement “in support of or 

opposition to” a claim for benefits within the meaning of Penal Code section 550, 

subdivision (b)(1) and (b)(2). That is exactly what Alzayat alleged in his complaint. 
16

Therefore, we conclude Alzayat pleaded predicate offenses under Penal Code 

section 550, subdivision (b)(1) and/or (b)(2).

Finally, relying on State ex rel. Wilson v. Superior Court (2014) 227 Cal.App.4th 

579 (Wilson), defendants argued for the first time at oral argument that civil penalties 

under Insurance Code section 1871.7(b) are only available to remedy the filing of

fraudulent claims for compensation. Arguments made for the first time at oral argument 

are generally waived. (Bonfigli v. Strachan (2011) 192 Cal.App.4th 1302, 1311, fn. 4.) 

In any event, we do not agree with such a cabined reading of the statute. 

Insurance Code section 1871.7(b) has three sentences. The first sentence provides 

that a “civil penalty” of no less than $5,000 and no more than $10,000, plus an assessment 

of no more than three times the amount of the underlying claim for compensation, “shall” 

be imposed on “[e]very person who violates any provision of this section or Section 549, 

550, or 551 of the Penal Code.” As noted, ante, sections 549 through 551 of the Penal 

Code criminalize various forms of insurance fraud, including but not limited to the filing 

of a fraudulent claim. The second sentence of Insurance Code section 1871.7(b) provides 

that the superior court also has the power to grant equitable or injunctive relief as 

necessary to protect the public from insurance fraud. Finally, the third sentence provides 

that the “civil penalty” mentioned in the first sentence “shall be assessed for each 

fraudulent claim presented to an insurance company by a defendant and not for each 

violation.”

Defendants argue that, notwithstanding the incorporation of all predicate 

violations of Penal Code sections 549 through 551 into the first sentence of Insurance 
17

Code section 1871.7(b), the third sentence limits penalties to the sole predicate violation 

of filing a fraudulent claim, and that the only available remedies for other predicate 

violations is the equitable and injunctive relief mentioned in the second sentence. But 

“[t]he meaning of a statute may not be determined from a single word or sentence; the 

words must be construed in context, and provisions relating to the same subject matter 

must be harmonized to the extent possible. [Citation.]” (Lungren v. Deukmejian (1988) 

45 Cal.3d 727, 735; accord, Weitzman, supra, 107 Cal.App.4th at p. 544.) The most 

reasonable reading of Insurance Code section 1871.7(b), which harmonizes all three 

sentences, is that the “civil penalty” mentioned in the first sentence may only be assessed 

once per underlying claim for compensation regardless of how many predicate violations 

occurred, and the equitable and injunctive remedies mentioned in the second sentence are 

supplementary to the civil penalty. In other words, rather than limiting the IFPA’s 

statutory penalties to one type of predicate violation, the most reasonable reading of 

Insurance Code section 1871.7(b) is that it limits the number of penalties that can be 

imposed for insurance fraud violations related to a single claim.

If the Legislature had intended the IFPA’s civil penalties to be limited to 

defendants who present false claims to insurance companies, as defendants contend, it 

could have made the point more clearly by amending the first sentence of Insurance Code 

section 1871.7(b) to only incorporate the predicate offense of filing a fraudulent claim in 

violation of Penal Code section 550, subdivision (a). Other changes to the statute that 

would more clearly express an intent to limit penalties to fraudulent claims would 

include: (1) amending the second sentence of Insurance Code section 1871.7(b) to 
18

expressly provide that equitable and injunctive relief is the sole remedy for insurance 

fraud in violation of Penal Code sections 549, 550, subdivision (b), and 551, but is a 

supplementary remedy for filing a fraudulent insurance claim in violation of Penal Code 

section 550, subdivision (a); and (2) amending the third sentence to clearly state that the

civil penalties mentioned in the first sentence are only available to remedy the filing of a 

fraudulent claim in violation of Penal Code section 550, subdivision (a). The Legislature 

did neither of those things, and the structure of the paragraph as a whole simply does not 

support the interpretation given to it by defendants. 

Even if we were to agree with defendants that the third sentence of Insurance Code 

section 1871.7(b) could be read to limit the civil penalties mentioned in the first sentence 

to the filing of fraudulent claims, such a reading would render the statute ambiguous 

because, as already noted, ante, on its face the first sentence more broadly provides for 

civil penalties to remedy all forms of insurance fraud proscribed by Penal Code 

sections 549 through 551. Normally, we only look no further than the plain language of a 

statute when determining the Legislature’s intent. (Nolan v. City of Anaheim (2004) 

33 Cal.4th 335, 340.) However, “[i]f we find the statutory language ambiguous or 

subject to more than one interpretation, we may look to extrinsic aids, including 

legislative history or purpose to inform our views. [Citation.]” (John v. Superior Court 

(2016) 63 Cal.4th 91, 96.)

The available legislative history supports our reading of the statute. Since 1995, 

the first sentence of Insurance Code section 1871.7(b) has incorporated Penal Code 

sections 549 through 551 in toto. (Stats. 1995, ch. 574, § 2, p. 4427.) The third sentence 
19

was added to section 1871.7(b) in 1999, when the Legislature adopted a number of 

amendments to the IFPA. (Stats. 1999, ch. 885, § 2, p. 6345.) One of the main purposes 

of those amendments was to change the distribution of penalties recovered in civil actions 

filed by insurance companies, but taken over by the Attorney General, the district 

attorney, or the Insurance Commissioner. (Assem. Com. on Insurance, Analysis of 

Assem. Bill No. 1050 (1999-2000 Reg. Sess.) as amended Apr. 19, 1999, p. 1.)6 

An early version of the bill to amend the IFPA would have added a new 

subdivision (g)(1)(B) to Insurance Code section 1871.7, to provide that insurance company 

relators would be entitled to “receive at least 75 percent but not more than 85 percent of the 

proceeds of the action or settlement of the claim depending upon the extent to which the 

insurer substantially contributed to the prosecution of the action.” (Assem. Bill No. 1050 

(1999-2000 Reg. Sess.) § 2, p. 9, as amended Apr. 19, 1999, italics omitted.)7 Along the 

same lines, the same version of the bill would have amended the first sentence of section 

1871.7(b) to read: “Every person who violates any provision of this section or Section 549, 

550, or 551 of the Penal Code shall be subject, in addition to any other penalties that may 

be prescribed by law, to a civil penalty for each violation of not less than five thousand 

dollars ($5,000) nor more than ten thousand dollars ($10,000), plus an assessment of not 

 

6

 Available at <http://www.leginfo.ca.gov/pub/99-00/bill/asm/ab_1001-

1050/ab_1050_cfa_19990421_082354_asm_comm.html> (as of Dec. 19, 2017). On our 

own motion, we take judicial notice of the legislative history materials mentioned in this

opinion related to Assembly Bill No. 1050 (1999-2000 Reg. Sess.), which amended 

Insurance Code section 1871.7. (Evid. Code, §§ 452, 459.)

7

 Available at <http://www.leginfo.ca.gov/pub/99-00/bill/asm/ab_1001-

1050/ab_1050_bill_19990419_amended_asm.pdf> (as of Dec. 19, 2017).
20

more than three times the amount of each claim for compensation, as defined in Section 

3207 of the Labor Code or pursuant to a contract of insurance.” (Assem. Bill No. 1050 

(1999-2000 Reg. Sess.), supra, § 2, pp. 4-5, as amended Apr. 19, 1999.) Note that the 

proposed amendment to the first sentence spoke of civil penalties for “each violation,” and 

not for “each fraudulent claim.”

Clearly such a proposed distribution of the civil penalty to insurance companies 

was seen as too generous, because as Assembly Bill No. 1050 proceeded through further 

amendments, the provision specifically addressing distribution of penalties to insurance 

companies was eliminated entirely. In its place, the amended bill more modestly 

increased the distribution of penalties to any person who initiated a civil lawsuit under 

the IFPA that was taken over by the government. (Assem. Bill No. 1050 (1999-2000 

Reg. Sess.) § 2, as amended May 19, 1999.)8 At the same time, the bill was amended to 

eliminate a windfall to relators by limiting the civil penalty to one per claim, rather than 

one per predicate violation. It was at this point that the third sentence of Insurance Code 

section 1871.7(b), with its reference to “each fraudulent claim,” was introduced. (Assem. 

Bill No. 1050 (1999-2000 Reg. Sess.), supra, § 2, p. 5, as amended May 19, 1999.) That 

language remained unchanged in the final bill signed by the Governor (Stats. 1999, ch. 

885, § 2, p. 6345), and it has not been amended since. (See Stats. 2010, ch. 400, § 26.)

Nothing in the legislative history to the 1999 amendments to Insurance Code 

section 1871.7 suggests that the Legislature intended to limit the assessment of penalties 

 

8

 Available at <http://www.leginfo.ca.gov/pub/99-00/bill/asm/ab_1001-

1050/ab_1050_bill_19990519_amended_asm.pdf> (as of Dec. 19, 2017).
21

to persons who fraudulently file insurance claims. To repeat, if that was its intent the 

Legislature could have easily amended the first sentence of section 1871.7(b) to limit the 

incorporation of predicate offenses. Because the addition of the third sentence to the 

statute related specifically to the Legislature’s intent to adopt a proper distribution of the 

penalties recovered, and not to any intent to limit the type of predicate violation that 

would give rise to penalties in the first place, we decline to read section 1871.7(b) as 

narrowly as defendants suggest. Therefore, we respectfully disagree with the court in 

Wilson, which held the addition of the third sentence to section 1871.7(b), did limit 

penalties to persons who file fraudulent claims with insurance companies. (Wilson, 

supra, 227 Cal.App.4th at pp. 595-597.) 

2. The litigation privilege.

Defendants contend that, even if Alzayat pleaded predicate offenses under Penal 

Code section 550 for purposes of civil liability under the IFPA, those offenses were based 

on communications that are absolutely privileged under Civil Code section 47(b). 

“The litigation privilege, codified at Civil Code section 47, subdivision (b), 

provides that a ‘publication or broadcast’ made as part of a ‘judicial proceeding’ is 

privileged. This privilege is absolute in nature, applying ‘to all publications, irrespective 

of their maliciousness.’ (Silberg v. Anderson (1990) 50 Cal.3d 205, 216 . . . .) ‘The usual 

formulation is that the privilege applies to any communication (1) made in judicial or 

quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to 

achieve the objects of the litigation; and (4) that [has] some connection or logical relation 

to the action.’ (Id. at p. 212.) The privilege ‘is not limited to statements made during a 
22

trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.’ 

(Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057 . . . .)” (Action Apartment, supra, 

41 Cal.4th at p. 1241.)

“‘The principal purpose of [Civil Code] section [47, subdivision (b)] is to afford 

litigants and witnesses [citation] the utmost freedom of access to the courts without fear 

of being harassed subsequently by derivative tort actions.’ (Silberg v. Anderson (1990) 

50 Cal.3d 205, 213 . . . .) Additionally, the privilege promotes effective judicial 

proceedings by encouraging ‘“open channels of communication and the presentation of 

evidence”’ without the external threat of liability (ibid.), and ‘by encouraging attorneys to 

zealously protect their clients’ interests.’ (Id. at p. 214.) ‘Finally, in immunizing 

participants from liability for torts arising from communications made during judicial 

proceedings, the law places upon litigants the burden of exposing during trial the bias of 

witnesses and the falsity of evidence, thereby enhancing the finality of judgments and 

avoiding an unending roundelay of litigation, an evil far worse than an occasional unfair 

result.’ (Ibid.)” (Flatley v. Mauro (2006) 39 Cal.4th 299, 321-322.)

In the trial court and in their briefs on appeal, defendants argue this court’s 

decision in Harris v. King (1998) 60 Cal.App.4th 1185 (Harris) is dispositive and 

mandates dismissal of Alzayat’s suit. The plaintiff in Harris sued a physician alleging he

submitted false and defamatory medical reports to the State Compensation Insurance 

Fund, which resulted in the temporary termination of the plaintiff’s disability and 

rehabilitation benefits. (Id. at pp. 1186-1187.) The plaintiff alleged causes of action for 
23

general negligence, fraud, and libel, and prayed for general and punitive damages. (Id. at 

p. 1187.)

On appeal, this court concluded the trial court properly sustained a demurrer to the 

complaint without leave to amend because the plaintiff’s claims were barred by the 

litigation privilege. “[Section 47(b)] creates a privilege for the report prepared by King. 

That section provides that ‘A privileged publication . . . is one made: [¶] . . . [¶] (b) In 

any . . . (2) judicial proceeding . . . .’ That privilege is absolute [citation], and applies to 

communications involving quasi-judicial proceedings, including workers’ compensation

proceedings. [Citation.] [¶] Harris alleged he was receiving workers’ compensation 

benefits as the result of a work-related injury. In connection with that proceeding, King 

communicated his report to the workers’ compensation insurance carrier. King’s 

communication satisfies the requirements for application of the litigation privilege 

because it was made in a quasi-judicial proceeding, by participants authorized by law to 

achieve the objects of the litigation, and the communication had a logical relation to that 

proceeding. [Citation.] The King report is therefore absolutely privileged and is not 

actionable even if prepared and communicated maliciously and with knowledge of its 

falsity. [Citation.]” (Harris, supra, 60 Cal.App.4th at pp. 1187-1188.)

At first blush, Harris would appear to support defendants’ contention that, because

Hebb’s alleged misrepresentations were made in the context of a workers’ compensation 

insurance proceeding, Alzayat’s lawsuit is barred by the litigation privilege. Alzayat 

argues, however, our decision in Harris does not compel dismissal of his IFPA claim

because: (1) the litigation privilege applies to common law tort causes of action and not 
24

to claims under remedial statutory schemes, and (2) application of the general litigation 

privilege is inappropriate when it will render a more specific statute to be wholly or 

significantly inoperable. Alzayat’s first argument is dubious at best,9 but we need not 

address it further because we conclude the IFPA is an exception to the privilege.

3. Exceptions to the litigation privilege.

As defendants point out, Alzayat cited no authority in his briefs for the proposition 

that the litigation privilege does not apply when it is inconsistent with, and would render 

ineffective, a more specific statute.10 In their brief, defendants contend they are unaware 

of any controlling authority that supports Alzayat’s argument and raise the stakes by 

boldly asserting “[t]here is not a single potential cause of action that could conceivably” 

be exempt from the litigation privilege. Quite to the contrary, there is ample published 

authority for the proposition that the general litigation privilege must yield when its

application will render a more specific law to be wholly or significantly inoperable. 

In Begier v. Strom (1996) 46 Cal.App.4th 877 (Begier), while a couple were in the 

midst of a marital dissolution action, the wife filed a police report falsely accusing her 

 

9

 The litigation privilege “has . . . been interpreted to preclude constitutional and 

statutory causes of action. [Citation.]” (People v. Persolve, LLC (2013) 218 Cal.App.4th 

1267, 1274 (Persolve).)

10

 “Each brief must: [¶] . . . [¶] State each point under a separate heading or 

subheading summarizing the point, and support each point by argument and, if possible, by 

citation of authority.” (Cal. Rules of Court, rule 8.204(a)(1)(B).) Issues not supported by 

citation to legal authority are subject to forfeiture. (Needelman v. DeWolf Realty Co., Inc.

(2015) 239 Cal.App.4th 750, 762.) Because the issue of whether the litigation privilege 

preempts the IFPA is a pure question of law, and because Alzayat cited Action Apartment

(discussed post) in his opposition to Sunline’s motion in the trial court, we exercise our 

discretion to address it despite Alzayat’s noncomplying brief.
25

husband of sexually abusing their young daughter and repeated the false accusation within 

the dissolution proceeding. (Id. at p. 881.) The husband thereupon sued his former wife 

for malicious prosecution and intentional infliction of emotional distress, and the wife 

successfully demurred to the emotional distress claim contending it was based on 

privileged communications and was, therefore, barred by section 47(b). (Begier, at 

p. 881.) On appeal, the husband conceded the wife’s false accusations made in the context 

of the dissolution proceeding were privileged, but he argued the false police report was 

not privileged. (Id. at p. 882.) Without deciding whether false police reports are 

absolutely privileged, the court held the litigation privilege was preempted in that case by 

the Child Abuse and Neglect Reporting Act (CANRA; Pen. Code, § 11164 et seq.). 

(Begier, at pp. 882-883.)

The purpose of CANRA is to protect children from abuse or neglect, and to that 

end it requires certain classes of individuals (mandatory reporters) to report known or 

suspected child abuse or neglect to a child protective agency. (Pen. Code, § 11166.) 

Failure to report known or suspected child abuse or neglect by a mandatory reporter is a 

misdemeanor. (Id., subd. (c).) Mandatory reporters are absolutely immune from criminal 

or civil liability for making a false report of child abuse or neglect. (Pen. Code, § 11172, 

subd. (a).) Nonmandatory reporters are entitled to qualified immunity for making a false 

report unless it is proven the reporter knew the report was false or made the report with 

reckless disregard for the truth or falsity of the report, in which case they are liable for 

damages caused by the false report. (Ibid.)
26

Begier agreed with the husband that “the Legislature’s direction in Penal Code 

section 11172 that a person who knowingly makes a false report of child abuse ‘is liable 

for any damages caused’ creates a limited exception to the privilege.” (Begier, supra, 

46 Cal.App.4th at p. 884.) The court “discern[ed] within [CANRA] a legislative effort to 

balance, on the one hand, the public interest in ferreting out cases of child abuse so that 

the child victims can be protected from harm and, on the other hand, the policy of 

protecting the reputations of those who might be falsely accused. [Citation.] The 

Legislature has struck that balance by withholding immunity from those who knowingly 

make false reports of child abuse.” (Begier, at p. 885, fn. omitted.) Application of the 

litigation privilege to knowingly made false reports of child sexual abuse, the court noted,

“would essentially nullify the Legislature’s determination that liability should attach.” 

(Ibid.) Mindful of its duty “to read statutes with reference to the whole system of law and 

to avoid rendering a statute meaningless and ineffective,” the Begier court held “that the 

statutory privilege of Civil Code section 47, subdivision (b), does not immunize a party 

who would otherwise be liable under Penal Code section 11172, subdivision (a).” 

(Begier, at p. 885; see Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1577 [reaffirming

the Begier holding that liability under CANRA for false reports of child sexual abuse 

preempts litigation privilege].)
27

In Action Apartment, the plaintiff argued a tenant harassment ordinance enacted by 

the City of Santa Monica, which established criminal and civil liability for maliciously 

serving an eviction notice or filing an unlawful detainer action without a reasonable 

factual or legal basis, was preempted by the litigation privilege. (Action Apartment, 

supra, 41 Cal.4th at pp. 1239-1240.) Although our Supreme Court stated the litigation 

privilege is broad, the court acknowledged the privilege “is not without limit[s]” and 

cited claims for malicious prosecution, certain criminal prosecutions and regulatory 

enforcement proceedings, as examples of actions that are exempt from the litigation 

privilege. (Id. at pp. 1242, 1245-1246.) Those exceptions “involved suits brought under 

state laws, each of which makes clear that the Legislature did not intend its enforcement 

to be barred by the litigation privilege.” (Id. at p. 1245; see id. at p. 1247 [“the 

Legislature remains free to create exceptions to the litigation privilege”].) “[R]ecognition 

of these exceptions to the litigation privilege,” the court continued, “has been guided by 

the ‘rule of statutory construction that particular provisions will prevail over general 

provisions.’ [Citations.] [¶] Each of the above mentioned statutes is more specific than 

the litigation privilege and would be significantly or wholly inoperable if its enforcement 

were barred when in conflict with the privilege.” (Id. at p. 1246.) Because local 

governments lack the authority to create their own exceptions to general state laws, the 

court declined to find an exception to the litigation privilege for the city’s ordinance. 

(Id. at p. 1247.)
28

The plaintiff in Komarova v. National Credit Acceptance, Inc. (2009) 

175 Cal.App.4th 324 (Komarova) sued alleging the defendant engaged in harassing and 

illegal debt collection practices in violation of the Rosenthal Fair Debt Collection 

Practices Act (Rosenthal Act; § 1788 et seq.), when it tried to collect a debt the plaintiff 

never incurred. (Komarova, at pp. 330-335.) On appeal, the defendant argued its 

conduct in attempting to collect the debt was privileged under section 47(b). (Komarova, 

at p. 337.) The Court of Appeal held “the privilege cannot be used to shield violations of 

the [Rosenthal] Act.” (Ibid.)

Citing Action Apartment, supra, 41 Cal.4th 1232, Komarova stated our Supreme 

Court had already recognized exceptions to the litigation privilege for “statutes that 

(1) are ‘more specific’ than the privilege, and (2) would be ‘significantly or wholly 

inoperable’ if the privilege applied.” (Komarova, supra, 175 Cal.App.4th at p. 339, 

citing Action Apartment, at p. 1246.) The defendant argued, however, that the litigation 

privilege was more specific than the Rosenthal Act “because the privilege ‘only applies 

to communications related to litigation,’ while the [Rosenthal] Act ‘prohibits a broad 

range of practices in the context of debt collection,’ ‘whether in litigation or not.’” 

(Komarova, at p. 339.) The court was not persuaded. “[T]he privilege is implicated in all 

judicial and quasi-judicial proceedings and the [Rosenthal] Act is implicated in only the 

small subset of those proceedings that involve collection of consumer debts. We note 

that the Legislature specifically prohibited certain litigation related activity when it 

passed the Rosenthal Act in 1977, presumably aware of the extant broad litigation 

privilege in section 47.” (Komarova, at pp. 339-340.)
29

The court recognized, however, that whether application of the litigation privilege 

would render the Rosenthal Act significantly inoperable was “a closer question.” 

(Komarova, supra, 175 Cal.App.4th at p. 340.) The defendant argued there was no need 

to find an exception to the litigation privilege for Rosenthal Act claims because “‘[t]he 

majority of debt collection attempts have nothing to do with litigation,’” “‘[o]nly a small 

percentage of debts are ever litigated,’ [and] the [Rosenthal] Act ‘will still provide broad 

protection to consumers from improper attempts to collect debts even if all litigation 

related communications are excluded from [its] reach . . . .’” (Komarova, at p. 340.) 

Assuming for purposes of its decision that a significant percentage of debts are not 

litigated, the court nonetheless concluded application of the litigation privilege would 

render the Rosenthal Act significantly inoperable. “We must . . . be mindful of the ease 

with which the [Rosenthal] Act could be circumvented if the litigation privilege applied. 

In that event, unfair debt collection practices could be immunized merely by filing suit on 

the debt.” (Komarova, at p. 340.) After acknowledging its duty to interpret remedial 

statutes broadly to effectuate their purpose, the court concluded the privilege would 

render the Rosenthal Act significantly inoperable and held the plaintiff’s claims were not 

barred.11 (Komarova, at p. 340.)

 

11

 The lower federal courts have uniformly followed Komarova, supra, 

175 Cal.App.4th 324 and rejected application of the litigation privilege to claims under 

the Rosenthal Act. (E.g., Holmes v. Electronic Document Processing, Inc. (N.D. Cal. 

2013) 966 F.Supp.2d 925, 935-937 [adopting Komarova holding that Rosenthal Act 

claims are not barred by litigation privilege, and noting that since issuance of Komarova

“not ‘a single federal court has found Rosenthal Act claims to be barred by the litigation 

privilege’”].)
30

Relying on the analysis in Komarova, 175 Cal.App.4th 324, the Court of Appeal 

in Persolve held an action filed by the People under the unfair competition law (Bus. & 

Prof. Code, § 17200), based on communications that allegedly violated specific 

provisions of the Rosenthal Act and the Fair Debt Collection Practices Act (FDCPA; 

15 U.S.C. § 1692 et seq.), was not barred by the litigation privilege. (Persolve, supra, 

218 Cal.App.4th at pp. 1275-1277.) “Applying the privilege to unlawful practices based 

on specific violations of the [Rosenthal Act] and the [FDCPA] would effectively render 

the protections afforded by those acts meaningless. . . . Civil statutes for the protection of 

the public should be interpreted broadly in favor of their protective purpose. 

Accordingly, the People’s unfair competition law claims that are based on [the Rosenthal 

Act] and/or the [FDCPA] are not barred by the litigation privilege.” (Persolve, at pp. 

1276-1277, citing Komarova, at pp. 339-340.)

The question before the court in Banuelos v. LA Investment, LLC (2013) 

219 Cal.App.4th 323 (Banuelos) was whether a claim for retaliatory eviction was barred 

by the litigation privilege. A landlord who files an unlawful detainer action in retaliation 

for the tenant lawfully organizing or participating in a tenant’s association, or in 

retaliation for the tenant’s lawful and peaceable exercise of her rights under law, is liable 

for damages. (§ 1942.5, subds. (c), (f); Banuelos, at p. 328.) The defendant argued “that 

insofar as section 1942.5 purports to allow a tenant to sue a landlord for ‘bring[ing] an 

action to recover possession[,]’ it is trumped by the ‘litigation privilege’ provision of 

section 47, subdivision (b).” (Banuelos, at p. 330.)
31

The court concluded section 1942.5, subdivisions (c) and (f), satisfied “both 

prongs” of the test under Action Apartment, supra, 41 Cal.4th 1232 for an exception to 

the litigation privilege. (Banuelos, supra, 219 Cal.App.4th at p. 332.) “The statute’s 

reference to a landlord’s liability ‘in a civil action’ for bringing ‘an action to recover 

possession’ in retaliation for a tenant’s exercise of rights coupled with the provision 

recognizing a good faith defense ‘at the trial or other hearing’ demonstrates that the 

Legislature intended to create a cause of action for retaliatory eviction that is not barred 

by the litigation privilege. If the litigation privilege trumped a suit for retaliatory 

eviction under section 1942.5 the privilege would ‘“effectively immunize conduct that 

the [statute] prohibits”’ (Komarova v. National Credit Acceptance, Inc., supra, 

175 Cal.App.4th at p. 338) thereby encouraging, rather than suppressing, ‘“the mischief 

at which it was directed. [Citation.]”’ (Barela v. Superior Court [(1981)] 30 Cal.3d 

[244,] 251.)” (Banuelos, at p. 332.) In addition, the court noted “the right of tenants to 

be free from eviction actions brought by their landlords because the tenants ‘lawfully 

and peaceably exercised [their] rights under the law’ (§ 1942.5, subd. (c)) would be 

‘significantly or wholly inoperable if its enforcement were barred [by the litigation 

privilege].’” (Banuelos, at p. 332, quoting Action Apartment, at p. 1246.)
32

Therefore, the court held the Legislature intended that section 1942.5 not be nullified by 

the litigation privilege.12 (Banuelos, at p. 335.)

More recently, a court found no exception for the litigation privilege where applying 

the privilege would advance rather than frustrate the purpose of a more specific statute. 

The plaintiff in McNair v. City and County of San Francisco (2016) 5 Cal.App.5th 1154

(McNair) had a commercial driver’s license and was employed as a bus driver. A 

physician employed by the San Francisco Department of Public Health sent a letter to the 

 

12

 The Banuelos court declined to follow two decisions of the Court of Appeal 

that concluded the litigation privilege barred retaliatory eviction claims under 

section 1942.5. (Banuelos, supra, 219 Cal.App.4th at p. 333.) The plaintiff in Feldman 

v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467 (Feldman) alleged his 

landlord filed an unlawful detainer action in violation of a city ordinance. Relying on 

Action Apartment, the appellate court concluded the retaliatory eviction claim was barred 

by the litigation privilege. (Feldman, at p. 1486.) As Banuelos noted, “the [Feldman]

court did not discuss the distinction between a tenant suing under a city ordinance, as in 

Action Apartment, and a tenant suing under the authority of coequal state statute, nor did 

it analyze section 1942.5 to determine whether it ‘makes clear’ that it is not barred by the 

litigation privilege.” (Banuelos, at p. 333, citing Action Apartment, supra, 41 Cal.4th at

p. 1246.)

The court in Wallace v. McCubbin (2011) 196 Cal.App.4th 1169 (Wallace) 

similarly held claims for retaliatory eviction under section 1942.5 were barred by the 

litigation privilege. (Wallace, at p. 1213, disapproved on another ground in Baral v. 

Schnitt (2016) 1 Cal.5th 376, 396, fn. 11.) “Like Feldman, the court [in Wallace] cited 

but did not discuss or analyze Action Apartment and the litigation privilege[,] nor did it 

distinguish between a city ordinance and a state statute when resolving the conflict 

issue.” (Banuelos, supra, 219 Cal.App.4th at p. 333.)

Banuelos also rejected the defendant’s suggestion that the California Supreme 

Court’s decisions in Ribas v. Clark (1985) 38 Cal.3d 355 and Rubin v. Green (1993) 

4 Cal.4th 1187 mandated application of the litigation privilege. “[B]oth addressed 

statutes that cover a broad spectrum of conduct, none of which specifically relates to 

litigation. It was only because the facts that gave rise to the causes of action in those 

cases happened to involve litigation activities that the privilege was implicated. Neither 

statute ‘would be significantly or wholly inoperable if its enforcement were barred when 

in conflict with the privilege.’” (Banuelos, supra, 219 Cal.App.4th at p. 335, quoting 

Action Apartment, supra, 41 Cal.4th at p. 1246.)
33

Department of Motor Vehicles (DMV) expressing her concern that, due to the plaintiff’s 

medical history and cognitive deficits, he posed a risk to public safety. In response, the 

DMV revoked the plaintiff’s commercial driver’s license. (Id. at pp. 1157-1160.) In his 

lawsuit, the plaintiff alleged a cause of action for breach of contract and tort claims based 

on violation of the Confidentiality of Medical Information Act (CMIA; § 52 et seq.). The 

defendants successfully argued in the trial court that the tort claims were barred by the 

litigation privilege. (McNair, at pp. 1160-1161.)

The Court of Appeal easily concluded the plaintiff’s tort claims, based on the 

physician’s letter to the DMV, were barred by the litigation privilege. (McNair, supra, 

5 Cal.App.5th at pp. 1163-1164.) The plaintiff, however, relied on a number of the cases 

discussed, ante, for the proposition that the general litigation privilege does not apply 

when it conflicts with a more specific statute. “Under [that] line of cases, application of 

the litigation privilege has been deemed inappropriate where the specific statute ‘would 

be significantly or wholly inoperable if its enforcement were barred when in conflict with 

the privilege.’” (Id. at p. 1164, citing Action Apartment, Komarova, Begier, & Siam v. 

Kizilbash.) The McNair court rejected the assertion that application of the litigation 

privilege “would eliminate safeguards governing disclosures of medical information that 

the Legislature sought to protect in the CMIA and would therefore render the CMIA 

‘significantly or wholly inoperable.’” (McNair, at p. 1165.) 

“The CMIA ‘was originally enacted . . . “to provide for the confidentiality of 

individually identifiable medical information, while permitting certain reasonable and 

limited uses of that information.” [Citation.]’” (McNair, supra, 5 Cal.App.5th at p. 1165, 
34

quoting Heller v. Norcal Mutual Ins. Co. (1994) 8 Cal.4th 30, 38.) Section 56.10, 

subdivision (c)(14), part of the CMIA, is a “catchall provision,” which permits disclosure 

of confidential medical information when specifically authorized by law. (McNair, at 

p. 1165, quoting Shaddox v. Bertani (2003) 110 Cal.App.4th 1406, 1414 (Shaddox).) 

“‘It legitimizes a myriad of situations the Legislature may not have cared to spell out, by 

establishing the principle of permissive disclosure when specifically authorized by law.’” 

(McNair, at p. 1165, quoting Shaddox, at p. 1414.) “[B]ecause California has a policy of 

encouraging reports regarding suspected unsafe drivers,” the McNair court concluded the 

catchall provision of section 56.10, subdivision (c)(14), “must be construed in a way that 

will not impede voluntary reports of the type generated by [a doctor], ‘reports whose 

importance is already recognized and immunized by [the official proceeding privilege 

under] section 47, subdivision (b)(3).’” (McNair, at p. 1166, quoting Shaddox, at 

p. 1418.)

“[A] voluntary disclosure of confidential medical information falls within the reach 

of [section 56.10,] subdivision (c)(14) if a public policy exists encouraging such disclosure; 

the disclosure involves issues of public safety; and it is a communication which would 

otherwise be immunized by the litigation privilege. In this case, California clearly has a 

policy of encouraging, and sometimes even mandating, reports regarding suspected unsafe 

drivers. . . . The [DMV’s] proposed decision to revoke or suspend a person’s driver’s 

license is subject to an evidentiary hearing and decision by an administrative officer or 

body, as well as review by the courts. (Veh. Code, § 14100 et seq.)’ [Citation.] In 

addition, [the doctor’s] letter clearly implicated issues of public safety, as she was 
35

disclosing a problem that could impair [plaintiff’s] ability to perform the public safety 

duties entrusted to him as a bus driver. Finally, this is a situation where the importance of 

the report has already been recognized and immunized by the litigation privilege.” 

(McNair, supra, 5 Cal.App.5th at pp. 1167-1168.) The court concluded the physician’s 

disclosure was authorized by, and not in violation of, the CMIA and held that application 

of the litigation privilege would not render the CMIA significantly or wholly inoperable. 

(McNair, at p. 1168.)

4. Claims under the IFPA for insurance fraud are an exception

to the litigation privilege.

We conclude the litigation privilege does not bar Alzayat’s claim under the IFPA.

First, we have no difficulty concluding Insurance Code section 1871.7 is a more specific 

statute than the litigation privilege.13 The litigation privilege “is implicated in all judicial 

and quasi-judicial proceedings” (Komarova, supra, 175 Cal.App.4th at p. 339, italics 

added), but the IFPA is limited to a “small subset of those proceedings” (Komarova, at 

p. 339), viz, actions to recover civil penalties for fraud related to claims for insurance

benefits. (Ins. Code, § 1871.7, subd. (b).)

Nor do we have any doubt that application of the litigation privilege would thwart 

rather than promote the legislative purpose behind the IFPA. Whereas in McNair

 

13

 Defendants do not address whether the IFPA is a more specific statute than the 

general litigation privilege, and instead focus their argument on whether application of 

the privilege will render the IFPA “wholly inoperable.” We need not decide whether 

applying the litigation privilege would completely render the IFPA inoperable because 

we conclude, post, that the privilege would render it significantly inoperable. (Action 

Apartment, supra, 41 Cal.4th at p. 1246.)
36

application of the litigation privilege supported the public policy of encouraging 

unfettered disclosures of confidential medical information in the interest of public safety 

(McNair, supra, 5 Cal.App.5th at pp. 1167-1168), applying the privilege to fraudulent 

communications made in support of or in opposition to a claim for insurance benefits

would frustrate the remedial purpose of the IFPA. Civil statues enacted for the protection 

of the public are to be construed broadly in favor of their protective purpose. (Pineda v. 

Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 530; People ex rel. Lungren v. 

Superior Court (1996) 14 Cal.4th 294, 313.) The Legislature was “presumably aware of 

the extant broad litigation privilege in section 47” (Komarova, supra, 175 Cal.App.4th at 

p. 340) when it enacted the IFPA to provide civil liability for fraudulent communications 

related to claims for insurance benefits, including liability for communications that are 

otherwise at the core of the privilege. This strongly suggests the Legislature balanced the 

public interest in preventing insurance fraud with the interest in encouraging free and 

unfettered communications in litigation, and “struck that balance” in favor of preventing 

insurance fraud. (Begier, supra, 46 Cal.App.4th at p. 885.) Applying the privilege here 

would “encour[age] rather than suppress[]” (Banuelos, supra, 219 Cal.App.4th at p. 332) 

the type of fraud the IFPA was designed to combat and would upset the legislative

balance enshrined in the Act.

Last, we conclude application of the litigation privilege would render the IFPA 

significantly inoperable. In its ruling, the trial court cited two examples of automobile 

insurance fraud that would not necessarily involve contemplated litigation and, therefore, 

would not trigger the litigation privilege. We agree there may be various ways of violating 
37

Penal Code section 550, and incurring liability under the IFPA, that do not involve actual 

or contemplated litigation. But we need not conclude that the litigation privilege would 

render the IFPA wholly inoperable before finding an exception to the privilege. A 

significant amount of fraud governed by the IFPA will occur during or in contemplation of 

litigation. Relevant here, false statements made by an employer, witness, or physician, 

casting doubt on the validity of a legitimate claim for workers’ compensation benefits, are 

made in the context of a quasi-judicial proceeding and absent an exception would be 

subject to the litigation privilege. (Harris, supra, 60 Cal.App.4th at pp. 1187-1188.) It is 

not difficult to imagine other types of insurance fraud that would potentially trigger the 

protections of the litigation privilege. Applying the privilege to such acts of fraud, in a 

remedial action under the IFPA, “would effectively render the protections afforded by [the 

Act] meaningless.” (Persolve, supra, 218 Cal.App.4th at p. 1277.) Therefore, we conclude 

Alzayat’s claims under the IFPA are not barred by the litigation privilege, and the trial 

court erred by granting judgment for defendants based on the privilege.

C. The Workers’ Compensation Exclusivity Rule Does Not Apply to Alzayat’s 

Claims Under the IFPA.

In their cross-appeal, defendants argue the trial court should have granted 

judgment on the pleadings on the alternative theory that Alzayat’s IFPA lawsuit is barred 

by the workers’ compensation exclusivity rule. According to defendants, Thompson, 

supra, 136 Cal.App.4th 24, on which the trial court relied when rejecting defendant’s 

alterative theory, does not apply to an IFPA claim filed by an employee. We conclude 

the trial court correctly rejected defendant’s alternative argument.
38

The WCA “‘provides an employee’s exclusive remedy against his or her employer 

for injuries arising out of and in the course of employment.’ [Citation.] The exclusive 

remedy provision of the act provides, in part, that ‘“[w]here the conditions of 

compensation set forth in Section 3600 concur, the right to recover compensation is . . . 

the sole and exclusive remedy of the employee or his or her dependents against the 

employer” (Lab. Code, § 3602, subd. (a)), and that “[i]n all cases where the conditions of 

compensation set forth in Section 3600 do not concur, the liability of the employer shall 

be the same as if this division had not been enacted” (Lab. Code, § 3602, subd. (c)). The 

legal theory supporting this exclusive remedy provision “is a presumed ‘compensation 

bargain,’ pursuant to which the employer assumes liability for industrial personal injury or 

death without regard to fault in exchange for limitations on the amount of that liability. 

The employee is afforded relatively swift and certain payment of benefits to cure or 

relieve the effects of industrial injury without having to prove fault but, in exchange, gives 

up the wider range of damages potentially available in tort.” [Citations.]’” (Melendrez, 

supra, 240 Cal.App.4th at pp. 638-639.)

In Thompson, supra, 136 Cal.App.4th 24, a self-insured employer filed a relator 

action alleging various physicians participated in a scheme to file false claims for 

workers’ compensation benefits on behalf of the relator’s employees, in violation of the 

IFPA. (Thompson, at p. 27.) On appeal from a judgment finding them liable, the 

defendants argued the relator’s claims were barred by the workers’ compensation 

exclusivity rule. (Thompson, at pp. 27-28.) The defendants argued the relator’s claim 

was basically a complaint of overbilling, and that Labor Code section 3820 already 
39

provided civil penalties for fraudulent practices. (Thompson, at p. 29.) The court was not 

persuaded. “[I]n [Labor Code section 3820] the Legislature expressly acknowledged that 

other penalties may exist, and it stated that the penalty set forth in subdivision (d) may be 

imposed ‘in addition to any other penalties that may be prescribed by law.’ And in 

subdivision (a) of Labor Code section 3820 the Legislature expressly recognized ‘that the 

conduct prohibited by this section is, for the most part, already subject to criminal 

penalties pursuant to other provisions of law.’” (Thompson, at pp. 28-29, fn. omitted.)

With respect to the IFPA, the court noted the Act “was intended to encompass 

fraudulent claims for workers’ compensation benefits” and “specifically provides for civil 

penalties for claims for compensation under Labor Code section 3207, which is part of 

the WCA.” (Thompson, supra, 136 Cal.App.4th at p. 30.) “Lest there be any residual 

confusion over the authority to proceed,” the court noted, “Insurance Code section 

1871.7, subdivision (k), makes it clear that the remedies it provides are ‘in addition to any 

other remedies provided by existing law.’” (Ibid.) “The express inclusion of workers’

compensation claims thus demonstrates the Legislature’s intention to allow civil actions 

under Insurance Code section 1871.7 arising from fraudulent acts made unlawful by 

Penal Code section 550, notwithstanding applicability of the WCA.” (Id. at p. 31.)

Defendants contend Thompson is limited to the facts in that case, and the holding 

there has no application to an IFPA claim filed by an employee. We need not decide 

whether Thompson is so limited. The workers’ compensation exclusivity rule only limits 

liability “against an employer for any injury sustained by his or her employees arising out 

of and in the course of the employment . . . .” (Lab. Code, § 3600, subd. (a), italics
40

added.) Because this lawsuit is based on an injury allegedly suffered by the People of the 

State of California, and was not filed for the purpose of remedying an injury suffered by 

Alzayat, the exclusivity rule simply does not apply.

By definition, a qui tam lawsuit vindicates an injury to the government, not an 

injury to the relator. “A qui tam statute effectively assigns part of the government’s 

interest to a relator so that the relator has standing to assert an injury suffered by the 

government. [Citation.]” (Stalley ex rel. U.S. v. Catholic Health Initiatives (8th Cir. 

2007) 509 F.3d 517, 521, second italics added.) “‘A qui tam relator is essentially a selfappointed private attorney general, and his recovery is analogous to a lawyer’s contingent 

fee. The relator has no personal stake in the damages sought—all of which, by definition, 

were suffered by the government.’ [Citation.] A qui tam action ‘is a type of private 

attorney general lawsuit’ [citation], in which ‘the qui tam plaintiff stands in the shoes of 

the state or political subdivision’ [citation]. ‘[A]lthough qui tam actions allow individual 

citizens to initiate enforcement against wrongdoers who cause injury to the public at 

large, the Government remains the real party in interest in any such action.’ [Citation.]” 

(Strathmann, supra, 210 Cal.App.4th at pp. 500-501.)

As a true qui tam provision, Insurance Code section 1871.7 does not mandate that 

the relator has suffered his or her own injury. In addition to a lawsuit by the district 

attorney or insurance commissioner, “[a]ny interested persons” may bring a lawsuit “for 
41

the person[14]and for the State of California,” alleging insurance fraud. (Ins. Code, 

§ 1871.7, subd. (e)(1).) “The action shall be brought in the name of the state.” (Ibid.) The 

superior court has jurisdiction over a relator action as long as the allegations or transactions 

underlying the claim are not already the subject of a proceeding in which the People are a 

party (Ins. Code, § 1871.7, subd. (h)(1)) and, if the lawsuit is based on allegations or 

transactions that were previously disclosed in another proceeding or by the media, the 

interested person is an “original source” of the information (id., subd. (h)(2)(A), (h)(2)(B)). 

In his complaint, Alzayat did not allege that he was personally harmed by the 

misrepresentations made by Hebb and adopted by Sunline.15 Instead, he alleged he is an 

“interested person” and an “original source” acting on behalf of the People of the State of 

California, and he prays for civil penalties to be paid to the People.

Taken to its logical conclusion, defendants’ position would mean that whenever 

the district attorney or insurance commissioner takes over an IFPA lawsuit filed by an 

employee who alleges workers’ compensation insurance fraud, those officials would also 

be forced to pursue civil penalties before the Workers’ Compensation Appeals Board. In 

addition, defendants’ argument would mean that a third party whistleblower who files a 

 

14

 The fact that an IFPA qui tam lawsuit is brought on behalf of the relator and

the People does not change our analysis. The successful relator is entitled to a percentage 

of the penalties ultimately recovered on behalf of the People, as a bounty for bringing the 

action, so by definition the lawsuit is brought on his or her behalf as well. It does not 

follow that the lawsuit seeks to remedy a direct harm to the relator, such that the workers’

compensation exclusivity rule would require the relator to pursue penalties before the 

Workers’ Compensation Appeals Board.

15

 As noted, ante, in footnote 2, Alzayat concedes he was already fully 

compensated for his back injury.
42

qui tam lawsuit on behalf of the People, based on fraud in the grant or denial of workers’

compensation benefits, would similarly be required to pursue civil penalties before the 

board. We are not convinced that the Legislature intended the workers’ compensation 

exclusivity rule to work such mischief.

Because a qui tam relator does not sue based on his or her own injuries, we 

conclude an IFPA claim filed by an employee against an employer is not barred by the 

workers’ compensation exclusivity rule.

IV.

DISPOSITION

The judgment is reversed. Mahmoud Alzayat shall recover his costs on appeal.

CERTIFIED FOR PUBLICATION

McKINSTER

Acting P. J.

We concur:

CODRINGTON

J.

SLOUGH

J.