Filed 12/21/20

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

STATE OF CALIFORNIA ex rel. 

AETNA HEALTH OF CALIFORNIA, 

INC. et al.,

 Plaintiffs and Respondents,

v.

PAIN MANAGEMENT SPECIALIST 

MEDICAL GROUP et al.,

 Defendants and Appellants.

2d Crim. No. B299025

(Super. Ct. No. 17CV-0362)

(San Luis Obispo County)

The Legislature created the Insurance Fraud Protection 

Act (IFPA) to combat insurance fraud. Here, a private insurance 

company contracts with a surgical center to provide medical 

services for its insureds. The contract contains an arbitration 

clause to settle disputes. The insurance company brings a qui 

tam action to recover damages and fees occasioned by the 

surgical center’s fraudulent billing practices.
2

Here we decide the qui tam action is not subject to 

arbitration because it is brought on behalf of the state which is 

not a party to the contract between the insurance company and 

the surgical center.

Pain Management Specialist Medical Group, Cypress 

Ambulatory Surgery Center, and Doctors Boris Pilch, Jashvant 

Patel, and Marc Wolfsohn (collectively Pain Management) appeal 

the trial court’s order denying their petition to compel arbitration 

of a qui tam action filed by relators Aetna Health of California, 

Inc. and Aetna Health Management, LLC (collectively Aetna) on 

behalf of the State of California (State).

This appeal concerns Aetna’s claims of fraudulent 

insurance billing practices by Pain Management and its 

healthcare billing services in violation of the IFPA. (Ins. Code 

§ 1871 et seq.)1 Pain Management filed a motion to compel 

arbitration of Aetna’s qui tam claim as well as Aetna’s asserted 

individual claims. The trial court decided that the State is the 

real party in interest of the qui tam claim and cannot be 

compelled to arbitrate. Pain Management now appeals that 

ruling. We apply de novo review and affirm.

FACTUAL AND PROCEDURAL HISTORY2

On July 28, 2017, Aetna filed a complaint against Pain 

Management and other defendants, alleging a qui tam cause of 

action on behalf of the People of the State of California as well as 

individual claims of fraud, among other causes of action. The 

1 All statutory references are to the Insurance Code unless 

stated otherwise.

2 We grant Pain Management’s motion to augment the 

record on appeal regarding three documents that were designated 

as part of the record, but inadvertently omitted.
3

complaint alleges that Pain Management performed surgeries at 

its in-network-contracted ambulatory surgery centers but billed 

Aetna as though the surgeries had been performed at its out-ofnetwork-non-contracted surgery centers. As a result, Aetna paid 

Pain Management higher fees. 

The qui tam cause of action alleges that Pain Management 

violated IFPA, by creating an unlawful insurance fraud billing 

scheme in violation of Penal Code section 550. Aetna served 

copies of the sealed complaint on the California Department of 

Insurance and the San Luis Obispo County District Attorney. 

(§ 1871.7, subd. (e)(2).) Neither agency sought to intervene and, 

as a result, the trial court ordered the qui tam complaint 

unsealed. Aetna later dismissed the individual causes of action 

and proceeded to prosecute only the qui tam cause of action.

On April 2, 2019, Pain Management moved to compel 

arbitration of the qui tam cause of action. To support its motion, 

Pain Management relied upon arbitration clauses contained in its 

contracts with Aetna. Although the clauses differed slightly from 

contract to contract, generally they provided for mandatory 

binding arbitration administered by the American Arbitration 

Association and application of the Federal Arbitration Act, 9 

United States Code sections 1-16, to the exclusion of inconsistent 

state laws that would yield a different result. Aetna had drafted 

the arbitration clauses in the Pain Management contracts and 

required that the contracts be executed by its medical providers. 

Following written and oral argument by the parties, the 

trial court denied the motion to compel arbitration. In a reasoned 

and thoughtful written ruling, the court ruled that “the state, as 

owner of the IFPA claim, is not a party to the contracts 

containing the arbitration provisions.”
4

Pain Management appeals and contends that Aetna, not 

the State, is the real party in interest who suffered harm by the 

alleged fraudulent billing practices.

DISCUSSION

Pain Management asserts that Aetna should be bound by 

the arbitration provisions that it drafted and required medical 

providers to execute. Pain Management relies upon an 

unpublished federal case, Deck v. Miami Jacobs Bus. College Co.

(S.D. Ohio, Jan. 31, 2013, No. 3:12-cv-63) 2013 U.S. Dist. Lexis 

14845, holding that a federal False Claims Act claim may be 

subject to arbitration. 

Pain Management points out that the qui tam cause of 

action rests upon the same allegations as Aetna’s individual 

causes of action. It adds that Aetna dismissed the individual 

causes of action without prejudice after receiving the demand to 

arbitrate.

Standard of Review

The party seeking arbitration bears the burden of proving 

the existence of an arbitration agreement; the party opposing 

arbitration bears the burden of proving any defense to 

arbitration. (Pinnacle Museum Tower Assn. v. Pinnacle Market 

Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).) 

Where, as here, there is no evidentiary conflict between the 

parties, we review the trial court’s denial of arbitration de novo. 

(Ibid.) Moreover, the interpretation and application of a statute 

to undisputed facts is a question of law subject to de novo review. 

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

Cal.App.4th 534, 543-544 (Weitzman) [statutory interpretation of 

IFPA section 1871.7].)
5

IFPA Provisions

The Legislature enacted the IFPA to combat insurance 

fraud committed against insurers by individuals, organizations, 

and companies. (Weitzman, supra, 107 Cal.App.4th 534, 548-

549.) Insurers are the direct victims of the fraud; insureds are 

the indirect victims who pay higher premiums due to insurance 

fraud. (Id. at p. 562.) “It is in the government’s interest to have 

insurers investigate and prosecute [qui tam] proceedings. The 

government serves to gain both in terms of fraud prevention and 

financially from such actions, especially given limited 

investigative and prosecutorial resources available to it.” (Ibid.) 

Generally, a qui tam action is one brought pursuant to a 

statute allowing a private person to sue as a private attorney 

general to recover damages or penalties, all or part of which is 

paid to the government. (People ex rel. Strathmann v. Acacia 

Research Corp. (2012) 210 Cal.App.4th 487, 491-492 

(Strathmann); Weitzman, supra, 107 Cal.App.4th 534, 538.) 

Pursuant to the IFPA, a qui tam action is brought on behalf of 

the People of the State of California, and the People are the real 

party in interest. (§ 1871.7, subd. (e)(1); People ex rel. Alzayat v. 

Hebb (2017) 18 Cal.App.5th 801, 830 [“[A] qui tam lawsuit 

vindicates an injury to the government, not an injury to the 

relator”]; Strathmann, at p. 492.) 

Section 1871.7, subdivision (e)(1) of the IFPA expressly 

authorizes any interested person to bring a qui tam action to 

recover damages and penalties for fraudulent insurance claims 

both for the person and the State. (Strathmann, supra, 210 

Cal.App.4th 487, 500.) Section 1871.7, subdivision (e)(1) 

provides: “Any interested persons, including an insurer, may 

bring a civil action for a violation of this section for the person 
6

and for the State of California. The action shall be brought in the 

name of the state.” 

The person bringing the qui tam action, the relator, stands 

in the shoes of the People of the State of California, who are 

deemed to be the real party in interest. (Strathmann, supra, 210 

Cal.App.4th 487, 501.) The relator in a section 1871.7 qui tam 

action does not personally recover damages, but, if successful, 

receives a substantial percentage of the recovery as a bounty. 

(§ 1871.7, subd. (g); Strathmann, at p. 500.)

The procedural requirements of IFPA reflect that the State 

retains primacy of a qui tam action. The State can dismiss the 

action, intervene in the action, or permit the relator to continue. 

(§ 1871.7, subds. (e)(1), (f)(3).) IFPA also permits the State to 

oppose any settlement or bounty. (§ 1871.7, subd. (g)(2)(A).)

Here the State cannot be compelled to arbitrate this qui 

tam IFPA action because it is not a signatory to the contracts. 

(Pinnacle, supra, 55 Cal.4th 223, 240.) “[I]t is a cardinal 

principle that arbitration under the FAA ‘is a matter of consent, 

not coercion.’ ” (Ibid., citing Volt Info. Sciences v. Leland 

Stanford Jr. U. (1989) 489 U.S. 468, 478 [103 L.Ed.2d 488].) 

Thus, a party cannot be required to submit to arbitration a 

dispute that he has not agreed to submit. (Ibid.)

In California, general principles of contract law determine 

whether the parties have a binding agreement to arbitrate. 

(Pinnacle, supra, 55 Cal.4th 223, 236.) “In determining the rights 

of parties to enforce an arbitration agreement within the FAA’s 

scope, courts apply state contract law while giving due regard to 

the federal policy favoring arbitration.” (Ibid.) 

In the related context of the California Private Attorney 

General Act, Iskanian v. CLS Transportation Los Angeles, LLC
7

(2014) 59 Cal.4th 348, 386-387, concluded that a private attorney 

general claim is not a dispute between an employee and an 

employer, but is a dispute between the employer and the State. 

A private attorney general claim is a type of qui tam action. (Id.,

at p. 382.) The government entity on whose behalf the plaintiff 

files suit is always the real party in interest in the suit. (Ibid.; 

Tanguilig v. Bloomingdale’s, Inc. (2016) 5 Cal.App.5th 665, 671.) 

Thus, the State is the owner of the qui tam action, the real party 

in interest, and cannot be compelled to arbitrate without its 

consent. (Correia v. NB Baker Electric, Inc. (2019) 32 

Cal.App.5th 602, 622.)

The reasoning of Deck v. Miami Jacobs Bus. College Co.,

supra, 2013 U.S. Dist. Lexis 14845, is not persuasive. Deck

concerned the federal False Claims Act, a different statutory 

scheme from the IFPA in its purpose, scope of liability, victims, 

and recoveries. (Weitzman, supra, 107 Cal.App.4th 534, 561 [the 

only direct victim of the federal False Claims Act is the 

government].) “The purpose of section 1871.7, on the other hand, 

is to prevent and remedy . . . insurance fraud. Insurers, not the 

state government, are the direct victims of the fraud. Insureds 

are the indirect victims who pay higher premiums due to the 

prevalence of insurance fraud. . . . The government does not 

necessarily recover funds lost to it because of a fraud perpetrated 

on it.” (Id. at p. 562.)
8

The order denying the motion to compel arbitration is 

affirmed. Costs are awarded to respondents.

CERTIFIED FOR PUBLICATION.

GILBERT, P. J.

We concur:

PERREN, J.

TANGEMAN, J.
9

Ginger E. Garrett, Judge

Superior Court County of San Luis Obispo

______________________________

Buchalter, Andrew H. Selesnick, Robert M. Dato and 

Christopher L. Dacus for Defendants and Appellants.

Kennaday Leavitt, Curtis S. Leavitt and Lance M. Martin 

for Plaintiffs and Respondents.