Opinion ID: 2516402
Heading Depth: 3
Heading Rank: 1

Heading: Abuse of process and fraud claims

Text: After reviewing the acts and motives that give rise to plaintiffs' abuse of process and fraud claims, we conclude these claims do not fit within the Unruh exception to workers' compensation exclusivity. Thus, they are barred. Plaintiffs' abuse of process and fraud claims, in essence, allege that each defendant engaged in a pattern or practice of delaying or denying payments in bad faith. For example, the abuse of process claims allege that defendants misused the claims process by making frivolous objections, filing sham petitions and documents with the WCAB, issuing unnecessary subpoenas, and improperly threatening to depose plaintiffs' physicians. Similarly, the fraud claim states that each individual defendant made false statements about and during its processing of plaintiffs' lien claims. All of these alleged acts are closely connected to a normal insurer activity the processing and payment of medical lien claims. Therefore, plaintiffs' abuse of process and fraud claims are encompassed within the compensation bargain. (See Marsh, supra, 49 Cal.3d at pp. 9-11, 259 Cal.Rptr. 733, 774 P.2d 762.) In reaching this conclusion, we reject plaintiffs' attempt to shield these claims from preemption by including superfluous allegations unrelated to the elements of the cause of action. For example, plaintiffs claim defendants committed abuse of process by advising other insurers not to pay plaintiffs' claims, distributing hit lists of medical providers and conducting training sessions on how to delay or avoid payments on plaintiffs' claims. These acts do not, however, support an abuse of process claim because they do not involve the use of a procedure incident to litigation. ( Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 104, fn. 4, 101 Cal.Rptr. 745, 496 P.2d 817 ( Barquis ).) Consequently, they cannot shield plaintiffs' abuse of process claims from the reach of the exclusive remedy provisions. Plaintiffs' characterization of defendants' acts of fraud as a scheme suffers from the same defect. Fraud does not require a scheme, and a scheme does not establish an element of a fraud claim. (See Civ. Code, § 1709.) Thus, the existence of a scheme cannot insulate plaintiffs' fraud claim from preemption. In any event, the mere allegation of a conspiracy is not enough where, as here, the alleged acts in furtherance of the conspiracyi.e., the fraudulent statementsare closely connected to claims processing, a normal insurer activity. (See Hazelwerdt v. Industrial Indent. Exchange (1958) 157 Cal. App.2d 759, 763, 321 P.2d 831 ( Hazelwerdt ).) The fact that the misdeeds alleged in the abuse of process and fraud claims may constitute crimes under Insurance Code sections 1871 and 1871.4 does not alter our conclusion. Unlike those classes of intentional . . . crimes against the employee's person by means of violence and coercion, such as those crimes numerated in part 1, title 8 of the Penal Code, regulatory crimes like the ones cited by plaintiffs do not violate the employee's reasonable expectations and transgress the limits of the compensation bargain. ( Fermino, supra, 7 Cal.4th at p. 723, fn. 7, 30 Cal. Rptr.2d 18, 872 P.2d 559; see also Up-Right, Inc. v. Van Erickson (1992) 5 Cal. App.4th 579, 582-584, 7 Cal.Rptr.2d 34 ( Up-Right ) [criminal violations of child labor laws do not support an exception to exclusivity].) Finally, neither abuse of process nor fraud contains a motive element that violates a fundamental public policy. Abuse of process claims merely require malice, which may be inferred from the wilful abuse of the process. ( Tranchina v. Arcinas (1947) 78 Cal.App.2d 522, 526, 178 P.2d 65.) This malice element does not violate a fundamental public policy. Meanwhile, fraud requires only an intent to induce another to alter his position to his injury or risk and not an intent that violates a public policy rooted in a constitutional, statutory, or regulatory provision. (Civ.Code, § 1709.) Because the acts and motives underlying plaintiffs' abuse of process and fraud claims fall within the risks contemplated by the compensation bargain, these claims are barred. (See Shoemaker, supra, 52 Cal.3d at p. 16, 276 Cal. Rptr. 303, 801 P.2d 1054.)