Court Opinion

ID: 9556072
Source: CourtListenerOpinion
Date Created: 2023-08-15 23:03:31.492157+00
Date Added: 2024-06-11T16:41:22.226974
License: Public Domain

Filed 8/15/23
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION THREE

 THE PEOPLE ex rel. ALLSTATE              B315264
 INSURANCE COMPANY et al.,
                                          (Los Angeles County
         Plaintiffs and Appellants,       Super. Ct. Nos. 20STCV45151
                                          & 20STCV42672)
         v.

 DISCOVERY RADIOLOGY
 PHYSICIANS, P.C., et al.,

         Defendants and Respondents.

 THE PEOPLE ex rel. ALLSTATE
 INSURANCE COMPANY et al.,

         Plaintiffs and Appellants,

         v.

 ONESOURCE MEDICAL
 DIAGNOSTICS, LLC, et al.,

         Defendants and Respondents.
      APPEALS from judgments of the Superior Court of
Los Angeles County, William F. Fahey, Judge. Reversed with
directions.
      Knox Ricksen, Thomas E. Fraysse, and Maisie C. Sokolove
for Plaintiffs and Appellants.
      Katten Muchin Rosenman, Ryan M. Fawaz, and
Christopher B. Maciel for The Coalition Against Insurance Fraud
as Amicus Curiae on behalf of Plaintiffs and Appellants.
      Hanson Bridgett, Katherine A. Bowles, and Adam Hoffman
for Defendant and Respondent Discovery Radiology Physicians,
P.C.
      Proskauer Rose, Vinay Kohli, and Mark D. Harris, for
Defendants and Respondents Sattar Mir, 1st Source Capital,
LLC, and OneSource Medical Diagnostics, LLC.
      Law Offices of Vatche Chorbajian and Vatche Chorbajian
for Defendants and Respondents Expert MRI, P.C., Sana Khan,
M.D., and Adil Mazhar, M.D.

                 ‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗

       Allstate Insurance Company and several of its affiliates
(collectively, Allstate) brought qui tam actions on behalf of the
State of California alleging insurance fraud under the California
Insurance Frauds Prevention Act (IFPA) (Ins. Code, § 1871
et seq.) and the Unfair Competition Law (UCL) (Bus. & Prof.
Code, § 17000 et seq.)1 against three medical corporations, a
medical management company and its parent company,
four physicians, and Sattar Mir, an individual. The operative

1    Subsequent undesignated statutory references are to the
Business and Professions Code.

                                2
complaints allege that while the medical corporations hold
themselves out as providers of radiology services, they in fact act
as radiology “brokers,” sending patients to radiology facilities and
radiologists with which the purported medical corporations have
contracted. The complaints further allege that although the
medical corporations appear to be owned and controlled by
licensed physicians, as state law requires, they are in fact
controlled by Mir, who is not a physician, and/or by his medical
management company. Finally, the complaints allege that these
facts were not disclosed on bills submitted to Allstate under
contracts of insurance, and Allstate would not have paid the
claims submitted by the medical corporations had it known the
true facts.
       The trial court found the complaints failed to state causes
of action under the IFPA and the UCL because they were not
pled with requisite specificity, the business models alleged were
lawful, and one of the actions was time-barred. We conclude that
the operative complaints adequately plead causes of action under
both statutes, and thus we will reverse the orders sustaining the
demurrers and judgments of dismissal.2
      FACTUAL AND PROCEDURAL BACKGROUND
I.    Allstate’s fraud actions; the initial demurrers.
       Allstate Insurance Company is an insurance company
licensed to issue automobile insurance policies in California. In
2020, Allstate filed two qui tam actions alleging insurance fraud
in violation of the IFPA and the UCL. The first action (the

2    The Coalition Against Insurance Fraud submitted an
amicus brief in support of Allstate, to which defendants have filed
responses.

                                 3
Discovery action) was filed against Discovery Radiology
Physicians, P.C. (Discovery Radiology), a professional medical
corporation; Mir; and radiologists Drs. Safvi and Feske. The
second action (the OneSource action) was filed against Mir;
OneSource Medical Diagnostics, LLC (OneSource), a medical
management company owned by Mir; 1st Source Capital, LLC
(1st Source), OneSource’s parent company; Safvi Medical
Corporation (Safvi Medical) and Expert MRI, P.C. (Expert MRI),
professional medical corporations; and radiologists Drs. Safvi,
Mazhar, and Khan.3 In brief, the complaints alleged that the
three medical corporations—Discovery Radiology, Expert MRI,
and Safvi Medical—were formed and controlled by Mir, who is
not a physician, to broker radiology services. The medical
corporations solicited patients, referred the patients to MRI
facilities and radiologists with whom Mir had contracted, and
then billed Allstate for the MRIs. The bills represented that the
MRIs had been performed by the defendant medical corporations,
but the MRIs actually were performed at MRI facilities whose
identities were not disclosed, and were read by radiologists under
contract with the medical corporations. The resulting bills falsely
identified the technical and professional services as having been
provided by one of the three defendant medical corporations and
grossly inflated the fees for the services provided. Allstate
alleged it would not have paid the claims for services purportedly
rendered by the three professional corporations had it known of
the false statements and fraudulent markups.
       Defendants demurred to Allstate’s initial complaint in the
Discovery action, and Allstate then filed a first amended

3    All defendants except Dr. Safvi, Dr. Feske, and Safvi
Medical are respondents in this appeal.

                                4
complaint, to which defendants again demurred. Separately,
defendants demurred to the complaint in the OneSource action.
       The trial court sustained the demurrer in the OneSource
action, finding that the complaint did not plead fraud with
sufficient specificity. The court granted Allstate “one
opportunity” to amend its complaint, ordering that as to all
named defendants, the amended complaint “shall allege specific
facts as to how each of the 2,300 billing statements was
fraudulent. These allegations shall be backed up by an attached
spreadsheet exhibit which contains seven columns listing: (1) the
dates, in chronological order, of each alleged false bill; (2) the
corresponding billing or claim number; (3) the person or entity
who prepared the bill; (4) the name of the MRI facility involved;
(5) the total charge on each bill; (6) the person or entity
transmitting the billing statement to Allstate; and (7) the alleged
false statement made on that bill.”
       On May 17, 2021, the court ordered the Discovery action
and the OneSource action related and sustained the demurrer to
the first amended complaint in the Discovery action for the same
reasons set forth in its order sustaining the demurrer in the
OneSource action.
II.   The amended complaints.
      A.    The Discovery action.
      Allstate filed a second amended complaint in the Discovery
action on June 1, 2021. It alleged as follows:
      In about May 2015, Mir created Discovery Radiology as a
professional medical corporation. Fictitious name permits filed
with the Medical Board of California described Dr. Feske, and
later Dr. Safvi, as the president and sole shareholder of Discovery

                                 5
Radiology. In fact, however, Discovery Radiology was owned,
operated, and controlled by Mir, who is not a doctor and has no
medical training. Further, although documents filed with the
California Secretary of State and the Medical Board of California
represented that Discovery Radiology was a diagnostic radiology
practice, Discovery Radiology did not administer or interpret
MRIs. Instead, Mir, through Discovery Radiology, solicited and
accepted referrals of individuals with personal injury claims,
entered into contracts with diagnostic radiology facilities to
administer the MRIs and with radiologists to interpret the MRI
images, referred patients to contract facilities and radiologists in
exchange for kickbacks or a fee-split, and then prepared false,
fraudulent or misleading bills that significantly marked up the
costs of medical services for submission to insurers, including
Allstate. Had Allstate known of these facts, it would not have
paid the claims.
       Allstate alleged that these referral and billing practices
gave rise to causes of action for violations of the IFPA because
Mir steered patients to diagnostic radiology facilities and
radiologists, and presented or caused to be presented insurance
claims containing false or fraudulent statements, including that
radiology services had been provided by Discovery Radiology, in
violation of Insurance Code section 1871.7, subdivisions (a) and
(b) of the IFPA. Allstate further alleged that these actions
constituted unlawful, unfair, or fraudulent business acts or
practices within the meaning of the UCL.
       Attached to the complaint was a spreadsheet identifying
238 allegedly false claims submitted to Allstate by Discovery
Radiology. For each claim, the spreadsheet identified the

                                 6
treatment date, claim number, provider name, billed amount,
and name of the attorney who submitted the claim.
      B.    The OneSource action.
       Allstate filed a first amended complaint in the OneSource
action on May 14, 2021. It alleged as follows:
       Mir is not a doctor and has no medical training. In about
January 2017, Mir formed OneSource (initially called Injury MRI
Network, LLC), which was owned, operated, and controlled solely
by Mir through 1st Source, another LLC he owns, operates, and
controls. OneSource holds itself out as providing management
services for medical practices, but in fact OneSource enters into
written contracts with diagnostic radiology facilities and
radiologists to refer patients for radiology services. These
contracts give Mir complete control over the selection of
diagnostic radiology facilities to which patients are sent, the
selection of physicians to read and interpret MRIs, the
preparation of billing statements, including determining the
amount billed for the services rendered and the billing codes
used, and the distribution of profits. By selecting radiology sites
and radiologists, and controlling billing and collection, Mir and
his management company engage in the unlawful practice of
medicine.
       Additionally, Mir incorporated two purported professional
medical corporations, Expert MRI and Safvi Medical. On paper,
it appears that Drs. Mazhar and Khan own, operate and control
Expert MRI, which holds itself out to the public as a diagnostic
radiology practice that performs and interprets MRIs at
18 locations in Southern California. Likewise, it appears that
Dr. Safvi owns, operates, and controls Safvi Medical, which holds
itself out as performing MRI interpretation and analysis from an

                                 7
office in Bellflower, California. In reality, however, Mir, through
OneSource and 1st Source, “controls all aspects of” Expert MRI
and Safvi Medical.
       “The scheme . . . is relatively simple. . . . [Mir] market[s]
the comprehensive diagnostic radiology services purportedly
provided by OneSource, Expert, or [Safvi Medical] primarily to
workers’ compensation and automobile-accident personal injury
attorneys, including those whose clients have claims for personal
injury against [Allstate policies]. After receiving patient referrals
as a result of the marketing, Mir steers the patients to one of
approximately 18 diagnostic imaging facilities located across
Southern California that OneSource, [Safvi Medical], or Expert
holds out as [their] own but which, in reality, are independent
diagnostic radiology facilities with which Mir, through
OneSource, contracts to perform the technical component of
MRI[s] for roughly $150 per scan. For example, the address for
‘Expert Beverly Hills’ is actually the location of a business known
as ‘Dynamic Upright MRI,’ and ‘Expert MRI Bakersfield’ is
actually a business known as ‘Bakersfield Upright MRI.’ One
facility located in Bellflower, California, which Expert holds out
as its own, is actually owned by Mir, via OneSource, with Mir
contracting with Expert to allow the use of the facility on a non-
exclusive basis. After the MRI is performed by the diagnostic
radiology facility, Mir uses his contracted radiologists, including
Safvi and Mazhar, to interpret the images and prepare reports of
their findings on Expert and [Safvi Medical] letterhead, for
roughly $25 per region of the body scanned.”
       “With zero oversight, control or review by the contracted
providers, Mir, through OneSource, prepares and provides to the
attorneys who referred patients to him false, fraudulent, or

                                 8
misleading billing statements containing grossly inflated ‘global’
[fn. omitted] fees for the MRI services on OneSource, Expert or
[Safvi Medical] letterhead, with the intent that they be used in
support of bodily injury and other claims. In addition to making
it appear as though the company on whose letterhead the bill
and/or report are documented rendered the service, Mir
knowingly conceals the true costs of the services rendered and
charges roughly ten times the amounts actually incurred by Mir
as the broker of the services, usually pricing a single study at
approximately $1,750. Mir’s $1,500+ mark-up of the charges is
not intended by Mir or the co-conspirator Defendant physicians to
cover the cost of so-called ‘administrative’ or ‘management’
services, if any, provided by OneSource to Expert and/or [Safvi
Medical]. To the contrary, the mark-up serves two purposes: to
ensure Mir makes an enormous profit for doing nothing more
than acting as ‘middleman’, brokering MRIs and referring
patients to providers, and to fraudulently increase the value of
the claim for personal injury made on behalf of claimants by the
referring attorneys . . . .”
       As in the Discovery action, Allstate attached to the
complaint in the OneSource action a spreadsheet that identified
2,300 allegedly false claims presented to Allstate by treatment
date, claim number, provider name, name of MRI facility, amount
billed, and the name of the attorney who submitted the claim.
III.   The demurrers to the amended complaints.
       Defendants demurred to the amended complaints.
Collectively, they asserted that (1) the amended complaints
lacked the specificity required to plead fraud claims,
(2) allegations that defendants are engaged in the unlawful
practice of medicine cannot form the basis for IFPA or UCL

                                9
claims, and (3) the claims in the Discovery action were time-
barred.
       Allstate opposed the demurrers. It asserted that the MRI
brokering scheme alleged in the amended complaints resulted in
false claims actionable under the IFPA and the UCL, the causes
of action were pled with sufficient particularity, and the
Discovery action was not time-barred.
       The trial court sustained the demurrers without leave to
amend. It found, first, that Allstate did not comply with the
court’s prior order because it did not identify the dates of each
allegedly false bill, the persons or entities who prepared the bills,
the persons or entities who transmitted the bills to Allstate, or
which defendants made each alleged false statement. Second,
the court found the complaints “woefully lacking in the required
specificity”: “While the body of the FAC makes a number of
inflammatory and conclusory assertions, largely based on
‘information and belief,’ the gravamen is that ‘defendants’
presented . . . inflated claims which Allstate paid. But when
specifically ordered to provide the details of these false claims,
Allstate had not done so.” Third, the court said, it was
insufficient for Allstate to “invoke the mantra of ‘structural
fraud.’ Importantly, Allstate makes no claim here that: (1) MRIs
were not administered; (2) MRIs were not medically necessary; or
(3) qualified radiologists did not read the MRIs. . . . [¶] . . .
[Instead, Allstate argues] that this case involves the unlawful
corporate practice of medicine and that ‘Mir engaged in the
unlawful practice of medicine.’ But what the oppositions focus
on, and the [complaints] allege, is that Mir handled the non-
medical elements for the radiology [practices], e.g., he picked the
sites and the MRI machines, selected the radiologists and

                                 10
handled the finances, including billing and collection. This
structure is not unlawful.” Fourth, the court said the Discovery
action was untimely. Finally, the court concluded that leave to
amend was not warranted.
      The trial court entered judgments of dismissal in the
Discovery and OneSource actions on August 16, 2021. Allstate
timely appealed.
                         DISCUSSION
       This appeal presents four basic issues: (1) Are the business
models alleged in the amended complaints unlawful? (2) If the
alleged business models are unlawful, do they give rise to causes
of action under the IFPA and the UCL? (3) Do the amended
complaints plead fraud with sufficient particularity? (4) Does the
Discovery action adequately allege delayed discovery to survive
demurrer on statute of limitations grounds?
       As we discuss more fully below, the answer to each of these
questions is “yes.” First, the operative complaints allege the
unlicensed practice of medicine in violation of the Medical
Practice Act (§ 2000 et seq.) and related statutes. Second, claims
submitted to an insurer for medical services rendered in violation
of the Medical Practice Act may give rise to causes of action
under the IFPA and the UCL. Third, Allstate’s claims are pled
with adequate specificity. Finally, as alleged, the claims asserted
in the Discovery action are not time-barred as a matter of law.
I.    Standard of review.
      “ ‘On appeal from an order of dismissal after an order
sustaining a demurrer, the standard of review is de novo: we
exercise our independent judgment about whether the complaint
states a cause of action as a matter of law. [Citation.] First, we

                                11
give the complaint a reasonable interpretation, reading it as a
whole and its parts in their context. Next, we treat the demurrer
as admitting all material facts properly pleaded. Then we
determine whether the complaint states facts sufficient to
constitute a cause of action. [Citations.] [¶] We do not, however,
assume the truth of contentions, deductions, or conclusions of
law. [Citation.]’ (Stearn v. County of San Bernardino (2009)
170 Cal.App.4th 434, 439–440.)
        “When a demurrer is sustained without leave to amend,
‘ “ ‘we decide whether there is a reasonable possibility that the
defect can be cured by amendment: if it can be, the trial court has
abused its discretion and we reverse; if not, there has been no
abuse of discretion and we affirm. [Citations.] The burden of
proving such reasonable possibility is squarely on the plaintiff.’
[Citation.]” ’ (State of California ex rel. Bowen v. Bank of America
Corp. (2005) 126 Cal.App.4th 225, 239.)” (State of California ex
rel. McCann v. Bank of America, N.A. (2011) 191 Cal.App.4th
897, 906 (McCann).)
II.   The operative complaints allege the unlicensed
      practice of medicine in violation of the Medical
      Practice Act.
      Defendants asserted below, and the trial court concluded,
that the business practices alleged in the complaints were lawful
because Mir and OneSource allegedly provided only managerial
and/or administrative services, not medical care, and thus did not
engage in the unlicensed practice of medicine. For the reasons
that follow, we disagree.

                                12
      A.    The Medical Practice Act and the unlicensed-
            practice-of-medicine doctrine.
      The Medical Practice Act (sometimes referred to as the Act)
and related provisions regulate the practice of medicine in
California. Among other things, the Medical Practice Act
prohibits unlicensed persons from practicing, advertising, or
holding themselves out as practicing “any system or mode of
treating the sick or afflicted” or “diagnos[ing], treat[ing],
operat[ing] for, or prescrib[ing] for any ailment, blemish,
deformity, disease, disfigurement, disorder, injury, or other
physical or mental condition of any person.” (§ 2052, subd. (a).)
The Act also prohibits physicians from employing, aiding, or
abetting any unlicensed person “to engage in the practice of
medicine or any other mode of treating the sick or afflicted which
requires a license to practice.” (§ 2264; see also § 125 [physician
who allows his or her license to be used by a non-physician, or
who acts as the agent or partner of a non-physician with the
intent to aid or assist the non-physician in the unlicensed
practice of medicine, is guilty of a misdemeanor and subject to
discipline].)4
            1.    Prohibition on lay ownership of medical
                  corporations and partnerships.
       Historically, the Medical Practice Act prohibited physicians
from practicing through for-profit corporations or artificial legal
entities of any kind. (See Lathrop v. HealthCare Partners
Medical Group (2004) 114 Cal.App.4th 1412, 1420.) More

4     Contrary to the assertions of Drs. Khan and Mazhar, a duly
licensed physician may, under these sections, be liable for aiding
and abetting the unlicensed practice of medicine.

                                13
recently, the Act has been amended to permit physicians to
conduct their medical practices through medical corporations or
partnerships so long as all the entities’ shareholders or partners,
as well as all employees rendering professional services, are
themselves licensed. (Id. at pp. 1420–1421, citing §§ 2402, 2406,
2415, 2416; Corp. Code, §§ 13401, 13405.) However, the Act
continues to prohibit what is sometimes referred to as the
corporate practice of medicine (see, e.g., Markow v. Rosner (2016)
3 Cal.App.5th 1027, 1033)—that is, it “generally precludes for-
profit corporations—other than licensed medical corporations—
from providing medical care through either salaried employees or
independent contractors.” (People v. Cole (2006) 38 Cal.4th 964,
970–971, italics added; see also Steinsmith v. Medical Board
(2000) 85 Cal.App.4th 458, 460 (Steinsmith) [“[m]edicine may be
practiced in a partnership or group of physicians (§ 2416), but
‘[c]orporations and other artificial legal entities . . . have no
professional rights, privileges, or powers’ (§ 2400), and a
‘fictitious-name’ permit to operate a facility called a ‘ “medical
clinic” ’ can be issued only if the clinic is wholly owned by licensed
physicians (§ 2415, subd. (b))”].)
        Applying this principle, the Court of Appeal found a
violation of the Medical Practice Act in Steinsmith, supra,
85 Cal.App.4th 458. There, the plaintiff was a licensed physician
who performed disability evaluations as an independent
contractor of a clinic owned in part by non-physicians. (Id. at
p. 460.) The physician was cited by the Medical Board of
California for aiding in the unlicensed practice of medicine, a
finding that the Court of Appeal upheld. (Id. at pp. 460–464.) In
so finding, the court rejected the physician’s contention that the
non-physician owners did not practice medicine because they

                                 14
merely owned the clinic and administered its business affairs.
The court explained: “A similar argument was rejected long ago
in Painless Parker v. Board of Dental Exam. (1932) 216 Cal. 285.
In that case, a licensed dentist was found to have aided and
abetted the unlicensed practice of dentistry by a corporation he
formed to own and operate dental offices. (Id. at pp. 289, 298.)
The dentist argued, as Steinsmith does here, that the licensing
requirements for the provision of professional services did not
apply to ‘the purely business side of the practice.’ (Id. at p. 295.)
Our Supreme Court rejected that argument . . . . [¶] . . . The
unlicensed practitioner in Painless Parker was a corporation, but
it has long been ‘well settled’ that ‘any other unlicensed person or
entity’ is subject to the same sanctions for unlawful practice as an
unlicensed corporation. [Citation.] Accordingly, the Painless
Parker case disposes of Steinsmith’s argument that there was no
unlicensed practice he could have aided.” (Id. at pp. 465–466.)
       The Attorney General similarly opined in a 1982 opinion
addressing whether an entity not licensed as a medical
corporation could lawfully engage physicians to treat
employment-related injuries sustained by employees of another
corporate entity. (65 Ops.Cal.Atty.Gen. 223 (1982).) The
Attorney General noted that, as general rule, a corporation “may
neither engage in the practice of medicine directly, nor may it do
so indirectly by ‘engaging [physicians] to perform professional
services for those with whom the corporation contracts to furnish
such services.’ ” (Id. at p. 224.) This is so, the Attorney General
explained, because “it has been said ‘to be against public policy to
permit a ‘middleman’ to intervene for profit in establishing the
professional relationship between members of said profession and
members of the public.’ [Citation.] . . . [T]he reasons underlying

                                 15
the proscription are two: first, that the presence of a corporate
entity is incongruous in the workings of a professional regulatory
licensing scheme which is based on personal qualification,
responsibility and sanction, and second, that the interposition of
a lay commercial entity between the professional and his/her
patients would give rise to divided loyalties on the part of the
professional and would destroy the professional relationship into
which it was cast.” (Ibid.) The Attorney General therefore
concluded that the proposed arrangement was unlawful because
the non-medical corporation at issue “is a lay commercial
enterprise that is organized for profit which it expects to derive
from creating and administering the professional relationship
between physicians whom it engages and their patients who are
employees of entities with whom it contracts to furnish medical
services. It actively solicits corporations to permit it to become
the ‘middleman’ in establishing that professional relationship
and to thereafter ‘administer’ it (e.g., billings, etc.). The activity
thus described, albeit a variation on the theme, clearly is of the
type that has consistently been assailed as constituting the
corporate practice of medicine.” (Id. at pp. 228–229.)
            2.     Prohibition on non-physicians exercising
                   undue control or discretion over a
                   medical practice.
       Although non-physicians may not own corporations that
engage in the practice of medicine, they may manage some non-
medical/business aspects of a physician’s practice without
violating the Medical Practice Act. (Epic Medical Management,
LLC v. Paquette (2015) 244 Cal.App.4th 504, 517–518 (Epic).)
Cases have noted, however, that “[i]n a professional corporation,
it is not always possible to divide the ‘business’ side of the

                                  16
corporation from the part which renders professional services”
(Marik v. Superior Court (1987) 191 Cal.App.3d 1136, 1140), and
a violation of the Act occurs if a non-physician exercises “control
or discretion” over a medical practice (Epic, at p. 517; People v.
Superior Court (Cardillo) (2013) 218 Cal.App.4th 492, 498
(Cardillo)).
       The Court of Appeal considered the extent to which a non-
physician may lawfully be involved in the running of a medical
practice in Epic, supra, 244 Cal.App.4th 504. There, a
management company contracted with a physician to lease him
office space and medical equipment, provide non-physician
personnel, and manage the physician’s marketing, billing,
collections, and accounting. In exchange, the physician agreed to
pay the management company 50 percent of his professional
revenues and 25 percent of his surgical revenues. (Id. at p. 508.)
After the physician terminated the management contract, the
management company sued to recover unpaid management fees.
The management company prevailed before an arbitrator, and
the trial court affirmed the award. (Id. at pp. 509–511.)
       On appeal, the physician urged that the management
contract was illegal because the management company engaged
in the unlicensed practice of medicine. (Epic, supra,
244 Cal.App.4th at pp. 511, 517–518.) The Court of Appeal
disagreed and affirmed. It explained: “Determining whether the
contractual relationship between a physician and a non-licensee
results in the non-licensee’s unlicensed practice of medicine
requires a legal interpretation of the substantive provisions of the
agreement. (55 Ops.Cal.Atty.Gen. 103 (1972).) The issue turns
on whether the non-licensee exercises or has retained the right to
exercise control or discretion over the physician’s practice.

                                17
[Citations.] Our review of the terms of the Management Services
Agreement shows a strict delineation between the medical
elements of the practice which the doctor controls, and the non-
medical elements which the doctor has retained the management
company to handle. The management company is not the doctor’s
employer nor his partner, and exercises no control over the
doctor’s practice.” (Id. at pp. 517–518, italics added.)5
Accordingly, the court said, there was no violation of the
prohibition against the unlicensed practice of medicine. (Id. at
p. 517.)
      The court considered a similar issue in Cardillo, supra,
218 Cal.App.4th 492. There, two non-physician owners of a
corporation that operated Kush Dr., a medical marijuana clinic,
were charged with practicing medicine without a license. (Id. at
p. 494.) They moved to dismiss the charges, urging that they had
not engaged in the unlicensed practice of medicine because they
did not treat patients, but instead provided only management
services for the physicians who operated out of the clinic and
wrote medical marijuana prescriptions. (Id. at pp. 495–496.)
      The trial court dismissed the charges, but the Court of
Appeal reinstated them, explaining that the evidence presented
at the preliminary hearing indicated that the clinic’s owners

5     Mir’s respondents’ brief asserts that under Epic,
arrangements between a physician and management company
are lawful as long as laypersons do not “ ‘exercise control or
discretion over . . . the medical elements of the practice.’ ” In fact,
as quoted above, Epic holds that whether a non-physician has
engaged in the unlicensed practice of medicine turns on “whether
the non-licensee exercises or has retained the right to exercise
control or discretion over the physician’s practice.” (Epic, supra,
244 Cal.App.4th at p. 517, italics added.)

                                  18
“controlled the operations of the clinics by employing licensed
physicians to issue recommendations for medical marijuana,
setting the physicians’ hours, soliciting and scheduling patients,
collecting fees from the patients, and paying the physicians a
percentage of those fees. In short, defendants set up a system or
mode for treating the sick or afflicted in violation of section 2052.
The fact that neither [non-physician] actually examined any
patients or prescribed medical marijuana to them does not
absolve them of criminal liability for practicing medicine without
a license.” (Id. at p. 498.)
       Synthesizing relevant legal authority, the California
Medical Board6 provides the following guidance for practitioners
regarding the delegation of practice management to non-
physicians: “[T]he following ‘business’ or ‘management’ decisions
and activities, resulting in control over the physician’s practice of
medicine, should be made by a licensed California physician and
not by an unlicensed person or entity: . . .
       “●    Selection, hiring/firing (as it relates to clinical
competency or proficiency) of physicians, allied health staff and
medical assistants;
       “●    Setting the parameters under which the physician
will enter into contractual relationships with third-party payers;
       “●    Decisions regarding coding and billing procedures for
patient care services; and
       “●    Approving of the selection of medical equipment and
medical supplies for the medical practice.”
(<https://www.mbc.ca.gov/Licensing/Physicians-and-Surgeons/

6     The California Medical Board has a variety of
responsibilities, including the enforcement of the disciplinary and
criminal provisions of the Medical Practice Act. (§ 2004.)

                                 19
Practice-Information/> [as of Aug. 15, 2023], archived at
<https://perma.cc/G9CT-BXT9>.)
       According to the Medical Board, the above decisions and
activities “cannot be delegated to an unlicensed person, including
(for example) management service organizations. While a
physician may consult with unlicensed persons in making the
‘business’ or ‘management’ decisions described above, the
physician must retain the ultimate responsibility for, or approval
of, those decisions.”
(<https://www.mbc.ca.gov/Licensing/Physicians-and-Surgeons/
Practice-Information/> [as of Aug. 15, 2023].)
       The Medical Board further states that a non-physician may
not “own[] or operat[e] a business that offers patient evaluation,
diagnosis, care and/or treatment,” and a management service
organization may not “arrang[e] for, advertis[e], or provid[e]
medical services rather than only provid[e] administrative staff
and services for a physician’s medical practice (non-physician
exercising controls over a physician’s medical practice, even
where physicians own and operate the business).” It explains:
“In the examples above, non-physicians would be engaged in the
unlicensed practice of medicine, and the physician may be aiding
and abetting the unlicensed practice of medicine.”
(<https://www.mbc.ca.gov/Licensing/Physicians-and-
Surgeons/Practice-Information/> [as of Aug. 15, 2023].)
            3.    Radiology referrals as the unlicensed
                  practice of medicine.
      We are not aware of any appellate decisions that have
discussed the unlicensed practice of medicine in the specific
context of referrals for radiology services. However, the Attorney
General has twice opined that selecting a radiology provider

                                20
involves the practice of medicine.7 In an opinion issued in 2000,
the Attorney General stated that a management services
organization may not, for a fee, select, schedule, secure, and pay
for radiology diagnostic services ordered by a physician because
that would constitute the unlicensed practice of medicine. The
opinion explained: “[T]he selection of a radiology site with
appropriate equipment and operational personnel best suited for
the performance of a diagnostic radiology study of a patient’s
particular physical disorder, as well as the selection of a qualified
radiologist to view and interpret the films, would involve the
exercise of professional judgment and evaluation as part of the
practice of medicine.” (83 Ops.Cal.Atty.Gen. 170 (2000).)8
       Subsequently, in a 2009 opinion the Attorney General
“reiterate[d] [its] view that professional radiology services—

7      “ ‘Opinions of the Attorney General, while not binding, are
entitled to great weight. [Citations.] In the absence of
controlling authority, these opinions are persuasive “since the
Legislature is presumed to be cognizant of that construction of
the statute,” ’ ” and we presume the interpretation “ ‘has come to
the attention of the Legislature, and if it were contrary to the
legislative intent that some corrective measure would have been
adopted . . . .’ ” (California Assn. of Psychology Providers v. Rank
(1990) 51 Cal.3d 1, 17 (Rank); Almond Alliance of California v.
Fish & Game Com. (2022) 79 Cal.App.5th 337 [quoting Rank].)

8     Discovery Radiology asserts that this opinion “may be
relevant to Allstate’s claims against OneSource, but it has no
relevance to Discovery’s operations.” We do not agree. Both
cases allege radiology referrals by a non-physician: by Mir in the
Discovery action, and by OneSource in the OneSource action.
The fact that the Discovery Radiology action does not allege the
existence of a management company is not relevant to the
analysis.

                                 21
specifically including the selection of a suitable radiologist, and
the selection of a suitable radiology facility with appropriate
equipment and personnel, as well as preparing and interpreting
radiological images—involve the exercise of professional
judgment as part of the practice of medicine.”
(92 Ops.Cal.Atty.Gen. 56 (2009).)
      B.    Analysis.
      The authorities discussed above make clear that a non-
licensed individual need not examine a patient or render a
medical diagnosis to engage in the unlicensed practice of
medicine—to the contrary, a non-physician unlawfully practices
medicine if he or she exercises undue control over a medical
practice. A non-physician undoubtedly exercises undue control
by owning a medical practice, but may also exercise such control
in a variety of other ways, including by choosing physicians to
provide medical services, selecting medical equipment,
determining the parameters of physicians’ employment, including
case load and compensation, and making billing decisions.
      The amended complaints state claims against each
defendant for engaging in or assisting in the unlicensed practice
of medicine because they allege an unlawful degree of control by
non-physicians over the medical corporations’ provision of
diagnostic radiology services. The operative complaint in the
Discovery Radiology action alleges that although Discovery
Radiology was licensed as a professional medical corporation
owned by Drs. Feske and Safvi, it actually was “owned, operated,
or controlled” by Mir, who is not a physician and is not licensed to
practice medicine. Specifically, Mir is alleged to have “created
[Discovery Radiology] as a professional medical corporation,” filed
documents on Discovery Radiology’s behalf with the California

                                 22
Secretary of State, the Medical Board of California, and the
Center for Medicare and Medicaid Services, “recruited . . .
patients from personal injury attorneys,” “recruited physicians,
including physician-Defendants Feske and Safvi, to appear on
paper as the owners of [Discovery Radiology],” “entered into
contracts with diagnostic radiology facilities to perform the
technical component of the MRI scans (i.e., administer the MRIs)
and with radiologists to perform the professional component of
the MRI scan (i.e., interpret the MRI images),” selected the
facilities and radiologists to whom patients would be referred,
and prepared bills and reports for submission to insurance
companies. Further, Drs. Feske and Safvi, the purported owners
of Discovery Radiology, are alleged to have “exercised no control,
supervision or management of the corporation,” but instead to
have ceded control over referrals, billing, collections, and
distribution of profits to Mir.
       Similarly, the operative complaint in the OneSource action
alleges that Mir created OneSource, 1st Source, Expert MRI, and
Safvi Medical, and that although Expert MRI and Safvi Medical
are licensed as professional medical corporations owned at
various times by Drs. Mazhar, Kahn, and Safvi, they in fact are
owned and controlled by Mir through OneSource. Through
OneSource, Mir allegedly markets the professional corporations
to workers’ compensation and personal injury attorneys, selects
the diagnostic imaging facilities and radiologists to which
patients are referred, and controls the professional corporations’
billing, collections, and distribution of profits. Further,
Drs. Mazhar, Kahn, and Safvi are alleged to provide “zero
oversight, control or review,” having agreed to allow Mir to have
“complete control over the selection of the diagnostic radiology

                                23
practices to which patients were sent; the selection of physicians
who read and interpreted the MRI studies; the preparation of
billing statements that [will] ultimately be presented to
insurance companies, including determining the amount billed
for the services rendered and billing codes used, if any; the
collection of payment for the services from insurance companies;
the banking of the insurance payments; and the distribution of
profit[s].”
       Defendants contend the complaints do not allege the
unlicensed practice of medicine because they describe “nothing
more than a permissible business model” in which a management
services organization or layperson enters into contracts with
professional corporations that “delegate[d] to the [management
services organization] or layperson some level of control over the
business management and administration of the [professional
corporation] without ceding control or discretion over the
physicians’ practice of medicine.” It is dispositive, defendants
suggest, that “Mir and OneSource did not decide whether a
patient needed MRI services, did not decide what MRI images
needed to be taken, did not take the images, did not interpret the
images, and did not form medical opinions based on those images.
All of those tasks were performed by licensed professionals at
their own discretion. Moreover, Allstate does not allege that the
medical services rendered were excessive, not medically
necessary, or inappropriate in any way, or that the billed-for
services were not rendered.”
       It is true, as defendants assert, that the amended
complaints do not allege that non-physicians ordered or
interpreted the MRIs, or that the radiology services provided
were excessive or not medically necessary. But that was equally

                               24
true in Cardillo and Steinsmith: In neither case was it alleged
that non-physicians interfered with the physicians’ practice of
medicine by dictating diagnosis or treatment, or that the services
provided were not medically necessary. Instead, the violation in
those cases was a non-physician’s partial ownership of the
practice (Steinsmith) and control over the operations of the
medical practice by, among other things, selecting the physicians
who would perform medical services, setting the physician’s
hours, and soliciting and scheduling patients (Cardillo). A
similar degree of control over the medical corporations by Mir is
alleged in the present cases.
       Contrary to defendants’ contentions, therefore, the facts as
alleged in the Discovery Radiology and OneSource actions are not
“nearly identical” to those established in Epic. In Epic, although
the management company had a significant role in managing the
physician’s practice, there was no suggestion there that the
management company formed the physician’s medical
corporation, submitted required filings on his behalf to the
Medical Board or Secretary of State, solicited patients, or
determined to which physician those patients would be referred.
Further, although the management company supplied the
physician’s medical equipment and support staff, the physician
selected the medical equipment with which his office would be
outfitted and trained and supervised the nursing staff. (Epic,
supra, 244 Cal.App.4th at p. 508.) In short, while the
management company’s role was significant, the physician—not
the management company—controlled the practice in a
meaningful way. In the present case, in contrast, Mir and/or his
management company, OneSource, are alleged to control the
radiology practices: As noted above, Mir and/or OneSource are

                                25
alleged to have formed the medical corporations, filed licensing
documents with federal and state authorities, contracted with
MRI providers and radiologists, selected the MRI facilities to
which patients would be directed, and determined which and how
many patients would be referred to the contract radiologists. In
short, Mir and OneSource are alleged to control the radiology
practices at issue in this case to a far greater degree than was
established in Epic.9
       For all the foregoing reasons, we conclude that the
operative complaints allege the unlicensed practice of medicine in
violation of the Medical Practice Act. We therefore turn to the
question of whether such allegations may give rise to claims
under the IFPA and UCL.
III.   The unlicensed practice of medicine may give rise to
       claims under the IFPA and UCL.
       Defendants contend that even if the amended complaints
allege the unlicensed practice of medicine in violation of the
Medical Practice Act, those allegations do not give rise to causes
of action under the IFPA or UCL. For the reasons that follow, we
disagree.
       A.   The operative complaints state claims under
            the IFPA.

9     Discovery Radiology cites an additional case, Blank v. Palo
Alto-Stanford Hospital Center (1965) 234 Cal.App.2d 377, 390,
which it asserts holds that there is no unlicensed practice of
medicine so long as physicians retain “freedom to practice.”
Blank concerned an alleged fee split between a medical group and
a hospital for radiology services; it has no relevance to the
present case.

                               26
            1.     Overview of the IFPA.
       The IFPA was enacted to prevent automobile and workers’
compensation insurance fraud in order to, among other things,
“significantly reduce the incidence of severity and automobile
insurance claim payments and . . . therefore produce a
commensurate reduction in automobile insurance premiums.”
(Ins. Code, § 1871, subd. (c).) To permit “the full utilization of the
expertise of the [insurance] commissioner and the department [of
insurance] so that they may more effectively investigate and
discover insurance frauds” (id., § 1871, subd. (a)), the IFPA
contains a qui tam provision that allows any interested person to
bring an action for damages and penalties for fraudulent
insurance claims on behalf of the individual and the State of
California (id., § 1871.7, subd. (e)(1)). The person bringing the
qui tam action, referred to as the “relator,” stands in the shoes of
the State of California, which is deemed to be the real party in
interest. (State ex rel. Aetna Health of California, Inc. v. Pain
Management Specialist Medical Group (2020) 58 Cal.App.5th
1064, 1069–1070 (Aetna); People ex rel. Strathmann v. Acacia
Research Corp. (2012) 210 Cal.App.4th 487, 500 (Strathmann).)
The relator in an Insurance Code 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); Aetna, at p. 1070; Strathmann, at p. 500.)
       The complaints at issue here assert causes of action under
the IFPA, Insurance Code section 1871.7, subdivision (b).10 That

10    The complaints also allege violations of Insurance Code
section 1871.7, subdivision (a). Because we conclude that the
complaints state claims under section 1871.7, subdivision (b), we
do not address subdivision (a).

                                 27
section prescribes civil penalties for violations of Penal Code
sections 549, 550, or 551, which target insurance fraud. As
relevant here, Penal Code section 550 prohibits knowingly
preparing, presenting, or causing to be presented (1) “any false or
fraudulent claim for the payment of a loss or injury, including
payment of a loss or injury under a contract of insurance,” or
(2) “any writing, with the intent to . . . allow it to be presented . . .
in support of any false or fraudulent claim.” (Pen. Code, § 550,
subd. (a)(1), (5).)
       A claim need not contain an express misstatement of fact to
be actionable under Penal Code section 550 and Insurance Code
section 1871.7, subdivision (b). (State ex rel. Wilson v. Superior
Court (2014) 227 Cal.App.4th 579, 601 (Wilson); People ex rel.
Allstate Ins. Co. v. Suh (2019) 37 Cal.App.5th 253, 260 (Suh).)
Instead, these sections require only that a person knowingly, and
with intent to defraud, “(1) present a claim that is false or
fraudulent in some respect, (2) present, prepare, or make a
statement containing false or misleading information about a
material fact, or (3) conceal an event that affects a person’s right
or entitlement to insurance benefits.” (Suh, at p. 260.) In other
words, “[a]n insurance claim is fraudulent under [Penal Code]
section 550 and [Insurance Code] section 1871.7, subdivision (b),
when it is ‘characterized in any way by deceit’ ” (ibid.) or
“result[s] from deceit or conduct that is done with an intention to
gain unfair or dishonest advantage.” (Wilson, at p. 602.)

                                   28
            2.    The unlicensed practice of medicine as
                  the basis for an IFPA claim.
      Defendants urge that as a matter of law, the unlicensed
practice of medicine cannot form the basis for an IFPA claim
because “[t]he IFPA by its terms does not prohibit the [unlicensed
practice of medicine] . . . [n]or does it incorporate Business and
Professions Code § 2400, which ‘embodies [California’s] ban on
the corporate practice of medicine’ . . . [or] any of the other
provisions of the Medical Practice Act . . . that govern the
unlicensed practice of medicine.” Further, defendants suggest,
because the IFPA “enumerates specific prohibited acts and
incorporates those prohibited acts listed in California Penal Code
§§ 549–551,” it presumably “intended for that list to be
exclusive.”
      We do not agree. Penal Code sections 549 to 551
criminalize the submission of false or fraudulent insurance
claims, but do not detail the circumstances that will render
particular claims “false” or “fraudulent.” Accordingly, courts
have held, the “clear import” of these sections “is to criminalize
the making of false or fraudulent claims the ultimate objective of
which is to obtain benefits to which the offender is not entitled.”
(People v. Blick (2007) 153 Cal.App.4th 759, 772–773.)
      Moreover, as Allstate notes, prior appellate decisions have
held that the unlicensed practice of medicine can form the basis
for an IFPA claim. The court considered this issue in People ex
rel. Monterey Mushrooms, Inc. v. Thompson (2006)
136 Cal.App.4th 24 (Monterey Mushrooms), one of two cases
addressing the unlicensed practice of medicine by chiropractors
Steven Thompson and Aster Kifle-Thompson (the Thompsons).
In brief, those cases concerned the Thompsons’s creation of

                                29
medical corporations to provide both chiropractic and medical
services, as well as a management company to provide
nonprofessional employees, payroll services, and management
services to the medical corporations. Because state law required
the medical corporations to be owned by a licensed physician, the
Thompsons arranged for an out-of-state physician to be the
absentee owner, and hired a licensed physician to work part-time
at the medical corporations’ clinics. (Kifle-Thompson v. State Bd.
of Chiropractic Examiners (2012) 208 Cal.App.4th 518, 521, 524–
526 (Kifle-Thompson).)11
      A self-insured employer sued the Thompsons for insurance
fraud, asserting that they and their medical and management
corporations had violated the IFPA by submitting false claims for
workers’ compensation payments. (Monterey Mushrooms, supra,
136 Cal.App.4th at p. 27.) The case was tried to the court, which
found the Thompsons and the corporations liable for “having ‘set
up sham corporations, with medical doctors as ostensible owners,
that presented to the public as full-service medical clinics. In
reality, the medical doctors were essentially a series of absentee
figureheads who gave no consideration for their ownership
interests and, for the most part, had no meaningful role in the
direction of patient care or general clinic operation.’ The purpose
of these corporations was to allow these defendants to ‘acquire
patients and refer them for chiropractic treatment and to present
fraudulent claims for services to third-party payors.’ The result
was that patients were ‘inevitably being directed to chiropractic
“treatment,” where they were grossly over[-]treated. Bills were
generated for these patient visits, and in some cases more than

11    Kifle-Thompson was a related appeal from the revocation of
Kifle-Thompson’s chiropractic license.

                                30
one claim was made for a single session.’ ” (Id. at p. 28, italics
omitted.) The trial court found that the insurance claims
submitted by the Thompsons and their corporations thus violated
the IFPA, and it awarded the plaintiff more than $1 million in
civil penalties and attorney fees. (Ibid.)
       The Thompsons appealed, contending, among other things,
that Kifle-Thompson and one of her medical corporations, IFMG,
should have been dismissed because they were not alleged to
have treated any of the patients identified in the complaint. The
Court of Appeal disagreed and affirmed. It explained that the
case “was not merely about the submission of false or excessive
treatment claims regarding specific employees; it embraced an
entire scheme in which Kifle-Thompson, on her own and through
IFMG, helped defraud [the employer], the workers’ compensation
system, and the public. The trial testimony and documentary
evidence convinced the trial court as fact finder that Kifle-
Thompson and her husband had set up illegal corporate medical
practices, ‘affecting not just a single patient or employer or even
solely patients with industrial injuries.’ They gave physicians
ostensible ownership of these corporations while retaining full
control over the structure, finances, and operation of each
corporation, including patient care. . . . [¶] . . . Kifle-Thompson
was an active part of the conspiracy enabling them to achieve
these objectives through [the medical corporations] [and] . . . their
‘management service’ or ‘shell’ corporation.” (Monterey
Mushrooms, supra, 136 Cal.App.4th at pp. 36–37.) Thus, the
Court of Appeal said, the trial court properly found Kifle-
Thompson and IFMG liable for violations of Insurance Code
section 1871.7. (Monterey Mushrooms, at pp. 39–40.)

                                 31
      The Court of Appeal reached a similar conclusion in a
related context in Suh, supra, 37 Cal.App.5th 253, an IFPA case
involving the unlicensed practice of law. There, evidence
introduced at trial demonstrated that defendants, who were not
attorneys, set up eight sham law firms, paid several attorneys a
monthly fee to use their names and state bar numbers, and filed
insurance claims on behalf of Allstate’s insureds. At trial,
Allstate did not contend that the insurance claims submitted by
defendants contained false or fraudulent statements about the
insureds, but rather that obtaining insurance proceeds by posing
as law firms was actionable under the IFPA. (Id. at pp. 255–
256.) The jury found for Allstate, and defendants appealed.
      On appeal, the defendants urged that as a matter of law,
they did not violate Penal Code section 550 or submit fraudulent
claims within the meaning of Insurance Code section 1871.7,
subdivision (b) because although the insureds were not actually
represented by attorneys, the information in the claim forms was
accurate—i.e., “ ‘[t]here was no allegation of staged accidents, nor
any claim that injuries were inflated or that treatment was not
provided.’ ” (Suh, supra, 37 Cal.App.5th at pp. 255, 259.) The
Court of Appeal disagreed, concluding that the defendants “read
the insurance fraud statutes too narrowly.” (Id. at p. 260.) It
explained: “[Defendants] perpetrated a deceitful insurance
scheme designed to acquire insurance proceeds illegally for
personal gain. [Defendants] deceived Allstate into believing the
attorneys whose names they were using actually and lawfully
represented its insureds. (See Cal. Code Regs., tit. 10, § 2695.2(c)
[only attorneys, family members, adjusters, or other persons
authorized by law may represent insureds].) In their
communications with Allstate, [defendants] misrepresented that

                                32
attorneys represented the insureds. They concealed the fact they
were masquerading as attorneys when they filed the insurance
claims. And the misrepresentations were material: Allstate
would not have released settlement proceeds to [defendants] or
their sham law firms had Allstate known the truth. The conduct
of [defendants] constituted insurance fraud under [Penal Code]
section 550 and [Insurance Code] section 1871.7.” (Id. at p. 260.)
            3.    Analysis.
       Plainly, both Monterey Mushrooms and Suh support the
proposition that the unlicensed practice of medicine (or law) can
give rise to IFPA claims. Defendants nonetheless contend that
because of factual differences between the present case, on the
one hand, and Monterey Mushrooms and Suh, on the other, those
cases are irrelevant here. We do not agree.
       Defendants contend that Monterey Mushrooms is
fundamentally different from the present cases because there the
physicians who acted as the professional corporations’ medical
directors “ ‘had no meaningful role in the direction of patient care
or general clinic operation,’ ” and patients were alleged to have
been “ ‘grossly over-treated.’ ” In the present cases, defendants
assert, “[n]o remotely similar facts have been alleged.”
       Defendants undoubtedly are correct that Monterey
Mushrooms concerned some facts not alleged in the present
cases—namely, that patients were over-treated and, in some
cases, multiple bills were submitted for the same sessions.
(Monterey Mushrooms, supra, 136 Cal.App.4th at p. 28.) The
Monterey Mushrooms court made clear, however, that the case
“was not merely about the submission of false or excessive
treatment claims regarding specific [patients],” but also
“embraced an entire scheme” in which the non-physician

                                 33
defendants set up corporate medical practices that were
ostensibly controlled by physicians, but over which the non-
physician defendants had “full control” of the “structure, finances,
and operation.” (Id. at p. 36.) In other words, Monterey
Mushrooms stands for the proposition that claims submitted by a
corporation engaging in the unlicensed practice of medicine may,
without more, give rise to IFPA claims, a conclusion of obvious
relevance to the present case.
       Defendants also contend that Suh is distinguishable
because in that case, the defendant “ ‘masquerad[ed]’ ” as an
attorney, “procured clients she was not ‘authorized to represent,’
and submitted insurance claims on behalf of those clients without
the consent of actual attorneys.” Unquestionably, there are
factual differences between Suh and the present cases. Suh
nonetheless is relevant because there was no allegation in that
case that accidents were staged, injuries were inflated, or
treatment was not provided. (Suh, supra, 37 Cal.App.5th at
p. 259.) In other words, the insurer neither alleged nor proved
that the policyholders were not entitled to recover under their
automobile insurance policies in the amounts of the claims they
submitted. Instead, the sole basis for the IFPA claim was the
organizational structure of the purported law firms that
submitted the claims on behalf of the policyholders—that is, that
the firms were controlled by laypersons, not by attorneys.
Allstate’s allegations in the present cases are similar: It alleges
that the claims submitted to it for services allegedly rendered by
the defendants are fraudulent because the entities that
submitted them are not what they purport to be—that is,
although the entities hold themselves out as professional
corporations, they actually are controlled by a layperson or

                                34
management company. Suh thus supports the proposition that
an allegation of this kind can support a claim under the IFPA.
       Defendants contend that Ebeid ex rel. United States v.
Lungwitz (9th Cir. 2010) 616 F.3d 993 (Ebeid) holds that an
unlicensed practice of medicine claim cannot serve as predicate to
a federal False Claims Act case, which defendants urge is
persuasive here. Not so. Ebeid concerned an allegation that
claims submitted by the defendant for Medicare reimbursement
were fraudulent because the defendants engaged in the unlawful
corporate practice of medicine. (Id. at p. 995.) The Ninth Circuit
affirmed the district court’s dismissal of the complaint for failure
to allege fraud with sufficient particularity. (Id. at p. 1001.) It
noted that under the federal False Claims Act, a plaintiff must
establish that an alleged false statement was material to the
government’s decision to make a payment to the claimant. (Id. at
p. 997.) In the case before it, however, the plaintiff did not “refer
to any statute, rule, regulation, or contract that condition[ed]
payment on compliance with state law governing the corporate
practice of medicine”; instead, plaintiff “baldly assert[ed] that had
[claimant] ‘not concealed or failed to disclose information
affecting the right to payment, the United States would not have
paid the claims.’ ” (Id. at pp. 999–1000.) The Ninth Circuit
concluded that this conclusory allegation was insufficient under
Rule 9(b) of the Federal Rules of Civil Procedure. (Ebeid, at
p. 1000.)
       Ebeid is not relevant to our analysis of the present case. It
does not hold that the unlicensed practice of medicine could never
support a claim under the False Claims Act, but only that the
operative complaint had not pled such a claim with the requisite
specificity. (Ebeid, supra, 616 F.3d at p. 1000.) Moreover,

                                 35
because Ebeid alleged fraudulent Medicare claims, the claimant’s
right to reimbursement necessarily was governed by federal
Medicare laws and regulations. In contrast, the present case
alleges false claims under the IFPA, and thus defendants’ rights
to reimbursement are governed by private contracts of insurance
and state law, not federal law. The plaintiff’s failure to state a
claim in Ebeid, therefore, is irrelevant to the demurrers in the
present case.
       Defendants also urge that California Physicians’ Service v.
Aoki Diabetes Research Institute (2008) 163 Cal.App.4th 1506
(Aoki) holds that an insurance company may not use an
unlicensed practice of medicine claim “as an excuse not to pay for
services rendered to its insureds.” Aoki is inapposite. The issue
in that breach of contract action was whether a medical
provider’s organization as a nonprofit corporation, rather than a
professional medical corporation, rendered its provider contract
with a medical insurer unenforceable so that the provider could
not recover under the contract. (Id. at pp. 1513, 1516–1517.) The
Court of Appeal held the provider contract was enforceable
because “a contract for the provision of medical services by
licensed professionals is plainly not malum in se.” (Id. at
p. 1517.) The present case, in contrast, does not arise out of a
contract between an insurer and a provider; it is instead a fraud
action brought in the name of, and on behalf of, the state of
California. Nor does Allstate seek to “avoid paying for” services
rendered under an insurance contract, as defendants suggest;
Allstate has already paid for those services, and seeks through
this action to recover a statutory penalty that, if recovered, will
be shared by the state. (Ins. Code, § 1871.7, subd. (g)(2)(A).)

                                36
      For all of these reasons, we conclude that the complaints
allege claims under the IFPA.
      B.    The operative complaints state claims under
            the UCL.
        The UCL prohibits “any unlawful, unfair or fraudulent
business act or practice and unfair, deceptive, untrue or
misleading advertising.” (§ 17200.) “ ‘By proscribing “any
unlawful” business practice, “section 17200 ‘borrows’ violations of
other laws and treats them as unlawful practices” that the unfair
competition law makes independently actionable.’ (Cel-Tech
[Communications, Inc. v. Los Angeles Cellular Telephone Co.
(1999)] 20 Cal.4th [163,] 180.) ‘To prevail on a claim under the
unlawful prong of the unfair competition law, the plaintiff must
show that a challenged advertisement or practice violates any
federal or California “statute or regulation.” ’ ” (Beasley v. Tootsie
Roll Industries, Inc. (2022) 85 Cal.App.5th 901, 911–912.)
        All parties agree that Allstate’s UCL claims are derivative
of its IFPA claims, and thus that the UCL claims rise or fall with
the IFPA claims. Because the complaints adequately plead
violations of the IFPA, they also adequately plead violations of
the UCL.
IV.   The amended complaints were pled with adequate
      specificity.
      Defendants urged in their demurrers, and the trial court
concluded, that the complaints did not plead the IFPA claims
with adequate specificity. For the reasons that follow, we
disagree.
      As in any action sounding in fraud, an IFPA action must be
pleaded with particularity. “In California, fraud must be pled

                                 37
specifically; general and conclusory allegations do not suffice.
[Citations.] . . . ‘This particularity requirement necessitates
pleading facts which “show how, when, where, to whom, and by
what means the representations were tendered.” ’ ” (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 645.)
        “ ‘The specificity requirement serves two purposes. The
first is notice to the defendant, to “furnish the defendant with
certain definite charges which can be intelligently met.”
[Citations.] The pleading of fraud, however, is also the last
remaining habitat of the common law notion that a complaint
should be sufficiently specific that the court can weed out
nonmeritorious actions on the basis of the pleadings. Thus, the
pleading should be sufficient “ ‘to enable the court to determine
whether, on the facts pleaded, there is any foundation, prima
facie at least, for the charge of fraud.’ ” ’ (Committee on
Children’s Television, Inc. v. General Foods Corp. (1983)
35 Cal.3d 197, 216–217.)” (JPMorgan Chase Bank, N.A. v.
Superior Court (2022) 85 Cal.App.5th 477, 494.)
        We conclude that both amended complaints are pled with
adequate specificity. The amended complaint in the Discovery
action identifies the role each defendant allegedly played in the
fraudulent scheme. Specifically, it alleges that Mir “owned,
operated, or controlled” Discovery Radiology, entered into
contracts with diagnostic radiology facilities to perform MRI
scans and with radiologists to interpret MRI images, recruited
patients from personal injury attorneys, selected the radiology
facilities and radiologists to which patients were sent, and
provided bills and reports on Discovery Radiology letterhead to
attorneys, with knowledge that the attorneys would present the
bills and reports to Allstate in support of insurance claims. The

                                38
amended complaint further alleges that Drs. Feske and Safvi
agreed to “appear on paper as the owners of” Discovery
Radiology, but “exercised no significant control over” its operation
and “surrender[ed] control of billing, collection, banking and the
distribution of profits” to Mir, knowing that Mir intended to bill
the insurer for the services. Finally, the attachment to the
amended complaint identifies each allegedly false insurance
claim by claim number, and additionally provides, for each claim,
the date of treatment, the provider name that appeared on the
claim, the amount billed, and the name of the attorney who
submitted the claim.
       Similarly, the amended complaint in the OneSource action
alleges that Mir owns, operates, and controls OneSource, Expert
MRI, and Safvi Medical, entered into contracts with radiology
facilities and radiologists to provide services at fixed fees,
markets radiology services to workers’ compensation and
personal injury attorneys, steers patients to radiologists and
diagnostic radiology providers with which he has contracted, and
prepares bills for the services provided without any supervision
by a licensed radiologist. The complaint further alleges that Mir
and OneSource “entered into contracts with the Defendant
radiologists or their purported professional corporations,
including [Safvi Medical] and [Expert MRI], to read and interpret
MRI studies and to prepare written reports of their findings and
diagnoses, to falsely appear on paper as owners and operators of
professional medical corporations utilizing OneSource, and to
grant absolute control to Mir and OneSource”; that Drs. Safvi,
Mazhar, and Khan agreed to read MRIs, x-rays, and scans at
negotiated rates and to allow Mir complete control over billing;
that the physicians billed Mir and OneSource directly through

                                39
monthly billing statements that were submitted only to Mir and
OneSource; that Safvi Medical entered into a written contract to
allow Mir and his company to “have the sole and exclusive right
to direct and oversee bill[ing] and collections . . . [and to] bill and
collect on a global basis, under [Safvi Medical’s] provider
number,” and agreed that it would have “no claims . . . for any
compensation or other amounts from third-party payors”; that
Dr. Mazhar allowed Mir to use his name and license number to
register Expert MRI with the California Secretary of State and
the California Medical Board, but never was a true owner of
Expert MRI; that Dr. Khan agreed to replace Dr. Mazhar as the
purported owner of Expert MRI, but never exercised any
operational control over the business; and that Dr. Khan “in
entering into the agreement to falsely appear as the owner of
[Expert MRI], [knew] that the fraudulent scheme involved the
preparation and presentation of false, fraudulent, and/or
misleading billing statements to insurance companies.” Finally,
the attachment to the complaint identifies each allegedly false
insurance claim by claim number, and additionally provides the
date of treatment, the provider name that appeared on the claim,
the amount billed, and the name of the attorney who submitted
the claim.
       Defendants contend that the complaints were not pled with
adequate specificity because the attached spreadsheets did not
allege “ ‘the dates . . . of each alleged false bill,’ ‘the person or
entity who prepared the bill,’ [or] ‘the person or entity
transmitting the billing statement to’ Allstate.’ ” But defendants
cite no authority for the proposition that these particular details
are necessary to meet the pleading requirements. Moreover,
even if these details were required, they were substantially

                                  40
provided. The bills were submitted on behalf of the providers,
whose names are identified, and through attorneys, whose names
are also identified. And although the complaints do not
specifically identify the dates the claims were submitted to
Allstate, they did state for each claim the dates of treatment and
the claim numbers, from which the allegedly false claims may be
readily identified. Defendants cite no authority to suggest that
more is required.
       Defendants also suggest that the complaints are
inadequate because they do not allege “what [the claims] said
that was false.” Not so. As we have described, the complaints
allege, among other things, that the claims were deceitful
because the defendant medical corporations on whose behalf the
claims were submitted were controlled by a non-physician, and
because the claims falsely represented that the MRIs were
performed and read by the defendant medical corporations,
rather than by third parties with whom the medical corporations
contracted.
       Defendants further suggest that this case is analogous to
McCann, supra, 191 Cal.App.4th at p. 908, a California False
Claim Act case in which the relators alleged that the defendant
bank defrauded the state by failing to pay over to it unidentified
credits subject to escheat as unclaimed property. (Id. at p. 902.)
The Court of Appeal concluded that the relators had not pled
their claims with sufficient particularity because while they
identified an allegedly fraudulent practice (the failure to
investigate unidentified credits and to then credit them to
presenting banks), they did not identify any particular property
that should have escheated. In other words, they failed “to
directly identify an amount or account—a liquidated and certain

                               41
obligation—due to any specified presenting bank (in California or
elsewhere) that would be subject to escheat under the [unclaimed
property law].” (Id. at p. 910.) The present case is
distinguishable because Allstate has pled not only an allegedly
fraudulent practice, but also identified each of the allegedly false
claims submitted as a result of that practice.
      For the foregoing reasons, we conclude that the complaints
are pled with adequate specificity.
V.    Allstate’s claims against Discovery Radiology cannot
      be resolved on demurrer.
       An action under the IFPA “may not be filed more than
three years after the discovery of the facts constituting the
grounds for commencing the action.” (Ins. Code, § 1871.7,
subd. (l)(1).) The statute of limitations under this section is
triggered by inquiry notice (State of California ex rel. Metz v. CCC
Information Services, Inc. (2007) 149 Cal.App.4th 402, 415–
417)—that is, the statute begins to run “once the plaintiff ‘ “ ‘has
notice or information of circumstances to put a reasonable person
on inquiry. . . .’ ” ’ ” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103,
1110–1111).
       It is undisputed that the Discovery action was filed more
than three years after Discovery Radiology’s bills were submitted
to Allstate. The operative complaint alleges that the action
nonetheless was timely filed because Allstate was not on inquiry
notice of the claims until January 2018, when it “discovered that
the facility address identified on the [Discovery Radiology] billing
statements as the location of the service provided was a post
office box at The UPS Store in Glendale, not an MRI facility, as
represented by [Discovery Radiology]. Allstate then attempted to
determine the physical location [of Discovery Radiology’s] MRI

                                   42
machines, . . . the identity of the person or entities that owned,
operated or controlled [Discovery Radiology], the identity of
[Discovery Radiology’s] MRI technicians involved in the
performance of scans, and where the [Discovery Radiology]
records and actual diagnostic studies were stored. In June 2019,
Allstate also discovered that [Discovery Radiology’s] La Palma,
California address, which it had represented to the California
Secretary of State as its corporate address on multiple occasions,
was a shared Regus office suite and answering service, not an
MRI facility or medical practice. Allstate identified all open and
closed files involving bills and reports from [Discovery Radiology]
that were presented in support of or in connection with claims,
finding that the service location listed on such documents was the
Glendale address, that the reports appeared to be templated, that
there were multiple MRI scans performed on patients, and that
the actual location where the MRI scan was performed was not
identified on the bills or reports.”
      Defendants contend that these allegations do not save the
Discovery action because Allstate “necessarily had possession of
the so-called ‘templated’ bills long before 2018. Indeed, Allstate
alleges that it began receiving the allegedly fraudulent bills as
early as November 2015.” Additionally, because each bill
included the Glendale address, “from the date that the first bill
was submitted—and well into 2015, 2016, and 2017—Allstate
would have been in possession of facts necessary to bring these
claims.”
      When a plaintiff reasonably should have discovered facts
for purposes of the accrual of a cause of action or application of
the delayed discovery rule is generally a question of fact, properly
decided as a matter of law only if the evidence (or, in the case of a

                                 43
demurrer, the allegations in the complaint and facts properly
subject to judicial notice) can support only one reasonable
conclusion. (Stella v. Asset Management Consultants, Inc. (2017)
8 Cal.App.5th 181, 193; Jolly v. Eli Lilly & Co., supra, 44 Cal.3d
at p. 1112.) Similarly, “ ‘ “[w]hether reliance [on a
misrepresentation] was reasonable is a question of fact for the
jury, and may be decided as a matter of law only if the facts
permit reasonable minds to come to just one conclusion.” ’
(Grisham v. Philip Morris U.S.A., Inc. [(2007]) 40 Cal.4th [623,]
638; accord, Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th
1226, 1239 [‘ “Except in the rare case where the undisputed facts
leave no room for a reasonable difference of opinion, the question
of whether a plaintiff’s reliance is reasonable is a question of
fact.” ’].)” (Broberg v. The Guardian Life Ins. Co. of America
(2009) 171 Cal.App.4th 912, 921.) “ ‘Whether a party has notice
of “circumstances sufficient to put a prudent man upon inquiry as
to a particular fact,” and whether “by prosecuting such inquiry,
he might have learned such fact” [citation], are themselves
questions of fact to be determined by the jury or the trial court.’
(Northwestern P. C. Co. v. Atlantic P. C. Co. (1917) 174 Cal. 308,
312; accord, Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412,
440.)” (Vasquez v. LBS Financial Credit Union (2020)
52 Cal.App.5th 97, 109.)
        Contrary to the trial court, we do not believe that the
timeliness of the Discovery action can be decided on demurrer.
This is not a case where the allegations of the complaint can
support only one reasonable conclusion: The claims submitted to
Allstate by Discovery Radiology are not alleged to have contained
any obviously false or fraudulent information, and we cannot say
that the only reasonable inference to be drawn from the facts

                                44
alleged in the operative complaint in the Discovery action is that
Allstate should have discovered the alleged unlicensed practice of
medicine by Mir and Discovery Radiology prior to November
2017. (See, e.g., Alexander v. Exxon Mobil (2013)
219 Cal.App.4th 1236, 1255–1256 [“We agree with appellants
that the allegations set forth in the complaint . . . do not lead to a
single ‘reasonable conclusion’ as to whether” notices advising the
plaintiffs of environmental contamination should have caused
them to suspect that such contamination posed a risk to their
health]; Broberg v. The Guardian Life Ins. Co. of America, supra,
171 Cal.App.4th at p. 922 [alleged unreasonableness of insured’s
reliance on insurer’s alleged misrepresentations was a fact issue
not suitable for resolution on demurrer].) Accordingly, at this
juncture we cannot conclude that the Discovery action is time-
barred as a matter of law.

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                         DISPOSITION
       The judgments of dismissal are reversed with directions to
the trial court to vacate the orders sustaining the demurrers,
enter new orders overruling the demurrers, and reinstate the
amended complaints. Allstate shall recover its appellate costs.

      CERTIFIED FOR PUBLICATION

                                           EDMON, P. J.

We concur:

                  EGERTON, J.

                  HEIDEL, J.*

*     Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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