Farmers Insurance Exchange et al v. First Choice Chiropractic & Rehabilitation et al

Filing 333

ORDER - The Court ADOPTS IN PART Judge Papak's Findings and Recommendations. Dkt. 319 . Defendants' Motion to Amend (Dkt. 231 ) is DENIED as moot. Defendants' Second Motion for Summary Judgment (Dkt. 172 ) is GRANTED IN PART AND DENIED IN PART, as described in Judge Papak's Findings and Recommendations (Dkt. 319 ), with the exception of Judge Papak's recommendation that Plaintiffs' UTPA damages should be reduced by the amount that Plaintiffs have already been reimbursed by other insurers. The parties will submit additional briefing on that issue as directed in this Order. Defendants' Third Motion for Summary Judgment (Dkt. 182 ) is GRANTED IN PART AND DENIED IN PART, as described in Judge Papa k's Findings and Recommendations (Dkt. 319). Defendants' First Motion to Strike (Dkt. 236 ) is GRANTED IN PART AND DENIED IN PART. Defendants' First Motion to Strike is GRANTED to the extent it seeks to strike paragraph 65 of the Darn ell Declaration. Defendants' First Motion to Strike is DENIED in all other respects. Defendants' Second Motion to Strike (Dkt. 288 ) is DENIED. Plaintiffs' Second Motion for Partial Summary Judgment (Dkt. 184 ) is DENIED. Plaintiffs& #039; Third Motion for Partial Summary Judgment (Dkt. 206 ) is DENIED. Plaintiffs' Fourth Motion for Partial Summary Judgment (Dkt. 211 ) is DENIED. Plaintiffs' Motions to Strike (Dkts. 295 , 297 ) are both DENIED. Signed on 4/15/2016 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

FARMERS INSURANCE EXCHANGE,
MID-CENTURY INSURANCE
COMPANY, TRUCK INSURANCE
EXCHANGE; COAST NATIONAL
INSURANCE COMPANY, 21ST
CENTURY CENTENNIAL INSURANCE
COMPANY, FARMERS INSURANCE
COMPANY OF WASHINGTON,
FARMERS INSURANCE COMPANY OF
OREGON, 21ST CENTURY PACIFIC
INSURANCE COMPANY, and 21ST
CENTURY INSURANCE COMPANY,

Case No. 3:13-cv-01883-PK
ORDER ADOPTING FINDINGS AND
RECOMMENDATIONS IN PART

Plaintiffs,
v.
FIRST CHOICE CHIROPRACTIC &
REHABILITATION, SUNITA BHASIN,
DAVID PETROFF, KELLY COLEY,
PARDIS TAJIPOUR, and AJAY
MOHABEER,
Defendants.
Michael H. Simon, District Judge.
United States Magistrate Judge Paul Papak issued Findings and Recommendations in this
case on February 25, 2016. Dkt. 319. Plaintiffs, a group of insurance companies, allege that

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Defendants, a chiropractic clinic and its staff, submitted fraudulent insurance claims. Judge
Papak recommended that the Court deny as moot Defendants’ Motion to Amend (Dkt. 231);
grant in part and deny in part Defendants’ Second Motion for Summary Judgment (Dkt. 172);
grant in part and deny in part Defendants’ Third Motion for Summary Judgment (Dkt. 182);
grant in part and deny in part Defendants’ Motions to Strike (Dkts. 236, 288); deny Plaintiffs’
Second Motion for Partial Summary Judgment (Dkt. 184); deny Plaintiffs’ Third Motion for
Partial Summary Judgment (Dkt. 206); deny Plaintiffs’ Fourth Motion for Partial Summary
Judgment (Dkt. 211); and deny Plaintiffs’ Motions to Strike (Dkts. 295, 297).
Under the Federal Magistrates Act (“Act”), the Court may “accept, reject, or modify, in
whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C.
§ 636(b)(1). If a party files objections to a magistrate’s findings and recommendations, “the court
shall make a de novo determination of those portions of the report or specified proposed findings
or recommendations to which objection is made.” Id.; Fed. R. Civ. P. 72(b)(3).
For those portions of a magistrate’s findings and recommendations to which neither party
has objected, the Act does not prescribe any standard of review. See Thomas v. Arn,
474 U.S. 140, 152 (1985) (“There is no indication that Congress, in enacting [the Act], intended
to require a district judge to review a magistrate’s report to which no objections are filed.”);
United States. v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (holding that the
court must review de novo magistrate’s findings and recommendations if objection is made, “but
not otherwise”). Although in the absence of objections no review is required, the Act “does not
preclude further review by the district judge[] sua sponte . . . under a de novo or any other
standard.” Thomas, 474 U.S. at 154. Indeed, the Advisory Committee Notes to Fed. R. Civ.

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P. 72(b) recommend that “[w]hen no timely objection is filed,” the Court review the magistrate’s
recommendations for “clear error on the face of the record.”
Defendants timely filed objections (Dkts. 321, 323), to which Plaintiffs responded
(Dkt. 330). Plaintiffs also timely filed objections (Dkts. 324, 325, 326, 327), to which
Defendants responded (Dkts. 331, 332). For those portions of Judge Papak’s Findings and
Recommendations to which neither party has objected, this Court follows the recommendation of
the Advisory Committee and reviews those matters for clear error on the face of the record. No
such error is apparent. For those portions of Judge Papak’s Findings and Recommendations to
which the parties objected, the Court has reviewed de novo Judge Papak’s Findings and
Recommendations, as well as the parties’ objections and responses to objections. In this Order,
the Court comments upon three specific matters raised by the parties in their objections. With
regard to the remainder of the matters addressed in the parties’ objections, the Court agrees with
Judge Papak’s reasoning and adopts those portions of the Findings and Recommendations.
A. Plaintiffs’ Objection to the Recommendations on Defendants’ First Motion to Strike
Plaintiffs object to Judge Papak’s recommendation that Defendants’ First Motion to
Strike be granted to the extent it seeks to strike as inadmissible hearsay the testimony of former
patients contained in Exhibit 22 of the Declaration of John Darnell.1 Dkt. 324 at 2-5. Plaintiffs
argue that Judge Papak’s citation to Fed. R. Civ. P. 32(a)(1) was erroneous because Exhibit 22
1

In Defendants’ response to Plaintiffs’ objections, Defendants argue that Judge Papak’s
findings regarding Defendants’ First Motion to Strike are subject to clear error, rather than de
novo, review. Dkt. 331 at 8 (Defendants’ Response to Plaintiffs’ Objections) (citing Grimes v.
City & Cty. of S.F., 951 F.2d 236, 241 (9th Cir. 1991)). The Court agrees that “‘[p]retrial orders
of a magistrate under 636(b)(1)(A) are reviewable under the clearly erroneous and contrary to
law standard; they are not subject to de novo determination. . . .’” Grimes, 951 F.2d at 241
(quoting Merritt v. Int’l Bhd. of Boilermakers, 649 F.2d 1013, 1017 (9th Cir. 1981)). Here,
however, Judge Papak’s findings regarding Defendants’ First Motion to Strike properly are
considered as part of his Findings and Recommendations regarding the parties’ summary
judgment motions, which are subject to de novo review under 28 U.S.C. § 636(b)(1).
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presents sworn testimony that is no different than an affidavit or declaration for summary
judgment purposes. See Curnow v. Ridgecrest Police, 952 F.2d 321, 323-24 (9th Cir. 1991)
(holding that answers to questions given under oath and transcribed by a court reporter were
properly considered as an affidavit under Fed. R. Civ. P. 56(c)); Hoover v. Switlik Parachute
Co., 663 F.2d 964, 966-67 (9th Cir. 1981) (holding that depositions in which opposing counsel
did not have the opportunity for cross-examination met the requirements for affidavits under Fed.
R. Civ. P. 56(c)). It may be correct that under Curnow and Hoover, the testimony of former
patients in Exhibit 22 should be treated as affidavits for purposes of summary judgment.2
Although the affidavits themselves would not be admissible in evidence, Plaintiffs could call the
former patients as witnesses at trial. Thus, the Court declines to adopt Judge Papak’s
recommendation that Defendants’ First Motion to Strike be granted to the extent it seeks to strike
as inadmissible hearsay the testimony of former patients contained in Exhibit 22 of the
Declaration of John Darnell. The Court notes, however, that considering the testimony of these
former patients on summary judgment does not affect the other portions of Judge Papak’s
Findings and Recommendations.
B. Plaintiffs’ Objection to the Recommendations on Plaintiffs’ Second Motion for Partial
Summary Judgment
Plaintiffs object to Judge Papak’s recommendation that Defendants’ representations
regarding the undercover operatives (“UOs”) are not actionable under Plaintiffs’ common law
fraud claim. Dkt. 327 at 7-8. Plaintiffs argue that whether Defendants’ alleged
misrepresentations regarding the UOs are actionable is irrelevant to Plaintiffs’ Second Motion

2

The Court notes that although Plaintiffs bring these controlling Ninth Circuit cases to
this Court’s attention in their objections to Judge Papak’s Findings and Recommendations, it
appears that Plaintiffs failed to cite to these cases in their discussion of Exhibit 22 in their
Response in Opposition to Defendants’ Motion to Strike. See Dkt. 290 at 27-29.
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for Partial Summary Judgment because Plaintiffs seek a finding of fact that Defendants falsified
the chart notes of the UOs. Judge Papak correctly found that Plaintiffs’ claim regarding UO 1
was time-barred. Judge Papak also correctly found that Plaintiffs cannot claim that they were
damaged by any purported fraud relating to UO 2’s treatment at FirstChoice because UO 2 was
not insured by Plaintiffs. Thus, because the finding requested by Plaintiffs will have no bearing
on Plaintiffs’ claim, it appears that Plaintiffs are asking the Court for an advisory opinion. See
Kittel v. Thomas, 620 F.3d 949, 951 (9th Cir. 2010) (stating that “federal courts may not issue
advisory opinions”) (citing U.S. Const. art. III; Flast v. Cohen, 392 U.S. 83, 96 (1968)). Because
Judge Papak correctly found that Plaintiffs’ claim regarding the UOs is not actionable under
common law fraud, the Court will not provide what is effectively an advisory opinion regarding
whether one of the elements of that common law fraud claim is satisfied. Accordingly, the Court
adopts Judge Papak’s recommendations concerning Plaintiffs’ Second Motion for Partial
Summary Judgment.
C. Plaintiffs’ Objection to the Recommendations on Defendants’ Second Motion for
Summary Judgment
Plaintiffs object to Judge Papak’s recommendation that Plaintiffs’ UTPA damages be
reduced by the amount that Plaintiffs have already been reimbursed by other insurers. Dkt. 325
at 35. Judge Papak stated that he previously determined in his June 10, 2015, Findings and
Recommendations (Dkt. 145) that damages under Plaintiffs’ First, Second, Third, and Fourth
Claims for relief must be reduced by the amount that Plaintiffs have already been reimbursed by
other insurers.3 Dkt. 319 at 59. In Defendants’ Second Motion for Summary Judgment,
Defendants argued that Farmers’ UTPA damages also should be reduced by that amount. Judge

3

This Court adopted Judge Papak’s June 10, 2015 Findings and Recommendations.
Dkt. 157 (July 22, 2015 Opinion and Order).
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Papak noted that Plaintiffs did not provide any argument in response and found that for the
reasons set forth in his June 10, 2015, Findings and Recommendations, Plaintiffs’ UTPA
damages should be reduced by the amount that Plaintiffs have already been reimbursed by other
insurers.
In Plaintiffs’ objection, Plaintiffs argue that Judge Papak erroneously stated that Plaintiffs
failed to respond to Defendants’ argument regarding this issue, and that the Court has previously
denied Defendants’ request to reduce Plaintiffs’ UTPA damages. Plaintiffs identify a footnote in
their Response to Defendants’ Second Motion for Summary Judgment that states:
This Court has previously denied Defendants’ Motion for
Summary Judgment regarding UTPA. See Dkt. 145 & Dkt. 157.
Again, Defendants failed to timely seek reconsideration. As such,
Defendants cannot again move on the same issue. As a result,
Defendants’ motion must be denied.
Dkt. 251 at 65 n.12.
Judge Papak’s June 10, 2015, Findings and Recommendations, to which Plaintiffs’
footnote refers, construed Defendants’ Cross-Motion for Partial Summary Judgment as moving
against “‘all amounts plaintiffs claim as damages for which they have already been reimbursed’
under Farmers[’] First, Second, Third, and Fourth claims for relief. . . . First Choice also moves
for summary judgment against . . . Farmers’ UTPA [Sixth] claim.” Dkt. 145 at 17. In
Defendants’ Cross-Motion for Partial Summary Judgment, Defendants argued that Plaintiffs’
UTPA claim should be dismissed in its entirety because Plaintiffs lack standing to sue under the
UTPA.4 Dkt. 128 at 18. Judge Papak denied Defendants’ Cross-Motion for Partial Summary
Judgment because he found that Plaintiffs did have standing under the UTPA. He did not reach
4

The Court notes that in Defendants’ Cross-Motion for Partial Summary Judgment,
Defendants briefly asserted that “damages [under the UTPA do] not exist for the reasons already
stated [with regard to Plaintiffs’ other claims] as to reimbursed bills.” Dkt. 128 at 18. This
additional comment, however, was not fully addressed by the parties in their briefing.
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the question whether Plaintiffs’ damages under the UTPA should be reduced by the amount that
Plaintiffs have already been reimbursed by other insurers.
Thus, Plaintiffs’ argument that Defendants have previously moved on Plaintiffs’ amount
of damages under the UTPA, and that the Court has already ruled on this issue, is unavailing.
Plaintiffs’ Response to Defendants’ Second Motion for Summary Judgment did not specifically
address Defendants’ argument that Plaintiffs’ UTPA damages should be reduced by the amount
that Plaintiffs have already been reimbursed by other insurers. Accordingly, Judge Papak was
correct in finding that Plaintiffs did not provide any responsive argument regarding this matter.
The Court, however, will allow Plaintiffs to address whether their claim for damages
under the UTPA should be reduced by the amount that Plaintiffs have already been reimbursed
by other insurers. Thus, the Court declines to adopt Judge Papak’s recommendation regarding
this issue. Plaintiffs have two weeks from the date of this Order to submit their legal argument as
to why their claim for damages under the UTPA should not be reduced by the amount that they
have already been reimbursed by other insurers. Plaintiffs, however, may not reargue that issue
concerning their First, Second, Third, and Fourth Claims, but may only address why their Sixth
Claim, under the UTPA, is different, if it is. Defendants will then have two weeks to reply. After
Defendants file their reply, the undersigned Court will rule on the matter.
CONCLUSION
The Court ADOPTS IN PART Judge Papak’s Findings and Recommendations. Dkt. 319.
Defendants’ Motion to Amend (Dkt. 231) is DENIED as moot. Defendants’ Second Motion for
Summary Judgment (Dkt. 172) is GRANTED IN PART AND DENIED IN PART, as described
in Judge Papak’s Findings and Recommendations (Dkt. 319), with the exception of Judge
Papak’s recommendation that Plaintiffs’ UTPA damages should be reduced by the amount that
Plaintiffs have already been reimbursed by other insurers. The parties will submit additional
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briefing on that issue as directed in this Order. Defendants’ Third Motion for Summary
Judgment (Dkt. 182) is GRANTED IN PART AND DENIED IN PART, as described in Judge
Papak’s Findings and Recommendations (Dkt. 319). Defendants’ First Motion to Strike
(Dkt. 236) is GRANTED IN PART AND DENIED IN PART. Defendants’ First Motion to
Strike is GRANTED to the extent it seeks to strike paragraph 65 of the Darnell Declaration.
Defendants’ First Motion to Strike is DENIED in all other respects. Defendants’ Second Motion
to Strike (Dkt. 288) is DENIED. Plaintiffs’ Second Motion for Partial Summary Judgment
(Dkt. 184) is DENIED. Plaintiffs’ Third Motion for Partial Summary Judgment (Dkt. 206) is
DENIED. Plaintiffs’ Fourth Motion for Partial Summary Judgment (Dkt. 211) is DENIED.
Plaintiffs’ Motions to Strike (Dkts. 295, 297) are both DENIED.
IT IS SO ORDERED.
DATED this 15th day of April, 2016.

/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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