By Ben Fuchs
[Note: This article first appeared in the Fall/Winter 2023 News & Updates edition of the Anti-Fraud Alliance. Knox Ricksen represented the Anti-Fraud Alliance as amicus curiae in the Court of Appeal and filed a request for depublication of the Court of Appeal’s opinion on behalf of a non-party insurer.]
In April, the California Supreme Court declined to review a lower court’s appellate decision holding that no right to a jury trial exists in whistleblower cases brought under the California Insurance Frauds Prevention Act (“IFPA”). The result of these decisions is that for the time being, courts will likely be more reluctant to grant demands for jury trials in IFPA cases.
In State of California ex rel. Rapier v. Encino Hospital Medical Center ((2022) 87 Cal.App.5th 811), the Second District Court of Appeal addressed whether the IFPA affords a right to a jury trial. Dr. Mary Lynn Rapier’s 2016 IFPA lawsuit centered on a medical detoxification center that operated within a Los Angeles-area hospital. Dr. Rapier alleged that the defendants engaged in unlawful patient steering and billed for services without a proper license (as the hospital was licensed for acute care but not for chemical dependency recovery treatment). The State of California intervened in Dr. Rapier’s case, and they contended that the defendants’ exposure under the IFPA, based on their alleged submission of more than 4,100 false claims, exceeded $150 million.
The trial court struck the plaintiffs’ jury request and forced the parties to proceed with a bench trial on grounds that the State had not timely paid jury fees as to the IFPA causes of action and that there is no right to a jury in IFPA matters. The court then found for the defendants at trial and denied a motion for a new trial. The plaintiffs appealed to the Second District Court of Appeal.
The Second District upheld the trial court’s finding that the State had waived its right to a jury on the IFPA causes of action because it had allegedly failed to timely pay jury fees. The appellate court also agreed with the trial court’s ruling that there is no right to a jury in IFPA
actions. The court held that because the IFPA does not explicitly provide for a right to a jury, the question turns on whether IFPA qui tam actions are primarily “equitable” or “legal” in nature. (Rapier, supra, at p. 835.) The court concluded that because “the gist” of an IFPA cause of action is equitable rather than legal, the plaintiffs were not entitled to a jury trial. (Id., at p. 837 (citing DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150, 184).)
Arguably, the Second District did not adhere to the established standard courts typically apply to questions involving the right to a jury in cases based on California statutes: whether common law “actions of the same class” were tried to juries at the time the state constitution was enacted in 1850. (See Nationwide Biweekly Administration, Inc. v. Superior Court of Alameda Cnty. (2020) 9 Cal.5th 279, 316.) Nor did the court reconcile its conclusion with caselaw affirming that anti-fraud qui tam actions, which have existed at common law since at least the early 18th century, afford a right to a jury. (See, e.g., One 1941 Chevrolet Coupe, 37 Cal.2d 283, 293, fn. 14 (listing qui tam actions decided between 1721 and 1728); Phile qui tam v. The Ship Anna (1787) 1 U.S. 197, 205 (qui tam action tried to jury); Wood v. Stoddard, (N.Y. Sup. Ct. 1807) 2 Johns. 194, 195 (qui tam action tried to jury); Mendoza v. Ruesga (2008) 169 Cal.App.4th 270, 284 (right to jury exists under statutes “principally intended to combat fraud”).) This caselaw includes decisions affirming the right to a jury under the federal False Claims Act—the statute that inspired the anti-fraud mission and mechanics of the IFPA. (See United States ex rel. Drakeford v. Tuomey Healthcare Sys., Inc. (4th Cir. 2012) 675 F.3d 394, 405.)
Article I, Section 16 of the California Constitution establishes that trial by jury is “a basic and fundamental part of our system of jurisprudence” that “should be zealously guarded by the courts.” (DiPirro v. Bondo Corp., supra, at p. 176 (citation omitted).) Consistent with that maxim, the question of a jury trial right when in doubt should “be resolved in favor of preserving a litigant’s right to trial by jury” (Cohill v. Nationwide Auto Serv. (1993) 16 Cal.App.4th 696, 699), such that “any seeming curtailment f the right to a jury trial should be scrutinized with the utmost care.” (Mendoza, supra, at p. 284 (citation omitted).)
Since the Supreme Court summarily denied the plaintiffs’ petition for review, whether the Second District’s analysis in Rapier of the right to a jury in IFPA cases ensured that this “basic and fundamental” right remained “zealously guarded” is perhaps an open question. So too is whether that analysis amounts to non-binding dicta, as the Second District had already upheld the trial court’s denial of the plaintiffs’ jury request based on the State’s alleged failure to timely pay jury fees.
The Rapier decision means that IFPA relators (and the State in cases where it intervenes) will likely face more opposition to demands for jury trials—for the time being. However, IFPA relators and advocates may be better served trying these often-complex cases before experienced judges.