Anthony K. Hui v. Beth Sturbaum
Court of Appeal, First Appellate District (January 9, 2014)
California’s anti-SLAPP statute (Code of Civil Procedure §425.16) was passed in 1992 because of the legislature’s concerns about “a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” The purpose of the statute was to allow a special motion to dismiss an action involving issues of protected free speech. This case considered the extent to which an insurance investigator’s discussions with a personal injury attorney about the treating chiropractor were the proper subject of a motion to strike the chiropractor’s defamation claims.
In November, 2010, chiropractor Anthony K. Hui (“Dr. Hui”) sued Beth Sturbaum (“Sturbaum”) for defamation, trade libel, libel per se and slander. Sturbaum was an insurance company claims investigator for Federated Mutual Insurance Company. She handled liability claims submitted to Federated and often read alerts posted by the National Insurance Crime Bureau (“NICB”) regarding potential fraudulent claims practices. While investigating a claim, Sturbaum reviewed billing invoices for chiropractic services by Dr. Hui provided to two claimants who had been in an automobile accident. She noted that services described on the invoices violated the Business and Professions Code and California regulations governing chiropractors. She also learned that the claimants’ attorney was being investigated by the NICB, and that Dr. Hui had prior chiropractic license suspensions and a revocation.
Sturbaum called Dr. Hui and expressed concern that the automobile collision in which the claimants had been injured was relatively minor, and that Dr. Hui’s services may be excessive. Sturbaum also called an assistant to the claimants’ attorney, Winnie Yu, and stated that the billings were “excessive because of the type of impact” in the car accident and that the billings “could be fraudulent.” Sturbaum mentioned that she made, or was going to make, a complaint about Dr. Hui. In 2010, the California Department of Insurance (“DOI”) informed Sturbaum that it was investigating Dr. Hui “for potential fraudulent activity” and asked her to provide information. She cooperated with the investigation and provided the requested information. Dr. Hui soon after learned about the DOI investigation.
Dr. Hui filed suit against Sturbaum and claimed that Sturbaum submitted false reports to the DOI and told personal injury attorneys not to send their clients to him. Sturbaum moved to strike the complaint and argued that it arose out of protected speech. The trial court granted Sturbaum’s motion and found that her communications with the DOI were absolutely privileged, and Sturbaum’s communications to Ms. Yu were not made with malice such as to defeat a qualified privilege.
The Court of Appeal affirmed after reviewing the case de novo. Dr. Hui only appealed the trial court’s finding with regard to Sturbaum’s communications with Ms. Yu. In an unpublished section of its opinion, the Court agreed that Sturbaum’s statements to the DOI were absolutely privileged under Civil Code § 47. In the published opinion, the Court held that Sturbaum’s statements to Ms. Yu were protected under Civil Code § 47(c), which provides a conditional privilege for “communications to interested persons” made without malice. As such, the Court found that Sturbaum’s statements to Ms. Yu were made “in connection with a public issue or an issue of public interest.” It noted that the business of insurance, and the issue of insurance fraud, impact most consumers of insurance and are a concern to a substantial number of people. The Court thus concluded that there was a sufficient “degree of closeness between the challenged statements and the asserted public interest” of preventing insurance fraud. On the other hand, Dr. Hui had not established a probability of prevailing pursuant to the Anti-SLAPP statute because he did not rebut the Court’s finding of a privilege, and did not meet his burden of showing that the statements were made with malice, hatred, ill will or in reckless disregard of Dr. Hui’s rights.
COMMENT
This chiropractor’s defamation lawsuit against an insurance investigator failed and was subject to an Anti-SLAPP motion because the investigator’s statements regarding fraud investigation were protected. The investigator’s speech was privileged because she complied with the duty to report suspected fraud to the DOI under Insurance Code § 1872.4, and alerted an interested third party that the chiropractor may have been engaging in excessive or fraudulent billing.
For a copy of the complete decision see:
http://www.courts.ca.gov/opinions/documents/A135597.PDF