The Qui Tam Action Is Brought On Behalf Of The State Which Is Not A Party To The Arbitration Agreement.
State of California ex rel. Aetna Health of California, Inc. et al., v. Pain Management Specialist Medical Group et al., B299025 (2/6 12/21/20) (Gilbert, Perren, Tangeman) involves a qui tam action brought under the Insurance Fraud Protection Act. An insurance company, Aetna, sued a surgical center, on behalf of the state, for insurance fraud. The provider, Pain Management, unsuccessfully petitioned to compel arbitration, and the Court of Appeal affirmed the denial of the petition.
"Here we decide," writes Justice Gilbert, "the qui tam action is not subject to arbitration because it is brought on behalf of the state which is not a party to the contract between the insurance company and the surgical center." The qui tam action belongs to the state, which is a nonsignatory, and which has not agreed to arbitrate.
The court's explanation is the same as that in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), which in the context of the California Private Attorney General Act, "concluded that a private attorney general claim is not a dispute between an employee and an employer, but is a dispute between the employer and the State."
I have written an article entitled "Qui tam actions can avoid arbitration in California" that appears in today's (December 24, 2020) Daily Journal. Because the Daily Journal is behind a paywall, I have not provided a link.
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