Filed 7/18/16 Edalati v. Kaiser Found. Health Plan CA1/5
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.


               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION FIVE


NAZILA EDALATI,
         Plaintiff and Appellant,
                                                                     A144758
v.
KAISER FOUNDATION HEALTH                                             (Solano County
PLAN, INC., et al.,                                                  Super. Ct. No. FCS044289)
         Defendants and Respondents.


         Kaiser Foundation Health Plan, Inc. (Kaiser) provides prescribed medications for
Medicare and Medicaid patients of Nazila Edalati, D.D.S. Kaiser erroneously notified
some of Edalati’s patients that she was on a federal list of excluded providers suspected
of fraud. Edalati sued for defamation, and Kaiser moved to dismiss, alleging its
communications with the patients was protected activity within the meaning of the anti-
SLAPP law1 (Code Civ. Proc., § 425.16).2 The trial court held Kaiser’s conduct was “in
furtherance of the exercise of the . . . constitutional right of free speech in connection
with a public issue or an issue of public interest” (id., subd. (e)(4)), namely Medicare
funding and fraud. We reverse.




         1
        “SLAPP” is an acronym for “strategic lawsuit against public participation.”
(Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57 & fn. 1.)
         2
             Undesignated statutory references are to the Code of Civil Procedure.


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                                   I.     BACKGROUND
         In October 2014, Edalati sued Kaiser for defamation and invasion of privacy–false
light. She alleged that Kaiser sent an unsolicited letter to some of her patients falsely
stating she had been excluded from participation in all federal health care programs as of
October 4, 2013, and referring the patients to a website of the Office of Inspector
General. Edalati alleged that Kaiser made the statement knowing of its falsity or in
reckless disregard for its truth and without undertaking an adequate investigation into its
truth.
         Kaiser moved to strike the complaint, arguing the alleged defamatory statements
were protected activity under section 425.16.3 “Here, Kaiser sent out the written
member-notifications at issue in connection with its responsibilities as a Medicare Part D
Sponsor” pursuant to guidelines promulgated by the federal Centers for Medicare &
Medicaid Services (CMS). Specifically, CMS guidelines required Part D Sponsors to
review lists of excluded providers on a monthly basis and to notify those providers’
patients that federal law prohibits Kaiser from using federal funds to cover the cost of any
drugs prescribed by those providers.
         Kaiser acknowledged the exclusion letters were erroneous, but presented evidence
the letters were sent as a result of simple negligence. A Kaiser employee misread a

         3
          Section 425.16 provides in relevant part: “A cause of action against a person
arising from any act of that person in furtherance of the person’s right of petition or free
speech under the United States Constitution or the California Constitution in connection
with a public issue shall be subject to a special motion to strike, unless the court
determines that the plaintiff has established that there is a probability that the plaintiff
will prevail on the claim. [¶] . . . [¶] . . . [An] ‘act in furtherance of a person’s right of
petition or free speech . . .’ includes: (1) any written or oral statement or writing made
before a legislative, executive, or judicial proceeding, or any other official proceeding
authorized by law, (2) any written or oral statement or writing made in connection with
an issue under consideration or review by a legislative, executive, or judicial body, or any
other official proceeding authorized by law, (3) any written or oral statement or writing
made in a place open to the public or a public forum in connection with an issue of public
interest, or (4) any other conduct in furtherance of the exercise of the constitutional right
of petition or the constitutional right of free speech in connection with a public issue or
an issue of public interest.” (§ 425.16, subds. (b)(1), (e).)


                                              2
similar name on the list of excluded providers and mistakenly concluded that Edalati had
been excluded. Kaiser consequently sent letters informing Edalati’s Medicare patients
that Kaiser “[could] no longer cover prescription medications . . . that are prescribed by
[Edalati] . . . because she has been excluded from participation in all federal health care
programs.” After Edalati complained in late December 2013, Kaiser discovered its error
and sent retraction letters to the same patients in January 2014, again pursuant to CMS
guidelines.
       Edalati opposed the anti-SLAPP motion, arguing “a private letter to 38 patients of
a dentist, speaking solely to a matter affecting only those persons, not addressed to any
‘issue,’ and not calling for the recipients to take action of any type, is not speech on an
issue of public interest.”
       The court granted Kaiser’s motion to strike. “The sending of the letters that
misidentified [Edalati] as an excluded health care provider under the Medicare Part D
program constitutes protected activity. . . in that it involved the exercise of the right of
free speech in connection with a public issue or an issue of public interest. Broadly
construing the statute, the court finds that the continuous dissemination of information
about the eligibility of health care providers in the Medicare Part D program represents
an ‘ongoing discussion’ about an issue of significance to the public, namely, the
expenditure of Medicare funds. (See Cross v. Cooper (2011) 197 Cal.App.4th 357, 382–
383; Hecimovich v. Encinal School Parent Teacher Organization (2012) 203 Cal.App.4th
450.) In this regard, the case is distinguishable from the case of Du Charme v.
International Brotherhood of Electrical Workers (2003) 110 Cal.App.4th 107 relied on
by [Edalati].” The court also found that Edalati had not established a probability of
prevailing on her claim, finding that “[t]he letters upon which [her] claims are based are
privileged under Civil Code Section 47(c) as communications made, without malice, to
an interested person by another interested person.”4 The court dismissed the action and

       4
         Civil Code section 47, subdivision (c) provides a conditional privilege for
communications made “without malice, to a person interested therein, (1) by one who is
also interested, or (2) by one who stands in such a relation to the person interested as to

                                               3
ruled that Kaiser was entitled to recover its attorney fees pursuant to section 425.16,
subdivision (c)(1).
                                     II.     DISCUSSION
       Edalati argues the trial court erred in ruling that Kaiser’s conduct was protected
activity within the meaning of the anti-SLAPP statute. She argues that unquestionably
false statements of fact are not constitutionally protected, and that private correspondence
to 38 individuals about their health care coverage is not a matter of public interest. We
reject the first argument but agree with the second. Because we find no protected activity
was at issue, the anti-SLAPP statute has no application and the trial court’s determination
that the statements were privileged need not be addressed.
A.     Standard of Review
       “In ruling on an anti-SLAPP motion, the trial court engages in a two-step process.
‘First, the court decides whether the defendant has made a threshold showing that the
challenged cause of action is one arising from protected activity. The moving
defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains
were taken “in furtherance of the [defendant]’s right of petition or free speech under the
United States or California Constitution in connection with a public issue,” as defined in
the statute. [Citation.] If the court finds such a showing has been made, it then
determines whether the plaintiff has demonstrated a probability of prevailing on the
claim.’ [Citations.] . . . [¶] On appeal, we review the motion de novo and independently
determine whether the parties have met their respective burdens.” (Cross v. Cooper,
supra, 197 Cal.App.4th at pp. 370–371 (Cooper).)
B.     False Statements of Fact
       Edalati first asserts that “[i]t is black letter law that false statements have no
constitutional protection whatsoever.” She draws this principle from cases that discuss
when defamation may be punished or enjoined consistent with the First Amendment of


afford a reasonable ground for supposing the motive for the communication to be
innocent, or (3) who is requested by the person interested to give the information.”


                                               4
the United States Constitution. (See Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323,
339–340 [distinguishing statements of fact and opinion]; Baker v. Los Angeles Herald
Examiner (1986) 42 Cal.3d 254, 260 [same]; Sanders v. Walsh (2013) 219 Cal.App.4th
855, 862; Copp v. Paxton (1996) 45 Cal.App.4th 829, 839 [same]; Ashcroft v. Free
Speech Coalition (2002) 535 U.S. 234, 245–246 [“freedom of speech has its limits; it
does not embrace certain categories of speech, including defamation”]; Beauharnais v.
Illinois (1952) 343 U.S. 250, 266 [“[l]ibelous utterances [are not] within the area of
constitutionally protected speech”].) Those cases are relevant to the second prong of
anti-SLAPP analysis, which addresses whether a plaintiff can prevail on her claims
against the defendant. They do not address the first prong of the analysis as to whether a
claim arises from protected activity within the meaning of the anti-SLAPP statute. As an
example of the distinction, an allegedly false and defamatory news article unquestionably
arises from an act in furtherance of the First Amendment rights. (See Balzaga v. Fox
News Network, LLC (2009) 173 Cal.App.4th 1325, 1336; Carver v. Bonds (2005)
135 Cal.App.4th 328, 342–344.) However, the publisher of such an article may still be
subject to civil liability. (See, e.g., Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d
711, 747 [false statements about private person and not about matter of public interest are
actionable if defendant was at fault]; Time, Inc. v. Hill (1967) 385 U.S. 374, 387 [false
statements about public figure are actionable if defendant acted with actual malice].)
That is, even when the anti-SLAPP law applies as an initial matter, the plaintiff might
nevertheless be able to prevail on the claim. (Cf. Balzaga, at pp. 1339–1343; Carver, at
pp. 344–360.) Defamation claims arising from protected activity are prime examples of
anti-SLAPP cases (Hecimovich v. Encinal School Parent Teacher Organization, supra,
203 Cal.App.4th at p. 464), but the defamation may nevertheless be actionable.
       Edalati cites Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696 (Lefebvre) in
support of her argument, but the case is inapposite. The defendant in Lefebvre had
falsely accused her ex-husband of crimes to gain advantage in her divorce proceeding.
The husband was charged and tried, found not guilty by a jury, and found factually
innocent by the court. He then sued his ex-wife for malicious prosecution among other


                                             5
causes of action, and the ex-wife responded with an anti-SLAPP motion. (Id. at pp. 700–
701.) The court held the wife’s conduct was not protected activity under the anti-SLAPP
law even though false reports of crimes are absolutely privileged under Civil Code
section 47. (See Hagberg v. California Federal Bank (2004) 32 Cal.4th 350, 355.) In
our view, Lefebvre follows the rule of Flatley v. Mauro, which held that conceded or
clearly established illegal behavior is not protected activity under the anti-SLAPP statute
even if it otherwise arises from activity in furtherance of the constitutional rights of free
speech or petition. (See Flatley v. Mauro (2006) 39 Cal.4th 299, 305; Lefebvre, at p. 704
[citing Flatley].) Other courts have similarly interpreted Lefebvre. (See Kenne v. Stennis
(2014) 230 Cal.App.4th 953, 966–967 [“the court in Lefebvre held that because the wife’s
report to the police was admittedly false and therefore illegal, it did not constitute conduct
in furtherance of her constitutional rights”; citing distinguishable cases]; Comstock v.
Aber (2012) 212 Cal.App.4th 931, 951–952 [no evidence of protected activity in Lefebvre
because “ ‘the record “conclusively” established that [the] statements to the police were
“illegal activity” under Penal Code section 148.5’ ”].)
       Edalati quotes a passage from Lefebvre suggesting that a court assessing whether
conduct is protected activity under section 425.16, subdivision (e)(4), must determine
whether the particular conduct at issue was constitutionally protected.5 To the extent
Lefebvre can be read to suggest that the merits of a plaintiff’s claim must be determined
as part of the first-prong anti-SLAPP analysis, we disagree. The merits assessment
clearly takes place under the second prong of the analysis except in the rare case, such as
Lefebvre, where the conduct at issue is admittedly illegal. (See Dwight R. v. Christy B.
(2013) 212 Cal.App.4th 697, 711–712.) “Illegal” for purposes of this rule means
criminal, not unlawful under civil law. (Fremont Reorganizing Corp. v. Faigin (2011)


       5
         “Because [defendant’s] act of making a false police report was not an act in
furtherance of her constitutional rights of petition or free speech, the anti-SLAPP statute
simply never comes into play in this case. Neither the federal nor the state constitutional
rights of petition or free speech encompass a right to file a false crime report.” (Lefebvre,
supra, 199 Cal.App.4th at p. 703.)


                                              6
198 Cal.App.4th 1153, 1169 [reviewing cases]; see Price v. Operating Engineers Local
Union No. 3 (2011) 195 Cal.App.4th 962, 971 [defamation is not “illegal” within the
meaning of Flatley v. Mauro].) In any event, Kaiser argues its conduct here was not
unlawful because it was protected by the common interest privilege of Civil Code
section 47, subdivision (c).
C.     Broad and Amorphous Public Interest is Insufficient
       Edalati also argues Kaiser’s conduct did not qualify as protected activity because it
was not connected to a matter of public interest within the meaning of the statute. Kaiser
maintains its conduct was in furtherance of the public’s interest in Medicare
expenditures. We find Edalati’s argument more persuasive.
       “ ‘The fact that “a broad and amorphous public interest” can be connected to a
specific dispute is not sufficient to meet the statutory requirements’ of the anti-SLAPP
statute. [Citation.] By focusing on society’s general interest in the subject matter of the
dispute instead of the specific speech or conduct upon which the complaint is based,
[some] defendants resort to the oft-rejected, so-called ‘synecdoche theory of public issue
in the anti-SLAPP statute,’ where ‘[t]he part [is considered] synonymous with the greater
whole.’ [Citation.] In evaluating the first prong of the anti-SLAPP statute, we must
focus on ‘the specific nature of the speech rather than the generalities that might be
abstracted from it.’ ” (World Financial Group, Inc. v. HBW Ins. & Financial Services,
Inc. (2009) 172 Cal.App.4th 1561, 1570 (World Financial).)
       The defendants in World Financial, who were the plaintiff’s direct competitors,
allegedly used misappropriated trade secrets and confidential information to solicit the
plaintiff’s employees to come work for them. (World Financial, supra, 172 Cal.App.4th
at pp. 1564, 1566.) The defendants contended their communications involved matters of
public interest: “ ‘the pursuit of lawful employment pursuant to Bus. & Prof. § 16600’
and ‘workforce mobility and free competition.’ ” (World Financial, at p. 1572.) The
appellate court was not persuaded. “Though couched in noble language, defendants’
communications were not ‘about’ these broad topics, nor were they designed to inform
the public of an issue of public interest. They were merely solicitations of a competitor’s


                                             7
employees . . . undertaken for the sole purpose of furthering a business interest. While
we do not dispute that employee mobility and competition are issues of public interest
and importance, ‘the focus of the anti-SLAPP statute must be on the specific nature of the
speech rather than on generalities that might be abstracted from it. [Citation.]’
[Citation.] Otherwise, every case alleging the breach of a noncompetition agreement or
the related misappropriation of trade secrets would be categorically subject to the anti-
SLAPP statute. Applying the statute in this manner would effectively ‘eviscerate the
unfair business practices laws,’ a result the Legislature plainly did not intend.” (World
Financial, at p. 1572.)
       Analogously, Kaiser’s communications with Edalati’s patients were not “about”
Medicare funding and were not designed to inform the public about the policy issue of
Medicare funding. Kaiser sent the exclusion letters to its members in purported
compliance with federal regulations so that it could continue to operate as a Medicare
Sponsor. If this conduct were protected under the anti-SLAPP law, the statute would
apply to any act of regulatory compliance by the hundreds of hospitals and tens of
thousands of health care providers who care for the more than 5 million Medicare
patients in this state.6 Such sweeping application would be far removed from the
Legislature’s intent of encouraging participation in matters of public significance.
(§ 425.16, subd. (a); see Consumer Justice Center v. Trimedica International, Inc. (2003)
107 Cal.App.4th 595, 601 [advertising about an herbal supplement was not speech on
matter of public interest because “nearly any claim [based on federal regulation of such
supplements] could be sufficiently abstracted to fall within the anti-SLAPP statute”].)
We hold that Kaiser cannot bring its conduct within the coverage of the anti-SLAPP
statute through such an attenuated link to a general matter of public interest.


       6
         See Centers for Medicare & Medicaid Services, MDCR PROVIDERS 4 and 5
<https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-
Reports/CMSProgramStatistics/2013/Providers.html> (as of July 12, 2016); id., MDCR
ENROLL AB 2 <https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
Trends-and-Reports/CMSProgramStatistics/2013/EnrollAB.html> (as of July 12, 2016).

                                              8
       Kaiser further argues the “existence of legislative or regulatory schemes pertaining
to the underlying subject matter can be indicative of the existence of a matter of public
interest.” The cases it cites for this principle, however, are readily distinguishable.
       In Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, the former
manager of a homeowners association brought a defamation action against association
members and directors based on their criticisms of his performance as manager. The
controversy about the manager’s performance eventually led to an unsuccessful recall
election of certain directors and a vote to switch to professional management. (Id. at
pp. 472–473.) The appellate court held that in this context—the statutorily-regulated
quasi-governmental and democratic operation of a homeowners association—the
statements were made in a public forum such that the alleged defamatory statements were
protected under section 425.16, subdivision (e)(3). (Damon, at pp. 475–476.) Kaiser
does not argue its statements were made in a public forum, and Damon does not assist
Kaiser by analogy because the regulatory scheme was cited simply to describe the quasi-
governmental nature of homeowners associations, not to link the challenged
communications to issues of public interest. (Id. at p. 475.)
       In Cross, a homeowner sued her tenants for informing (or threatening to inform)
prospective homebuyers that a registered sex offender lived nearby. (Cross, supra,
197 Cal.App.4th at pp. 365–366.) The reviewing court held the tenants’ communications
were protected activity because they “involved the location of a registered sex offender, a
subject specifically and directly related to an issue of compelling and widespread
interest.” (Id. at p. 379.) The court noted that the Legislature specifically required home
sale contracts to advise prospective buyers of a public database showing the location of
sex offenders: “This requirement reflects not only the general public interest in the
dissemination of information about registered sex offenders but also the specific public
interest in making sure that prospective . . . buyers know where to find this information
. . . . [¶] Here, [the tenants’] conversation . . . was closely and directly related to specific
issues of great interest to the general public.” (Id. at p. 377, italics added; see id. at
pp. 375–377 [reviewing sex offender registration statutes and Legislature’s statements of


                                                9
intent in enacting those statutes].) In other words, the act or threatened act of informing
prospective buyers of the nearby residence of a sex offender was at the core of the
conduct protected and encouraged by the statute.
       Kaiser also cites Cross and similar cases for the principle that “even statements
which at first blush seem to hold importance to only a small segment of the population,
and which were only communicated to a select group of people, [may be] made ‘in
connection with . . . an[] issue of public interest’ ” as required by section 425.16,
subdivision (e)(4). However, in such contexts “the constitutionally protected activity
must, at a minimum, occur in the context of an ongoing controversy, dispute or
discussion, such that it warrants protection by a statute that embodies the public policy of
encouraging participation in matters of public significance.” Du Charme v. International
Brotherhood of Electrical Workers, supra, 110 Cal.App.4th at p. 119, fn. omitted; see,
e.g., Terry v. Davis Community Church (2005) 131 Cal.App.4th 1534, 1539, 1547–1548
[church leaders’ and members’ allegations of sexually inappropriate conduct by two
youth leaders were protected because the statements pertained to a matter of controversy
within the church and lead to internal investigation and police report]; Hecimovich v.
Encinal School Parent Teacher Organization, supra, 203 Cal.App.4th at pp. 455–456,
465–468 [statements by volunteers and a parent-teacher organization about a coach’s
disciplinary policy were protected because the policy became a matter of controversy
within the afterschool program and the coach was later barred from coaching].)
       Kaiser also cites a decision of this Division in which we held an insurance claims
adjuster’s statements about possible fraudulent conduct of a chiropractor were protected
activity. (Hui v. Sturbaum (2014) 222 Cal.App.4th 1109, 1112.) The published portion
of that opinion, however, did not include our analysis on that issue, and that case’s facts
differ starkly from this one. The claims adjuster had obtained information about the
allegedly fraudulent practices from nongovernmental investigative reports, cooperated in
a separate government investigation of the chiropractor, and made the alleged actionable
statements (to the chiropractor and a law firm representing the chiropractor’s patients) in
the context of resolving insurance claims in which they were all involved. (Id. at


                                              10
pp. 1112–1113.) In other words, there was an ongoing controversy about whether this
particular chiropractor was engaging in fraud and the insurance claims representative was
playing an active role in that controversy. In Du Charme v. International Brotherhood of
Electrical Workers, supra, 110 Cal.App.4th 107, by contrast, a statement that a union
officer had been removed for financial mismanagement was not related to an ongoing
controversy because the officer had already been terminated and the members were not
being asked to take a position on the issue. (Id. at p. 118.) Similarly here, there was no
ongoing controversy about Edalati’s fraudulent practices, and Kaiser’s statements were
not whistleblower-type statements about alleged or possible fraud that contributed to a
debate on a matter of public interest. Instead, Kaiser’s communications were connected
to the broader issue of Medicare funding and fraud only because they occurred in the
context of a highly-regulated industry.
       As several courts have acknowledged, it can be difficult to draw lines between
protected and unprotected activity in cases where the speech or conduct at issue involves
only a small number of persons and occurs in a nonpublic forum. (See Cross, supra,
197 Cal.App.4th at pp. 372–374 [reviewing cases]; cf. All One God Faith, Inc. v. Organic
& Sustainable Industry Standards, Inc. (2010) 183 Cal.App.4th 1186, 1200–1210
[holding trade association’s “organic” labeling was not protected speech on issue of
public interest]; id. at pp. 1219–1228 (dis. opn., of Simons, J.) [arguing the labeling was
protected speech under anti-SLAPP statute].) We find Kaiser’s activities here
unprotected by the anti-SLAPP statute because they involve only an administrative error
in the context of regulatory compliance, rather than an affirmative effort to participate in
a controversy related to an issue of public interest.
       Because we hold that Kaiser’s conduct did not arise from protected activity, we do
not reach the second prong of the anti-SLAPP analysis, which evaluates Edalati’s
probability of prevailing on her claims. “[Kaiser] may have a valid privilege-based
defense which [it] may present in another procedural context, but such a defense may not
be presented by way of an anti-SLAPP motion.” (Lefebvre, supra, 199 Cal.App.4th at
p. 705; Flatley v. Mauro, supra, 39 Cal.4th at p. 325 [Civ. Code, § 47 may limit a party’s


                                              11
liability, but that “does not mean [an allegedly defamatory communication] is also a
protected communication for purposes of section 425.16”].)
                                   III.   DISPOSITION
       The order granting Kaiser’s anti-SLAPP motion and granting Kaiser attorney fees
pursuant to section 425.16, subdivision (c)(1) are reversed. Kaiser shall bear Edalati’s
costs on appeal.




                                                 _________________________
                                                 BRUINIERS, J.


WE CONCUR:


_________________________
SIMONS, Acting P. J.


_________________________
NEEDHAM, J.




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