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Reporting an accusation of insurance fraud leads to defamation proceedings



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Fox Television Stations, LLC (Fox), William Melugin, Daniel Leighton and Kris Knutsen (together with the Fox defendants) appealed against orders to reject their special motion to strike (Code Civ. Proc., § 425.16; anti-SLAPP charter ) complaint submitted by Dr. Jay W. Calvert, a nationally recognized plastic surgeon, and Jay Calvert, MD, Professional Corporation (the professional company) (together the Calvert plaintiffs). IJay W. Calvert et al. v. Fox Television Stations, LLC et al., B310772, California Court of Appeals, (May 25, 2022), the Court of Appeals reversed the Court’s decision.

FACTS

This case arises from the fact that Fox defendants broadcast and publish news reports on a civil lawsuit against Dr. Calvert by his former patient Natalie West regarding insurance fraud and medical battery. In response, the Calvert plaintiffs sued the Fox defendants and Houston for libel. The trial court found that even if the defamation claims stemmed from protected activities, the Calvert plaintiffs had shown a likelihood of winning their claim.

On appeal, Fox Defendants and Houston argue that Fox reporting, including its interview with Houston, is absolutely privileged under Section 47, Subsection (d) of the Civil Code, as a fair and truthful report of a legal proceeding. Furthermore, the Calvert plaintiffs failed to invoke and prove genuine malice. The defendants Fox also claim that several of the statements in question do not constitute defamation.

On May 31, 2018, West filed a lawsuit against Dr. Calvert, the professional company, University of Southern California (USC) and others, alleging causes of fraud, medical battery, breach of contract and forced sexual penetration of an unconscious person with a foreign object. West claimed in his second amended complaint that Dr. Calvert 2013 performed a cosmetic nose surgery to reconstruct West’s nose after a failed reconstructive surgery by another doctor. West paid for the operation in full, but Dr. Calvert fraudulently billed West’s medical insurer for the procedure by incorrectly characterizing the surgery as a medically necessary correction of a nasal obstruction in the airways.

West claimed that after the operation, Dr. Calvert told her that the operation had been “a complete success” but that he needed to make two “adjustments” in a second operation. From 2013 through 2017, Dr. persuaded Calvert West to undergo another 12 unnecessary and harmful nasal surgeries to bill West’s insurance company for further intervention. West claimed that Dr. Calvert “essentially treats[ed]West’s health insurance as “its own personal ATM.”

Letter from Dr. Calvert’s counsel to Leighton and Melugin

On April 25, 2019, Dr. Calvert’s lawyer, Arthur H. Barens, in response to a request regarding the Fox-owned television station KTTV’s intention to broadcast a report on West’s allegations against Dr. Calvert. Calvert, to KTTV’s senior producer Leighton and requested a review of Leighton. West’s medical records before the report was sent.

KTTV published a written version of the report on its website.

The report May 15, 2019

On May 15, 2019, KTTV broadcast a second news report on West’s accusations against Dr. Calvert. Melugin reported, “Many new details [are] comes out after our examination of Dr. Jay Calvert aired on Monday night. Melugin reported that USC had “removed all connection to [Dr. Calvert] from their website for plastic surgery. “Melugin stated that Hakala held a press conference that day, where she stated that more than 20” new alleged victims “had contacted her to make similar allegations about insurance fraud and unnecessary operations. In photos from the press conference, Hakala said that USC would not have been in a “great hurry” to distance itself from Dr. Calvert if USC had full confidence in him.

Dr. Calvert’s claim for revocation

On May 30, 2018, Neville L. Johnson, attorney for Dr. Calvert, a letter to Melugin, KTTV’s news director Kris Knutsen and Fox’s legal department, demanding that the reports of 13 and 15 May and associated online articles be withdrawn.

Fox defendants made no withdrawal.

Dr. Calvert’s complaint against the fox accused and Houston

On June 9, 2020, the Calvert plaintiffs sued the Fox defendants with a claim for a single libel suit. The complaint alleged that 60 statements in the reports on 13 and 15 May were “[f]also [a]accusations. “

Fox Defendants and Houston’s special motions to strike

The defendants Fox filed separate motions separately to strike out the complaint.

Dr. Calvert submitted statements in support of the Calvert plaintiffs’ objections. He attached to his statement in opposition to the Fox defendants’ motion parts of West’s and Houston’s records, consent forms, insurance licenses and billing history, which he claimed contradicted their allegations.

The district court rejected the special demands for a strike. The trial court found that the remaining 47 statements identified in the Calvert plaintiffs’ complaint fell within the scope of the Code of Civil Procedure section 425.16 because they “concerned a public figure and a matter of public interest.” The court found that the privilege of fair reporting did not apply to any of the statements.

DISCUSSION

An action arising from an act in favor of a defendant’s constitutional right to petition or freedom of expression in connection with a public issue is the subject of a special strike visit unless the plaintiff shows a likelihood of winning the claim.

If the evidence relied on cannot be adduced in the proceedings, since it is categorically statute-barred or if indisputable facts show inadmissibility, the court may not examine it before an objection.

The defendants bore the burden of showing that most of their claims arose from the defendant’s protected activity

The complaint’s allegations of protected activity that only provide context for the Calvert plaintiffs’ defamation claims must be disregarded in the anti-SLAPP analysis.

The Defamation Act

The parts of a defamation claim are (a) a publication that is (b) false, (c) defamatory and (d) unprivileged, and that (e) has a natural tendency to harm or that causes special harm. In addition, a defamatory plaintiff who is a public figure must prove, by clear and convincing evidence, that the defendant made the defamatory statement with real malice, that is, knowing that it was false or with ruthless disregard for whether it was false or not.

The Professional Corporation failed to bear its burden of proving a probability of winning its claims as none of the contested statements concerned Professional Corporation

Fox defendants and Houston claim that none of the alleged defamatory statements concerned the professional company. The Calvert plaintiffs do not argue to the contrary.

The trial court erred in dismissing the Fox defendants’ special request to strike out the complaint concerning Dr. Calvert’s claims

A plaintiff must prove that the alleged defamatory statements are not materially true. Dr. Calvert provided no evidence contrary to Fox defendant’s special strike attempt to show that Melugin’s statements about USC were not materially true. He has therefore failed to bear the burden of showing a likelihood of success with his defamation claims based on these statements.

Civil Code section 47, subsection (d) gives an absolute privilege to any fair and true report in, or communication to, a public journal of a legal proceeding, or anything said in the course thereof. In the case of the fair reporting privilege, the reported statements are absolutely privileged regardless of the defendants’ motives for reporting them. Justice and truth in this context do not refer to the truth or correctness of the things argued in the legal proceedings, but rather to the correctness of the contested statements with regard to what happened during the legal proceedings.

An accused media does not have to justify every word in the alleged defamatory material that is published. The reporter is not bound by the straitjacket of the witness’s exact words; a certain degree of flexibility is tolerated when it comes to deciding what is a “fair report”.

The justice privilege of the report protects most of the disputed statements by West, Hakala and Melugin regarding West’s accusations against Dr. Calvert

Most of the statements by Melugin, West and Hakala regarding West’s other amended complaints are privileged. The trial court therefore erred in failing to grant the Fox defendant’s specific request to strike on those statements in the complaint.

To the extent that Melugin’s reporting of West’s and Hakala’s statements at the press conference – that more than 20 new alleged victims had contacted Hakala – exceeded the scope of West’s other amended complaints, Dr. Calvert’s allegations were based on these statements because he did not show the fox prosecuted published statements with real malice.

DISPOSITION

The order that denies Fox defendants’ special strike attempts is reversed. The reason is referred back to court with instructions to revoke the order rejecting the Fox defendant’s special strike attempt and to enter a new order granting the motion. The defendants Fox shall reimburse their costs upon appeal. The Houston and Calvert plaintiffs must bear their own costs in the appeal.

This case clarified the immunity created by section 47 of the Civil Code as it applies to the press and all SIU investigators who make a report of a suspected insurance fraud to the state. People, like Dr. Calvert, who is accused of insurance fraud in a civil proceeding, cannot stop the publication of that information and must not sue for defamation. Immunity is absolute.


(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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