In November 2010, Brad Culpepper filed a claim for workers’ compensation benefits for injuries he allegedly suffered playing professional football. In 2000, Culpepper played six games in California while a member of the Chicago Bears, making him eligible for California benefits.
Fairmont Premier Insurance Company settled with Culpepper for $175,000 by way of an Order Approving Compromise and Release.
Shortly after the settlement Culpepper became a contestant on the reality television show Survivor, a show which can be physically demanding on its contestants.Fairmont alleges in its subsequent civil action against him, that during the pendency of Culpepper’s workers’ compensation claim, he engaged in activities such as running and kickboxing that were inconsistent with his claimed disability. Fairmont also alleges Culpepper misled the medical examiners hired as part of the claim process to evaluate his condition.
On December 21, 2015 Fairmont filed the instant qui tam action in California state court under California’s Insurance Fraud Prevention Act (IFPA) § 1871.7(e)(1). Culpepper removed the case to federal court on the basis of diversity,and moved to dismiss under Fed. R. Civ. P. 12(b)(1).
Culpepper argued that California Labor Code § 5901 divests the court of jurisdiction to hear this case. CLC § 5901 divests courts of jurisdiction to consider causes of action “arising out of any final order, decision or award” of the WCAB until after the WCAB has had an opportunity to reconsider its prior ruling. The district court granted Culpepper’s motion and dismissed the suit because it concluded that the instant qui tam suit “arises out of” the OACR, which is a “final order” per § 5901, and because Fairmont had not asked the WCAB to reconsider the OACR prior to filing this suit.
The United States Court of Appeals for the 9th Circuit reversed in the unpublished case of People of the State of California ex rel. TIG Insurance Co. v Culpepper.
IFPA § 1871.7(b) authorizes a relator to bring a qui tam claim on behalf of the State of California when the relator discovers violations of, inter alia, CPC § 550.3 CPC § 550 in turn prohibits “knowingly present[ing] or caus[ing] to be presented any false or fraudulent claim” for insurance.
Fairmont alleges Culpepper violated CPC § 550 when he “presented” a fraudulent claim for insurance. Its claim therefore arises from Culpepper’s allegedly fraudulent presentation of his claim for insurance benefits, not from the settlement of that claim or from the WCAB’s approval of that settlement. Even if no settlement had ever been reached, a suit under CPC § 550 may still be available so long as the relator has discovered the presentation of a fraudulent claim. This suit therefore does not arise from the OACR, and the trial court has subject matter jurisdiction to hear it. The Court said it will not construe the term “arising out of” beyond its plain meaning as Culpepper suggests.
The WCAB also does not have exclusive jurisdiction over this appeal because this is an action on behalf of the State of California, not an action for benefits against an employer. People ex rel. Alzayat v. Hebb, 18 Cal. App. 5th 801, 830 (Cal. Ct. App. 2017).