Blue cross/blue Shield v. Rubin , 490 F.3d 718 ( 2007 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BLUE CROSS AND BLUE SHIELD OF 
ALABAMA; BLUE CROSS AND BLUE
SHIELD OF MASSACHUSETTS, INC.;
BLUE CROSS AND BLUE SHIELD OF
MICHIGAN; BLUE CROSS AND BLUE
SHIELD OF NEBRASKA; BLUE
CROSS AND BLUE SHIELD OF NORTH
CAROLINA; BLUE CROSS AND BLUE
SHIELD OF TENNESSEE, INC.;
CAREFIRST BLUE CROSS AND BLUE
SHIELD; EMPIRE HEALTHCHOICE
ASSURANCE, INC., d/b/a EMPIRE
No. 05-56261

BLUE CROSS BLUE SHIELD;
EXCELLUS HEALTH PLAN, INC., d/b/a D.C. No.
EXCELLUS BLUE CROSS BLUE CV-05-00230-TJH
SHIELD; R.M.S.C.O., INC.;
HIGHMARK, INC., d/b/a HIGHMARK
BLUE CROSS BLUE SHIELD and d/b/a
HIGHMARK BLUE SHIELD; PREMERA
BLUE CROSS; REGENCE BLUE
SHIELD; REGENCE BLUECROSS
BLUESHIELD OF UTAH; REGENCE
BLUECROSS BLUESHIELD OF OREGON;
REGENCE BLUESHIELD OF IDAHO,
Plaintiffs-Appellants,
v.

6215
6216 BLUE CROSS AND BLUE SHIELD v. RUBIN
UNITY OUTPATIENT SURGERY 
CENTER, INC.,
Defendant,
and
MITCHELL RUBIN; STEVEN RUBIN;
DANIEL ROSE, M.D.; MARIO Z.
ROSENBERG, M.D.; PARATHA
GOVINDARAJAN, M.D.; ROSALINDA
LANDON; LEON HALAC, M.D.; 
BYUNG CHUN, M.D.; ROBERT J.
MCKENNA, M.D.; ARDALAN
BABAKNIA, M.D.; MOUSTAFA EL
ALAMY, M.D.; MICHAEL CHAN,
M.D.; BHARAT PATEL, M.D.;
EDGAR LLUNCOR, M.D.; LAN THI
NGOC NGUYEN; HUONG THIEN NGO,
Defendants-Appellees.

BLUE CROSS AND BLUE SHIELD v. RUBIN 6217
BLUE CROSS AND BLUE SHIELD OF 
ALABAMA; BLUE CROSS AND BLUE
SHIELD OF MASSACHUSETTS, INC.;
BLUE CROSS AND BLUE SHIELD OF
MICHIGAN; BLUE CROSS AND BLUE
SHIELD OF NEBRASKA; BLUE
CROSS AND BLUE SHIELD OF NORTH
CAROLINA; BLUE CROSS AND BLUE
SHIELD OF TENNESSEE, INC.;
CAREFIRST BLUE CROSS AND BLUE
SHIELD; EMPIRE HEALTHCHOICE
ASSURANCE, INC., d/b/a EMPIRE
BLUE CROSS BLUE SHIELD;
EXCELLUS HEALTH PLAN, INC., d/b/a
EXCELLUS BLUE CROSS BLUE No. 06-55316
SHIELD; R.M.S.C.O., INC.;
HIGHMARK, INC., d/b/a HIGHMARK
 D.C. No.
CV-05-00230-TJH
BLUE CROSS BLUE SHIELD and d/b/a
HIGHMARK BLUE SHIELD; PREMERA
BLUE CROSS; REGENCE BLUE
SHIELD; REGENCE BLUECROSS
BLUESHIELD OF UTAH; REGENCE
BLUECROSS BLUESHIELD OF OREGON;
REGENCE BLUESHIELD OF IDAHO,
Plaintiffs-Appellants,
v.
UNITY OUTPATIENT SURGERY
CENTER, INC.; UNITY OUTPATIENT
SURGERY CENTER, LLC;
MILLENNIUM OUTPATIENT SURGERY
CENTER, a

6218 BLUE CROSS AND BLUE SHIELD v. RUBIN
Medical corporation; ST. PAUL 
OUTPATIENT SURGERY CENTER,
LLC; TAM VU PHAM, a/k/a TOM
VU; ROSALINDA LANDON; ANDREW
HARNEN; THU NGOC PHAM; a/k/a
PERRY PHAM; MADHUKAR JIGJINNI,
MD; CHIN KIM, MD; MARTHA
MADRID, MD; AMER RAYYES, MD,
Defendants-Appellees,
and
ANAHEIM WEST OUTPATIENT
SURGERY CENTER, INC.; LINCOLN
MANAGEMENT GROUP, LLC; ST.
FRANCIS OUTPATIENT MEDICAL
CENTER, INC.; INLAND ORANGE
MEDICAL MANAGEMENT, INC.; 
NEWPORT SUPERIOR OUTPATIENT
MEDICAL CENTER, INC.; NEWPORT
SUPERIOR MANAGEMENT GROUP,
LLC; HARBOR MULTI-SPECIALTY
SURGICAL CENTER, INC.; PACIFIC
OUTPATIENT MEDICAL CENTER, a
Medical corporation; PACIFIC
OUTPATIENT MEDICAL MANAGEMENT
GROUP, LLC; PREMIUM OUTPATIENT
SURGERY CENTER, a Medical
corporation; HUONG THIEN NGO;
LAN THI NGOC NGUYEN; GORDON
MERRICK; DEE FRANCIS; DANIEL
ROMANELLO; OCHER COUNTY
CLINICS, INC.; MITCHELL RUBIN;

BLUE CROSS AND BLUE SHIELD v. RUBIN 6219
STEVEN RUBIN; CATHERINE BACH; 
MICHAEL SCHNEIDER; ARDALAN
BABAKNIA, MD; MICHAEL D. CHAN,
MD; BYUNG CHUN, MD; MOUSTAFA
EL ALAMY, MD; PARATHA
GOVINDARAJAN, MD; LEON HALAC,
MD; LARS HANSON, MD; WILLIAM
HAMPTON, MD; EDGAR LLUNCOR, 
MD; ROBERT J. MCKENNA, MD;
BHARAT PATEL, MD; DANIEL ROSE,
MD; MARIO Z. ROSENBERG, MD;
HAMILTON SAH, MD; YOUN S. TOH,
MD; LLOYD WHITE, MD,
Defendants.

BLUE CROSS AND BLUE SHIELD OF 
ALABAMA; BLUE CROSS AND BLUE
SHIELD OF MASSACHUSETTS, INC.;
BLUE CROSS AND BLUE SHIELD OF
MICHIGAN; BLUE CROSS AND BLUE
SHIELD OF NEBRASKA; BLUE
CROSS AND BLUE SHIELD OF NORTH No. 06-55565
CAROLINA; BLUE CROSS AND BLUE
SHIELD OF TENNESSEE, INC.;  D.C. No.
CAREFIRST BLUE CROSS AND BLUE CV-05-00230-TJH
SHIELD; EMPIRE HEALTHCHOICE
ASSURANCE, INC., d/b/a EMPIRE
BLUE CROSS BLUE SHIELD;
EXCELLUS HEALTH PLAN, INC., d/b/a
EXCELLUS BLUE CROSS BLUE
SHIELD; R.M.S.C.O., INC.;

6220 BLUE CROSS AND BLUE SHIELD v. RUBIN
HIGHMARK, INC., d/b/a HIGHMARK 
BLUE CROSS BLUE SHIELD and d/b/a
HIGHMARK BLUE SHIELD; PREMERA
BLUE CROSS; REGENCE BLUE
SHIELD; REGENCE BLUECROSS
BLUESHIELD OF UTAH; REGENCE
BLUECROSS BLUESHIELD OF OREGON;
REGENCE BLUESHIELD OF IDAHO,
Plaintiffs-Appellants,
v.
UNITY OUTPATIENT SURGERY
CENTER, INC.; UNITY OUTPATIENT
SURGERY CENTER, LLC;
MILLENNIUM OUTPATIENT SURGERY
CENTER, a Medical corporation; ST. 
PAUL OUTPATIENT SURGERY CENTER,
LLC; TAM VU PHAM, a/k/a TOM
VU; ROSALINDA LANDON; ANDREW
HARNEN; THU NGOC PHAM, a/k/a
PERRY PHAM; MADHUKAR JIGJINNI,
MD; CHIN KIM, MD; MARTHA
MADRID, MD; AMER RAYYES, MD;
LINCOLN MANAGEMENT GROUP,
LLC; INLAND ORANGE MEDICAL
MANAGEMENT, INC.; NEWPORT
SUPERIOR OUTPATIENT MEDICAL
CENTER, INC.; NEWPORT SUPERIOR
MANAGEMENT GROUP, LLC; PACIFIC
OUTPATIENT MEDICAL CENTER, a

BLUE CROSS AND BLUE SHIELD v. RUBIN 6221
Medical corporation; PACIFIC 
OUTPATIENT MEDICAL MANAGEMENT
GROUP, LLC; PREMIUM OUTPATIENT
SURGERY CENTER, a Medical
corporation; HUONG THIEN NGO;
LAN THI NGOC NGUYEN; GORDON
MERRICK; DEE FRANCIS; DANIEL
ROMANELLO; MITCHELL RUBIN;
STEVEN RUBIN; CATHERINE BACH;
MICHAEL SCHNEIDER; ARDALAN
BABAKNIA, MD; MICHAEL D. CHAN,
MD; BYUNG CHUN, MD; MOUSTAFA
EL ALAMY, MD; PARATHA
GOVINDARAJAN, MD; LEON HALAC,
MD; LARS HANSON, MD; WILLIAM
HAMPTON, MD; EDGAR LLUNCOR, 
MD; ROBERT J. MCKENNA, MD;
BHARAT PATEL, MD; DANIEL ROSE,
MD; MARIO Z. ROSENBERG, MD;
HAMILTON SAH, MD; YOUN S. TOH,
MD; LLOYD WHITE, MD,
Defendants,
and
ANAHEIM WEST OUTPATIENT
SURGERY CENTER, INC.; ST. FRANCIS
OUTPATIENT MEDICAL CENTER, INC.;
HARBOR MULTI-SPECIALTY SURGICAL
CENTER, INC.; OCHER COUNTY
CLINICS, INC.,
Defendants-Appellees.

6222 BLUE CROSS AND BLUE SHIELD v. RUBIN
Appeal from the United States District Court
for the Central District of California
Terry J. Hatter, Chief District Judge, Presiding
BLUE CROSS/BLUE SHIELD OF 
ALABAMA, BLUE CROSS AND BLUE
SHIELD OF MASSACHUSETTS, INC;
BLUE CROSS AND BLUE SHIELD OF
MICHIGAN; BLUE CROSS AND BLUE
SHIELD OF NEBRASKA; BLUE
CROSS AND BLUE SHIELD OF NORTH
CAROLINA; BLUE CROSS BLUE
SHIELD OF TENNESSEE, INC.;
CAREFIRST BLUE CROSS AND BLUE
SHIELD; EMPIRE HEALTHCHOICE No. 06-71645
ASSURANCE, INC., dba EMPIRE BLUE
D.C. No.

CROSS BLUE SHIELD; EXCELLUS
HEALTH PLAN, INC. dba EXCELLUS CV-05-00230-TJH/
BLUE CROSS BLUE SHIELD; VBK
R.M.S.C.O., INC.; HIGHMARK INC., OPINION
dba HIGHMARK BLUE CROSS BLUE
SHIELD AND dba HIGHMARK BLUE
SHIELD; PREMERA BLUE CROSS;
REGENCE BLUE CROSS
BLUESHIELD OF UTAH; REGENCE;
BLUE CROSS BLUESHIELD OF
OREGON AND REGENCE
BLUESHIELD OF IDAHO,
Petitioners,
v.

BLUE CROSS AND BLUE SHIELD v. RUBIN 6223
UNITED STATES DISTRICT 
COURT FOR THE CENTRAL
DISTRICT OF CALIFORNIA,
Respondent,
UNITY OUTPATIENT SURGERY
CENTER, INC., UNITY OUTPATIENT
SURGERY CENTER, LLC; ST. PAUL
OUTPATIENT SURGERY CENTER,
LLC; MILLENNIUM OUTPATIENT
SURGERY CENTER, A MEDICAL
CORPORATION; TAM VU PHAM, aka
TOM VU; HUONG THIEN NTO; LAN
THI NGOC NGUYEN; ANDREW
HARNEN; ROSALINDA LANDON;
MITCHELL RUBIN, STEVEN RUBIN;

THU NGOC PHAM, aka PERRY PHAM;
ARDALAN BABAKNIA, M.D.;
MICHAEL CHAN, M.D.; BYUNG
CHUN, M.D.; MOUSTAFA EL ALAMY,
M.D.; PARATHA GOVINDARAJAN,
M.D.; LEON HALAC, M.D.;
MADHUKAR JIGJINNI, M.D.; CHIN
KIM, M.D.; EDGAR LLUNCOR, M.D.;
MARTHA MADRID, M.D.; BHARAT
PATEL; AMER RAYYES, M.D.;
DANIEL ROSE, M.D.; MARIO Z.
ROSENBERG, M.D.,
Real Parties in Interest.

Petition for Writ Of Mandamus
Argued and Submitted
November 13, 2006—Pasadena, California
Filed May 25, 2007
6224 BLUE CROSS AND BLUE SHIELD v. RUBIN
Before: Stephen Reinhardt and Jay S. Bybee, Circuit Judges,
and Larry A. Burns,* District Judge.
Opinion by Judge Reinhardt
*The Honorable Larry A. Burns, United States District Judge for the
Southern District of California, sitting by designation.
BLUE CROSS AND BLUE SHIELD v. RUBIN 6225
COUNSEL
Howard Veisz and Marvin Wexler, Kornstein Veisz Wexler
& Pollard, LLP, New York, New York, for the plaintiff-
appellant.
6226 BLUE CROSS AND BLUE SHIELD v. RUBIN
Peter Morris, Altman & Morris, Los Angeles, California, for
defendants-appellees Mario Z. Rosenberg, M.D. and Madhu-
kar Jigjinni, M.D.
Mark Gregory Clinnin, Law Offices of Mark Gregory Clin-
nin, Los Angeles, California, for defendant-appellee Thu
Ngoc Pham.
Jennifer J. Miller, Beam Brobeck West Borges & Rosa, LLP,
Santa Ana, California, for defendant-appellee Amer Rayyes,
M.D.
Alexander W. Kirkpatrick, Bondcurtis, LLP, Pasadena, Cali-
fornia, for defendant-appellee Edgar Lluncor, M.D.
Paul M. Gelb, Hooper Lundy & Bookman, Inc., Los Angeles,
California, for defendant-appellee Robert J. McKenna, M.D.
Andrea L. Jacobs, Law Office of David W. Wiechert, San
Clemente, California, for defendant-appellee Huong Thien
Ngo.
Harold Sullivan, Law Offices of Harold Sullivan, Pasadena,
California, for defendant-appellee Millennium Outpatient Sur-
gery Center.
Dennis E. Lee, Fenton & Nelson, Los Angeles, California, for
defendants-appellees Moustafa El Alamy, M.D., Michael
Chan, M.D., and Unity Outpatient Surgery Medical Center,
Inc.
Joel Bruce Douglas and Keith Mitchell Rozanski, Bonne
Bridges Mueller O’Keefe & Nichols, Los Angeles, California,
for defendant-appellee Byung Chun, M.D.
Raymond J. McMahon and Marc B. Thompson, Bonne Brid-
ges Mueller O’Keefe & Nichols, Santa Ana, California, for
defendant-appellee Chin Kim, M.D.
BLUE CROSS AND BLUE SHIELD v. RUBIN 6227
Margaret M. Holm, Bonne Bridges Mueller O’Keefe & Nich-
ols, Santa Ana, California, for defendant-appellee Ardalan
Babaknia, M.D.
R. Timothy Stone, Green & Associates, Los Angeles, Califor-
nia, for defendants-appellees Mitchell Rubin, Steven Rubin
and Daniel Rose.
OPINION
REINHARDT, Circuit Judge:
This case arises out of a scheme allegedly entered into by
the defendants to fraudulently bill Blue Cross and Blue Shield
Plans (“Blue Cross”) for unnecessary medical services. Plain-
tiffs allege that defendants and their associates enticed indi-
viduals from around the country into undergoing unnecessary
treatments at the defendant medical clinics by offering cash
payments and beach vacations. Plaintiffs allege that they were
then billed for the unnecessary procedures and, as a result,
paid millions of dollars to defendants.
In addition to the civil suit, several of the defendants are
currently facing criminal prosecution in state or federal court
or both. The events leading to this appeal began when a num-
ber of defendants, none of whom had been indicted in the
criminal proceedings, requested stays of the civil proceeding
on the basis that discovery in the civil suit implicated their
Fifth Amendment rights. The district court granted these
stays. It subsequently granted stays to most of the other indi-
vidual defendants and to corporate defendants who argued
that they would be prejudiced if required to defend against the
civil suit without discovery against the individual defendants
who had received stays. The precise duration of the stays is
difficult to discern, as the district court granted the motions
without mentioning duration, but most of the defendants
6228 BLUE CROSS AND BLUE SHIELD v. RUBIN
requested stays “pending the resolution of the criminal inves-
tigations and/or prosecutions that have arisen in connection
with the acts alleged in plaintiffs’ complaint.” Blue Cross
argues that the district court abused its discretion in granting
the stays, and asks us to reverse this determination so that the
suit can go forward on the merits.
[1] The defendants argue that we lack jurisdiction to review
the stay orders because they are not final judgments. How-
ever, a stay order is appealable if it places the plaintiff “effec-
tively out of court.” Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 10 (1983). In Moses H. Cone, the
Supreme Court held that an order staying litigation in federal
court pending the resolution of a case in state court that would
have res judicata effect on the federal case placed the plaintiff
effectively out of court. Id. Moses H. Cone applies whenever
there is a possibility that proceedings in another court could
moot a suit or an issue, even if there is no guarantee that they
will do so. Lockyer v. Mirant Corp., 398 F.3d 1098, 1102 (9th
Cir. 2005).
[2] We have not yet considered whether we have jurisdic-
tion over stay orders that impose lengthy or indefinite delays
absent risk that another proceeding will have res judicata
effect on the federal case. However, the majority of circuits
that have considered this question have found jurisdiction. See
Hines v. D’Artois, 531 F.2d 726, 731 (5th Cir. 1976); Am.
Mfrs. Mut. Ins. Co. v. Edward D. Stone, Jr. & Assocs., 743
F.2d 1519 (11th Cir. 1984); Kahn v. Gen. Motors Corp., 889
F.2d 1078, 1080 (Fed. Cir. 1989); Johnson & Johnson, Inc. v.
Wallace A. Erickson & Co., 627 F.2d 57, 62 (7th Cir. 1980);
see also Rojas-Hernandez v. Puerto Rico Elec. Power Auth.,
925 F.2d 492, 495 (1st Cir. 1991) (treating a denial of a
motion to set a trial date as a stay and finding jurisdiction due
to the indefinite delay); Discon Corp. v. Nynex Corp., 4 F.3d
130, 134 (2d Cir. 1993) (finding jurisdiction under the collat-
eral order doctrine because the stay imposed an indefinite
delay placing the plaintiff effectively out of court); but see
BLUE CROSS AND BLUE SHIELD v. RUBIN 6229
Marcus v. Twp. of Abington, 38 F.3d 1367, 1370 (3d Cir.
1994); Crystal Clear Commc’ns v. Sw. Bell Tel. Co., 415 F.3d
1171 (10th Cir. 2005). We agree with the majority position
that lengthy and indefinite stays place a plaintiff effectively
out of court. Such an indefinite delay amounts to a refusal to
proceed to a disposition on the merits. Discon Corp., 4 F.3d
at 134. Even if litigation may eventually resume, such stays
create a “danger of denying justice by delay.” Am. Mfrs., 743
F.2d at 1524. Delay “inherently increases the risk that wit-
nesses’ memories will fade and evidence will become stale.”
Pagtalunana v. Galaza, 291 F.3d 639, 643 (9th Cir. 2002).
Additionally, in some cases plaintiffs may go out of business
awaiting recovery or face irreparable harm during the time
that their suits are on ice.1 In determining that stays of the
type at issue here are appealable, however, we do not mean
to intimate that they are invariably improper or inappropriate.
Rather, it is within the district court’s discretion to grant or
deny such stays, after weighing the proper factors. Keating v.
Office of Thrift Supervision, 45 F.3d 322, 325 (9th Cir. 1995);
infra at p. 12.
[3] The stays in this case are both indefinite and expected
to be lengthy. They could easily last as long as the five- or
six-year limitations period in the criminal cases, or even lon-
ger if the government initiates criminal prosecutions shortly
before the end of that period. Even the stays for defendants
Ngoc Nguyen, Thien Ngo, and Perry Pham, which appear to
last only for the duration of the criminal proceedings already
initiated against them, have thus far lasted longer than the 18-
1
We also agree with the Fifth and Eleventh Circuits that Coopers &
Lybrand v. Livesay, 437 U.S. 463 (1978), does not suggest that these prac-
tical concerns are irrelevant to our analysis of whether a plaintiff is “effec-
tively out of court.” See Am. Mfrs., 743 F.2d at 1524 n.4. As the Supreme
Court explained in Moses H. Cone, Coopers & Lybrand involved a case
in which the order has “no legal effect on the named plaintiff’s ability to
proceed with his individual claim in federal court,” while the stay order
in this case, like that in Moses H. Cone, blocks the plaintiffs from proceed-
ing as a matter of law. 460 U.S. at 10 n.11.
6230 BLUE CROSS AND BLUE SHIELD v. RUBIN
month delays that other courts have considered sufficient to
place the plaintiffs effectively out of court. See Am. Mfrs., 743
F.2d at 1524; Hines, 531 F.2d at 732. Thus, we hold that we
have jurisdiction to review the stays because they place the
plaintiffs effectively out of court.2
[4] Having concluded that we have jurisdiction to review
the district court’s decision, however, we search in vain for a
reasoned decision to review. The district court’s decision to
grant a stay is reviewed for abuse of discretion, meaning that
we must examine the adequacy of the rationale behind the dis-
trict court’s decision rather than simply reach the conclusion
that seems best to us. Lockyer, 398 F.3d at 1105. The district
court is required to perform a five-factor balancing test, con-
sidering the interests of the parties, the public, and the court.
Keating, 45 F.3d at 325. We cannot review the district court’s
exercise of its discretion in weighing these factors unless we
know that it has done so and why it reached its result.
“[M]eaningful appellate review for abuse of discretion is fore-
closed when the district court fails to articulate its reasoning.”
United Nat’l Ins. Co. v. R & D Latex Corp., 141 F.3d 916,
919 (9th Cir. 1998).
[5] In this case, the district court did not provide any expla-
nation at all in any of its orders granting stays to the various
parties. Instead, it simply announced peremptorily—without
any discussion of the relevant factors or any indication of the
basis for its decision—that it is “ordered that the motion [of
listed defendants] be, and hereby is, Granted.” In doing so, the
district court left us with no reasoned decision to review, and
no basis upon which to evaluate its exercise of discretion,
thereby making it impossible for us to do our judicial duty.
Where, as here, a district court does not explain its reasoning,
we must remand to that court to reconsider its decision and to
2
Because we hold that we have appellate jurisdiction, we need not con-
sider plaintiffs’ mandamus petition. Accordingly, that petition is dismissed
as moot.
BLUE CROSS AND BLUE SHIELD v. RUBIN 6231
set forth its reasons for whatever decision it reaches, so that
we can properly exercise our powers of review. Gov’t
Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir.
1998) (en banc). The “somewhat less deferential” abuse of
discretion review we perform when reviewing a district
court’s stay order, Lockyer, 398 F.3d at 1105, does not change
this general rule. Thus, as in R & D Latex Corp. and Drizol,
we remand the matter to the district court.
In exercising its discretion on remand, the district court
should consider, inter alia, the distinctions between the corpo-
rate defendants and the individual defendants, and the distinc-
tions between the defendants that have been indicted and
those that have not. The district court should also consider the
lengths of the stays requested by the various defendants.
Accordingly, cases numbered 05-56261, 06-55316, and 06-
55565 are VACATED and REMANDED. Case numbered
06-71645 is DISMISSED.