In the Matter of a Mail Dispute Between:

PATRICK S. ZACCALINI, M.D.
and
ABNER NICHERIE
CLINICAL RECOVERY SYSTEMS, INC.
and
SHELDON H. LEVY, RECEIVER

P. S. Docket No. MD-138

APPEARANCE FOR DR. ZACCALINI:
Penee R. C. Hull
Patrick S. Zaccalini, M.D., pro se
11645 Wilshire Blvd.
Los Angeles, CA  90052-6810

APPEARANCE FOR MR. NICHERIE & CLINICAL RECOVERY SYSTEMS, INC.:
Arnold G. Regardie, Esq.
12021 Wilshire Blvd.
Los Angeles, CA  90025-1200

APPEARANCE FOR MR. LEVY:
Byron Z. Moldo, Esq.
David L. Ray, Esq.
Saltzburg, Ray & Bergman
10960 Wilshire Blvd., 10th fl.
Los Angeles, CA  90024-3702

INITIAL DECISION

            This mail dispute proceeding was docketed under Domestic Mail Manual §153.72, which requires Regional Counsel to forward certain unresolved mail disputes to this Department for decision.  Disputants Zaccalini and Nicherie/Clinical Recovery Systems, Inc. (CRS) filed written submittals under 39 C.F.R. §965.5 and comments under §965.6.  Although untimely filed, Zaccalini has shown good cause why his submittals should be considered.  Disputant Sheldon H. Levy intervened as Receiver for Dr. Zaccalini and filed a submittal under §965.5.  The caption has been changed to add Mr. Levy and CRS as parties.  The dispute concerns delivery of mail addressed to Brentwood Medical Management Services and Brentwood Specialists Medical Group, 11645 Wilshire Blvd., Los Angeles, CA  90025-6810.  The following findings of fact and conclusions of law are based upon the submittals, comments, and exhibits attached thereto:

FINDINGS OF FACT

            1.  Disputant Patrick S. Zaccalini, M.D., operating as a professional corporation (PSZ, Inc.), d/b/a "Brentwood Specialists Medical Group" (BSMG), has been, until his recent illness, an orthopedic surgeon conducting a practice at 11645 Wilshire Boulevard, Suite 1050, Los Angeles, CA  90025.  By early 1991, he had begun negotiating with Abner and Daniel Nicherie, Richard Giberson, and Alan Cohen, for the purpose of engaging them as collection agents for his accounts receivable, and to otherwise administer his financially troubled office.  These latter men owned, or were associated with, Clinical Recovery Systems, Inc., (CRS).

            2.  The first of a series of contracts was executed on February 15, 1991, when CRS agreed to provide medical management services including the collection of accounts receivable.  In this agreement, Zaccalini maintained his ownership of the receivables.

            3.  On May 15, 1991, Dr. Zaccalini executed an "Authorization" for CRS to verify, negotiate, and settle all claims, bills, or liens originated prior to December 31, 1990 by himself, PSZ, Inc., or BSMG.

            4.  Thereafter, Giberson, Nicherie, and Cohen formed Brentwood Medical Management Services, Inc., (BMMS) for the purpose of managing Zaccalini's office and collecting his receivables.  On May 23, 1991, Giberson, as president of BMMS, and Dr. Zaccalini, executed an agreement for BMMS to administrate the offices of BSMG at 11645 Wilshire Blvdl, Suite 1050.  This included all day to day operations, collection of receivables, budget, and bill paying.  It also stated that Zaccalini "has agreed to sell $100,000 of (accounts receivable) (existing prior to October 15, 1990) to BMMS at a 50% discount."  Giberson also agreed to continue collecting old receivables for the benefit of Zaccalini and devoting 20 hours per week at BSMG.

            5.  On July 3, 1991, Giberson and Zaccalini executed a "BSMG/CRS Agreement" which states in part as follows:

1.  This agreement supersedes, precludes, and negates all previously written and oral misunderstood or poorly written agreements or contracts.

2.  Brentwood Specialists desires to have an immediate collection effort performed on its (1988-1990) receivables now in the form of hard copy, in existence prior to 1991, and amounting to approximately $550,000.00.

3.  The monthly collections will be segregated from those new 1991 receivables billed and collected by AOK Billing Service.

4.  CRS will distribute its collections each month as follows:

a.  The first $25,500 to the present agreed and budgeted overhead . . .

b.  Next $20,000 to be paid 25/75 to CRS/BSMG.

c.  Next $15,000 to be paid 50/50 to CRS/BSMG.

d.  Next $15,000 to be paid 75/25 to CRS/BSMG.

4.  This agreement/contract will automatically expire December 31, 1991 as regarding those above circumscribed receivables.  The uncollected accounts will revert to BSMG.  Performance on this contract will influence the other agreements/contracts which may or may not be in existence.

5.  All receipts and expenditures will be processed through (BMMS).  [Emphasis supplied].

            6.  On the same date, they also executed "BSMG/CRS Agreement Clinic 4" for the collection by CRS of Zaccalini's 1984-1987 receivables totaling $363,000.  The collections were to be split 40/60 CSR/BSMG, with collections going into CSR's own "lock-box" system, and like the other "BSMG/CRS Agreement", the agreement would expire on December 31, 1991 with the uncollected accounts reverting to BSMG.

            7.  Thereafter, CRS/BMMS took over the administration of Zaccalini's office at 11645 Wilshire Boulevard.  At that location, CRS/BMMS sought collection of the above receivables and requested that payment be sent to BSMG and/or Zaccalini at that address.  BMMS may have requested in some instances that payment be made, and remittances addressed, to BMMS at that address.

            8.  In October of 1991, Zaccalini declared that CRS/BMMS had breached the July 3 contracts, and thereby revoked his prior authorization for CRS/BMMS to act as his agent (1) for collection of accounts receivable, (2) for the receipt of all Zaccalini business mail addressed to BSMG or BMMS at his business address, and (3) for any other matters concerning the administration of his office.  He instructed the Post Office to deliver such mail to him.

            9.  Zaccalini contends that CRS/BMMS breached the agreement, inter alia, by taking all of his files, including the current accounts arising in 1991 which were already being collected by AOK Billing Service, and failing to make distributions as agreed.

            10.  Zaccalini brought an action against CRS in the Superior Court of California, County of Los Angeles, (SC 12 890).  On December 5, 1991, the Superior Court issued a "Minute Order" which held as follows:

"IT IS ORDERED that the files shall be returned to plaintiff (Zaccalini) no later than December 10, 1991, except for the original liens, which may be retained but may not be destroyed in any manner. . . .The court believes that, to the extent there is an assignment, the defendant (CRS) is entitled to the original liens."

            11.  In a letter to certain patients or their representatives dated January 10, 1992, Arnold Regardie, Esq., as attorney for BMMS, alleged that the Minute Order held that BMMS was the legal owner of the patient's account, and directed that payment be made to BMMS at a new location, 12021 Wilshire Blvd., Ste 545, Los Angeles, CA  90025.

            12.  Zaccalini now contends that there was never any assignment, but that in any event, CRS would only be entitled to receive a percentage of the collections received on the accounts receivable that had been assigned.

            13.  In Manns & Green v. Patrick S. Zaccalini, Case No. 90 C03553, on December 4, 1991, the Municipal Court of the Beverly Hills District, County of Los Angeles, appointed Disputant Sheldon H. Levy to act as a Receiver to enforce a judgment in favor of the plaintiff law firm against the Judgment Debtor, Zaccalini.  Mr. Levy was authorized to operate, manage, control and conduct the assets of Zaccalini's business, including taking possession of his accounts receivable.  He was further authorized to conduct examinations of debtors and to collect, settle, and/or compromise, and take the proceeds into the receivership estate.  Finally, the Receiver was specifically authorized to:

1.  Receive, collect and review all mail addressed to Judgement Debtor (Zaccalini), including but not limited to, mail addressed to (him) at his business address of 11645 Wilshire Boulevard, Suite 1050, Los Angeles, CA, or any other address from which (he) conducts business . . . The Receiver is further authorized to remove all checks and/or negotiate instruments made payable to Judgment Debtor, to endorse the same, and deposit the same in the Receiver's bank account.  (Emphasis supplied)

CONCLUSIONS OF LAW
Positions of the Parties

            1.  All parties have requested delivery of the mail in dispute, which is addressed to Brentwood Specialists Medical Group (BSMG) or Brentwood Medical Management Services, Inc. (BMMS) at 11645 Wilshire Boulevard, Los Angeles, CA.

            2.  Zaccalini claims that all of the mail is intended for his business, and that CRS/BMMS, his previous office administrator and collection agency, no longer has any authority to receive his mail.  In this regard, he notes that he terminated CRS's contract in October of 1991.

            3.  CRS demands delivery of the mail on the ground that it is the assignee of some of Zaccalini's accounts receivable ("original liens"), and that some of the mail will contain payments on those receivables.  CRS relies on agreements prior to July 3, 1991, which mention such an assignment, and the Superior Court's "Minute Order."  CRS argues that the Order recognizes the alleged assignment to CRS.  However, Zaccalini contends he never made an assignment and that the July 3, 1991 agreements negated any prior assignment.  In the alternative, Zaccalini argues that if an assignment occurred, CRS would be entitled to only a percentage of the money collected in the mail as payment on the receivable, but that CRS would not be entitled to delivery of his mail.

            4.  Finally, Sheldon Levy requests delivery of the disputed mail on the ground that he has been appointed Receiver for Zaccalini.  There is no dispute that Mr. Levy has been appointed Receiver, and the municipal court has clearly ordered him to take delivery of all of Zaccalini's business mail.  Accordingly, to the extent Zaccalini would otherwise be entitled to delivery of the mail in dispute, such mail will be delivered to Mr. Levy in accordance with the court order.

Conclusions

            5.  CRS/BMMS was entitled to receive mail addressed to BSMG, Zaccalini, or BMMS at Zaccalini's address solely by reason of its authorization by Zaccalini to receive mail intended for his business.  However, when Zaccalini revoked its authority to act as his agent in October of 1991, CRS/BMMS was no longer authorized to act for him and receive such mail.^[1]

            6.  Further, CRS bases its claim to the mail in question on an alleged assignment of receivables to it from Zaccalini.  However, it is not clear whether there was a valid assignment.  In this regard, the July 3 agreement stated that it negated all previous agreements, and no assignment was mentioned in that agreement.  However, the parties also recognized that other agreements, which might include a prior assignment, "may or may not" exist.  Also, the Minute Order of the Superior Court does not appear to resolve the problem:  it merely states that CRS is entitled to the original liens "to the extent that there is an assignment."  It fails to specify to what extent, if any, an assignment took place.

            7.  In any event, assuming arguendo that Zaccalini assigned the $100,000 in receivables to CRS on or about May 23, 1991, this fact would not help CRS in the instant mail dispute.  Those receivables would generate a relatively small amount of mail in comparison to the remittances and other correspondence regarding $550,000 of receivables mentioned in the "BSMG/CRS Agreement" dated July 3, plus all of the 1991 receivables and other Zaccalini business mail.  (The remittance on an additional $363,000 of receivables for the Clinic 4 contract may only have been addressed to CRS's Post Office Box).

            8.  Thus, even if an assignment took place, only a fraction of the mail addressed to Zaccalini, BSMG, or BMMS at 11645 Wilshire Boulevard would constitute payment on, or otherwise relate to, the assigned receivables.  In fact, the bulk of the disputed mail would relate to the other receivables, and other BSMG/Zaccalini business matters, for which CRS/BMMS no longer has any agency relationship, and such mail would be intended only for BSMG or Zaccalini.  Since CRS/BMMS is no longer authorized to receive the latter mail, or to act as agent for BSMG or Zaccalini, the disputed mail should be delivered to Sheldon Levy, as Receiver for Zaccalini and his business.

            9.  As previously indicated, this proceeding does not determine the ownership of any mail.  The only question is how the mail addressed to BSMG or BMMS at 11645 Wilshire Blvd. should be delivered.  Accordingly, if Sheldon Levy, acting as Receiver for Zaccalini, receives any mail pursuant to this Order which constitutes the property of CRS/BMMS, it shall be responsible for ensuring that such mail is properly forwarded to CRS/BMMS.

            10.  The attached mail delivery order should be issued.

Randolph D. Mason
Administrative Law Judge

^[1]/  Under the agreement of July 3, this authority would have automatically expired on December 31, 1991.  However, the Superior Court's order that the files (except for the "original liens") be returned to Zaccalini prior to that date, implicitly recognizes that the agency agreement had been terminated by Zaccalini in October of 1991.