The 25-year-old was driving in her car when she was blocked by a horde of photographers and customers from the nearby Hookah Lounge.
The venue's manager Thaer Kamal claimed Lohan was driving when she hit him on her way out of a nearby club, reported TMZ Online.
According to the LA County District Attorney rejection notification, Kamal was a non-credible witness who changed his story and refused to cooperate with law enforcement.
Kamal refused to produce the medical records, he claims he had from his hospital visit. The police has said that there was no collision in the surveillance video.