Judge: Jon R. Takasugi, Case: 22STCV16768, Date: 2022-09-26 Tentative Ruling

Case Number: 22STCV16768    Hearing Date: September 26, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ motion to compel arbitration is GRANTED. This matter is ordered stayed pending the completion of arbitration proceedings.

            On 5/20/2021, Plaintiff M.S. (Plaintiff) filed suit against Kaiser Foundation Health Plan, Inc, Kaiser Foundation Hospitals, Southern California Permanente Medical Group, Lauren Michelle Walton, M.D. (collectively, Defendants), alleging: (1) violation of California Confidentiality Medical Information Act;  (2) common law invasion of privacy; (3) violation of right to privacy; (4) negligence and negligence per se; (5) intentional infliction of emotional distress/negligent infliction of emotional distress; and (6) violation of Business and Professions Code section 17200.

            Now, Defendants move to compel arbitration of Plaintiff’s Complaint.

Legal Standard

Where the Court has determined that an agreement to arbitrate a controversy exists, the Court shall order the petitioner and the respondent to arbitrate the controversy …unless it determines that…  grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.) Among the grounds which can support rescission are fraud, duress, and unconscionability. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) The Court may also decline to compel arbitration wherein there is possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2 (c).)

Discussion

The party moving to compel arbitration “bears the burden of proving [the] existence [of an arbitration agreement] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party also bears the burden of demonstrating that the claims fall within the scope of the arbitration agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

A.    Existing Agreement

Defendant submitted evidence that Plaintiff’s claims are subject to binding arbitration pursuant to the provisions of the 2021 Group Agreement and Evidence of Coverage between Kaiser Foundation Health Plan, Inc. (Health Plan) and the County of Los Angeles (LA County) (the LA County Agreement/EOC) through which Plaintiff was enrolled and sought and obtained medical care from Kaiser.

In opposition, Plaintiff argues that she never signed the LA County Agreement/EOC, and that Defendant has not established that Plaintiff ever saw the arbitration provision(s).

However, whether or not Plaintiff signed the LA County Agreement/EOC itself is irrelevant. It is well-established that the contracting employer (in this case the County of Los Angeles) “acts as the agent or representative of the employees” in contracting for a group health plan, and that plans negotiated and entered into “within the scope of its authority … bind those employees who enroll under the contract.” (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 705-07.) (arbitration agreement in group agreement between Kaiser and CalPERS is binding on enrollees)

Defendants submitted evidence that Plaintiff accessed the County’s healthcare enrollment website multiple times, and completed enrollment events in 2015 and 2016. Each time, when Plaintiff elected Kaiser from among the health plans offered, “a prominent disclosure of the binding arbitration agreement appears on the screen” which the enrollee must accept by clicking the “Accept/Enroll Now” button immediately following the arbitration disclosure, or will be directed to select a different plan. (Valenzuela Decl.., ¶¶ 2 & 3.)

In opposition, Plaintiff contends that: (1) her electronic signature was insufficient; (2) that the arbitration disclosure was not prominently displayed; (3) that she has no memory of signing or agreement to the arbitration disclosure; (4) the agreement is not binding because the Agreement is not signed by the County of Los Angeles; and (5) the language is not clear and understandable.

As to the first point, electronic signatures satisfy any legal requirement for a signature under the Uniform Electronic Transactions Act (Civ. Code §§ 1633- 1633.17 [“UETA”]). Under § 1633.2(h), an “electronic signature” means “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.” And under Civil Code § 1633.7, “a record or signature cannot be denied legal effect or enforceability solely because it is in electronic form.”

As to the second point, for purposes of Health & Safety Code § 1363.1(b), “prominent” or “prominently displayed” is defined as “standing out from its surroundings” (Burks v. Kaiser Foundation Health Plan, Inc. (2008) 160 Cal.App.4th 1021, 1028-29) or as “readily noticeable” (Imbler v. PacifiCare of Cal. Inc. (2002) 103 Cal.App.4th 567, 579) Here, Defendant attached an “exemplar copy of the web enrollment screen arbitration disclosure” and an electronic record “[logging Plaintiff’s] activities on the web enrollment system, including her acceptance of the arbitration agreement.” (Id., ¶ 7 & Exs. D & E.) This shows that the arbitration disclosures appear on a separate screen, are preceded by the title “Kaiser Arbitration” in large font, followed by a bold and underlined heading, “Kaiser Foundation Health Plan, Inc. and Kaiser Permanente Insurance Company Arbitration Agreement”, followed by the arbitration disclosure in clear and bold font, appearing by itself with no other topics or unrelated provisions. The Court readily agrees that this layout satisfies the requirements of Health & Safety Code § 1363.1(b),

            As to the third point, while Plaintiff states she has no memory of agreeing to the arbitration provision, LA County’s records indicate that she did. (Valenzuela Decl., ¶¶ 3, 4.) Moreover, Plaintiff would not have been able to move forward with Kaiser enrollment if she had not agreed and Plaintiff accepted and obtained the benefits of Kaiser enrollment for many years.

            As to the fourth point, it is undisputed that the County accepted the contract (and all its employees obtained benefits) through payment, as stated on the signature page:

Acceptance of Agreement

Group acknowledges acceptance of this Agreement by signing the Signature Page and returning it to Health Plan. If Group does not return it to Health Plan, Group will be deemed to have accepted this Agreement if Group pays Health Plan any amount toward Premiums.

(Pet., Ex. A at PDF p. 40, emphasis added; see Vasques Decl., ¶ 4 [proof of payment by County].)

Nothing in Health & Safety Code § 1363.1 requires the employer to sign the group agreement in order to accept its arbitration provision, and, as demonstrated by Defendants in reply, the agreement complied with the applicable portions of Health & Safety Code section 1363.1. Moreover, the County was well aware of the arbitration provision -- it placed a disclosure of “Kaiser Arbitration” on its own benefits enrollment website. (Pet., Ex. D.)

            Finally, as to the fourth point, while Plaintiff argues the language is not clear and understandable, Plaintiff does not identify any specific material language that is unclear. Plaintiff refers to Certificate of Insurance language, but this in no way undermines the import of the disclosure. Moreover, the fact that the arbitration wording in the enrollment disclosure and the full Agreement/EOC are different does not affect the validity of either. Health & Safety Code §§ 1363.1(a) and (c) identify certain concepts that must be included in the disclosure (“whether the plan uses binding arbitration”; “including specifically … medical malpractice”; “whether the enrollee is waiving his or her right to a jury trial”; and the disclosure be substantially expressed” in the wording of C.C.P. § 1295(a)). There is no requirement that the disclosure repeat the full plan arbitration provision or match its wording.

            Based on the foregoing, the Court finds that the preponderance of evidence indicates that a binding arbitration agreement exists between Plaintiff and Defendants. (Rosenthal, supra, 14 Cal.4th at p. 413.) 

B.    Covered Claims

The Binding Arbitration provision states, in part:

Binding Arbitration

For all claims subject to this “Binding Arbitration” section, both Claimants and Respondents give up the right to a jury or court trial and accept the use of binding arbitration. . . .

Scope of arbitration

Any dispute shall be submitted to binding arbitration if all of the following requirements are met:

·        The claim arises from or is related to an alleged violation of any duty incident to or arising out of or relating to this EOC or a Member Party’s relationship to Kaiser Foundation Health Plan, Inc. (Health Plan), including any claim for medical or hospital malpractice (a claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered), for premises liability, or relating to the coverage for, or delivery of, services or items, irrespective of the legal theories upon which the claim is asserted.

·        The claim is asserted by one or more Member Parties against one or more Kaiser Permanente Parties or by one or more Kaiser Permanente Parties against one or more Member Parties.

·        Governing law does not prevent the use of binding arbitration to resolve the claim

Members enrolled under this EOC thus give up their right to a court or jury trial, and instead accept the use of binding arbitration except that the following types of claims are not subject to binding arbitration:

Plaintiff argues that her claims for violation of privacy rights do not fall under the arbitration provision because they are not specifically listed and because they are derived from constitutional or statutory provisions. However, this argument is contrary to both the express terms of the contract and California law.

Here, the contract between Plaintiff and Kaiser requires arbitration of claims based on the “alleged violation of any duty” arising from that agreement or the relationship between Kaiser and its members. Plaintiff’s claims are arbitrable because they “arise[] from” or are “related to” an alleged violation of “any duty incident to or arising out of or relating to this EOC or a Member Party’s relationship to Kaiser Foundation Health Plan, Inc ….” (Pet., Ex. A, p. 76.)

Given that Defendants have established by a preponderance of the evidence that an arbitration agreement exists, and that Plaintiff’s claims are covered by that agreement, the burden shifts to the Plaintiff to establish that the arbitration clause should not be enforced. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236. (Pinnacle).)

II.               Plaintiff’s Burden 

The party opposing arbitration bears the burden of proving, by a preponderance of the evidence any defense, such as unconscionability or duress. (Pinnacle, supra, 55 Cal.4th at p. 236.)

“Unconscionability has both procedural and substantive elements. Although both must appear for a court to invalidate a contract or one of its individual terms, they need not be present in the same degree: ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’”  (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469. (Roman).) Where the degree of procedural unconscionability is low, “the agreement will be enforceable unless the degree of substantive unconscionability is high.” (Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796 (Ajamian).)

A.    Procedural Unconscionability

Plaintiff argues that the agreement is procedurally unconscionable because it is an adhesion contract and does not include arbitration rules. Plaintiff argues the agreement is substantively unconscionable because it imposes unfair costs on Plaintiff.

However, Plaintiff’s first contention ignores the fact that Plaintiff had a choice of various health plans as an employee of the County of Los Angeles. Plaintiff cites no authority that the traditional adhesion contract analysis applies to an enrollee who has a choice of health plans and is represented by a large governmental entity with undeniable bargaining power.

Plaintiff’s second contention ignores that the rules of arbitration were incorporated in the agreement, and that failure to attach them, on its own, is not grounds for procedural unconscionability. (Brinkley v. Monterey Financial Services (2015) 242 Cal.App.4th 314, 341-42) (this is “not a ground for concluding the entire arbitration agreement is procedurally unconscionable;” the rules were “easily accessible,” “available on the Internet,” and plaintiff was “already online completing the e-signature process”; and citing cases). Here the OIA Rules are readily available from Kaiser’s Member Services (Ex. A, p. 76) and on the Internet (https://oiakaiserarb.com/1/rules-and-info/rules).

Because Plaintiff has failed to present any evidence of procedural unconscionability, she has failed to meet her burden.

Based on the foregoing, Defendants’ motion to compel arbitration is granted. This matter is ordered stayed pending the completion of arbitration proceedings.

It is so ordered.

Dated:  September    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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