Judge: Jon R. Takasugi, Case: 23STCV20007, Date: 2024-05-09 Tentative Ruling

Case Number: 23STCV20007    Hearing Date: May 9, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motion to compel arbitration is GRANTED, and this action is ordered stayed pending the completion of proceedings.

            On 8/21/2023, Plaintiff Lucas Villanueva (Plaintiff), a minor, by and though his Guardian ad Litem Cristina Olivares, filed suit against Southern California Permanente Medical Group, Kaiser Foundation Hospitals, and Kaiser Foundation Health Plan, Inc. (collectively, Defendants), alleging general negligence.

            Now, Defendants move for an order compelling arbitration of Plaintiff’s Complaint, and staying this action pending the completion of arbitration proceedings.

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 at the time of the medical services at issues, Ms. Olivares was enrolled as a Health Plan member under the LA County Agreement/EOC, and she sought and received medical services thereunder. She initially enrolled as a Health Plan member under the LA County Agreement/EOC effective October 1, 2012, and she elected Kaiser and renewed her enrollment each year thereafter through the present time. (Petition, Ex. B; Vasques Decl., ¶ 6.)

In opposition, Plaintiff argues that has no memory of being presented with this Arbitration Agreement: “When I enrolled in health care coverage with Defendants through the LA County online enrollment system in 2012, and when I renewed annually thereafter, I do not recall seeing any pop-up screens or any other prominent arbitration disclosure during this application process, and I did not review the terms of any arbitration agreement.” (Olivares Decl., ¶ 5.)  Plaintiff also argues that the arbitration provision is not prominently displayed.

However, as to the first contention, while Plaintiff states she has no memory of agreeing to the arbitration provision, Defendants records indicate that she did. (Vasques Decl., ¶ 6.) 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 second contention, 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.” (Petition, Exs. C, D-1 & 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 agrees that this layout satisfies the requirements of Health & Safety Code § 1363.1(b),

            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:

·        Claims within the jurisdiction of the Small Claims Court

·        Claims subject to a Medicare appeal procedure as applicable to Kaiser Permanente Senior Advantage Members

·        Claims that cannot be subject to binding arbitration under governing law

As referred to in this “Binding Arbitration” section, “Member Parties” include:

·        A Member

·        A Member’s heir, relative, or personal representative

·        Any person claiming that a duty to him or her arises from a Member’s relationship to one or more Kaiser Permanente Parties

(Petition, Exh. A.)

Here, Plaintiff’s claim in this action arise out of the LA County Agreement/EOC under which Ms. Olivares was enrolled, and thus are covered within the scope of the arbitration agreement.

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).)

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. As such, while Plaintiff was not able to opt out of arbitration if she wished to be enrolled at Kaiser, Plaintiff was free to select other health care options if she did not wish to opt into Kaiser’s arbitration requirement.

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 Arbitration Agreement provides: “If you have questions about the Rules, please call the OIA at (213) 637-9847, email us at oia@oia-kaiserarb.com, or visit the OIA’s website at www.oiakaiserarb.com. Copies of the Rules for Kaiser member arbitrations, forms, and other helpful items can be found at the OIA website.” (Petition, Exh. F, p. 22.)

As such, the Court finds no evidence of procedural unconscionability based on the adhesive nature of Kaiser’s arbitration provisions or the failure to attach rules.

As for substantive unconscionability,       in opposition, Plaintiff argues that the agreement is substantively unconscionable because the Arbitration Agreement requires a three-person arbitration panel, with each side paying for its own “party arbitrator” and paying half of the neutral arbitrator’s fees. This would likely lead to fees vastly more expensive than that anticipated by a civil case, and Ms. Olivares stated in arbitration that it would be a “crushing” financial burden. (Olivares Decl. ¶ 3.) While the Agreement offers an option to have arbitration be conducted a single neutral arbitrator, Plaintiff would have to agree that his damages are worth no more than $200,000. Plaintiff’s claim—which is based on allegations that Defendants’ negligence lead him to suffer since birth from severe pain, physical disability, disfigurement, emotional anxiety, and an disruption of his nervous system—alleges damages much higher than $200,000. As such, this option would force Plaintiff’s family to either take on a great financial burden or agree to a damages cap which greatly limits his ability to recover damages.    

While the Court is deeply sympathetic to this concern, Plaintiff has not presented the Court with sufficient evidence to grant the requested relief. In opposition, Plaintiff cites cases like Hang v. RG Legacy I, LLC (2023) 88 Cal.App.5^th 1243 and Roldan v. Callahan & Blaine (2013) 219 Cal.App.4^th 87, 97 to show that the Court, while unable to order Defendants to pay Plaintiff’s share of fees, can give Defendants a choice: “if the trial court determines that any of these plaintiffs is unable to share in the cost of the arbitration, [Defendant] can elect to either pay that plaintiff's share of the arbitration cost and remain in arbitration or waive its right to arbitrate that plaintiff's claim.” (Roldan, supra, 219 Cal.App.4th at p. 98.)

However, in both Hang and Roldan, Plaintiffs were indigent, and were unable to pay any portion of the arbitration fees. Here, by contrast, Ms. Olivares does not claim to be indigent, and also does not clarify what portion of fees, if any, she would be able to cover.

Rather, the only evidence submitted by Ms. Olivares to show that she is unable to cover the costs of arbitration is a single statement in declaration:

I am unable to pay those fees, and they would be a crushing financial burden. I do not have savings or assets that would enable me to pay thousands of dollars in arbitration fees, much less a hundred thousand or more. I am the primary source of income for our family. The income from my employment business is only approximately $60,000 annually. Because of Lucas’ severe and serious injuries resulting from Defendants’ negligence at birth, Lucas requires a significant amount of care on a daily basis, which leaves me unable to work additional time to supplement my income.

(Olivares Decl., ¶ 9.)

As such, Ms. Olivares has not submitted any evidence of financial status or ability to pay beyond this single statement in declaration. She does not submit any financial documents to clarify her household’s financial condition or savings, nor does she clarify By contrast, the determination in Hang was supported by “substantial evidence” including “declarations and exhibits [submitted by the estate’s representative] showing that former resident's sole income when he died was $826 per month in Social Security benefits, that all funds in his trust account at facility were used to pay for his funeral and burial expenses, and that his estate had no other assets or property.” (Hang, supra, 88 Cal.App.5^th at p. 1255.)

Moreover, in reply, Kaiser indicates that the requirement that Plaintiff remit damages over $200,000 is a statutory provision, rather than something required by Kaiser’s agreement. (See Health & Saf. Code § 1373.19.) Kaiser also indicated that it will waive the use of party arbitrators, which results in “(1) neutral arbitrator cost-shifting to Kaiser and (2) no need to appoint or pay a party arbitrator. “(OIA, Rule 15(a)(ii).)  Accordingly, the Court finds that Plaintiff’s concerns over an ability to pay are mitigated by Kaiser’s waiver of the use of party arbitrators in this matter.

Based on the foregoing, Defendant’s motion to compel arbitration is granted, and this action is ordered stayed pending the completion of proceedings.

It is so ordered.

Dated:  May    , 2024

   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.  For more information, please contact the court clerk at (213) 633-0517.