Judge Lisa K. Sepe-Wiesenfeld, Case Number: 22SMCV01711, Date: 2023-11-28 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 22SMCV01711, Date: 2023-11-28 Tentative Ruling

Case Number: 22SMCV01711 Hearing Date: January 23, 2024 Dept: N

TENTATIVE RULING

Defendant Oscar Health Plan of California’s Motion to Compel Arbitration, and to Stay Proceedings Pending Determination of Motion and Outcome of Arbitration is GRANTED.

The proceedings are hereby STAYED pending the outcome of arbitration.

Defendant Oscar Health Plan of California to give notice.

REASONING

Request for Judicial Notice

Defendant Oscar Health Plan of California (“Defendant”) requests judicial notice of a minute order granting Defendant’s motion to compel arbitration in an Orange County Superior Court action (Case No. 30-2022-01269688-CU-BC-NJC) (Prime Healthcare Huntington Beach LLC v. Oscar Health Plan of California). Defendant’s request is GRANTED pursuant to Evidence Code section 452, subdivision (d).

Analysis

Defendant moves for an order compelling Plaintiff Curative Labs Inc. (“Plaintiff”) to submit its first, second, and third causes of action alleged in its First Amended Complaint (“FAC”) to arbitration consistent with an applicable arbitration provision and for an order staying this case pending the determination of the outcome of arbitration.

“[I]n considering a . . . petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” (M & M Foods, Inc. v. Pac. Am. Fish Co. (2011) 196 Cal.App.4th 554, 559; see also Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 [“petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The burden then shifts to the opposing party to prove, by a preponderance of evidence, a defense to enforcement of the agreement. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Code of Civil Procedure section 1281.2 provides, in relevant part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.

(c) A party to the arbitration is also a party to a pending court action or special proceeding with a third party . . . .

“The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.” (Eng’rs & Architects Ass’n v. Cmty. Dev. Dep’t (1994) 30 Cal.App.4th 644, 653.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate. (Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640-641 [“The existence of a valid agreement to arbitrate involves general contract principles”].)

Plaintiff has brought this action claiming that Defendant has refused to reimburse Plaintiff for COVID-19 testing that Plaintiff provided to members or beneficiaries of Defendant’s health plans during the pandemic. (FAC ¶ 2.) The first three causes of action for breach of contract and bad faith delay, underpayment, and denial of claims arise from the terms of insurance plans, or Evidence of Coverage (“EOC”) contracts, in effect during the Plaintiff submitted claims to Defendant, which included a “BINDING ARBITRATION” provision, which states, in part: “All disputes between You and Oscar, including but not limited to disputes relating to the delivery of services under the Agreement . . . and any other issues related to the Agreement must be resolved by binding arbitration if the amount in dispute exceeds the jurisdictional limit of small claims court.” (Mot., Bowker Decl. ¶ 4; see also Bowker Decl. ¶ 7, Exs. A-L.) Defendant argues that Plaintiff is seeking the benefit of the EOCs in its first, second, and third causes of action, such that Plaintiff must be forced to arbitrate those claims pursuant to the EOCs. By the nature of their claims, it appears Plaintiff concedes that they are seeking to enforce the EOCs and thus must be bound by them. In opposition, Plaintiff argues that Defendant’s anti-assignment clause is voided by Health and Safety Code section 1342.2, the arbitration clause exempts the small value claims at issue and cannot preclude their consolidation in this Court, and reading Defendant’s arbitration clause to require individual arbitrations of $200 to $300 claims for COVID-19 tests renders it unconscionable. The Court addresses each argument in turn.

First, Plaintiff argues that the anti-assignment clause in the EOCs, which states that benefits are not transferable and “[y]ou and Your covered Dependents are the only persons entitled to receive benefits under this Agreement” is voided by Health and Safety Code section 1342.2, and insurers cannot avoid paying providers of COVID-19 tests by pointing to language in their insurance agreements. Put simply, Plaintiff fails to describe why the Court should make a finding about the anti-assignment clause here, as it does not appear to be relevant to the applicability of an arbitration provision. Instead, the anti-assignment clause relates only to Plaintiff’s ability to prove their claims. Thus, the Court makes no finding as to the anti-assignment clause at this juncture.

Plaintiff next argues that the arbitration clause exempts the small value claims at issue because the provision requires arbitration only “if the amount in dispute exceeds the jurisdictional limit of small claims court” (Mot., Bowker Decl. ¶ 4; see also Bowker Decl. ¶ 7, Exs. A-L), i.e., $5,000 for cases filed before January 1, 2024, (Code Civ. Proc., § 116.220), and the claims must be evaluated individually for purposes of the arbitration clause. This belies Plaintiff’s FAC, which seeks at least $12,548,850 total (FAC ¶¶ 115, 130, 140) and other fines and damages (FAC, pp. 26-27). Plaintiff itself has prayed for damages exceeding $200 or $300, and it has not filed each claim as an individual $200 or $300 claim in its pleading, such that the Court lacks a basis to conclude that Plaintiff seeks damages under the jurisdictional limit of small claims court.

Finally, Plaintiff contends that reading Defendant’s arbitration clause to require individual arbitrations of $200 to $300 claims for COVID-19 tests renders it unconscionable. In so arguing, Plaintiff presumes that Defendant takes the position that Plaintiff’s claims are subject to separate and individual arbitrations. Defendant has not so argued, and such an argument would be contrary to the argument that Plaintiff is asserting an individual claim seeking $12,548,850 in damages. There is no basis to conclude that Defendant is seeking individual arbitration of each $200 or $300 claim; thus, there is no basis to conclude that the arbitration provision is unconscionable on this basis. (See McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 [“Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability. The procedural element of unconscionability focuses on whether the contract is one of adhesion” and “whether there is ‘oppression’ arising from an inequality of bargaining power or ‘surprise’ arising from buried terms in a complex printed form,” while “[t]he substantive element addresses the existence of overly harsh or one-sided terms”].)

Accordingly, Defendant Oscar Health Plan of California’s Motion to Compel Arbitration, and to Stay Proceedings Pending Determination of Motion and Outcome of Arbitration is GRANTED. The proceedings are hereby STAYED pending the outcome of arbitration.