Judge: Michael E. Whitaker, Case: 21STCV24090, Date: 2022-12-09 Tentative Ruling

Case Number: 21STCV24090    Hearing Date: December 9, 2022    Dept: 32

PLEASE NOTE:   Parties are encouraged to meet and confer concerning this tentative ruling to determine if a resolution may be reached.  If the parties are unable to reach a resolution and a party intends to submit on this tentative ruling, the party must send an email to the Court at sscdept32@lacourt.org indicating that party’s intention to submit.  The email shall include the case number, date and time of the hearing, counsel’s contact information (if applicable), and the identity of the party submitting on this tentative ruling.  If the Court does not receive an email indicating the parties are submitting on this tentative ruling and there are no appearances at the hearing, the Court may place the motion off calendar or adopt the tentative ruling as the order of the Court.  If all parties do not submit on this tentative ruling, they should arrange to appear in-person or remotely (which is highly encouraged).  Further, after the Court has posted/issued a tentative ruling, the Court has the inherent authority to prohibit the withdrawal of the subject motion and adopt the tentative ruling as the order of the Court. 

TENTATIVE RULING

PETITION

Defendants Kaiser Foundation Hospitals, Southern California Permanente Medical Group, and Dr. John V. Ganal (“Petitioners”) move to compel Plaintiff Lisa Sabat (“Respondent”) to arbitrate Petitioner’s medical malpractice claim.  Respondent opposes the petition.

Following the initial hearing on October 7, 2022, Petitioners filed a Supplemental Memorandum of Points and Authorities and a Notice of Lodgment of Legislative History Excerpt.  Respondent filed a Supplement Briefing re: Opposition to Defendants’ Petition and Petitioners filed a Supplemental Reply Memorandum of Points and Authorities. 

BACKGROUND

            In the complaint filed on June 29, 2021, Respondent alleges that she was under the care and treatment of Petitioners in June 2020.  (Complaint, ¶ 36.)  Respondent in particular asserts that she underwent a cervical epidural steroid injection procedure on July 1, 2020 and following the administration of the injection procedure she suffered from injuries.  (Complaint, ¶¶ 37-39.) 

EVIENTIARY OBJECTIONS

            With respect to Respondent’s evidentiary objections, the Court rules as follows:

1. Taylor Declaration, 13:21-23 – Overruled
2. Taylor Declaration, 13:23-25 – Overruled
3. Taylor Declaration, 14:22-25 – Overruled
4. Taylor Declaration, 14:24-28 – Sustained (Foundation)
5. Taylor Declaration, 15:1-2 – Sustained (Foundation)
6. Taylor Declaration, 15:2-4 – Sustained (Foundation)
7. Exhibit E – Sustained (Foundation)

ANALYSIS

1.       MOTION TO COMPEL ARBITRATION – LEGAL STANDARDS

    

               “[T]he advantages of arbitration include a presumptively less costly, more expeditious manner of resolving disputes.  It follows a party to a valid arbitration agreement has a contractual right to have its dispute with another party to the contract resolved quickly and inexpensively.”  (Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 99–100 [cleaned up].)  Thus, “on petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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.”  (Code Civ. Proc., § 1281.2; see also

   EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 [the language in section 1281.2 compelling arbitration is mandatory].) The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.  (Code Civ. Proc., § 1281.2, subds. (a)-(c).)   

    

               “On a petition to compel arbitration, the trial court must first determine whether an agreement to arbitrate the controversy exists.  Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.  The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent's signature.”  (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 [cleaned up].)  The party seeking to compel arbitration must also “plead and prove a prior demand for arbitration and a refusal to arbitrate under the agreement.”  (Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 640-641.) 

    

               And while the moving party on a motion to compel arbitration “bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, [a] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.”  (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [cleaned up]; see also Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability”].) 

              

2. ARBITRATION AGREEMENT – IS IT ENFORCEABLE?

    

               Petitioners allege that Respondent has improperly refused to arbitrate pursuant to Petitioners’ health plan membership agreement with Respondent by filing and prosecuting the instant action.  (Petition, ¶ 17.) 

    

               Petitioners advance the Declaration of Charles Topp (“Topp”), the Executive Director of Kaiser Permanente for Individuals and Families Membership Administration.  Topp avers in part that Exhibit A to the petition is a true and correct copy of “the 2020 Combined Membership Agreement, Evidence of Coverage, and Disclosure Form for Kaiser Permanente for Individuals and Families, under which Plaintiff Lisa Sabat was enrolled through Covered California as a Health Plan Member,” (hereafter Membership Agreement).  (See Declaration of Charles Topp, ¶ 3,  Exhibit A.)  The Membership Agreement at pages 73-75 contain the “Binding Arbitration” provisions which Petitioners claim Respondent must adhere to. 

    

               Further, Topp declares that “Health Plan’s records reflect that Lisa Sabat was enrolled in Health Plan’s Covered California plan effective April 1, 2019 and January 1, 2020, and that she remained so enrolled as a Health Plan member under the Covered California Agreement/EOC until September 1, 2020.”  (Declaration of Charles Topp, ¶ 4, Exhibit B (Membership History).) 

    

               Petitioners proffer the Declaration of Vonya E. Taylor (“Taylor”) who is employed by Kaiser Foundation Health Plan, Inc., as a Senior Exchange Operations Consultant for California Exchange Operations.  Taylor declares in part: 

    

   In order to enroll for Kaiser coverage through Covered California’s online system, the enrollee must agree to resolve claims against Kaiser through binding arbitration, as opposed to a jury or court trial. In particular, as part of the Covered California online enrollment process, the consumer receives a separate screen regarding binding arbitration. True and correct copies of the separate screen and arbitration language are attached hereto as Exhibits C & D . . . .  In order for the consumer to move forward with his or her Covered California exchange online enrollment, the consumer must check the “I Have Read And Agree To The Binding Arbitration Agreement” box on this pop-up screen. If the consumer does not click the “I Have Read And Agree To The Binding Arbitration Agreement” box, the consumer cannot move forward with enrollment in Health Plan.

    

   (See Declaration of Vonya E. Taylor, ¶ 3, Exhibits C-D.)  The arbitration language set forth in Exhibits C and D state:

    

   I understand that every participating health plan has its own rules for resolving disputes or claims, including, but not limited to, any claim asserted by me, my enrolled dependents, heirs, or authorized representatives against a health plan, any contracted health care providers, administrators, or other associated parties, about the membership in the health plan, the coverage for, or the delivery of, services or items, medical or hospital malpractice (a claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered), or premises liability. I understand that, if I select a health plan that requires binding arbitration to resolve disputes, I accept, and agree to, the use of binding arbitration to resolve disputes or claims (except for Small Claims Court cases and claims that cannot be subject to binding arbitration under governing law) and give up my right to a jury trial and cannot have the dispute decided in court, except as applicable law provides for judicial review of arbitration proceedings. I understand that the full arbitration provision for each participating health plan, if they have one, is in the health plan coverage document, which is available online at CoveredCA.com for my review, or I can call Covered California for more information.

    

   (Ibid.)  In addition, Taylor avers that “If an enrollee is accepted for enrollment in Kaiser through the Covered California exchange online system, the enrollee will have accepted the arbitration requirement by checking the “I Have Read And Agree To The Binding Arbitration Agreement” box.”  (See Declaration of Vonya E. Taylor, ¶ 4.)  Taylor also states that “Ms. Sabat also resubmitted her online application for Kaiser coverage through the Covered California exchange on November 2, 2019, for continued enrollment effective January 1, 2020.”  (Ibid.) 

              

   1. HEALTH AND SAFETY CODE SECTION 1363.1

       

                  Respondent argues that the Membership Agreement is unenforceable because Petitioners have not established compliance with Health and Safety Code section 1363.1.  Section 1363.1 provides:

Any health care service plan that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets all of the following conditions:

(a) The disclosure shall clearly state whether the plan uses binding arbitration to settle disputes, including specifically whether the plan uses binding arbitration to settle claims of medical malpractice.

(b) The disclosure shall appear as a separate article in the agreement issued to the employer group or individual subscriber and shall be prominently displayed on the enrollment form signed by each subscriber or enrollee.

(c) The disclosure shall clearly state whether the subscriber or enrollee is waiving his or her right to a jury trial for medical malpractice, other disputes relating to the delivery of service under the plan, or both, and shall be substantially expressed in the wording provided in subdivision (a) of Section 1295 of the Code of Civil Procedure.

(d) In any contract or enrollment agreement for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan.

(Health & Saf. Code, § 1363.1, subds. (a)-(d), emphasis added.)  “The disclosure requirements set forth in section 1363.1 are mandatory.  . . .  Courts have concluded that strict compliance with section 1363.1 is required to enforce an arbitration provision in a health service plan. Technical violations of the statute—such as the failure to prominently display an arbitration provision immediately above the signature line on the enrollment form—render the arbitration provision unenforceable regardless of whether the person enrolling in the health plan received some notice of the arbitration clause by reviewing the non-complying provision.”  (Medeiros v. Superior Court (2007) 146 Cal.App.4th 1008, 1015 [cleaned up]; see also Burks v. Kaiser Foundation Health Plan, Inc. (2008) 160 Cal.App.4th 1021, 1025-1026 [“It is undisputed that a violation of section 1363.1 renders a contractually binding arbitration provision in a health service plan enrollment form unenforceable”].) 

Here, Respondent advances her own declaration in which she declares in pertinent part: 

During the entire enrollment process, I was never notified that to enroll with Kaiser’s health plan the company required me to forfeit my constitutional right to a jury.  I do not remember seeing an arbitration provision that said Kaiser required binding arbitration.  I did not go searching for an arbitration provision in all the documents I received related to Kaiser’s health plan.  I assumed that I would be directly notified about important aspects of the health plan, like if there was an arbitration provision that required me to give up my right to a jury trial.

(Declaration of Lisa Sabat, ¶¶ 6-7.)  With Respondent’s declaration as a backdrop, the Court examines the four corners of the disclosure as set forth in Petitioners’ Exhibits C and D.  Based upon that review, the Court finds that the disclosure does not meet the technical requirements of Section 1363.1. 

            Foremost, the disclosure does not specifically mention Petitioners or whether Petitioners’ health plan includes a binding arbitration provision.  The disclosure is ambiguous at best as to whether Respondent, upon choosing Petitioners’ health plan, would be subject to binding arbitration.  In particular, the disclosure states:  “I understand that, if I select a health plan that requires binding arbitration to resolve disputes, I accept, and agree to, the use of binding arbitration to resolve disputes or claims (except for Small Claims Court cases and claims that cannot be subject to binding arbitration under governing law) and give up my right to a jury trial and cannot have the dispute decided in court, except as applicable law provides for judicial review of arbitration proceedings.” 

            Second, the disclosure requires an enrollee to review a separate document to determine whether binding arbitration would be applicable to potential claims of professional negligence.  Here, the disclosure states:  “I understand that the full arbitration provision for each participating health plan, if they have one, is in the health plan coverage document, which is available online at CoveredCA.com for my review, or I can call Covered California for more information.”  The subject “health plan coverage document” is apparently Petitioners’ Exhibit A which is an 82-page Membership Agreement including arbitration provisions on pages 73-75. 

            The deficiencies with the disclosure are two-fold:  (1) the disclosure does not distinctly state whether Petitioners’ plan uses binding arbitration to settle disputes, including specifically whether Petitioners’ plan uses binding arbitration to settle claims of medical malpractice, and (2) the disclosure of Petitioners’ binding arbitration provisions are not prominently presented on the enrollment form signed by Respondent.  Therefore, the Court finds that the arbitration provisions set forth in the Membership Agreement are not enforceable because the disclosure (Exhibits C and D) do not meet the technical requirements of Health and Safety Code section 1363.1, subdivisions (a)-(b). 

1. AFFORDABLE CARE ACT – COVERED CALIFORNIA

            Notwithstanding the disclosure’s noncompliance with Health and Safety Code section 1363.1, Petitioners argue that Section 1363.1 has been superseded by the California Health Benefit Exchange (Gov. Code, §§ 100500 et seq. (hereafter Covered California)) adopted by the California Legislature to implement the Patient Protection and Affordable Care Act (42 U.S.C. §§ 18001 et seq. (hereafter ACA)). 

            “There is in state government the California Health Benefit Exchange, an independent public entity not affiliated with an agency or department, which shall also be known as Covered California.”  (Gov. Code, § 100500, subd. (a).)  “In addition to meeting the minimum requirements of Section 1311 of the federal act, [1] the board shall do all of the following:   Determine the criteria and process for eligibility, enrollment, and disenrollment of enrollees and potential enrollees in the Exchange and coordinate that process with the state and local government entities administering other health care coverage programs, including the State Department of Health Care Services, the Managed Risk Medical Insurance Board, and California counties, in order to ensure consistent eligibility and enrollment processes and seamless transitions between coverage.”  (Gov. Code, § 100503, subd. (a)(1).) 

            Further, Petitioners argue that adherence to Section 1363.1 is incompatible with the ACA and Covered California.  In particular, Petitioners ’ assert the ACA requires each state to use a “single, streamlined form” for all state health subsidy programs that can be submitted online, in person, by mail or by telephone.  (See 42 U.S.C.A. § 18083, subd. (b)(1)(A).)  To that end, the “single, streamlined” enrollment process is put into effect through regulations promulgated through Covered California which in pertinent part state:

A single, streamlined application shall be used to determine eligibility and to collect information necessary for:  (1) Enrollment in a QHP, [2] (2) Medi-Cal, (3) CHIP, (4) APTC, and (5) CSR.

To apply for any of the programs listed in subdivision (a) of this section, an applicant . . .  shall submit all information, documentation, and declarations required on the single, streamlined application, as specified in subdivisions (c), (d), and (e) of this section, and shall sign and date the application.  . . .   An applicant or an application filer shall provide the following information on the single, streamlined application . . . .” 

(Cal. Code Regs., tit. 10, § 6470, subds. (a)-(c).)  And as part of that “single, streamlined” process, Petitioners contend that the subject disclosure which is utilized for enrolling in a health plan through Covered California, is mandated. 

All individuals, responsible parties, or authorized representatives, age 18 or older who are selecting and enrolling into a health insurance plan shall agree to, sign, and date the agreement for binding arbitration, as set forth below:

For an Exchange Plan: “I understand that every participating health plan has its own rules for resolving disputes or claims, including, but not limited to, any claim asserted by me, my enrolled dependents, heirs, or authorized representatives against a health plan, any contracted health care providers, administrators, or other associated parties, about the membership in the health plan, the coverage for, or the delivery of, services or items, medical or hospital malpractice (a claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered), or premises liability. I understand that, if I select a health plan that requires binding arbitration to resolve disputes, I accept, and agree to, the use of binding arbitration to resolve disputes or claims (except for Small Claims Court cases and claims that cannot be subject to binding arbitration under governing law) and give up my right to a jury trial and cannot have the dispute decided in court, except as applicable law provides for judicial review of arbitration proceedings. I understand that the full arbitration provision for each participating health plan, if they have one, is in the health plan's coverage document, which is available online at CoveredCA.com for my review, or, I can call Covered California at 1-800-300-1506 (TTY: 1-888-889-4500) for more information.”

(Cal. Code Regs., tit. 10, § 6470, subd. (f)(2)(A).) 

            In Hunter v. Kaiser Foundation Health Plan, Inc., the United States District Court was faced with the following question:  “whether the arbitration provisions in [the plaintiff’s] contracts with Kaiser” are enforceable. In concluding that arbitration provisions were enforceable, the District Court held that Health and Safety Code section 1363.1 does not apply.  (Hunter v. Kaiser Foundation Health Plan, Inc.  (N.D. Cal. 2020) 434 F.Supp.3d 764, 767 (hereafter Hunter).) 

             Some of the underlying facts and arguments in Hunter are similar to the facts and arguments made herein.  Noteworthy, the Hunter plaintiff enrolled in a Kaiser health plan through Covered California encountering the same disclosure [3] and similar Membership Agreement [4] as Respondent purportedly did so herein.  (Hunter, supra, 434 F.Supp.3d at pp.769-770.)   Yet, the Hunter plaintiff, like Respondent, argued that “no agreement to arbitrate was formed because Kaiser did not comply with Section 1363.1.”  (Id. at p. 771.)  But Kaiser argued that Section 1363.1 was preempted by the ACA.  (Id. at pp. 771-772.)  The District Court agreed with Kaiser which reasoned as follows:

[A]s part of California's creation of its ACA exchange, several statutes and promulgating regulations were passed by the California legislature. In particular, the Covered California board in charge of setting up the exchange promulgated regulations describing the enrollment process the exchange would follow in exhaustive detail, including the requirements for the single, streamlined application and the specific language the Covered California application was to use when disclosing binding arbitration requirements that may be incorporated in health plans that would be offered on the exchange.  [T]he regulations enacted by California to operate the exchange, including those that established Covered California's mandated arbitration disclosure limit the extent of Section 1363.1’s applicability.  . . .  Given the extensive regulation under both the ACA itself and its implementation by the State of California that govern how applicants can enroll and the mandated methods of disclosing the existence of arbitration required by the underlying health care plans, I hold that the requirements of Section 1363.1 do not apply to Hunter's enrollment and her agreement to the arbitration provisions of the Kaiser health plan during the ACA period.

(Hunter, supra, 434 F.Supp.3d at p. 773 [cleaned up].)  In considering the arguments advanced by Petitioners and Respondent, this Court agrees with the District Court’s reasoning in determining that Section 1363.1 is inapposite. 

            In opposition, Respondent contends that Hunter should not be followed because the District Court relied on an unpublished California appellate opinion.  But Respondent fails to mention that the District Court adopted that appellate court’s rationale as its own to hold that Section 1363.1 was inapplicable to determining whether Kaiser’s binding arbitration provisions were enforceable.  Apart from that critique, Respondent does not squarely challenge the District Court’s reasoning which is revealing.  In turn, Respondent states that “there is ample existing California caselaw upholding Section 1363.1’s disclosure requirements.”  (Supplemental Opposition, p. 11.)  While that assertion on the surface may be true, the authorities relied upon by Respondent do not address the applicability of Section 1363.1 to binding arbitration agreements vis-à-vis the ACA and Covered California.        

CONCLUSION AND ORDER

In short, the Court finds that Petitioners have the better argument in relying upon Hunter which held that Health and Safety Code section 1363.1 is inapplicable to determining whether the binding arbitration provisions set forth in the subject Membership Agreement are enforceable against Respondent.  Therefore, the Court grants Petitioners’ petition to compel arbitration under Code of Civil Procedure section 1281.2, and orders the action stayed pending completion of the binding arbitration under Code of Civil Procedure section 1281.4.

Further, the Court vacates the trial setting conference set for March 9, 2023, and sets a status conference re: completion of binding arbitration on June 14, 2023 at 8:30 A.M. in Department 32.  The parties shall file a joint report regarding the status of the binding arbitration no later than 5 court days before the scheduled status conference. 

Petitioners shall provide notice of the Court’s orders and file a proof of service of such.