Judge Michael E. Whitaker, Case Number: 22STCV24515, Date: 2023-12-11 Tentative Ruling

Judge: Michael E. Whitaker, Case: 22STCV24515, Date: 2023-12-11 Tentative Ruling

On July 29, 2022, Plaintiff Tiera Terry (“Respondent”) filed a complaint for damages against Defendants Safa Elizabeth Sharabi, M.D. (“Petitioner”) and Kaiser Permanente West Los Angeles Medical Center (“Kaiser”), alleging causes of action for (1) medical malpractice; (2) battery; (3) breach of contract; (4) breach of implied contract; (5) lack of informed consent; (6) breach of fiduciary duty; (7) negligent infliction of emotional distress; and (8) fraud and deceit, stemming from a breast reduction and lift procedure Petitioner performed on Respondent at Kaiser in August of 2021. Kaiser has not yet appeared in the case.

Petitioner seeks to compel Respondent to arbitrate Respondent’s claims and to stay the action pending resolution of the arbitration proceeding. Respondent opposes the petition, [1] and Petitioner replies.

“[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”].)

In 2017, Respondent telephonically enrolled as a Kaiser member in the Inland Empire Health Plan (“IEHP”), a Local Initiative Plan that contracts with the California Department of Health Care Services for the provision of covered health care services to eligible Medi-Cal beneficiaries, like Respondent. In turn, the Inland Empire Health Plan contracted with Kaiser to provide those services to patients like Respondent. (Mot. at pp. 1-2.)

Kaiser is not involved in the enrollment process, and “typically has no interaction with a member until after” it is notified that the member has enrolled. (Mot. at p. 3; Deniz Decl. ¶ 4.) Following Respondent’s 2017 enrollment in the plan, Kaiser mailed Respondent a copy of the 2017 IEHP Member Handbook Combined Evidence of Coverage and Disclosure Form on November 7, 2017, which covered the time period July 1, 2017 through June 30, 2018. (Velarde Decl. ¶ 6 & Ex. D.) In subsequent years, Kaiser mailed Respondent a notice explaining how to view the new year’s IEHP Member Handbook Combined Evidence of Coverage and Disclosure Form. (Id. at ¶ 7 & Exs. E-G.) Kaiser mailed Respondent notice of the 2021 IEHP Member Handbook Combined Evidence of Coverage and Disclosure Form on June 30, 2021. (Ibid.)

The Kaiser Permanente 2021 IEHP Member Handbook Combined Evidence of Coverage and Disclosure Form for beneficiaries who have elected Kaiser contains the following arbitration provision:

Binding arbitration is a way to solve problems using a neutral third party. This third party hears both sides of the issue and makes a decision that both sides must accept. Both sides give up the right to a jury or court trial [….]

You must use binding arbitration if the claim is related to this Member Handbook or your membership with us, if all of the following requirements are met:

¿Malpractice (a claim that medical services or items were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered); or

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

¿You do not have to use binding arbitration for claims that can be settled through a State Hearing

¿You cannot use binding arbitration if you have gotten a decision on the claim through a State Hearing

In this “Binding Arbitration” section only, “you” means the party who is asking for binding arbitration:

¿Someone who claims that a duty to them exists due to your relationship with us

In this “Binding Arbitration” section only, “us” means the party who has a claim filed against them:

¿Any person or organization with a contract with any of these parties that requires the use of binding arbitration

(Velarde Dec. Ex. C at 120-121, emphases in original.) Although the arbitration agreement is not signed, Petitioner notes that an agreement to arbitrate may be express or implied (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420-421) and suggests that by continuing to stay enrolled in the plan, and utilizing the plan’s services, after being given notice of the provision, Respondent agreed to arbitrate the claims at issue.

Respondent’s Opposition is not exactly a model of clarity, dedicating pages to countering arguments Petitioner did not make, and arguing facts not present in this case, apparently including lengthy passages of arguments made in an opposition brief from another case or cases. Distilled down to the best of the Court’s ability, the Court interprets the Opposition as raising the following arguments:

· The agreement is not valid because Kaiser failed to comply with various provisions of Health and Safety Code section 1599.81

· The scope of the arbitration agreement does not extend to the claims at issue

· The arbitration provision is both procedurally and substantively unconscionable, including because the provision lacks mutuality and because it imposes financial burdens on Plaintiff.

With regard to the purported failure to comply with various provisions of Health and Safety Code section 1599.81, as Respondent explains, that section “specifies the requirements for arbitration clauses in nursing home contracts.” (Opp. at p. 6.) Moreover, Health and Safety Code section 1599 provides: “It is the intent of the Legislature in enacting this chapter to expressly set forth fundamental human rights which all patients shall be entitled to in a skilled nursing or intermediate care facility, as defined in Section 1250 [….]” Section 1250 defines “skilled nursing facility” as “a health facility that provides skilled nursing care and supportive care to patients whose primary need is for availability of skilled nursing care on an extended basis.” Similarly, Section 1250 defines “intermediate care facility” as “a health facility that provides inpatient care to ambulatory or nonambulatory patients who have recurring need for skilled nursing supervision and need supportive care, but who do not require availability of continuous skilled nursing care.”

Respondent underwent a breast reduction and lift surgery at Kaiser. There is no evidence in the record suggesting that Kaiser is a “skilled nursing facility” or “intermediate care facility” providing extended or recurring nursing care services such that Section 1599.81 applies.

Therefore, Kaiser’s purported failure to comply with the requirements of Section 1599.81 does not render the arbitration agreement invalid.

The agreement provides that the following claims are subject to mandatory arbitration:

¿Malpractice (a claim that medical services or items were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered; or

Respondent argues that the “arbitration agreement does not clearly encompass” the claims in Respondent’s Complaint. A careful review of the Complaint demonstrates that all of Respondent’s causes of action arise from Petitioner’s alleged removal of more than the 50 grams of breast tissue Respondent had authorized to be removed. Thus, all of the causes of action in the Complaint arise from “a claim that medical services or items were unnecessary or unauthorized, or were improperly, negligently, or incompetently rendered” and fall within the scope of the arbitration agreement.

“Unconscionability is ultimately a question of law for the court.” (Flores v. Transamerica Homefirst, Inc. (2001) 93 Cal.App.4th 846, 851.) “However, numerous factual issues may bear on that question.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 89.) As such, Respondent must show two elements to establish the unconscionability defense: (1) procedural unconscionability, which focuses on the manner in which the contract was negotiated, and (2) substantive unconscionability, which concerns whether the contract’s terms are unreasonably one-sided. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-115 (hereafter, Armendariz).)

“The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree. Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. In other words, the 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.” (Armendariz, supra, 24 Cal.4th at p. 114 [cleaned up].)

Procedural unconscionability examines the “oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Preprinted forms buried within a volume of documents offered on a “take or leave it basis” evidence a high degree of procedural unconscionability. (See Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 102-104.) Most consumer contracts are adhesive and therefore present some procedural unconscionability. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915.) “[A] finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Ibid.)

In support of its contention that the arbitration agreement is not adhesive, Petitioner cites Madden v. Kaiser Found Hosps. (1976) 17 Cal.3d 699. In that opinion, the Court of Appeal held that Kaiser’s arbitration provision, contained in a membership agreement between Kaiser and the plaintiff’s employer through the California Public Employees Retirement System, was not adhesive. The appellate court reasoned that the arbitration provision was “the product of negotiation” between the State Employees Retirement System, acting as agent and representative of the employees, and the plan” and employees had the opportunity to select from among several medical plans. (Id. at p. 711.)

In opposition, Respondent cites to Victoria v. Superior Court (1985), 40 Cal.3d 734, which affirmed the Madden decision that Kaiser’s arbitration provision was not adhesive, and held again that Kaiser’s arbitration provision was not adhesive, because it was the product of bargaining between the State Employees Retirement System and Kaiser, even though it had some adhesive characteristics, such as that it was a lengthy, standard form contract Kaiser utilizes for all or almost all of the groups to which it provides services.

Similarly, here, Kaiser’s applicable arbitration provision for Medi-Cal beneficiaries who enroll in its plan is presumably the product of negotiations between IEHP and Kaiser, as well as IEHP and the Department of Healthcare Services. Moreover, like Madden, Medi-Cal beneficiaries have the option to enroll in other plans.

Therefore, the Court finds that the arbitration provision at issue is not procedurally unconscionable.

The arbitration provision is also not substantively unconscionable. Respondent argues that the provision is substantively unconscionable because it imposes financial burdens on Respondent and because the provision lacks mutuality.

With regard to financial burdens, Respondent contends that the arbitration violates the cost burden rules of Armendariz. Armendariz held that “arbitration agreements that encompass unwaivable statutory rights” in furtherance of public policy “must be subject to particular scrutiny.” (Armendariz, supra, 24 Cal.4th at p. 100.) Such an arbitration agreement is lawful if it “(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum.” (Id. at p. 102.)

Otherwise, the default rule is that each side bears its own costs and fees. (Code Civ. Proc. § 1284.2.) Here, Respondent’s claims do not encompass any such unwaivable statutory rights in furtherance of public policy.

Nor is the fee provision at issue unconscionably burdensome. The provision provides that the $150 filing fee “will be waived if you cannot pay your share of the costs.” (Velarde Decl., Ex. C at p. 122.) Moreover, the provision explains “If you are not able to pay your share of the costs of binding arbitration, you can ask the Office of the Independent Administrator to waive the costs. To do this, you must fill out and send in a Fee Waiver Form[….]” (Id. at p. 123.) Kaiser also “will pay the fees of the neutral arbitrator” (1) in cases of hardship; or (2) if the claimant signs a form waiving objections to Kaiser’s payment of 100% of the arbitrator fees and waiving the right to a party arbitrator in cases where the claim exceeds $200,000. (Pierrou Decl., Ex. Q at p. 9.)

Thus, in all instances of financial hardship, Kaiser will pay the fees. And even if there is no financial hardship, Kaiser will still pay the fees, so long as the claimant waives the right to a party arbitrator on claims exceeding $200,000. If paying the party arbitrator fees on a claim exceeding $200,000 would be a financial hardship to claimant, then Kaiser will pay the fees.

Respondent does not raise any substantive arguments regarding mutuality, other than to conclude generally that the provision is not mutual. The Court disagrees. The arbitration provision provides, “[b]oth sides give up the right to a jury or court trial” and the provision applies to claims brought by plan members against Kaiser, as well as Kaiser against plan members. Thus, the provision is mutual.

For the reasons stated above, Petitioner’s motion to compel Respondent’s claims to arbitration is granted and orders that action stayed pending the conclusion of the arbitration proceedings.

Further, the Court vacates that Case Management Conference set on January 26, 2024 and sets a Status Conference regarding the arbitration on June 5, 2024 at 8:30 A.M. in Department 207. The parties shall meet and confer, and cooperate in the filing of a joint report on the status of the arbitration no later than 5 court days before the scheduled status conference.

Petitioner shall provide notice of the Court’s ruling and file a proof of service regarding the same.

[1] The Court notes that the Opposition brief contains 26 pages, in violation of California Rules of Court, rule 3.1113(d) which states: “Except in a summary judgment or summary adjudication motion, no opening or responding memorandum may exceed 15 pages.” Therefore, it is within the authority of the Court to disregard all pages of the Opposition in excess of the fifteenth page. Nonetheless, the Court exercises its discretion and considers the excess pages although Respondent did not obtain the Court’s permission to file a longer memorandum. (See Cal. Rules of Court, rule 3.1113(e).)

DEPARTMENT	207
HEARING DATE	December 11, 2023
CASE NUMBER	22STCV24515
MOTION	Petition to Compel Arbitration and Stay Action
MOVING PARTY	Defendant Safa Elizabeth Sharabi, M.D.
OPPOSING PARTY	Plaintiff Tiera Terry