Judge: Peter A. Hernandez, Case: 23PSCV01850, Date: 2024-02-29 Tentative Ruling

Case Number: 23PSCV01850    Hearing Date: February 29, 2024    Dept: K

Defendant Health Net of California, Inc.’s Motion to Compel Arbitration is GRANTED. The case is ordered stayed, pending completion of the arbitration.

Background[1]  

Plaintiff Ning Sun (“Plaintiff”) alleges that his health care insurer, Health Net of California, Inc. (“Defendant”), wrongfully delayed and denied his cancer treatment.

On June 22, 2023, Plaintiff filed a complaint, asserting causes of action against Defendant for:

1.                  Bad Faith—Breach of the Implied Covenant of Good Faith and Fair Dealing

2.                  Breach of Contract

3.                  Intentional Infliction of Emotional Distress

4.                  Negligent Infliction of Emotional Distress

A Trial Setting Conference is set for February 29, 2024.

Legal Standard

“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, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2, subds. (a) and (b).)

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761.) The burden then shifts to the opposing party to prove by a preponderance of the evidence a defense to enforcement (e.g., fraud, unconscionability, etc.) (Id.) “In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

“If a court of competent jurisdiction. . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4).

Discussion

Defendant moves the court for orders compelling arbitration of Plaintiff’s claims and staying all further judicial proceedings in this action pending completion of arbitration.

Notice of Remand

At the outset, the court notes that on August 9, 2023, Defendant filed a “Notice of Filing of Notice of Removal” (“Notice”), advising therein that Defendant had removed this action to the United States District Court for the Central District of California by filing a Notice of Removal in that Court.

On August 11, 2023, the court acknowledged receipt of the Notice, vacated the Case Management Conference and Order to Show Cause Re: Failure to File Proof of Service scheduled for November 28, 2023 and scheduled a Status Conference Re: Removal to Federal Court for December 11, 2023.

Defendant represents that the case was remanded on October 22, 2023. (Reply, 2:25-26). The instant motion was filed on November 17, 2023. On December 11, 2023, a Status Conference Re: Removal to Federal Court was held; the minute order from that date reflects that Defendant’s counsel informed the court that the matter had been demanded back to the court from Federal Court. Defendant’s counsel was instructed to file the Notice of Remand.

There is no indication that Defendant’s counsel has filed the Notice of Remand, as instructed (i.e., as of February 23, 2024, 9:18 a.m.) Pursuant to 28 U.S.C. § 1446(d), the court may proceed no further unless and until this case is remanded.

Accordingly, the following ruling is contingent upon Defendant’s counsel first filing the Notice of Remand at or before the time of the hearing:

Merits

1.                  Existence of a Valid Arbitration Agreement

Defendant submits that, throughout 2018 and 2019, Plaintiff was enrolled in three separate Health Net HMO plans (i.e., Silver 94 CommunityCare HMO 552508, Silver 87 CommunityCare HMO 552507 and Silver 70 CommunityCare HMO 552504, respectively) and that each plan contract contained an identical arbitration clause reading, in relevant part, as follows:

Binding Arbitration

Sometimes disputes or disagreement may arise between you (including your

enrolled Family Members, heirs or personal representatives) and Health Net

regarding the construction, interpretation, performance or breach of this Plan

Contract or regarding other matters relating to or arising out of your Health

Net membership. Typically such disputes are handled and resolved through

the Health Net Grievance, Appeal and Independent Medical Review process

described above. However, in the event that a dispute is not resolved in that

process, Health Net uses binding arbitration as the final method for resolving

all such disputes, whether stated in tort, contract or otherwise and whether or

not other parties such as employer groups, health care providers or their agents

or employees, are also involved. In addition, disputes with Health Net involving

alleged professional liability or medical malpractice (that is, whether any

medical services rendered were unnecessary or unauthorized or were

improperly, negligently or incompetently rendered) also must be submitted to

binding arbitration.

As a condition to becoming a Health Net Member, you agree to submit all

disputes you may have with Health Net, except those described below, to final

and binding arbitration. Likewise, Health Net agrees to arbitrate all such

disputes. This mutual agreement to arbitrate disputes means that both you and

Health Net are bound to use binding arbitration as the final means of resolving

disputes that may arise between the parties and thereby the parties agree to forego

any right they may have to a jury trial on such disputes. However, no remedies

that otherwise would be available to either party in a court of law will be forfeited

by virtue of this agreement to use and be bound by Health Net’s binding

arbitration process. This agreement to arbitrate shall be enforced even if a party to

the arbitration is also involved in another action or proceeding with a third party

arising out of the same matter. . .

(Grigoryan Decl., ¶ 3, Exhs. A-1, p. 111, A-2, p. 111 and A-3, pp. 111-112).

Plaintiff does not dispute the existence and validity of the above arbitration provisions.

Further, the above arbitration clause encompasses the claims in this action. Plaintiff’s complaint filed June 22, 2023 asserts causes of action for Bad Faith—Breach of the Implied Covenant of Good Faith and Fair Dealing, Breach of Contract, Intentional Infliction of Emotional Distress and Negligent Infliction of Emotional Distress.[2] Plaintiff has alleged that he enrolled in the Covered California health program in 2018 and 2019, that he was subsequently enrolled in his wife’s employer group health plans “[f]rom 06/2019” and in Medi-Cal “[f]rom 01/2022 to now” and that Defendant “is the only insurance company from which plaintiff ha[s] chosen his health plan.” (Complaint, 1:25-2:2). Plaintiff’s claims arise from alleged improper provider referrals under his Health Net plans and a resulting delay in medical treatment. (Id., pp. 2-3). Plaintiff alleges that, beginning in 2018, he repeatedly submitted requests for Photo-chemo-therapy (“PUVA”) treatment to Allied Pacific of California IPA (“APC”), which was assigned to Plaintiff by Defendant to provide medical referrals and other related services, but that APC did not provide him with the treatment or find him a qualified provider. (Complaint, p. 2). Plaintiff alleges that he finally began receiving PUVA treatment October 2021 to December 2021, but that APC then failed to provide proper documentation which delayed the treatment again until July 2022. (Id., p. 4).

Plaintiff does not dispute Defendant’s assertion that his claims pertaining to conduct occurring in 2018 and 2019 arise under the above arbitration provisions.

2.                  Waiver

Plaintiff, however, contends that Defendant’s request for arbitration should nevertheless be denied on the basis of waiver. “[T]he party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195). “State law, like the FAA, reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims.” (Id.) “In determining waiver, a court can consider (1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” (Id. at 1196 [quotations and citations omitted].)

As an initial matter, Plaintiff has provided no legal support for his contention that any prelitigation conduct can act as a waiver of arbitration.

Plaintiff argues that Defendant actively participated in litigation inconsistent with its right to arbitrate by removing the case to federal court. However, “[a] defendant's removal of a case filed in state court to federal court does not by itself constitute an implicit waiver of the right to compel arbitration” (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1204). The court notes that neither Plaintiff’s opposition nor Defendant’s reply are supported by declaration; further, the court is not privy to the proceedings in federal court. With that said, it appears undisputed that Defendant filed a motion to compel arbitration in federal court on August 29, 2023, shortly after filing its “Notice of Removal” on August 8, 2023. (Opp., 4:20-23 and 6:10; Reply, 2:18-19 and 6:25-26). It also appears undisputed that on September 11, 2023 Plaintiff concurrently filed an Amended and Supplemental Complaint and a Motion to Remand in federal court and that on September 25, 2023 Defendant filed a response to Plaintiff’s Motion to Remand, consenting to remand on the basis that “Plaintiff’s First Amended Complaint (‘FAC’) no longer seeks any relief, damages, or remedies arising out of the period governed by his employer’s ERISA plan.” (Opp., 4:24-25 and 5:1-10; Reply, 7:14).

The above information and timeline belies Plaintiff’s assertion that Defendant’s removal of the case to federal court constituted bad faith, an intent to delay proceedings or was otherwise inconsistent with the right to arbitrate.

Conclusion

The motion is granted. The case is stayed, pending completion of the arbitration.