Judge: Shirley K. Watkins, Case: 22VECV01343, Date: 2023-02-28 Tentative Ruling

Case Number: 22VECV01343    Hearing Date: February 28, 2023    Dept: T

            [TENTATIVE] ORDER:  Defendants Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and Southern California Permanente Medical Group’s Petition to Compel Arbitration is DENIED.  Plaintiffs' objection to Exhibit D is overruled.  Response to complaint due in  30 days.

Introduction

            Defendants Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and Southern California Permanente Medical Group (collectively, Defendants) moved to arbitrate and stay the Complaint by Plaintiff Mike Gevshanyan, by and through his Guardian Ad Litem, Agapi Gevshanyan and Agapi Gevshanyan. 

            Procedure

            Plaintiffs objected to the admissibility of Defendants’ Petition Exh. D on several grounds.  However, with Defendants’ supplemental declaration attached to the Reply, Defendants cured.

            Discussion 

            Defendants argued that Plaintiffs’ claims are subject to binding arbitration under the arbitration provision found in the 2021 Combined Membership Agreement, Evidence of Coverage, and Disclosure Form for Kaiser Permanente for Individuals and Families (collectively, 2021 Plan) (Exh. A., at pg. 73, Bate Stamp pg. 101.)[1]  While there is an arbitration provision in the 2021 Plan, there is no "Disclosure Form."  Once petitioners establish that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement. (Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.)  The existence of the agreement is determined under standard rules of contract interpretation. (Mitchell v. American Fair Credit Ass'n, Inc. (2002) 99 Cal.App.4th 1345, 1355-1356.)  Defendants are required to comply with the Knox-Keen Health Care Service Plan Act of 1975 (Health & Saf. Code secs. 1340 et seq.) Defendants must comply with the disclosure requirements under Health and Safety Code sec. 1363.1.  Failure to comply with the disclosure requirements results in the unenforceability of the arbitration agreement.  (Burks v. Kaiser Found. Health Plan, Inc. (2008) 160 Cal.App.4th 1021, 1025-1029; Malek v. Blue Cross of Calif. (2004) 121 Cal.App.4th 44, 62-72.) 

            In relevant part, the statute requires Defendants to disclose the arbitration agreement on the Enrollment Form.  (Health & Saf. Code. sec. 1363.1(b).)  Also, in any contract or agreement, "the disclosure required by this section shall be displayed immediately before the signature line ... provided for the individual enrolling..." in the plan. (Emphasis added.) (Health & Saf. Code. sec. 1363.1(d).) Defendants failed to attach the Enrollment Form for the 2021 Plan. There is no disclosure for the 2021 plan with plaintiffs' signature.  Defendants failed to produce a document showing immediately above signature line on the enrollment form for the 2021 plan the disclosure required by  (Health & Saf. Code. sec. 1363.1(b).) Defendants have not shown compliance with the disclosure requirements as to the 2021 Plan.  On this defect, the petition is denied.

            Instead, Defendants submitted an Enrollment Form executed in 2004 (2004 Enrollment Form) (Petition Exh. D) and a Plan Change Form executed in 2007 (2007 Plan Change Form) (Petition Exh. D.)  As submitted by Defendants, the Plan at issue is the 2021 Plan, especially because the medical services and the alleged negligence occurred in 2021 (Compl. pars. 10-17) and into 2022 (Compl. pars. 18-22.)  Defendants submitted that the 2004 Enrollment Form applied to the “Individual Plan Membership Agreement and Disclosure Form and Evidence of Coverage for Kaiser Permanente for Individuals and Families $25 and $50 Copayment Plans” (2004 Plan.) (Petition Exh. B.)  As expressly stated in the 2004 Plan, the effective term for that plan expired on December 31, 2004, unless there is an amendment as defined in the “Miscellaneous Provisions” section.  (Petition Exh. B, pg. 41, Bate Stamp pg. 155.)  Defendants failed to present any facts to show that any amendment occurred.  Without evidence showing that the terms of the 2004 Plan were extended into 2021 and 2022, the 2004 Plan and its concurrent 2004 Enrollment Form are irrelevant to the 2021 Plan’s Arbitration Agreement.  As to the 2007 Plan Change Form, the form expressly stated that the Plan was being changed to a “$0/$2,700 Deductible Plan with HSA.”  The 2021 Plan, however, is for health care coverage under a different plan, “Deductible HMO 30/2700 with HSA.”  (First full sentence of Petition Exh. A at pg. 17, Bate Stamp pg. 45.)  Because the 2007 Plan Change Form does not refer to the correct health care coverage identified in the 2021 Plan, the 2007 Plan Change Form is also irrelevant to the 2021 Plan.  Because the 2004 Enrollment Form and the 2007 Plan Change Form are inapplicable to the 2021 Plan, Defendants’ arguments are unpersuasive to show compliance with the statutory disclosure requirements based upon those two forms for two other, different plans.  The failure to comply with the statutory disclosure requirement results in Defendants’ failure to meet their initial burden as to the existence of an enforceable arbitration agreement.

            Defendants then argued that Plaintiffs were “continuing” members as defined by the 2004 Plan.  However, this argument is seen as a “red-herring.”  The 2004 Plan is not the Membership Agreement that is at issue. In fact, the reference to Binding Arbitration in 2004 is specifically on a form (Petition Exh. B, page 150) that states at the bottom of the page: "Kaiser Permanente for individuals and families $25 and $50 Copayment Plans.  Effective 1/1/04-12/31/04.  Date: January 25, 2004."   (Emphasis added.)  By its terms, the plan was no longer effective as of 12/31/2004. 

            If the 2004 arbitration agreement was in effect in 2007, then there would have been no need for a new arbitration agreement to be entered into on the Plan Change form in 2007. (Petition, Exh. D, page 177.)

            Defendants argued that there is no requirement to sign new arbitration disclosures when changing health care coverage.  This is contradicted by defendants' own exhibits.  Defendants’ Plan Change Form expressly disclosed the existence of an arbitration agreement when Plaintiffs elected a new type of coverage.  (Petition, Exh. D, pg. 177.)  In any event, Defendants’ argument is also unpersuasive because their argument in the Petition asserted that the 2021 Plan is the operative contract between the parties.  The 2021 Plan is not merely just a change in the type of health care coverage but entry into a completely new contract, which is different from the contract evidenced by the 2004 Plan.  Further, the authority requiring the disclosure of the arbitration agreement when entering any new Plan or contract is expressly provided in Health and Safety Code sec. 1363.1 – “[a]ny health care service plan that includes terms that require binding arbitration… .” (Emphasis added.) There is no dispute by Defendants that there was a new plan in 2021. With the parties’ entry into the 2021 Plan, Defendants were required to show compliance with the statutory disclosure requirement in 2021.  Defendants’ argument to “mix and match” chronologically differing Plans/contracts, enrollment forms, change forms, and arbitration disclosure is unpersuasive to show compliance with the statutory disclosure requirements.

            There is nothing signed by plaintiffs submitting to binding arbitration for the 2021 Plan.  Without compliance with the disclosure requirement, there was no enforceable arbitration agreement in effect at the time of the claimed injuries in the Fall of 2021. 

            The Petition to Compel Arbitration is DENIED.

            IT IS SO ORDERED, CLERK TO GIVE NOTICE.