Judge Virginia Keeny, Case 22VECV01444 2023-03-29 Tentative Ruling

Judge: Virginia Keeny, Case: 22VECV01444, Date: 2023-03-29 Tentative Ruling

Case Number: 22VECV01444 Hearing Date: March 29, 2023 Dept: W

SOHAIL NASIM, M.D., et al. v. HCA HEALTHCARE INC, et al.

defendant s hca healthcare, inc., hca healthcare services of california, west hills hospital, and mark miller’s motion to compel arbitration

Date of Hearing: March 29, 2023 Trial Date: None set.

Department: W Case No.: 22VECV01444

Moving Party: Defendants HCA Healthcare, Inc., HCA Healthcare Services of California, West Hills Hospital, and Mark Miller

Responding Party: Plaintiffs Sohail Nasim, M.D., SNASIM, Inc., Caleb Hirsch, M.D., Samir Parmekar, M.D., Paul Diehl, M.D., Dr. Paul E. Diehl, A Medical Corporation; H. Norman Xu, M.D. Ph.D, H Norman Xu MD, Inc.

BACKGROUND

Plaintiffs Sohail Nasim, M.D., SNASIM, Inc., Caleb Hirsch, M.D., Samir Parmekar, M.D., Paul Diehl, M.D., Dr. Paul E. Diehl, A Medical Corporation; H. Norman Xu, M.D. Ph.D, H Norman Xu MD, Inc. allege Defendants HCA Healthcare, Inc., HCA Healthcare Services of California, West Hills Hospital, and Mark Miller took Plaintiffs’ vested property rights when they ended Plaintiffs’ Emergency Room On-Call Panel and transferred those privileges to Defendant TeamHealth. Plaintiffs allege Defendants did so fraudulently so TeamHealth could give illegal referrals and kickbacks.

Plaintiffs filed a complaint against Defendants on September 29, 2022 for (1) Unfair Competition Under Business and Professions Code §17200; (2) Violations of Health & Safety Code §1278.5; (3) Violation of Government Code §12653; (4) Intentional Interference with Prospective Economic Advantage; (5) Violation of the Cartwright Act; (6) Conspiracy; and (7) Declaratory and Injunctive Relief. On February 16, 2023, plaintiffs filed an Amended Complain. Defendants filed a motion to compel arbitration and to stay proceedings on March 7, 2023.

[Tentative] Ruling

Defendants HCA Healthcare, Inc., HCA Healthcare Services of California, West Hills Hospital, Mark Miller, and Team Health Holdings, Inc.’s Motion to Compel Arbitration and Stay Proceedings is DENIED.

EVIDENTIARY OBJECTIONS

Defendants submit evidentiary objections to the Declaration of Caleb Hirsch M.D., Sohail Nasim, M.D., and J. Grant Kennedy, filed concurrently with Plaintiffs’ Opposition to Motion for an Order Compelling Arbitration and Stay Proceedings.

The court rules as follows on those objections:

Defendants generally object to the entirety of the Hirsch and Nasim declarations because they aver that they have personal knowledge of some facts or base them on information and belief, but do not distinguish between the two. The court overrules this general objection because many of the statements made are properly authenticated and do lay a proper foundation. Where the statement appears conclusory or without foundation, the court has sustained the more particularized objection. The court does agree that the declaration from Dr. Hirsh applies to an earlier version of the complaint, but the court is able to determine what factual allegations his declaration relates to and so overrules the general objection. The specific objections are ruled on below:

A. Dr. Caleb Hirsh

The court sustains the following objections:

2, 4, 5, 6, 7 (but only as to the phrase “who already had ‘vested property rights’), 8, 10, 11, 12, 13, 14, 15 (but only as to the phrase “nor any other plaintiff”), 17 (but only as to phrase “any other plaintiff”), 19, 24, 25, 28, 31-33, 34, 36.

The remainder of the objections to Dr. Hirsh’s declaration are overruled.

B. Dr. Sohail Nasim

The court sustains the following objections:

37, 38, 39, 41, 45 (but only as to the phase “Other plaintiffs and”), 46, 52, 53 (but only as to the sentence beginning “That would be absurd. . . “), 54, 57, 58, 59, 61, 63, 66, 70, 71 (but only as to the phrase starting “and some of those doctors”), 72, 73 (but only as to the phrase “nor any other plaintiff”), 74, 75, 76, 85, 90, 91, 92, 93, 94, 96, 97, 98, 99, 101-105, 110 (but only as to the phrase “other plaintiffs and”),

The remainder of the objections to Dr. Nasim’s declaration are overruled.

C. J. Grant Kennedy

The court sustains the following objections:

113-118. *

DISCUSSION

Defendants HCA Healthcare, Inc., HCA Healthcare Services of California, West Hills Hospital, Mark Miller, and Team Health Holdings, Inc. move for an order compelling this entire action, and all causes of action within the complaint, to arbitration and staying this action pending said arbitration. Defendants make the motion on the grounds that each of the parties hereto entered into a Professional Services Agreement (“PSA”), which provided for arbitration of all claims and controversies relating to or arising out of said agreement, including claims and issues made subject to this lawsuit.

Code of Civil Procedure section 1281.2 permits a party to file a petition to request that the court order the parties to arbitrate a controversy. The trial court first determines whether an enforceable arbitration agreement exists between the parties and then whether the plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) “California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of Cal. (2000) 83 Cal.App.4th 677, 686.)

The party seeking to enforce the arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.) The party opposing the petition to compel arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. (Id.)

Defendant presents evidence of a “Professional Services Agreement” (or “PSA”) between the Hospital and each of the physicians, or their medical corporations. Each PSA requires arbitration of “[i]n the event of any controversy or dispute related to or arising out of this Agreement, the parties agree to meet and confer in good faith to attempt to resolve the controversy or dispute without an adversary proceeding.” (Laporte Decl. ¶4, Exhs. A1-A5.)

Plaintiffs do not dispute the existence of the PSA or the arbitration provision contained within the PSA. Plaintiffs contend the reasons, facts, and law herein demonstrate that the issues of the complaint do not “arise out of or relate to” the PSA. Plaintiffs argue their case is about the massive fraud occurring by the corporate practice of medicine and kickbacks as it impacted the Plaintiffs and the PSA is only a mere agreement to pay doctors for serving indigent patient needs.

“]In determining the scope of an arbitration clause, “[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.”’ (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, 222 Cal.Rptr. 1, 710 P.2d 833; accord, Laymon v. J. Rockcliff, Inc. (2017) 12 Cal.App.5th 812, 820, 219 Cal.Rptr.3d 185; see Civ. Code, § 1648 [‘[h]owever broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract’].) As a general rule, arbitration should be upheld ‘”’unless it can be said with assurance that the arbitration clause is not susceptible to an interpretation covering the asserted dispute.’”’ (Rice v. Downs (2016) 248 Cal.App.4th 175, 185, 203 Cal.Rptr.3d 555; accord, Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323, 197 Cal.Rptr. 581, 673 P.2d 251 [‘doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration’].) ‘Nonetheless, this policy does not override ordinary principles of contract interpretation. “[T]he contractual terms themselves must be carefully examined before the parties to the contract can be ordered to arbitration ....” ”[T]he terms of the specific arbitration clause under consideration must reasonably cover the dispute as to which arbitration is requested.”’ (Rice, at p. 185, 203 Cal.Rptr.3d 555.)” (Ahern v. Asset Mgmt. Consultants, Inc. (2022) 74 Cal.App.5^th 675, 687-688.)

In the instant case, the PSA arbitration agreement signed by each plaintiff provides that “in the event of any controversy or dispute related to or arising out of this Agreement,” the parties will submit the matter to binding arbitration. Plaintiffs contend and the court ultimately agrees that the PSA was only intended to set forth the agreement between the doctors and West Hills Hospital relating to the care of indigent patients. Because this case involves many claims that do not relate to or arise out of the treatment of indigent patients, the court agrees that the arbitration agreement should not be interpreted to include any other relationship or vested rights, if any, between the plaintiffs and the hospital.

Turning to the PSA, at the top of the agreement, it states in bold typeface that it is a “PROFESSIONAL SERVICES AGREEMENT” relating to a single subject area: “Emergency Coverage for the care of Indigent patients (the "Services") for Nephrology (the "Program").” (Laporte Decl., Exh. A-1, p. 1.) Thus, the only services that would fall under the agreement are those relating to indigent patients. Covered services are further defined in the Addendum. Section 3 of the addendum provides:

A. Contractor shall provide coverage to Facility's Emergency Department for Nephrology Services. Contractor further agrees to

provide Covered Services (as defined herein) to indigent Patients (as defined herein) at Facility in accordance with Facility’s

Bylaws, Rules and Regulations and Policies and Procedures and in accordance with Facility policy. When available, Contractor

and Contractor's Representatives shall respond to all calls requested by the Emergency Department and acknowledge that

determination of the need for call is at the discretion of the requesting Emergency Department physician.

B. For purposes of this Agreement "Covered Services" means Professional Medical Services which are usually provided at

Facility by physicians and limited to: l) Professional Medical Services rendered to Indigent Patients in the Emergency Department who are not the private patients of the physicians; or2) Professional Medical Services rendered to Indigent patients during the inpatient hospitalization at Facility from an Emergency Department admission; and 3) Professional Medical Services rendered to indigent inpatients admitted to the hospital by another service, but who develop emergent conditions requiring Nephrology services. For purposes of this Agreement, a patient shall be considered an "Indigent Patient if the Facility determines:

l)(a) There is no availability of third-party coverage, including without limitation, through employment or other group

coverage, personally paid insurance coverage, liability insurance, Medicare, Medicaid, Medi-Cal or any other governmental

coverage and (b) the patient has no ability to make a material initial deposit and/or monthly payments (as determined by an

assessment of financial resources); or (2) The patient is qualified for Medicaid or Medi-Cal directly or through a Medicaid or

Medi-Cal sponsored HMO or managed care plan and has signed a Medicaid or Medi-Cal waiver. Facility shall make its best

efforts to determine whether a patient is an "Indigent Patient" for purposes of this Agreement within sixty (60) days of

discharge.

C. Call Coverage. Contractor will provide Emergency Department call coverage in accordance with Facility's Bylaws, Rules and Regulations and Policies and Procedures and in accordance with the call schedule maintained by the Facility.

D. Non-discrimination. Neither Contractor nor any Contractor's Representative may refuse to respond to a call based upon

arbitrary, capricious or unreasonable discrimination involving an individual's race, religion, national origin, age, gender, physical condition, economic status, ethnicity, citizenship, disability, medical condition, marital status, sexual orientation, insurance status, ability to pay, or perception that the individual has any of these characteristics or is associated with anyone who has or is perceived to have these characteristics.

E. Required Response. Contractor and Contractor's Representatives shall respond to all calls requested by the Emergency

Department and acknowledge that determination of the need for call is at the discretion of the requesting Emergency Department physician.

F. Panel Participation. When taking call from for [sic] Facility's call panel, Facility will be the only hospital and the designated specialty will be the only specialty for which Contractor should be on call, unless suitable back-up is arranged for instances when Contractor is engaged in activities at another hospital and is unavailable to respond in a timely fashion to Facility consults.

(LaPorte Decl.,, Exh. A-1, pp. 12-13.) Read together, these descriptions of the type of services the doctors were agreeing to provide and the ability of the hospital to terminate those services was limited to emergency room services for indigent patients, not all patients or all on-call services. If this case only involved a refusal by the hospital to allow the doctors to handle indigent patients or to receive reimbursement for such services if the hospital was able to recover them, the court would likely agree with defendant West Hills Hospital that the matter should be sent to arbitration. But this case relates to many issues other than indigent health care.

Although the original complaint was an example of an over-pleaded complaint full of hyperbole, argument and repetition (and the Amended Complaint has many of the same issues), the gist of the complaint still can be discerned. Plaintiffs allege that by virtue of their long practice at West Hills Hospital and the hospitals Bylaws they had certain vested property rights, as well as due process rights (Amended Complaint, ¶2-6, 14); that they had been providing on-call services in the emergency room for many years (irrespective of the indigent patients covered by the PSA) (Amended Complaint, ¶¶18, 104); that defendant West Hills Hospital unilaterally and without due process terminated their ability to provide on-call services at the hospital (Amended Compliant, ¶15); that such termination interfered with their vested property rights; deprived them of future income (¶19-20); and was done without due process (¶¶26-28); and was done in order to silence the plaintiffs, all of whom claim to be whistle blowers (¶¶74-81); and that defendants receive bribes and illegal kickbacks from a medical group which is engaging in the corporate practice of medicine (¶¶30-31, 103, 110); and that such conduct also constitutes unfair business practices, restraint on trade (¶¶10-110), among other things.

The court agrees that these allegations of the wholesale removal of their right to serve on the on-call panel and to have privileges does not arise out of the limited agreement they entered into in 2019 (the “PSA”) to also care for indigent patents. Because that small subset of patients is the only group covered by the PSA, the court finds no intend by the parties to subject their entire working relationship – including hospital privileges, presence on the on-call panel in the emergency room and service on the hospital committees, and the like – to the PSA’s arbitration agreement.

Because of this finding, the court need not address whether the remaining defendants were third party beneficiaries of the PSA’s arbitration agreement.