Judge: Yolanda Orozco, Case: 22STCV25765, Date: 2023-02-24 Tentative Ruling
Case Number: 22STCV25765 Hearing Date: February 24, 2023 Dept: 31
MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
tentative ruling
Defendant Beverly Hills Rehabilitation Centre’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.
Background
On August 95, 2022 Plaintiff George Fuller by and through Marjorie Grant-Fuller filed a Complaint against Defendants
Beverly Hills Rehabilitation Centre (“BHRC”); Kaiser Foundation Hospitals; Southern California Permanente Medical Group; Kaiser Foundation Health Plaint; and Does 1 to 200 for:
1) Elder Abuse;
2) Negligence;
3) Violation of Residents Rights.
On September 15, 2022, BHRC filed a petition to compel arbitration and stay proceedings. The petition was denied without prejudice on November 01, 2022.
Defendant BHRC filed a renewed Motion to Compel Arbitration on November 10, 2022.
The hearing was continued to allow Plaintiff to file opposing papers.
Plaintiff filed opposing papers on January 30, 2023.
Defendant filed a reply on February 16, 2023.
Legal Standard
Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute.¿(Code Civ. Proc., § 1281.2; Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)
A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-57.)
“If a court of competent jurisdiction, whether in this State or not, 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 Beverly Hills Rehabilitation Centre (“BHRC”) moves to compel arbitration and stay the action pursuant to an arbitration agreement signed by Plaintiff’s agent by way of power of attorney.
BHRC asserts that an arbitration agreement (the “Agreement”) exists between the parties which covers the claims Plaintiff asserts against BHRC. BHRC asserts that Plaintiff/decedent’s wife executed a Power of Attorney form on December 01, 2020, that made her the agent of the Decedent/Plaintiff George Fuller. (See Bernabe Decl. Ex. B.)
In Garrison v. Superior Court¿(2005) 132 Cal.App.4th 253, 265, the Appeal Court found that the power of attorney signed by the plaintiff’s daughter gave her daughter the authority to bind the plaintiff to the arbitration agreement. Similarly, Plaintiff’s wife had the power to bind Plaintiff Fuller to the Agreement when she signed the agreement on his behalf on May 14, 2012. (See Barnabe Decl. Ex. A.)
Existence of an Arbitration Agreement
The initial burden of proving the existence of an arbitration agreement is on BHRC which has met its initial burden by attaching a copy of the Agreement to this motion bearing the signature of the opposing party. (See Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 541-543 [“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.”].) Alternatively, the moving party can meet its initial burden by setting forth the agreement’s provisions in the motion. (See Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.)
¿“If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement.” (Gamboa v. Northeast Community Clinic¿(2021) 72 Cal.App.5th 158, 165.)
Plaintiff argues that Defendant has failed to authenticate the power of attorney and the arbitration agreement, and therefore Defendant cannot establish the existence of a valid Agreement. The argument fails because Plaintiff cannot meet his burden of challenging the existence of a valid agreement to arbitrate by arguing that Defendant has failed to properly authenticate the Agreement.
“For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication. ‘[T]he court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists....’ (§ 1281.2) The statute does not require the petitioner to introduce the agreement into evidence. A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity.”
(Condee, supra, 88 Cal.App.4th at 218–219.)
Plaintiff fails to meet his burden by producing evidence that challenges the authenticity of the Agreement such as Plaintiff’s wife’s declaration that she did not sign the Agreement or that she does not recall signing the Agreement. Defendant need not introduce evidence authenticating the Agreement.
Validity of Agreement
Plaintiff challenges the validity of the Agreement by arguing that it fails to comply with various regulations.
a. Failure to Comply with Heath and Safety Code § 1599.81 and Title 22 CCR 72516
Plaintiff argues that the Agreement fails to comply with the California Health and Safety Code section 1599.81 subdivisions (a) and (b) and California Code of Regulations, Title 22, Section 72516 subdivisions (c) and (d).
Health and Safety Code section 1599.81 subdivisions (a) and (b) requires that “[a]ll contracts of admission that contain an arbitration clause shall clearly indicate that agreement to arbitration is not a precondition for medical treatment or for admission to the facility” and that the arbitration clause be separate from the rest of the admission contract. Title 22, Section 72516 subdivisions (c) and (d) have similar provision.
In the Agreement, after the resident’s name and before the terms of the Agreement are outlined, in bold lettering, the Agreement states:
“Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility.”
(Mot. Ex. A [bold original].)
Hence, the Agreement clearly complies with Health and Safety Code Section 1599.81 subdivisions (a) and (c) and California Code of Regulations, Title 22, Section 72516 subdivision (c) and (d). Moreover, Article 3 of the Agreement also states:
“The execution of this Arbitration Agreement is not a precondition to receiving medical treatment, care, services and/or, for admission to the Facility.”
(Mot. Ex. A.)
Thus, Plaintiff’s argument is without merit.
b. Failure to Comply with Health and Safety Code § 1430
Plaintiff also argues that the Agreement fails to contain a notice that a patient may not waive their ability to sue for violation of the Patient’s Bill of Rights under Health and Safety Code section 1430. Defendant argues that Health and Safety Code section 1430 is preempted by the Federal Arbitration Act (FAA). (See Scott v. Yoho (2016) 248 Cal.App.4th 392 [holding that 30-day recession right in the Code of Civil Procedure section 1295(c) is preempted by the FAA].)
Article 1 of the Agreement states:
“It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings.”
(Mot. Ex. A.)
Article 6 states:
“California substantive law, including California Code of Civil Procedure §667,7 and Civil Code §§333.1-3333.2 applies to any and all claims arising out of the care, treatment and services provided to the Resident by the Facility.”
(Mot. Ex. A.)
Nevertheless, Article 7 states:
“This Agreement relates to the Resident’s admission to the Facility, and the Facility, among other things, participates in the Medicare and/or Medi-Cal programs and/or procures supplies from out of state vendors. The parties, therefore, agree that the underlying admission to the Facility involves interstate commerce. Accordingly, this Agreement is to be governed by the Federal Arbitration Act and the procedural rules set forth in the Federal Arbitration Act shall govern any petition to compel arbitration.”
(Mot. Ex. A [bold added].)
Accordingly, due to the Agreement’s express provisions, the Court finds that the Agreement is governed by the FAA except for provisions where the Agreement specifies that California substantive law shall apply. “It follows that when an agreement provides that its ‘enforcement’ shall be¿governed¿by the¿FAA, the¿FAA¿governs¿a¿party's¿motion¿to¿compel¿arbitration.” (Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 346; see also Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956.)
For this reason, the Court agrees the Health and Safety Code 1430 is preempted by the FAA to the extent that section prohibits arbitration. (See Valley View Health Care, Inc. v. Chapman (E.D. Cal. 2014) 992 F.Supp.2d 1016, 1041 [Holding the California Health and Safety Code provisions were preempted by the Federal Arbitration Act (FAA) to the extent they barred arbitration of claims under California Patients’ Bill of Rights]; see also AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 [131 S.Ct. 1740, 1743] [“When state law prohibits outright the arbitration of a particular type of claim, the FAA displaces the conflicting rule.”].)
Accordingly, any alleged violation of Health and Safety Code 1430 is insufficient to invalidate the Arbitration Agreement.
c. Applicability of Health and Safety Code 1599.65
The Court agrees that Plaintiff fails to explain how Health and Safety Code 1599.65 applies to the Agreement when the code section only pertains to Admission Agreements and not Arbitration Agreements.
Section 1599.81 states, in the relevant part:
“Unless the prospective resident has been declared legally incompetent or is unable to understand and sign the contract because of his or her medical condition, he or she shall sign or cosign the admission agreement.”
(Id. [bold added].)
Therefore, Plaintiff’s argument in this regard is without merit.
d. Compliance with 42 CFR Section 483.70(n)
Title 42 of the Code of Federal Regulations, section 483.70, in the relevant part:
“If a facility chooses to ask a resident or his or her representative to enter into an agreement for binding arbitration, the facility must comply with all of the requirements in this section.
(1) The facility must not require any resident or his or her representative to sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility and must explicitly inform the resident or his or her representative of his or her right not to sign the agreement as a condition of admission to, or as a requirement to continue to receive care at, the facility.
(2) The facility must ensure that:
(i) The agreement is explained to the resident and his or her representative in a form and manner that he or she understands, including in a language the resident and his or her representative understands;
(ii) The resident or his or her representative acknowledges that he or she understands the agreement;
(iii) The agreement provides for the selection of a neutral arbitrator agreed upon by both parties; and
(iv) The agreement provides for the selection of a venue that is convenient to both parties.”
(42 C.F.R. § 483.70 subd. (n)(1-2).)
Plaintiff argues that Agreement fails to comply with section 483.70 because Defendant failed to present evidence of compliance with section 483.70. Again, Plaintiff fails to present evidence that Defendants failed to comply with section 483.70.
Defendant counters by stating that the Agreement clearly states that signing the Agreement is not a condition of admission into Defendant’s facility.
Moreover, Plaintiff has failed to present evidence that Plaintiff’s wife did not sign the Agreement or that Plaintiff’s wife did not understand what she was signing. “[O]ne who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he [or she] has not read it.” (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686 [internal quotes omitted].) Accordingly, because Plaintiff’s wife signed the Agreement, the signatory is deemed to have assented to the terms of the Agreement.
Defendants also point out that the Centers for Medicare and Medicaid Services (“CMS”) has stated that section 483.70 subdivision (n) does not regulate or prevent the enforcement of arbitration agreements. (See 84 Fed. Reg. 34,718, 34,718 (July 18, 2019) [“This rule in no way would prohibit two willing and informed parties from entering voluntarily into an arbitration agreement.”].) The Eighth Circuit Court of Appeals has also affirmed that violations of 42 C.F.R. §§ 483.70(n)(2)(i) & (ii) do not prevent the enforcement of an arbitration agreement because the CMS does not have the power to annul a valid contract, and section 483.70 only establishes the conditions for receipt of federal funding through the Medicare and Medicaid programs. (Northport Health Services of Arkansas, LLC v. U.S. Department of Health and Human Services¿(8th Cir. 2021) 14 F.4th 856, 868,¿cert. denied.)
“So, for example, if an LTC [Long Term Care] facility entered into an arbitration agreement with a resident without complying with the Revised Rule by requiring the resident to sign as a condition of admission to the facility,¿see¿42 C.F.R. § 483.70(n)(1), the arbitration agreement would nonetheless be enforceable, absent a showing of ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ (Citations.) CMS would simply enforce the regulation through a combination of administrative remedies, including denial of payment and civil monetary penalties.”
(Id.)
Accordingly, the Court finds that any purported failure to comply with the arbitration provisions in section 483.70 does not render the Agreement unenforceable.
e. Risk of Inconsistent Rulings Under Section 1281.2(c)
Plaintiff argues that under Code of Civil Procedure section 1281.2 subdivision (c), arbitration should not be compelled because there is a risk of inconsistent rulings since Kaiser Foundation Hospitals are also a Defendant in this action and are not part of the Agreement.
In Article 6, in the relevant part, the Agreement expressly states:
“The parties agree that California Code of Civil Procedure § 1281.2(c) is excluded from this Agreement as the parties mutually desire to have any and all disputes submitted to binding arbitration.”
(Mot. Ex. A.)
Moreover, in Article 7, the Agreement expressly states:
“this Agreement is to be governed by the Federal Arbitration Act and the procedural rules set forth in the Federal Arbitration Act shall govern any petition to compel arbitration.”
(Mot. Ex. A [bold added].)
“The procedural aspects of the FAA do not apply in state court absent an express provision in the arbitration agreement.” (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 840.) Since the Agreement expressly provides that the procedural rules of the FAA apply to the exclusion of section 1281.2 subdivision (c), that section is inapplicable to the Agreement.
f. Unconscionability
Plaintiff argues that the Agreement is procedurally and substantively unconscionable.
A showing of unconscionability requires both procedural and substantive unconscionability. Procedural unconscionability asks whether there is oppression from unequal bargaining power or surprise from buried terms. (Armendariz v. Foundation Health (2000) 24 Cal.4th 83, 114.) Substantive unconscionability asks whether there are overly harsh, one-sided terms. (Id.) Both are required to be proven in order to find unconscionability. However, there is a sliding scale; if an agreement is particularly substantively unconscionable, the petitioner need not show a large amount of procedural unconscionability, and vice versa. (Id.) “The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)
Plaintiff asserts that because Defendant failed to provide evidence that the Agreement was explained to Plaintiff’s wife, the Agreement is procedurally unconscionable. However, Plaintiff bears the burden of proving, by a preponderance of the evince, any fact necessary to show the Agreement was invalid. (See Banner Entertainment Inc., supra, 62 Cal.App.4th at 356-357.) Plaintiff fails to present evidence that the Agreement was never explained to Plaintiff’s wife. Moreover, the fact that the Agreement was never explained to Plaintiff’s wife, is not evidence of unconscionability unless Defendant actually prevent Plaintiff’s wife from reading and understanding the Agreement. (See Pinnacle Museum Tower Assoc. v. Pinnacle Market Dev., LLC (2012) 55 Cal.4th 223, 236 [“An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.”]; 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal. App. 4th 1199, 1215 [Plaintiff’s claim to not have read arbitration clause was “unavailing” because “[r]easonable diligence requires the reading of a contract before signing it. A party cannot use [her] own lack of diligence to avoid an arbitration agreement.”].)
Plaintiff’s contention that the agreement did not warn a person who signs as the resident’s representative or agent that they are agreeing to be bound in both their individual and representative capacity is also without merit.
Defendant claims the argument is irrelevant since Plaintiff’s wife is not bringing any claims in her individual capacity. Furthermore, Article 4 expressly warns signatories that they are agreeing to be bound by the terms of the Agreement in both their individual and representative capacity:
“The Resident's representatives, agents, executors, family members, successors in interest and heirs who execute this Agreement below on the signature line are doing so not only in their representative capacity for the Resident, but also in their individual capacity and thus agree that any claims brought individually by any such representatives, agents, executors, family members; representatives, successors in interest and heirs are subject to binding arbitration.”
(Mot. Ex. A.)
Therefore, Plaintiff fails to present evidence of procedural unconscionability.
Plaintiff argues evidence of substantive unconscionability is found in the fact the Agreement lacks mutuality since residents are required to arbitrate those claims they are most likely to bring against Defendant while excluding claims of eviction and collection which Defendant is likely to bring against residents.
Plaintiff fails to show how the exclusion of eviction and collections claims from the Agreement are overly harsh one-sided terms that render the entire agreement substantively unconscionable. Plaintiff also fails to cite any legal authority showing that the exclusion of certain claims from arbitration makes the agreement as a whole substantively unconscionable.
The Court finds the Agreement is not void due to unconscionability.
Based on the foregoing, Defendant’s Motion to Compel Arbitration is GRANTED.
Conclusion
Defendant Beverly Hills Rehabilitation Centre’s Motion to Compel Arbitration is GRANTED. The Court will set a Status Conference regarding the status of the arbitration proceedings on August 18, 2023, at 9 a.m. The Court expects the parties to act expeditiously in scheduling and completing the arbitration. The Court recommends that the parties meet and confer regarding the manner of proceeding, if at all, against the Kaiser Defendants. The Court will take up this matter on March 15, 2023
The parties waived notice.