1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PATRICIA LOUCKS, et al., Case No. 20-cv-01216-EMC
8 Plaintiffs, ORDER GRANTING UC REGENTS’ 9 v. MOTION TO DISMISS, AND GRANTING KAISER’S MOTION TO 10 KAISER FOUNDATION HOSPITALS, et COMPEL ARBITRATION al., 11 Docket Nos. 14, 29 Defendants. 12 13 14 I. INTRODUCTION 15 This case arises out of the circumstances surrounding the death of Shawn Loucks (“Mr. 16 Loucks”), who died at a UCSF hospital on February 23, 2019, after also receiving medical care at 17 Kaiser Santa Rosa on February 10 and 20, 2019. Plaintiffs are Patricia Loucks, Donna Barry, 18 Luke Barry, Christina Keeney-Foster, Eric Foster, Pete Figone, Dawn Loucks, Ashley Loucks, 19 Tony Marks, and Neno Meola-Marks (collectively “Plaintiffs”). Defendants are Kaiser 20 Foundation Hospitals, Kaiser Foundation Health Plan, Inc, The Permanente Medical Group, Inc. 21 (together “Kaiser”), American Medical Response (“AMR”), and the Regents of the University of 22 California (“the Regents” or “the UC Regents”) (all collectively “Defendants”). Plaintiffs assert 23 claims for medical malpractice, dependent adult abuse, negligent infliction of emotional distress, 24 intentional misconduct, violations of the Emergency Medical Treatment and Labor Act 25 (“EMTALA”), and wrongful death. See Docket No. 1 (“Complaint”) ¶ 1. Kaiser moves to 26 compel arbitration of all of Plaintiffs’ claims against Kaiser, or in the alternative, to dismiss the 27 Complaint. See Docket No. 4 (“Kaiser Mot.”). The UC Regents assert immunity under the 1 alternatively seek dismissal for failure to state a claim, move for a more definite statement, and 2 move to strike certain portions of the complaint. See Docket No. 14 (“UC Mot.”). 3 II. BACKGROUND 4 A. Factual Background 5 Plaintiffs allege the following. Prior to the events described herein, Mr. Loucks (age 51) 6 was “healthy and athletic.” Complaint ¶ 28. On February 10, 2019, Mr. Loucks suddenly became 7 dizzy and nauseous. Id. He was taken by ambulance to the emergency room at Kaiser Santa Rosa 8 at around 2:45p.m. Id. ¶¶ 2, 28. Sometime after 10p.m., he was diagnosed with a stroke and sent 9 home; Plaintiffs contend that no tPA clot buster was administered. Id. Ten days later, Mr. Loucks 10 suffered another stroke and was again transported by ambulance to the emergency room at Kaiser 11 Santa Rosa. Id. ¶ 3. “After several hours,” the medical staff determined that Mr. Loucks required 12 “a higher level of care.” Id. Plaintiffs assert that “[a]ttempts were made to obtain a critical care 13 ambulance” to transfer Mr. Loucks to either UCSF or the Redwood City Kaiser, but “[t]here were 14 repeated delays in obtaining the ambulance.” Id. Mr. Loucks was transferred to UCSF in the 15 early morning hours of February 21, 2019, where he died on February 23, 2019. Id. ¶ 3, 6. 16 Plaintiffs allege that Kaiser “breached the standard of medical care and recklessly 17 discharged [Mr. Loucks] after the first visit,” and they assert that “further hospitalization and close 18 monitoring . . . in all probability would have prevented his condition from deteriorating and 19 causing . . . the second and fatal stroke.” Id. ¶ 4. They contend that “[t]he second Kaiser visit also 20 involved inappropriate delays in diagnosis and treatment, including but not limited to timely 21 critical care transfer.” Id. ¶ 5. They also assert that Kaiser “had a pattern and practice of delaying 22 ambulance transfers” and “a pattern and practice of failing and refusing to transport critically ill 23 patients to the most readily available lifesaving critical care.” Id. ¶ 6. Instead, the company 24 “avoided transfer to non-KAISER facilities and avoided using non-KAISER ambulances even 25 when it greatly increased the risk to their patients.” Id. ¶ 6. 26 At the same time, Plaintiffs also allege that “KAISER documents that they had consulted 27 with ambulance provider defendant AMERICAN MEDICAL RESPONSE (AMR) who had 1 determined not to do so and refused to do so. AMR negligently and recklessly and intentionally 2 refused to send the critical care ambulance as promised.” Id. ¶ 8. This caused Kaiser personnel to 3 “frantically search for an alternative critical care ambulance.” Id. Ultimately, the only critical 4 care ambulance that was located “had to come from hours away in Sacramento.” Id. Plaintiffs 5 allege that “[t]hese critical care delays were agonizing for the family members [who were present] 6 who recognized that these delays were causing severe harm” to Mr. Loucks; these delays furnish 7 the basis for the Plaintiffs’ negligent infliction of emotion distress claims. Id. 8 Finally, Plaintiffs allege that “UCSF had been called repeatedly by KAISER to obtain 9 permission for immediate transport to UCSF but UCSF delayed for hours responding. This was 10 not only negligent and reckless but also violates the federal law EMTALA statute.” Id. ¶ 9. 11 B. Procedural Background 12 Plaintiffs filed their Complaint in federal court on February 19, 2020. See Docket No. 1. 13 On April 21, 2020, the Regents filed a Motion to Dismiss (pursuant to both Rule 12(b)(2) and 14 Rule 12(b)(6)) and for a More Definite Statement, as well as a Motion to Strike. See Docket No. 15 14. On May 11, 2020, Kaiser filed a Motion to Compel Arbitration and Stay the Case and in the 16 Alternative to Dismiss. See Docket No. 29. These motions were heard on June 18, 2020. See 17 Docket Nos. 29, 31. On May 22, 2020, American Medical Response filed a Motion for a More 18 Definite Statement, to Dismiss, and to Strike. See Docket No. 35. That motion is scheduled to be 19 heard on July 23, 2020. See Docket No. 44. 20 III. UC REGENTS’ MOTION 21 A. Legal Standard 22 Under Federal Rule of Civil Procedure 12(b)(2), a court must dismiss an action where it 23 does not have personal jurisdiction over a defendant. While the burden is on the plaintiff to 24 demonstrate that the court has jurisdiction, “the plaintiff need only make a prima facie showing of 25 jurisdictional facts to withstand the motion to dismiss.” Brayton Purcell LLP v. Recordon & 26 Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010) (citation omitted). The Court must accept 27 uncontroverted allegations in the plaintiff’s complaint as true and resolve all disputed facts in 1 B. Analysis 2 The UC Regents seek dismissal for lack of personal jurisdiction, contending that they are 3 immune from suit in federal court under the Eleventh Amendment. See UC Mot. at 8, 10. “The 4 ultimate guarantee of the Eleventh Amendment is that nonconsenting States may not be sued by 5 private individuals in federal court.” Beentjes v. Placer Cty. Air Pollution Control Dist., 397 F.3d 6 775, 777 (9th Cir. 2005) (quoting Bd. of Trs. of Univ. of Ala. v. Garrett, 531 U.S. 356, 363 7 (2001)). This rule “extends to suits by citizens against their own state and certain actions against 8 state agencies and state instrumentalities.” Holz v. Nenana City Pub. Sch. Dist., 347 F.3d 1176, 9 1180 (9th Cir. 2003) (internal citations and quotation marks omitted). 10 The Supreme Court and the Ninth Circuit have both previously found in numerous 11 contexts that the UC Regents are instrumentalities of the state entitled to Eleventh Amendment 12 immunity. See Regents of the Univ. of California v. Doe, 519 U.S. 425, 431 (1997) [hereinafter 13 Doe] (finding the Eleventh Amendment applied to the Regents as instruments of the state); BV 14 Eng’g v. Univ. of California, Los Angeles, 858 F.2d 1394, 1395 (9th Cir. 1988) (internal 15 modifications and citations omitted) (“The University of California and the Board of Regents are 16 considered to be instrumentalities of the state and therefore enjoy the same immunity as the state 17 of California.”); see also Thompson v. City of Los Angeles, 885 F.2d 1439, 1443 (9th Cir. 1989), 18 overruled on other grounds by Bull v. City & Cty. of San Francisco, 595 F.3d 964 (9th Cir. 2010) 19 (citing Hamilton v. Regents, 293 U.S. 245, 257 (1934)) (“It has long been established that UC is 20 an instrumentality of the state for purposes of the Eleventh Amendment.”). Notably, these cases 21 do not involve action by the University of California in a unique governmental role different from 22 other public entities; instead, they involve its role e.g. as a prospective employer (Doe), alleged 23 copyright infringer (BV), and as law enforcement (Thompson). Across various functions, the 24 courts have held the Regents enjoy Eleventh Amendment immunity. 25 In addition, in a case involving allegations of inadequate medical care furnished by faculty 26 of UCSF, Judge Wilken concluded that “[the] Regents are considered instrumentalities of the state 27 and therefore, absent waiver, enjoy Eleventh Amendment immunity. Herbert v. City & Cty. of 1 Engineering, 858 F.2d at 1395). In Herbert, the plaintiff alleged that he sought care for knee pain 2 at San Francisco General Hospital, where he was treated by physicians who were faculty members 3 at UCSF. Id. He alleged that the doctors first diagnosed him with a “sprang knee,” but that two 4 days later, he returned to the hospital and was diagnosed with Methicillin-Resistant 5 Staphylococcus Aureus and had seven surgeries to his left leg. Id. He named the UC Regents as 6 defendants, and the Regents asserted Eleventh Amended immunity. In concluding that immunity 7 applied, Judge Wilken noted that the assertion was “supported by controlling case law” and that 8 “[t]he Eleventh Amendment generally renders states immune from private damages claims 9 brought in federal court.” Id. (citing Stanley v. Trustees of California State University, 433 F.3d 10 1129, 1133 (9th Cir. 2006) (Title IX lawsuit brought by a former student)). Judge Wilken added 11 that “[t]he bar is generally absolute and covers states as well as their ‘instrumentalities.’” Id. 12 (citing Doe, 519 U.S. at 429).] 13 Even if the issue were to be revisited and examined anew under the Ninth Circuit’s five- 14 factor test for determining whether an entity should be considered an arm of the state, the Court 15 finds Plaintiffs’ arguments unavailing. Plaintiffs’ Opposition to UC Regents’ Motion (“UC 16 Opp.”) at 2–4, 5, Docket No. 20. Plaintiffs assert that the Ninth Circuit has “established a five- 17 part test for use in evaluating a litigant’s claim that it is an ‘arm of the state’ entitled to Eleventh 18 Amendment immunity.” ITSI T.V. Prods., Inc. v. Agric. Associations, 3 F.3d 1289, 1292 (9th Cir. 19 1993); UC Opp. at 3. The test is as follows:
20 To determine whether a governmental agency is an arm of the state, the following factors must be examined: [1] whether a money 21 judgment would be satisfied out of state funds, [2] whether the entity performs central governmental functions, [3] whether the 22 entity may sue or be sued, [4] whether the entity has power to take property in its own name or only the name of the state, and [5] the 23 corporate status of the entity. To determine these factors, the court looks to the way state law treats the entity. 24 25 Id. (quoting Durning v. Citibank, N.A., 950 F.2d 1419, 1423 (9th Cir. 1991)). In addition, “the 26 element of State liability is the single most important factor in determining whether an entity is an 27 arm of the state.” Doe v. Lawrence Livermore Nat. Lab., 131 F.3d 836, 839 (9th Cir. 1997) (on 1 opposed to financial liability such that indemnification by a non-state entity, such as an insurance 2 company, did not eviscerate immunity). 3 With respect to the first factor, courts have previously found that money judgments against 4 the Regents will be “satisfied out of state funds.” See, e.g., Vaughn v. Regents of Univ. of 5 California, 504 F. Supp. 1349, 1353 (E.D. Cal. 1981) (“[A]ny judgment obtained by plaintiffs 6 against the Regents will have to be paid out of the state treasury or other sources of state funds.”); 7 see also Ass’n of Christian Sch. Int’l v. Stearns, No. CV0506242SJORZX, 2006 WL 8434678, at 8 *10 (C.D. Cal. Aug. 8, 2006) (“[T]he fact that Plaintiffs are not pursuing money damages does not 9 alter the relationship between the state of California and the University. If Plaintiffs were seeking 10 money damages, it would be the state of California to which they would look.”). At the hearing, 11 Counsel for the Regents also indicated that if there were to be a judgment against the Regents in 12 this case, it would be paid by the state. In addition, Courts have also found that the Regents 13 perform a “central governmental function[]” of providing higher education to Californians. See, 14 e.g., Vaughn, 504 F. Supp. at 1353 (“[T]he Regents perform[] the essential governmental function 15 of providing the citizens of the State of California with a higher education.”). That function 16 applies in the context of a public hospital of the University of California. See Daniel v. Am. Bd. of 17 Emergency Med., 988 F. Supp. 127, 161 (W.D.N.Y. 1997), disapproved on other grounds, 428 18 F.3d 408 (2d Cir. 2005) (noting that a university hospital has the “primary purpose” of advancing 19 higher education which “weighs in favor of granting the hospital sovereign immunity”). These 20 facts both favor treatment of the Regents as an arm of the state. 21 On the other hand, the Court notes that the Regents may “sue or be sued,” that the entity is 22 a public corporation, and that it is “is intended to operate as independently of the state as 23 possible.” Vaughn, 504 F. Supp. at 1353 (first citing Jackson Sawmill Co. v. United States, 580 24 F.2d 302, 308 (8th Cir. 1978), cert. denied, 439 U.S. 1070 (1979); and then quoting San Francisco 25 Labor Council v. Regents of the University of California, 26 Cal.3d 785, 789 (1980)). These 26 factors would disfavor classifying the Regents as an arm of the state. 27 However, numerous cases have nonetheless concluded that—despite some factors tipping 1 are therefore entitled to immunity. See, e.g., Steshenko v. Albee, 70 F. Supp. 3d 1002, 1009 (N.D. 2 Cal. 2014) (citing Jackson v. Hayakawa, 682 F.2d 1344, 1350 (9th Cir. 1982)) (”The Board of 3 Trustees is an arm of the state of California and thus the Board of Trustees may invoke the 4 Eleventh Amendment immunity.”); Herbert, 2009 WL 691067, at *1 (finding immunity for the 5 Regents as discussed above); Campbell v. Regents of Univ. of California, No. 6 217CV2057KJMDBPS, 2018 WL 2970805, at *5 (E.D. Cal. June 11, 2018), report and 7 recommendation adopted, No. 217CV2057KJMDBPS, 2019 WL 325271 (E.D. Cal. Jan. 25, 2019) 8 (“The Ninth Circuit has repeatedly held that the Regents are an arm of the State of California.”). 9 See also Vaughn, 504 F. Supp. at 1353 (noting also that “members of the Board of Regents of the 10 University are appointed by the Governor and approved by the Senate, and thus the State retains a 11 measure of control over the governing body of the University of California”); Jackson, 682 F.2d at 12 1350 (“[T]he University of California and the Board of Regents are considered to be 13 instrumentalities of the state for purposes of the Eleventh Amendment.”); Mitchell v. Los Angeles 14 Cmty. Coll. Dist., 861 F.2d 198, 201 (9th Cir. 1988) (“California cases demonstrate that California 15 state colleges and universities are ‘dependent instrumentalities of the state.’”). 16 To be sure, there is at least one context in which the University was found not to have 17 immunity. See Regents of Univ. of California v. Superior Court, 17 Cal. 3d 533, 537 (Cal. 1976) 18 [hereinafter Superior Court] (“In choosing to invest its endowment by extending loans to 19 borrowers . . . , the University is acting in a capacity no different from a private university, 20 corporation, or individual investing in a similar manner” and it is “entitled to no sovereign 21 protection in its lending decisions.”). In Superior Court, the California Supreme Court examined 22 both the provision of the California Constitution establishing usury limits and also the provision 23 creating the University of California:
24 Our conclusion is supported by an examination of the constitutional provision itself. There the drafters established a generally 25 applicable usury limit, exempting certain types of lenders, but providing for their regulation by the Legislature. (Cal. Const., art. 26 XX, 2d § 22.) The provision for regulation of even the exempt classes indicates an intent to regulate all loans for the protection of 27 the public. There is no indication of any intent that the University independently of the state as possible. (See Cal. Const., art. IX, § 9.) 1 2 17 Cal. 3d at 537. Thus, in Superior Court, the usury limit specifically identified entities that 3 would be exempt from the regulation, but did not include the Regents; accordingly, in their role as 4 a lender, the Regents were not entitled to immunity from claims arising under the usury law. 5 Here, Plaintiffs have not pointed to any analogous law that might subject the Regents to liability 6 here. 7 Accordingly, even if some of the ITSI factors might suggest that the Regents are not 8 properly characterized as an arm of the state—a number of relevant factors also tilt in favor of the 9 conclusion that they are. In addition, the Ninth Circuit has repeatedly concluded (as have district 10 courts in cases post-dating ITSI and Doe) that the Regents are properly understood as an arm of 11 the state and are therefore entitled to Eleventh Amendment immunity. 12 Plaintiffs argue that the Regents “have not established absolute immunity under the 13 Eleventh Amendment as a matter of law.” UC Opp. at 2. To the extent that Plaintiffs raise a 14 waiver argument, id. at 2–4, 5, the Court finds that there is no meaningful development of that 15 point in Plaintiffs’ briefing. Plaintiffs only vaguely “question[] if there might be a waiver of 16 Eleventh Amendment Immunity depending upon a contractual agreement.” Id. at 5. However, 17 Plaintiffs offer nothing to substantiate this point, and the Court notes that numerous courts have 18 concluded that EMTALA—to the extent Plaintiffs contend that statute is the basis of the waiver 19 argument—contains no expression of intent to abrogate state immunity. See Campbell, 2018 WL 20 2970805, at *5 (collecting cases); see also Porter v. S. Nevada Adult Mental Health Servs., No. 21 16-CV-02949-APG-PAL, 2017 WL 6379525, at *14 (D. Nev. Dec. 13, 2017), aff’d, 788 F. App’x 22 525 (9th Cir. 2019) (“EMTALA, however, contains no clear expression of intent to abrogate the 23 states’ immunity.”). Ultimately, Plaintiffs have failed to make “a prima facie showing of 24 jurisdictional facts” sufficient to “withstand the motion to dismiss.” Brayton Purcell, 606 F.3d at 25 1127. 26 Thus, the Court GRANTS the Regents’ Motion to Dismiss for Lack of Personal 27 Jurisdiction as to the Regents. 1 IV. KAISER’S MOTION 2 Kaiser moves to compel arbitration and stay the case as to Kaiser, and in the alternative, to 3 dismiss Plaintiffs’ claims. 4 A. Legal Standard 5 Under the Federal Arbitration Act (“FAA”), “[a] written provision in . . . a contract 6 evidencing a transaction involving commerce to settle by arbitration a controversy thereafter 7 arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such 8 grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA 9 establishes “a liberal federal policy favoring arbitration agreements.” Epic Sys. Corp. v. Lewis, 10 138 S. Ct. 1612, 1621 (2018) (citing 9 U.S.C. § 2); see also Blair v. Rent-A-Ctr., Inc., 928 F.3d 11 819, 825 (9th Cir. 2019) (quoting 9 U.S.C. § 2). Courts “must place arbitration agreements on an 12 equal footing with other contracts . . . and enforce them according to their terms.” AT&T Mobility 13 LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted). 14 To determine “the validity of an arbitration agreement, federal courts apply state law 15 contract principles.” Lau v. Mercedes-Benz USA, LLC, No. CV 11-1940 MEJ, 2012 WL 370557, 16 at *2 (N.D. Cal. Jan. 31, 2012) (citing Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th 17 Cir. 2002)). However, arbitration agreements may “be invalidated by ‘generally applicable 18 contract defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only 19 to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” 20 Concepcion, 563 U.S. at 339. 21 Typically, “the question whether an issue is arbitrable . . . is ‘an issue for judicial 22 determination . . . .’” Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (citing 23 Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 2013)). In other words, 24 “there is a presumption that courts will decide which issues are arbitrable; the federal policy in 25 favor of arbitration does not extend to deciding questions of arbitrability.” Oracle Am., Inc., 724 26 F.3d at 1072. However, where “the parties clearly and unmistakably provide otherwise, the 27 question of whether the parties agreed to arbitrate” may be decided by an arbitrator. AT&T Techs., 1 evidence of agreement to arbitrate arbitrability might include . . . a course of conduct 2 demonstrating assent . . . or . . . an express agreement to do so.” Momot v. Mastro, 652 F.3d 982, 3 988 (9th Cir. 2011). Here, neither party asserts that the issues presented in Kaiser’s Motion to 4 Compel Arbitration fall outside the jurisdiction of this Court; accordingly, the Court does not 5 address any issues of arbitrability. 6 B. Analysis 7 Kaiser has moved for an order compelling Plaintiffs’ claims to arbitration and staying this 8 case, or in the alternative dismissal of Plaintiffs’ Complaint. See Kaiser Mot. at 3. Kaiser 9 contends:
10 The agreement under which Mr. Loucks was enrolled as a member of Kaiser Foundation Health Plan, Inc. (“Health Plan”) contains an 11 arbitration provision requiring binding arbitration of all of Plaintiffs’ claims against KAISER in this action. The agreement requires 12 Plaintiffs to arbitrate any claim arising from or relating to “an alleged violation of any duty incident to or arising out of or relating 13 to this [Agreement]” or a member’s relationship to Health Plan “irrespective of the legal theories upon which the claim is asserted.” 14 The provision expressly applies to claims by heirs and relatives. 15 Id. 16 Several documents bear on whether Plaintiffs are bound to arbitrate their claims. The full 17 text of the arbitration provision is included in the 2019 Traditional Plan HMO Plan Combined 18 Disclosure Form and Evidence of Coverage for San Francisco Health Service System Fund. See 19 Exh. A (“EOC”) to Declaration of Eric Carlile (“Carlile Decl.”), Docket No. 29-4. In relevant 20 part, that document provides:
21 Scope of arbitration Any dispute shall be submitted to binding arbitration if all of the 22 following requirements are met:
23 • The claim arises from or is related to an alleged violation of any duty incident to or arising out of or relating to this EOC 24 or a Member Party's relationship to Kaiser Foundation Health Plan, Inc. ("Health Plan"), including any claim for 25 medical or hospital malpractice (a claim that medical services or items were unnecessary or unauthorized or were 26 improperly, negligently, or incompetently rendered), for premises liability, or relating to the coverage for, or delivery 27 of, services or items, irrespective of the legal theories upon • The claim is asserted by one or more Member Parties against 1 one or more Kaiser Permanente Parties or by one or more Kaiser Permanente Parties against one or more Member 2 Parties • Governing law does not prevent the use of binding 3 arbitration to resolve the claim
4 Members enrolled under this EOC thus give up their right to a court or jury trial, and instead accept the use of binding arbitration except 5 that the following types of claims are not subject to binding arbitration: 6 • Claims within the jurisdiction of the Small Claims Court 7 • Claims subject to a Medicare appeal procedure as applicable to Kaiser Permanente Senior Advantage Members 8 • Claims that cannot be subject to binding arbitration under governing law 9 As referred to in this "Binding Arbitration" section, "Member 10 Parties" include:
11 • A Member • A Member's heir, relative, or personal representative 12 • Any person claiming that a duty to him or her arises from a Member's relationship to one or more Kaiser Permanente 13 Parties
14 "Kaiser Permanente Parties" include:
15 • Kaiser Foundation Health Plan, Inc. • Kaiser Foundation Hospitals 16 • KP Cal, LLC • The Permanente Medical Group, Inc. 17 • Southern California Permanente Medical Group • The Permanente Federation, LLC 18 • The Permanente Company, LLC • Any Southern California Permanente Medical Group or The 19 Permanente Medical Group physician • Any individual or organization whose contract with any of 20 the organizations identified above requires arbitration of claims brought by one or more Member Parties 21 • Any employee or agent of any of the foregoing
22 "Claimant" refers to a Member Party or a Kaiser Permanente Party who asserts a claim as described above. "Respondent" refers to a 23 Member Party or a Kaiser Permanente Party against whom a claim is asserted. 24 25 Id. (formatting and emphasis in original). 26 /// 27 /// 1 The arbitration provision is also discussed more briefly in the 2019 Group Agreement with 2 San Francisco Health Service System. See Exh. B (“Group Agreement”) to Carlile Decl., Docket 3 No. 29-4.
4 Binding Arbitration
5 As more fully set forth in the arbitration provision in the applicable Evidence of Coverage, disputes between Members, their heirs, 6 relatives, or associated parties (on the one hand) and Health Plan, Kaiser Permanente health care providers, or other associated parties 7 (on the other hand) for alleged violation of any duty arising out of or related to this Agreement, including any claim for medical or 8 hospital malpractice (a claim that medical services or items were unnecessary or unauthorized or were improperly, negligently, or 9 incompetently rendered), for premises liability, or relating to the coverage for, or delivery of, services or items pursuant to this 10 Agreement, irrespective of legal theory, must be decided by binding arbitration and not by lawsuit or resort to court process, except as 11 applicable law provides for judicial review of arbitration proceedings. Members enrolled under this Agreement thus give up 12 their right to a court or jury trial, and instead accept the use of binding arbitration as specified in the applicable Evidence of 13 Coverage except that the following types of claims are not subject to binding arbitration: Claims within the jurisdiction of the Small 14 Claims Court; Claims subject to a Medicare appeals procedure as applicable to Kaiser Permanente Senior Advantage Members; 15 Claims that cannot be subject to binding arbitration under governing law. 16 17 See Group Agreement. 18 Kaiser contends that Mr. Loucks would have been made aware of the arbitration provision 19 in one or both of two ways. First, the EOC “was made available to San Francisco Health Service 20 System each year with instructions to distribute it to current and prospective subscribers in 21 accordance with section 1363(a)(10), Cal. Health & Safe. Code.” Kaiser Mot. at 5. During the 22 period relevant to this lawsuit, “Mr. Loucks was enrolled as a health Plan member pursuant to his 23 former employment under a group membership agreement between Health Plan and the San 24 Francisco Health Service System.” Id. Accordingly, he should have received the EOC (and the 25 arbitration provision that it contained) through the distribution channels of the San Francisco 26 Health Service System. 27 In addition, Kaiser asserts that in January 2018, “Mr. Loucks signed an enrollment form to 1 System Plan.” Id. at 5. Right above the signature line on that form is a notice that provides:
2 KAISER FOUNDATION HEALTH PLAN, INC., ARBITRATION AGREEMENT: 3 I understand that (except for Small Claims Court cases, claims 4 subject to a Medicare appeals procedure or the ERISA claims procedure regulation, and any other claims subject to a Medicare 5 appeals procedure or the ERISA claims procedure regulation, and any other claims that cannot be subject to binding arbitration under 6 governing law) any dispute between myself, my heirs, relatives, or other associated parties on the one hand and Kaiser Foundation 7 Health Plan, Inc. (KFHP), any contracted health care providers, administrators, or other associated parties on the other hand, for 8 alleged violation of any duty arising out of or related to membership in KFHP, including any claim for medical or hospital malpractice (a 9 claim that medical services were un-necessary or unauthorized or were improperly, negligently, or incompetently rendered), for 10 premises liability, or relating to the coverage for, or delivery of, services or items, irrespective of legal theory, must be decided by 11 binding arbitration under California law and not by lawsuit or resort to court process, except as applicable law provides for judicial 12 review of arbitration proceedings. I agree to give up our right to a jury trial and accept the use of binding arbitration. I understand that 13 the full arbitration provision is contained in the Evidence of Coverage. 14 15 See Exh. D (“Enrollment Form”) to Declaration of Kern Carson (“Carson Decl.”), Docket No. 29- 16 3. 17 In response, Plaintiffs first contend that Kaiser’s arbitration agreement does not comply 18 with California Health and Safety Code Section 1363.1, which imposes specific requirements on 19 health care service plans that require binding arbitration. See Opposition to Kaiser’s Motion at 3, 20 Docket No. 36. Section 1363.1 provides:
21 Any health care service plan that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver 22 of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets all of the following conditions: 23 (a) The disclosure shall clearly state whether the plan uses binding 24 arbitration to settle disputes, including specifically whether the plan uses binding arbitration to settle claims of medical malpractice. 25 (b) The disclosure shall appear as a separate article in the agreement 26 issued to the employer group or individual subscriber and shall be prominently displayed on the enrollment form signed by each 27 subscriber or enrollee. enrollee is waiving his or her right to a jury trial for medical 1 malpractice, other disputes relating to the delivery of service under the plan, or both, and shall be substantially expressed in the wording 2 provided in subdivision (a) of Section 1295 of the Code of Civil Procedure.1 3 (d) In any contract or enrollment agreement for a health care service 4 plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative 5 of the group contracting with a health care service plan and immediately before the signature line provided for the individual 6 enrolling in the health care service plan. 7 Cal. Health & Safety Code § 1363.1. If Plaintiffs’ assertion of noncompliance is correct, the 8 binding arbitration provision would be unenforceable. See Malek v. Blue Cross of California, 121 9 Cal. App. 4th 44, 50 (2004) (“A violation of section 1363.1 renders a contractually binding 10 arbitration provision in a health service plan enrollment form unenforceable. Although we do not 11 foreclose the possibility that under the appropriate circumstances the doctrine of substantial 12 compliance might apply, we conclude that the Blue Cross enrollment form at issue here does not 13 substantially comply with section 1363.1.”). 14 However, the notice provided to Mr. Loucks fulfills the requirements set forth in Section 15 1363.3: (a) it clearly states that the plan uses binding arbitration, including to settle claims of 16 medical malpractice (“I understand that . . . any dispute between myself, my heirs, relatives, or 17 other associated parties on the one hand and Kaiser Foundation Health Plan, Inc. (KFHP), . . . for 18 alleged violation of any duty arising out of or related to membership in KFHP, including any 19 claim for medical or hospital malpractice . . . must be decided by binding arbitration under 20 California law and not by lawsuit or resort to court process . . . .”); (b) although the Group 21 Agreement is not explicitly organized into “articles,” there is a section entitled “Binding 22 Arbitration,” and the arbitration provision is also prominently displayed on the signed enrollment 23 1 “Any contract for medical services which contains a provision for arbitration of any dispute as to 24 professional negligence of a health care provider shall have such provision as the first article of the contract and shall be expressed in the following language: “It is understood that any dispute as to 25 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 26 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 27 proceedings. Both parties to this contract, by entering into it, are giving up their constitutional 1 form; (c) the wording of the disclosure is substantially similar to the wording provided in Section 2 1295(a) of the California Code of Civil Procedure; and (d) in the enrollment agreement, the 3 disclosure is displayed immediately before the signature line. See Enrollment Agreement; EOC. 4 The cases cited by Plaintiffs do not compel a different conclusion (i.e. a finding that the 5 disclosure failed to comply with Section 1363.3). For example, in Malek, Blue Cross “concede[d] 6 that the enrollment form d[id] not comply with subdivision (d) of section 1363.1 . . . because the 7 arbitration provision did not immediately appear before the signature line.” 121 Cal. App. 4th at 8 61. In addition, the Court found that the enrollment form did not meet the prominence 9 requirement of Section 1363.1(b) because “[t]he arbitration provision [wa]s in the same type size 10 and font as provisions authorizing deductions and release of medical information.” Id. The court 11 further observed: “While the arbitration provision constitutes a separate numbered paragraph, it 12 does not stand out and was not readily noticeable from these other provisions.” Id. Here, by 13 contrast, the arbitration provision appears directly above the signature line of the enrollment form, 14 and it appears in bold with a title printed in capital lettering and enlarged font size. It is fair to say 15 that it is “readily noticeable.” Id.; see also Imbler v. PacifiCare of Cal., Inc., 103 Cal. App. 4th 16 567, 579 (2002) (finding a failure to comply with the prominence requirement where “the 17 disclosure sentence was written in the middle of the authorization for the release of medical 18 records and an authorization for payroll deduction of premiums” and where it “was in the same 19 font as the rest of the paragraph, and was not bolded, underlined or italicized”); Burks v. Kaiser 20 Found. Health Plan, Inc., 160 Cal. App. 4th 1021, 1025 (2008) (finding a failure to comply with 21 the prominence requirement where the arbitration provision was “printed in typeface that is 22 substantially the same or smaller than the typeface used on the rest of the enrollment form” and 23 was “not highlighted, italicized, or bolded” and “lack[ed] any kind of heading”). Accordingly, the 24 Court finds that the disclosure of the arbitration provision complies with Section 1363.3. 25 Next, Plaintiffs contend that the Enrollment Form is not a “binding contract.” See Opp. at 26 4. They note that it “is not signed by anyone on behalf of Kaiser,” and therefore that “[t]here is no 27 acceptance.” Id. (internal quotation marks omitted). Plaintiffs also note that the Enrollment Form 1 happened in February of 2019 the following year. No signed form has been provided for the year 2 2019 in question.” Id. (emphasis in original). Their contention is that because there is no form for 3 2019 and/or because there is no proof of “offer and acceptance,” no arbitration agreement exists 4 between the parties. Id.; see also Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 299 5 (2010) (“[C]ourts should order arbitration of a dispute only where the court is satisfied that . . . the 6 formation of the parties’ arbitration agreement . . . [is not] in issue.”). 7 However, Kaiser contends that there is no requirement “that an enrollee sign a new 8 enrollment form each year. . . . [and t]here is no dispute that Mr. Loucks’s enrollment continued in 9 2019.” Kaiser’s Reply in Support of Motion to Compel Arbitration or Dismiss (“Kaiser Reply”) 10 at 3, Docket No. 37. The existence of a contract between Kaiser and Mr. Loucks is evidenced by 11 their mutual performance. See Cal. Civ. Code § 1584 (“Performance of the conditions of a 12 proposal, or the acceptance of the consideration offered with a proposal, is an acceptance of the 13 proposal.”). California courts have specifically recognized that performance can evince offer and 14 acceptance in the context of insurance contracts with arbitration provisions. See, e.g., NORCAL 15 Mut. Ins. Co. v. Newton, 84 Cal. App. 4th 64, 78–82 (Cal. 2000) (where respondent’s action 16 “constituted conduct seeking the benefit, and therefore requiring acceptance of the burden, of the 17 insurance policy” she could not avoid arbitration as required by the policy); Avina v. Cigna 18 Healthplans of California, 211 Cal. App. 3d 1, 3 (Cal. Ct. App. 1989) (“To allow respondent to 19 assert rights and benefits under the contract and then later repudiate it merely to avoid arbitration 20 would be entirely inequitable. Consequently, . . . respondent is estopped by her own subsequent 21 conduct from denying the existence of a contractual obligation.”). Here, too, Mr. Loucks enjoyed 22 the benefits of health insurance coverage through Kaiser, and Kaiser provided that coverage to 23 him prior to his death; thus, the parties’ conduct also evinces the existence of a contractual 24 agreement between Mr. Loucks and Kaiser. 25 In addition, Kaiser contends that “Plaintiffs’ assertion that the enrollment form does not 26 constitute a binding agreement is contrary to the law” because “well-established California law” 27 indicates that employers “have the authority to enter into agreement[s] for group health care 1 Hosps., 17 Cal. 3d 699, 705–09 (1976)). In Madden, the California Supreme Court held that “an 2 agent or other fiduciary who contracts for medical treatment on behalf of his beneficiary retains 3 the authority to enter into an agreement providing for arbitration of claims for medical 4 malpractice.” 17 Cal. 3d at 709. Although Madden involved a federal statute that conferred 5 authorization for an agency relationship, subsequent cases have interpreted it to stand for the more 6 general principle that an employer has authority to enter into an agreement for healthcare on 7 behalf of employees. See, e.g., Viola v. Dep’t of Managed Health Care, 133 Cal. App. 4th 299, 8 311 (2005), as modified on denial of reh’g (Nov. 4, 2005), as modified (Nov. 9, 2005) (“In 9 Madden, the Supreme Court concluded that an employer, acting as agent of its employees, has 10 implied authority to agree to binding arbitration of malpractice claims arising under a health 11 services plan it negotiates as part of an employee benefit package.”); Buckner v. Tamarin, 98 Cal. 12 App. 4th 140, 142 (2002) (citing Madden, 17 Cal. 3d at 706). In keeping with that approach, here, 13 Kaiser’s signature appears on an agreement between Mr. Loucks’s employer and Kaiser, as 14 opposed to on the Enrollment Form signed by Mr. Loucks. See Exh. E (“Renewal Group 15 Agreement Letter”) to Carson Decl., Docket No. 29-3 (with signatures of representatives of both 16 Kaiser and the San Francisco Health Service System indicating renewal of the parties’ contract for 17 the 2019 year). Thus, even setting aside Mr. Loucks’s direct commitment to the arbitration 18 provision, the agreement between Kaiser and San Francisco Health Service System—which also 19 contains the arbitration clause—binds Mr. Loucks as well. 20 Lastly, Plaintiffs argue that the Court should use its “broad discretion” to deny Kaiser’s 21 Motion to Compel Arbitration because the “caselaw supports denial of arbitration pursuant to 22 [California Code of Civil Procedure] 1281.2(c) . . . where there are non-signatories to the 23 arbitration agreement and there is a risk of conflicting outcomes.” Opp. at 5. In relevant part, 24 Section 1281.2(c) states:
25 On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a 26 party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the 27 controversy if it determines that an agreement to arbitrate the special proceeding with a third party, arising out of the same 1 transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For 2 purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party 3 refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This 4 subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care 5 provider made pursuant to Section 1295. 6 Cal. Civ. P. Code § 1281.2 (emphasis added). Assuming Section 1281.1 is not preempted by the 7 FAA, the last sentence of Section 1281.2(c) would deprive the Court of discretion it might 8 otherwise have to deny arbitration under Section 1281.2(c). The caselaw suggests that Plaintiffs’ 9 claims fall within the realm of professional negligence and that Mr. Loucks’s heirs can be bound 10 to arbitrate even their independent actions. See, e.g., Ruiz v. Podolsky, 50 Cal. 4th 838, 851 (Cal. 11 2010) (“Although a wrongful death claim is an independent action, wrongful death plaintiffs may 12 be bound by agreements entered into by decedent that limit the scope of the wrongful death 13 action.”); Mormile v. Sinclair, 21 Cal. App. 4th 1508, 1511 (1994) (concluding that “a patient can 14 bind his or her nonsignatory spouse to arbitrate a loss of consortium claim against a health care 15 provider”); Bolanos v. Khalatian, 231 Cal. App. 3d 1586, 1591 (Ct. App. 1991) (internal citations 16 and quotation marks omitted) (compelling third-party emotional distress claim to arbitration and 17 noting that “where, as here, a patient expressly contracts to submit to arbitration any dispute as to 18 medical malpractice, and that agreement fully complies with Code of Civil Procedure section 19 1295, it must be deemed to apply to all medical malpractice claims arising out of the services 20 contracted for, regardless of whether they are asserted by the patient or a third party”). 21 Accordingly, the Court GRANTS Kaiser’s Motion to Compel Arbitration and STAYS the 22 case as it relates to Plaintiffs’ claims against Kaiser. 23 /// 24 /// 25 /// 26 /// 27 /// 1 V. CONCLUSION 2 For the foregoing reasons, the Court GRANTS the UC Regents’ Motion to Dismiss for 3 lack of personal jurisdiction. It also GRANTS Kaiser’s Motion to Compel Arbitration and 4 STAYS the case as to Plaintiffs’ claims against Kaiser. Accordingly, Kaiser’s Motion to Dismiss 5 is DENIED as moot. 6 This order disposes of Docket Nos. 14 and 29. 7 8 IT IS SO ORDERED. 9 10 Dated: June 25, 2020 11 LL <== co ED M. CHEN 13 United States District Judge
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