Myra Louise Wills v. Kaiser Foundation Hospitals, et al.

• Court: District Court, N.D. California
• Decided: November 6, 2025
• Docket: 3:25-cv-01948
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 MYRA LOUISE WILLS, Case No. 25-cv-01948-LB

12 The plaintiff, ORDER COMPELLING ARBITRATION AND STAYING CASE 13 v. Re: ECF No. 24 14 KAISER FOUNDATION HOSPITALS, et al., 15 The defendants. 16 17 INTRODUCTION 18 This is a medical-malpractice action brought by plaintiff Myra Wills, as conservator for her son 19 Stephen Andrew Wills II, against defendants Kaiser Foundation Hospitals, Kaiser Foundation 20 Health Plan, Inc., Kaiser Foundation Hospitals, and The Permanente Medical Group, Inc. 21 (collectively, Kaiser). She claims that they committed malpractice and dependent adult abuse, in 22 violation of state law, and violated the federal Emergency Medical Treatment and Labor Act 23 (EMTALA), by discharging him prematurely to his mother’s care. Kaiser moves to compel 24 arbitration based on an arbitration provision in Mr. Wills’s Kaiser Medical managed-health plan. 25 The plaintiff opposes, arguing that no valid arbitration agreement exists because the enrollment 26 process did not comply with the disclosure requirements of Cal. Health & Safety Code § 1363.1, 27 which requires his express consent. Kaiser replies that § 1363.1 does not apply to Medi-Cal 1 STATEMENT 2 1. Kaiser and the Medi-Cal Framework 3 Kaiser Permanente is an integrated entity that provides medical services through its affiliated 4 entities: Kaiser Foundation Health Plan, which administers health plans, The Permanente Medical 5 Group, which provides physician and related health-care services, and Kaiser Foundation Hospitals, 6 which operates hospitals.1 Kaiser Foundation Health Plan contracts with the State of California to 7 offer managed-care plans under Medi-Cal, California’s Medicaid program, which is funded jointly 8 by federal and state governments and provides health coverage to low-income persons. 42 U.S.C. § 9 1396a; 42 C.F.R. § 430.0. States can deliver Medicaid services through managed-care plans. 42 10 U.S.C. § 1396u-2(a)(1)(A)(i). California’s Medi-Cal program authorizes state and local 11 governments to contract with managed-care plans such as Kaiser. Cal. Welf. & Inst. Code §§ 12 14200, et seq. The director of the California Department of Health Care Services (DHCS) can 13 promulgate regulations and other orders and standards to implement the law. Id. §§ 10725, 14105. 14 California has different types of Medi-Cal models, including a County Organized Health 15 System, whereby the state contracts with counties, which in turn contract with providers. Id. § 16 14087. A county can provide services directly or subcontract with primary-care providers, HMOs, 17 insurance carriers, or other entities or individuals. Id. § 14087.6. Sonoma County administers Medi- 18 Cal through a County Organized Health System operated by Partnership HealthPlan of California 19 (PHP), which contracts with DHCS to administer Medi-Cal benefits through local providers in 20 Sonoma County. PHP contracts with the local providers, including Kaiser (through December 31, 21 2023).2 Kaiser does not enroll members into this plan directly; instead, PHP handles enrollments.3 22 Since 2024, Kaiser Foundation Health Plan has contracted directly with DHCS, which explains on 23 its website how subscribers can join a plan online, by phone, by mail, or in person.4 24 25 1 Kimoto Decl. – ECF No. 24-29 at 2 (¶ 2). Citations refer to the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page number at the top of documents. 26 2 Velarde Decl. – ECF No. 24-1 at 2–3 (¶ 2). 27 3 Id.; 2023 Handbook, Ex. A to id. – ECF No. 24-2 at 22; Deniz Decl. – ECF No. 24-4 at 3 (¶ 4). 4 1 Mr. Wills is a Medi-Cal member enrolled in Kaiser plans. He challenges medical care he 2 received at Kaiser, first in 2023 in the emergency department and thereafter with his primary-care 3 physician, and then in 2024, through follow-up care.5 This implicates two plans and their arbitration 4 provisions: the 2023 PHP plan and the 2024 Kaiser Foundation Health Plan. 5 6 2. The Plans 7 Until January 1, 2024, Sonoma County automatically enrolled its Medi-Cal-eligible residents in 8 PHP. Members would call PHP to request assignment to a provider, which included Kaiser until 9 January 1, 2024.6 Mr. Wills was enrolled as a Kaiser member in a Medi-Cal managed-care plan 10 through PHP from October 1, 2009, to August 1, 2012, November 1, 2012, to October 1, 2013, and 11 February 1, 2014, to January 1, 2024.7 Annually renewed Medi-Cal handbooks governed Mr. 12 Wills’s enrollment and had arbitration provisions. This is the arbitration provision in 2023: 13 Binding Arbitration Binding arbitration is a way to solve problems using a neutral third party. This third 14 party hears both sides of the issue and makes a decision that both sides must accept. 15 Both sides give up the right to a jury or court trial. Scope of Arbitration 16 You must use binding arbitration if the claim is related to this Member Handbook 17 or your membership with us, if all of the following requirements are met: 18 • The claim is for: 19 o Malpractice (a claim that medical services or items were unnecessary or unauthorized or were improperly, negligently, or 20 incompetently rendered); or 21 o Delivery of services or items; or 22 o Premises liability • The claim is brought by: 23 o You against us; or 24 o Us against you 25 26 5 Compl. – ECF No. 1 at 1–4 (¶¶ 2–16). 27 6 Velarde Decl. – ECF No. 24-1 at 2–3 (¶ 2); 2023 Handbook, Ex. A at id. – ECF No. 24-2 at 25, 27. • Government law does not prevent the use of binding arbitration to resolve 1 the claim 2 • The claim cannot be settled through Small Claims Court 3 Keep in mind: • You do not have to use binding arbitration for claims that can be settled 4 through a State Hearing 5 • You cannot use binding arbitration if you have gotten a decision on the claim through a State Hearing 6 In this “Binding Arbitration” section only, “you” means the party who is asking for 7 binding arbitration: 8 • You (a Member) 9 • Your heir, relative or someone you name to act for you • Someone who claims that a duty to them exists due to your relationship 10 with us 11 In this “Binding Arbitration” section only, “us” means the party who has a claim filed against them: 12 • Kaiser Foundation Health Plan, Inc. (“KFHP”) 13 • Kaiser Foundation Hospitals (“KFH”) 14 • Southern California Permanente Medical Group (“SCPMG”) 15 • The Permanente Medical Group, Inc. (“TPMG”) 16 • The Permanente Federation, LLC • The Permanente Company, LLC 17 • Any SCPMG or TPMG doctor 18 • Any person or organization with a contract with any of these parties that 19 requires the use of binding arbitration • Any employee or agent of any of these parties.8 20 21 The 2024 handbook has virtually the same provision.9 Kaiser Foundation Health Plan distributes the 22 handbooks to new members and sends annual notices advising that the new handbook is online 23 (including how to request a paper copy) and that the plan uses arbitration to resolve disputes.10 24 25

26 8 2023 Handbook, Ex. A to Velarde Decl. – ECF No. 24-2 at 128–29. 27 9 2024 Handbook, Ex. B to Velarde Decl. – ECF No. 24-3 at 160–62. 10 1 In addition to these notices about arbitration, in late 2023, Kaiser Foundation Health Plan sent a 2 letter to the plaintiff advising that as of January 1, 2024, it would contract directly with the DHCS, 3 he would be automatically enrolled in Kaiser Foundation Health Plan (not PHP), and Kaiser 4 requires arbitration to address disputes about “medical treatment (called medical malpractice).” It 5 explained that by “choosing to keep Kaiser Foundation Health Plan, Inc. as your Medi-Cal plan, 6 you agree (1) to give up your right to a jury or court trial for these disputes, [and] (2) to use binding 7 arbitration to resolve these disputes[.]” It advised that persons who do not agree should call Health 8 Care Options to switch to another plan.11 As of January 1, 2024, the plaintiff’s membership was 9 automatically converted to Kaiser Foundation Health Plan’s direct contract with DHCS.12 10 11 3. Jurisdiction 12 The court has federal-question subject-matter jurisdiction. 28 U.S.C § 1331. The parties 13 consented to magistrate-judge jurisdiction.13 Id. § 636(c). 14 15 ANALYSIS 16 Under the Federal Arbitration Act (FAA), “arbitration is a matter of contract, and courts must 17 enforce arbitration contracts according to their terms.” Henry Schein, Inc. v. Archer & White 18 Sales, Inc., 586 U.S. 63, 67 (2019); Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1259 (9th Cir. 19 2017) (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)). “Section 2 of the 20 FAA makes agreements to arbitrate ‘valid, irrevocable, and enforceable, save upon such grounds 21 as exist at law or in equity for the revocation of any contract.’” Poublon, 846 F.3d at 1259 (citing 22 9 U.S.C. § 2). “By its terms, the Act leaves no place for the exercise of discretion by a district 23 court, but instead mandates that the district court shall direct the parties to proceed to arbitration 24 on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. 25 26 11 Letter, Ex. I to Gupta Decl. – ECF No. 24-12 at 3. 27 12 Deniz Decl. – ECF No. 24-4 at 2–3 (¶ 3); Pl.’s Account Details, Ex. C to id. – ECF No. 24-5. 1 Byrd, 470 U.S. 213, 218 (1985) (cleaned up) (citing 9 U.S.C. §§ 3–4). “The court’s role under the 2 Act is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it 3 does, (2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho 4 Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (citing 9 U.S.C. § 4). “If the response is 5 affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in 6 accordance with its terms.” Id. 7 The parties dispute whether Kaiser can compel arbitration. The plaintiff contends that he did not 8 consent to arbitration because Kaiser did not provide notice of the arbitration agreement, and he (or 9 his mother) did not sign it, in violation of Cal. Health & Safety Code § 1363.1.14 Kaiser counters 10 that California law exempts § 1363.1 from Medi-Cal enrollments, and federal Medicaid statutes 11 preempt the state disclosure statute.15 12 Section 1363.1 requires healthcare plans with binding arbitration and jury-trial-waiver 13 provisions to include a disclosure that meets the following conditions: (a) a statement that “the 14 plan uses binding arbitration to settle disputes,” including, specifically, claims of medical 15 malpractice; (b) a prominent disclosure as a separate article on the enrollment form signed by each 16 enrollee; (c) an express waiver of the right to a jury trial; and (d) in an enrollment agreement for a 17 healthcare service plan, a disclosure immediately above the signature line for the contracting 18 group or the enrolling individual. Cal. Health & Safety Code § 1363.1(a)–(d). 19 Kaiser contends that § 1363.1, including the requirement of an arbitration disclosure above the 20 enrollee’s signature, does not apply to Medi-Cal plans because DHCS has exempted the Medi-Cal 21 enrollment process from § 1363.1’s requirements.16 The caselaw supports Kaiser’s position. 22 Under federal law, states must simplify the Medi-Cal enrollment process by allowing phone 23 enrollments. 42 U.S.C. § 18083. They must enroll by default persons who fail to select a plan. 42 24 U.S.C. § 1396u-2(a)(4)(D); 42 C.F.R. § 438.54(d)(5). The Legislature has expressly exempted 25 26 14 Opp’n – ECF No. 29 at 3–4, 6–7. 27 15 Mot. – ECF No. 24 at 14–24; Reply – ECF No. 30 at 6–15. 1 Sonoma County’s Medi-Cal arrangement from Chapter 2.2 of the Knox-Keene Act, which 2 includes § 1363.1. Cal. Welf. & Inst. Code § 14087.95. 3 The plaintiff does not contest this but argues that allowing online or telephone enrollments does 4 not preclude an arbitration disclosure that complies with § 1363.1.17 But DHCS, which by statute 5 controls enrollment (see supra summarizing the regulatory scheme) has not required that process. 6 For example, it could have authorized only written enrollment with a disclosure over the signature 7 line or allowed telephone enrollment only after an arbitration disclosure.18 Its use of a simplified 8 process is consistent with the Legislature’s approval of the use of managed-care plans for Medi-Cal 9 beneficiaries to encourage efficient delivery of healthcare services, reduce the “inflationary costs of 10 health care,” improve the quality of services, and reduce the administrative costs of operating the 11 Medi-Cal program. Id. § 14201. It also is consistent with the Affordable Care Act’s simplification 12 of Medicaid enrollment by permitting enrollment by means other the paper. Requiring disclosure of 13 the arbitration provision is inconsistent with a mandated default enrollment. 14 In addition, the regulatory scheme leaves no room for health plans to impose an additional 15 requirement to sign an enrollment form complying with § 1363.1: once DHCS/PHC notified Kaiser 16 that the plaintiff was a member of the plan, Kaiser was required to accept him.19 17 No case requires DHCS to conform to state laws like § 1363.1 that govern non-Medi-Cal Knox- 18 Keene plans regulated by a different state agency (the California Department of Managed Health 19 Care).20 Moreover, even if DHCS could not exempt Medi-Cal enrollments from § 1363.1, the 20 ACA’s amendments to the Medicaid Act — requiring a simplified enrollment process, including 21 phone enrollment — preempt § 1363.1. See Winninger v. Scott, 2022 No. 21-CV-04689-HSG, 2022 22 WL 3205035, at *4 (N.D. Cal. July 5, 2022) (the ACA’s “simplified enrollment procedure” was 23 24 17 Opp’n – ECF No. 29 at 5–6. The reverse side of the current Medi-Cal Choice form contains an arbitration notice. Form, Ex. U to Pierrou Decl. – ECF No. 24-26 at 2. DHCS did not produce a Medi- 25 Cal Choice for the plaintiff in response to Kaiser’s subpoena, and PHC does not keep records for more than ten years. Wayne Decl. – ECF No. 24-13 at 3 (¶ 4); PHC Prod. – ECF No. 24-19. The plaintiff does 26 not dispute the inference that he enrolled by telephone. Reply – ECF No. 30 at 7. 18 Reply – ECF No. 30 at 7 (making these points). 27 19 See Statement (summarizing the regulatory scheme). 1 inconsistent with state arbitration disclosure and signature requirements under Cal. Code Regs. tit. 2 10 § 6470); Hunter v. Kaiser Found. Health Plan, Inc., 434 F. Supp. 3d 764, 773 (N.D. Cal. 2020) 3 (ACA amendments for telephone and online enrollments preempt § 1363.1). 4 Based on the foregoing, the plaintiff — who was notified about the plan terms in the plan 5 handbooks and through annual notices from Kaiser — is bound by the terms even if he did not 6 agree to them. The California Arbitration Act and the FAA require a writing, not a signature. Cal. 7 Civ. Proc. Code § 1281; 9 U.S.C. § 2; see Craig v. Brown & Root, Inc., 84 Cal. App. 4th 416, 420– 8 21 (2000) (employer proved its employee was bound to arbitrate claims based on her receipt of an 9 unsigned employee brochure); Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 10 Cal. 4th 223, 236 (2012) (condo owners bound to arbitration agreement in recorded covenants, 11 conditions, and restrictions). The handbook is a DHCS-issued template — including the placement 12 of the arbitration provision — that plans must follow so that DHCS and Medi-Cal beneficiaries can 13 compare plans.21 DHCS and PHC negotiated the agreements on behalf of Medi-Cal beneficiaries 14 under federal Medicaid and state Medi-Cal law. 42 U.S.C. § 1396u-2(a)(1)(A)(i); Cal. Welfare & 15 Inst. Code § 14200 et seq.22 By enrolling in the plans, Medi-Cal beneficiaries bind themselves to the 16 terms of the plan set forth in the plan handbooks, including arbitration and the jury-trial waiver. See 17 Madden v. Kaiser Found. Hospitals, 17 Cal. 3d 699, 709 n.11 (1976) (CalPERS bound state 18 employee to arbitrate; notice, not knowledge, is required); Clay v. Permanente Med. Grp., Inc., 540 19 F. Supp. 2d 1101, 1106–10 (N.D. Cal. 2007) (the federal Medicare program waives jury trials on 20 behalf of Kaiser’s Medicare Advantage plan enrollees who may be unaware of the arbitration 21 provision); Kuntz v. Kaiser Found. Hosps., 62 Cal. App. 5th 1135, 1148–51 (2021) (same for 22 CalPERS for state employees); Viola v. Dep’t of Managed Health Care, 133 Cal. App. 4th 299, 313 23 (2005) (“The Legislature may authorize the waiver of the right to a civil jury trial in this setting, and 24 has done so by enactment of the Knox-Keene Act.” (cleaned up)). 25 The plaintiff cites three additional cases that do not change this conclusion. 26

27 21 Velarde Decl. – ECF No. 24-1 at 2 (¶ 3). 1 Schlegel v. Kaiser Foundation Health Plan, Inc. did not involve a Medi-Cal plan. No. 2:07-CV 2 |} 00520-MCEKJM, 2007 WL 2492393, at *3 (E.D. Cal. Aug. 30, 2007); cf Hunter, 434 F. Supp. 3d 3 at 771 (courts have held that non-compliance with § 1363.1 renders an arbitration provision in an 4 || enrollment form unenforceable; followed recent unpublished California authority — enrollment 5 || through California’s online portal preempted § 1363.1’s requirements — as persuasive). 6 Platt v. Sodexo, S.A. held that a plan could not unilaterally amend an ERISA plan to add an 7 || arbitration provision without the consent of the relevant party. 148 F.4th 709, 714-15 (9th Cir. 8 || 2025). Its reasoning does not apply here: the original plan contained the arbitration provision, and 9 || the relevant parties — DHCS on behalf of Medi-Cal enrollees and Kaiser Foundation Health Plan 10 || on behalf of Kaiser providers — agreed to it. 11 Brockman vy. Kaiser Foundation Hospitals is another non-Medi-Cal case. The court of appeal 12 || held that the defendant had not preserved the argument that the plaintiff's mother’s union had 13 authority to agree to the arbitration provision on her behalf. 2025 WL 2701643, at *10, 114 Cal. 14 || App. 5th 569 (2025), reh’g denied. The plaintiff cites footnote 7, where the court held that Kaiser’s 3 15 assertion — it was common practice not to require a signature — was not supported by □□□□□□□□□□ a 16 || Jd. at *5 n.7. The issue there was whether it was common practice for employers not to sign a grou 2 17 || agreement and the time of renewal and instead to renew by paying practices. There were evidence Z 18 issues present, including proof that the union paid premiums to agree to renew. /d. That is different 19 || than the undisputed enrollment process here in writing, online, or by telephone. 20 21 CONCLUSION 22 The court compels arbitration and stays the case pending arbitration. Smith v. Spizziri, 601 23 || U.S. 472, 474, 476-78 (2024) (per curiam) (requiring stay). This resolves ECF No. 24. 24 IT IS SO ORDERED. Lif EC 25 Dated: November 6, 2025 LAUREL BEELER 26 United States Magistrate Judge 27 28 || 7? Opp’n— ECF No. 29 at 6-7.