Palomar Health, et al. v. ‘N Health Network Partners, LLC

• Court: District Court, S.D. California
• Decided: April 14, 2026
• Docket: 3:25-cv-02272
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT 2 SOUTHERN DISTRICT OF CALIFORNIA 3 PALOMAR HEALTH, et al., Case No.: 25-cv-2272-AGS-MSB

4 Plaintiffs, ORDER DENYING MOTION TO 5 v. COMPEL ARBITRATION (ECF 19) AND MOTION TO STAY PENDING 6 ‘N HEALTH NETWORK PARTNERS, ARBITRATION (ECF 20) LLC, 7 Defendant. 8

9 The parties here have several partnership agreements, some with arbitration clauses, 10 others without. The key question is whether one agreement’s arbitration clause trumps 11 another’s explicit approval of judicial proceedings. It does not. 12 BACKGROUND 13 Years ago, the parties signed four agreements: (1) the “Management Services and 14 Participation Agreement” between defendant ‘N Health Network Partners, LLC, and 15 plaintiff “Arch Health Partners, Inc.”—which does business as “Palomar Health Medical 16 Group” (ECF 19-1, at 5); (2) the “Participating Provider Agreement” between those same 17 two parties (ECF 1-2, at 40); (3) the “Preferred Provider Agreement” between those same 18 two parties (ECF 2-1, at 5); and (4) another “Preferred Provider Agreement” between 19 ‘N Health and the other plaintiff, “Palomar Health” (ECF 2-1, at 85). The first two 20 agreements contain arbitration clauses. The latter two do not. 21 DISCUSSION 22 In general, “questions of arbitrability must be addressed with a healthy regard for 23 the federal policy favoring arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. 24 Corp., 460 U.S. 1, 24 (1983). But when “contracts are separate, the lack of an arbitration 25 clause” in one agreement “means disputes over [that] agreement are not subject to 26 arbitration.” Johnson v. Walmart, 57 F.4th 677, 682–83 (9th Cir. 2023) (cleaned up). And 27 “while doubts concerning the scope of an arbitration clause should be resolved in favor of 28 arbitration, the presumption does not apply to disputes concerning whether an agreement 1 to arbitrate has been made.” Id. at 680–81 (emphasis added). So, this Court is tasked with 2 “determining whether a valid arbitration agreement exists and, if so, whether the agreement 3 encompasses the dispute at issue.” Lifescan v. Premier Diabetic Servs., 363 F.3d 1010, 4 1012 (9th Cir. 2004). “If the answer is yes to both questions, the court must enforce the 5 agreement.” Id. Here, however, the answer to the second question is no. 6 This case’s only remaining dispute involves plaintiffs’ allegation that ‘N Health 7 breached the terms of “Exhibits G of each of the [Preferred Provider Agreements],” which 8 “require [‘N Health] to pay” plaintiffs as detailed in that exhibit. (ECF 1, at 6.) ‘N Health 9 concedes that the Preferred Provider Agreements do “not contain an arbitration clause,” 10 but still argues for arbitration because it thinks the Management Services Agreement 11 “incorporates” the Preferred Provider Agreements as “component agreements[,] thereby 12 binding” plaintiffs to its terms—“including its arbitration provision.” (ECF 19, at 6.) 13 So, does the Management Services Agreement’s arbitration provision govern the 14 Preferred Provider Agreements? “To determine the reach of a particular agreement, we 15 must look to its express terms” and interpret any “arbitration clauses in connection with 16 the rest of the agreement[.]” Johnson, 57 F.4th at 682 (cleaned up). 17 Let’s start with the Preferred Provider Agreements under which plaintiffs sued. 18 Those agreements not only lack arbitration clauses, but they also include an affirmative 19 statement allowing that the parties “may[] resort to judicial proceedings.” (See ECF 2-1, 20 at 14, 94 (emphasis added).) And the Preferred Provider Agreements are fully integrated: 21 they “constitute[] the entire agreement of the parties hereto with respect to this subject 22 matter hereof and supersede[] any prior or contemporaneous oral and written 23 understandings or agreements.” (Id. at 15, 95.) 24 The defense ignores the agreements’ explicit consent to judicial proceedings and 25 instead argues that the Court should order arbitration “notwithstanding [the] integration 26 clauses.” (ECF 23, at 5.) But even adopting the reasoning of the case it relies on for that 27 proposition, the defense still loses: “the mere inclusion of an integration clause in the later 28 agreement does not create an irreconcilable inconsistency if the later document is silent on 1 a particular matter and is not otherwise inconsistent.” Change Lending, LLC v. Montoya, 2 No. cv 24-544 GBW/JHR, 2025 WL 872530, at *4 (D.N.M. Mar. 19, 2025) (emphasis 3 added). The Preferred Provider Agreements are far from silent regarding plaintiffs’ ability 4 to “resort to judicial proceedings” for this dispute. (ECF 2-1, at 14, 94.) And the Court 5 must “give effect to every part” of the contract. Cal. Civ. Code § 1641. 6 Still, the defense asserts that the Management Services Agreement’s language 7 “incorporates” the Preferred Provider Agreements and “bind[s]” plaintiffs to the arbitration 8 provision. (ECF 19, at 6.) Not so. For starters, the arbitration provision—which is 9 admittedly broad—limits itself to “any dispute arising out of or relating to this Agreement.” 10 (ECF 19-1, at 17–18 (emphasis added).) At the agreement’s outset, it defines “the 11 ‘Agreement’” to mean only the “Management Services and Participation Agreement.” (Id. 12 at 5.) And the contract takes care to use different terms in different contexts. For example, 13 when it refers to the full panoply of contracts that the parties signed, it uses the term 14 “Company Participant Provider Agreement.” (See id. at 6 (defining the term); see also id. 15 at 11 (discussing obligations “pursuant to a Company Participant Provider Agreement”).) 16 Yet “Company Participant Provider Agreement” is absent from the arbitration clause. 17 Nor does the defense’s discussion of the Participating Provider Agreement’s 18 arbitration clause—which also states that it only applies to “this Agreement”—move the 19 needle in its favor. (See ECF 19, at 11; ECF 1-2, at 52.) In fact, the Participating Provider 20 Agreement’s arbitration clause seems to cut against the defense’s argument. It 21 demonstrates that when the contracting parties wanted to include arbitration provisions in 22 subsequent agreements, they knew how to and, in fact, did. 23 Finally, the defense asserts that “[a]ny resolution of Plaintiffs’ claims will 24 necessarily require interpretation of the [Management Service Agreement]’s terms.” 25 (ECF 19, at 13.) But ‘N Health does not cite to any part of plaintiffs’ complaint that would 26 require the Court or the parties to look outside the four corners of the fully integrated 27 Preferred Provider Agreements to resolve plaintiffs’ claims. It instead asserts that because 28 the Management Service Agreement broadly “discusses the calculation, allocation, and | |/distribution of’ funds, and because “Plaintiffs challenge Defendant’s withholding and 2 ||offsets—actions that directly follow the [Management Service Agreement]’s 3 requirements,” this case “must be resolved through arbitration as set out in” that agreement. 4 ||(ECF 23, at 3.) When weighed against the plain language of both contracts, though, the 5 || defense’s general discussion of purportedly overlaying financial considerations—without 6 ||any reference to which parts of the Management Service Agreement plaintiffs’ claims 7 would require anyone to interpret—is unpersuasive. And ‘N Health’s reliance on Truck 8 || Insurance Exchange v. Certain Underwriters at Lloyd’s London, No. 2:24-cv-08157-SB- 9 || IC, 2024 WL 5439268 (C.D. Cal. Nov. 15, 2024), fares no better. The 7ruck plaintiff had 10 right to payment” that was “independent of” the contract containing the arbitration 11 |;}agreement. /d. at *3. Plaintiffs here, on the other hand, root their claims in the Preferred 12 ||}Provider Agreements’ “Exhibit[]G,’ which has no arbitration agreement and 13 ||independently creates a payment right: “90% of the paid amount” from a fee schedule. 14 || (ECF 1, at 6; see also ECF 2-1, at 33, 113.) 15 So, ‘N Health has not met its “burden” of showing “that the agreement to arbitrate 16 || encompasses the dispute at issue.” See Ashbey v. Archstone Prop. Mgmt., 785 F.3d 1320, 17 || 1323 (9th Cir. 2015). 18 CONCLUSION 19 The motion to compel arbitration is DENIED, and the motion to stay this case 20 || pending arbitration is DENIED as moot. The April 17, 2026 hearing is vacated. 21 ||Dated: April 14, 2026

23 Hon. Andrew G. Schopler 4 United States District Judge 25 26 27 28