Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01980/USCOURTS-cand-3_07-cv-01980-1/pdf.json

Nature of Suit Code: 151
Nature of Suit: Overpayments under the Medicare Act
Cause of Action: 42:1395 HHS: Adverse Reimbursement Review

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MOURHIT DRISSI; KARIM DRISSI; SARAH

DRISSI; MOURHIT DRISSI as Successor

in Interest for the Estate of

COLLEEN DRISSI, deceased,

Plaintiffs,

 v.

KAISER FOUNDATION HOSPITALS, INC.;

KAISER FOUNDATION HEALTH PLAN,

INC.; THE PERMANENTE MEDICAL GROUP;

and DOES 1-25, inclusive,

Defendants.

 

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No. 07-1980 SC

ORDER GRANTING

DEFENDANTS' MOTION TO

COMPEL ARBITRATION

I. INTRODUCTION

Plaintiffs Mourhit Drissi, Karim Drissi, and Sarah Drissi

("Plaintiffs") are the spouse and adult children of Colleen

Drissi, who they allege died as a result of the inadequate care

she received from defendants while awaiting a kidney transplant. 

Plaintiffs bring this suit on their own behalf and on behalf of

the estate of Colleen Drissi, alleging causes of action for

wrongful death, concealment, and conspiracy.

Defendants Kaiser Foundation Hospitals, Inc., Kaiser

Foundation Health Plan, Inc. ("Health Plan"), and the Permanente

Medical Group (collectively "Defendants" or "Kaiser") removed the

suit from the San Francisco County Superior Court to this Court,

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claiming federal question jurisdiction arising under the

provisions of Part C of the Medicare Act, 42 U.S.C. § 1395w-21 et

seq. 

Defendants move the Court to compel Plaintiffs to submit all

causes of action to binding arbitration pursuant to an arbitration

agreement Mrs. Drissi purportedly signed when she enrolled in the

Health Plan. Plaintiffs assert that the arbitration agreement is

unenforceable because it violates California Health & Safety Code

section 1363.1, which imposes certain standards on health care

service plans that require binding arbitration. Defendants

maintain that the California law is inapplicable because it is

preempted by the Medicare Act.

This Order follows quickly on the Court's recent Order

Granting Defendants' Motion to Compel Arbitration in the related

case, Clay v. Permanente Medical Group, Inc., No. 06-7926. See

Docket No. 15 ("Clay Order"). The facts and legal issues are

largely similar, as is the Court's conclusion. The Court issues

this Order separately to address minor, but relevant, factual

differences.

The parties have fully briefed the issues, and counsel for

both parties participated in oral argument before the Court in the

Clay matter. Having considered all of the submissions and

arguments, the Court hereby GRANTS Defendants' Motion to Compel

Arbitration.

II. BACKGROUND

Colleen Drissi enrolled in the Health Plan under a group

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agreement between Health Plan and her employer, San Juan Unified

School District. Dean Decl. ¶ 2. Mrs. Drissi was a Health Plan

member from the time she enrolled, in October 1990, until her

death in January 2005. 

Mrs. Drissi suffered kidney problems and, in 2000, she was

placed on the waiting list for a kidney transplant. At that time,

Defendants did not operate their own kidney transplant program, so

Defendants paid for Mrs. Drissi to receive medical care through

the kidney transplant program at U.C. Davis. 

The Health Plan Senior Advantage is a program under which the

Health Plan provides Medicare services to plan members, pursuant

to an agreement with the Centers for Medicare & Medicaid Services

("CMS"). In 2003, Mrs. Drissi enrolled in the Health Plan Senior

Advantage program. According to Jason Hall, Health Plan's

Director of Medicare Compliance, when a Health Plan member

requests information regarding the Senior Advantage program,

Health Plan sends the member an enrollment kit containing the

Election Form and a copy of the Evidence of Coverage ("EOC"). The

Election Form Mrs. Drissi signed included a notice, in bold text

surrounded by a box and highlighted with a different background

color from the rest of the page, stating, "Please read the

Conditions of Election and Authorization to Exchange Information

on the back of this form. Sign and date below." Dean Decl. Ex.

D. Beneath that box, the following text appeared:

I understand that, except for Small Claims Court cases

and claims subject to a Medicare appeals procedure, any

dispute between myself, my heirs, or other associated

parties on the one hand and Health Plan, its health care

provides, or other associated parties on the other hand,

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for alleged violation of any duty arising out of or

related to membership in Health plan, including any

claim for medical or hospital malpractice, for premises

liability, or relating to the coverage for, or delivery

of services or items, irrespective of legal theory, must

be decided by binding arbitration under California law

and not by lawsuit or resort to court process, except as

applicable law provides for judicial review of

arbitration proceedings. I agree to give up my right to

a jury trial and accept the use of binding arbitration. 

I understand that the arbitration provision is contained

in the Evidence of Coverage.

Id. On the back of the Election Form the following paragraph

appeared under the bold heading "Conditions of Election":

If you are electing Kaiser Permanente Senior Advantage

Coverage, be certain that you fully understand the

arbitration provision, benefits, limitations, and

conditions, which are described in the Kaiser Permanente

Senior Advantage Group Disclosure Form and Evidence of

Coverage or the Individual Membership Agreement and

Disclosure Form and Evidence of Coverage. The above

documents may be found in the enrollment kit, and it is

available through your group benefits administrator, or

made available by calling the Kaiser Permanente Member

Service Call Center. . . ."

Id. Ex. E. The Health Plan amended the EOC annually, and sent

each member a summary of the amendments, as well as the final

amended EOC approved by the CMS. 

In June 2004, Defendants informed Mrs. Drissi that they were

opening their own kidney transplant program in San Francisco, and

would therefore no longer cover the cost of her care at U.C. Davis

or U.C. San Francisco. At the time, Mrs. Drissi was supposedly

near the top of the waiting list for a new kidney in the U.C.S.F.

program. In September 2004, Mrs. Drissi transferred to the Kaiser

transplant program. A few months later, without undergoing a

transplant, Mrs. Drissi died from complications arising out of her

kidney problems.

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During the second half of 2004 and beginning of 2005, when

Mrs. Drissi was transferred to Kaiser's kidney transplant program,

the then-current EOC contained the following provisions for

binding arbitration:

For all claims subject to this "Binding Arbitration"

section, both Claimants and Respondents give up the

right to a jury or court trial, and accept the use of

binding arbitration. Insofar as this "Binding

Arbitration" section applies to claims asserted by

Kaiser Permanent Parties, it shall apply retroactively

to all unresolved claims that accrued before the

effective date of this EOC. Such retroactive

application shall be binding only on the Kaiser

Permanente Parties.

Scope of Arbitration

Any dispute shall be submitted to binding arbitration if

all of the following requirements are met:

1. 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 or a Member Party's

Relationship to Kaiser Permanente Health Plan, Inc.

(Health Plan), including any claim for medical or

hospital malpractice, for premises liability, or

relating to the coverage for, or delivery of,

Services, irrespective of the legal theories upon

which the claim is asserted.

2. The claim is asserted by one or more Member Parties

against one or more Kaiser Permanente Parties or by

one or more Kaiser Permanente Parties against one

or more Member Parties.

Hall Decl. Ex. C. 

Plaintiffs filed this suit alleging wrongful death,

concealment, and conspiracy. Defendants asked if Plaintiffs would

submit the matter to binding arbitration. Plaintiffs refused, and

Defendants brought this motion.

III. PREEMPTION ANALYSIS

Section 2 of the Federal Arbitration Act ("FAA") provides

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that "a contract evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter arising out of such

contract or transaction . . . shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity

for the revocation of any contract." 9 U.S.C. § 2. Rather than

belabor the point, the Court adopts its reasoning from Clay, and

holds that the FAA is applicable here. See Clay Order at 5-6.

Plaintiffs assert that the arbitration agreement violates

California Health & Safety Code section 1363.1, and is therefore

unenforceable. See Malek v. Blue Cross of Cal., 121 Cal. App. 4th

44, 64 (Ct. App. 2004). Defendants respond that application of

section 1363.1 is preempted by the Medicare Act.

"[W]hen Congress has 'unmistakably. . . ordained,' that its

enactments alone are to regulate a part of commerce, state laws

regulating that aspect of commerce must fall." Jones v. Rath

Packing Co., 430 U.S. 519, 525 (1977) (quoting Fla. Lime & Avocado

Growers, Inc. v. Paul, 373 U.S. 132, 142 (1963)). Here, Congress

has unmistakably ordained that Medicare preempts all state

regulation:

Relation to State laws. The standards established under

this part shall supersede any State law or regulation

(other than State licensing laws or State laws relating

to plan solvency) with respect to MA plans which are

offered by MA organizations under this part.

42 U.S.C. § 1395w-26(b)(3). The standards established under this

statute govern the approval and distribution of marketing

materials, such as the EOC. See, e.g., 42 C.F.R. §§ 422.80,

422.111. Specifically, 42 C.F.R. § 422.80(c) provides the

guidelines for CMS review of Medicare Advantage marketing

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1

A more detailed analysis of preemption, including discussion

of the congressional purpose in amending the Medicare preemption

provision, is set forth in the Clay Order at pages 7-15. That

reasoning is equally applicable here, and the Court therefore

adopts it. The only difference on this issue here is that the Clay

decedent had signed his enrollment form for the Health Care Senior

Advantage in 2000, and the Clay plaintiffs argued that under the

then-applicable standards, section 1363.1 was not preempted. As

Mrs. Drissi did not enroll in the Health Plan Senior Advantage

until 2003, there is no need to consider the pre-2000 version of

the statute.

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materials. The CMS review process checks to make sure that the

disclosure is printed in a proper format and text size. Id. §

422.80(c)(1). The CMS also reviews the marketing materials to

determine whether they include an "[a]dequate written explanation

of the grievance and appeals process, including differences

between the two, and when it is appropriate to use each." Id. §

422.80(c)(1)(iii).

As California Health & Safety Code section 1363.1 purports to

regulate the adequacy of disclosures regarding arbitration

agreements imposed by health plans, the foregoing federal

regulations preempt its application to Medicare marketing

materials.1 The Court therefore cannot apply section 1363.1 to

invalidate the arbitration provision of the EOC governing the

relationship between Mrs. Drissi and Defendants.

IV. APPLICABILITY OF THE EOC TO NON-SIGNATORY PLAINTIFFS

Plaintiffs argue that because they did not agree to the

arbitration agreement, they cannot be bound by it, even if it

would have bound Mrs. Drissi. On this issue, Defendants rely on

Herbert v. Superior Court of Los Angeles County, 169 Cal. App. 3d

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2

Again, a complete analysis comparing Herbert and Rhodes

appears in the Clay Order, which the Court adopts here as well.

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718 (Ct. App. 1985), and its progeny. In Herbert, the court held

that the non-signatory plaintiffs had to submit their wrongful

death claims to arbitration. Id. at 725. Plaintiffs identify a

split in the California authority, directing the Court to Rhodes

v. California Hospital Medical Center, 76 Cal. App. 3d 606 (Ct.

App. 1978), and subsequent decisions following it. As in Clay,

the Court finds the Herbert authority more persuasive.2 

One factual difference between Clay and the present matter

warrants discussion, however. In Clay, the deceased and his

spouse were both members of the same health plan. Clay Order at

18-19. This was relevant because previous California decisions

suggested that the authority to secure health care for one's

spouse implies the authority to require the spouse to arbitrate

claims arising out of that health care. See id. (citing Herbert,

169 Cal. App. 3d at 723; Hawkins v. Super. Ct., 89 Cal. App. 3d

413, 418-19 (Ct. App. 1979)). Here, there is no evidence that Mr.

Drissi is a member of the Health Plan, so it is less clear that

Mrs. Drissi could bind Mr. Drissi to the arbitration agreement.

None of the authority cited by the parties addresses this

distinction. Plaintiffs' cases are distinguishable here for the

same reasons they were in Clay. The arbitration agreement in

Rhodes lacked a provision purporting to bind the decedent's heirs

to the arbitration agreement. 76 Cal. App. 3d at 608-09. Also

unlike the present case, the Rhodes plaintiffs did not include the

decedent's estate. Id. at 609. The same distinctions apply to

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Baker v. Birnbaum, 202 Cal. App. 2d 288, 290-92 (Ct. App. 1988). 

Finally, in Buckner v. Tamarin, 98 Cal. App. 4th 140 (Ct. App.

2002), neither the decedent's estate nor the decedent's spouse was

a plaintiff. Id. at 141-43. 

Of the cases reviewed by the Court, Herbert is the most

applicable. The Court must determine, however, if the fact that

Mr. and Mrs. Drissi were not members of the same health plan is

relevant. The Hawkins decision, on which Herbert relied, noted

that, "[s]pouses have mutual obligations to care for and support

the other . . . , including the obligation to provide medical care

. . . , and they occupy a fiduciary relationship to each other." 

89 Cal. App. 3d at 418-19 (internal citations omitted). The

support obligations have a statutory origin. See id. (citing Cal.

Civ. Code § 242 (repealed and replaced by Cal. Fam. Code § 4300)). 

The Hawkins court concluded that these obligations give one spouse

the power to contract for medical care on behalf of the other. 

Id. at 419. The court recognized that in similar situations,

where one party has the power to contract for medical care on

another's behalf, he or she may also agree on the other's behalf

to arbitrate. Id. (citing Madden v. Kaiser Found. Hosps., 17 Cal.

3d 699 (1976)(parent can bind child to arbitration when securing

care for child); Doyle v. Giuliucci, 62 Cal. 2d 606 (1965)(state

can bind employees to arbitration when negotiating group health

care on their behalf)). 

In both Herbert and Hawkins, the decedent and his or her

spouse were enrolled in the same medical plan. See Herbert, 169

Cal. App. 3d at 723-24; Hawkins, 89 Cal. App. 3d at 418-19. 

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However, the decedent's authority to bind the spouse to arbitrate

was based upon the authority to provide for medical care, not the

actual provision of care. That is, it appears that the fiduciary

duties and obligations of spouses to provide medical care for one

another are sufficient basis for binding one another to

arbitration agreements. Thus, Mrs. Drissi's agreement that her

heirs would arbitrate claims arising from her membership in the

Health Plan Senior Advantage binds Mr. Drissi. Because both Mrs.

Drissi's estate and Mr. Drissi are bound to arbitrate, the

remaining Plaintiffs must also arbitrate their claims for wrongful

death. See Herbert, 169 Cal. App. 3d at 725-26 (describing the

policy underlying the "one-action rule" for wrongful death suits).

V. CONCLUSION

For the reasons set forth above, the Court GRANTS Defendants'

Motion to Compel Arbitration and ORDERS as follows:

1. Plaintiffs are hereby ORDERED to submit all claims to

binding arbitration.

2. This action is hereby stayed pending the outcome of the

arbitration, pursuant to 9 U.S.C. § 3.

IT IS SO ORDERED.

January 3, 2008

 

 UNITED STATES DISTRICT JUDGE

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