Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01980/USCOURTS-cand-3_07-cv-01980-0/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

DEBORAH CLAY, an individual and as

the Successor in Interest to the

Estate of RODNEY CLAY; RODNEY CLAY,

JR.; VELICIA HAMILTON; TAMIKO MOON;

and THOMASINA CLAY,

Plaintiffs,

 v.

THE PERMANENTE MEDICAL GROUP, INC.;

KAISER FOUNDATION HOSPITALS; KAISER

FOUNDATION HEALTH PLAN; and DOES 1-

200, inclusive,

Defendants.

 

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No. 06-7926 SC

ORDER GRANTING

DEFENDANTS' MOTION TO

COMPEL ARBITRATION

I. INTRODUCTION

Plaintiffs Deborah Clay, individually and as the successor in

interest to the estate of Rodney Clay, Rodney Clay, Jr., Velicia

Hamilton, Tamiko Moon, and Thomasina Clay ("Plaintiffs") brought

this suit against the Permanente Medical Group, Inc., Kaiser

Foundation Hospitals, and Kaiser Foundation Health Plan ("Health

Plan") (collectively "Defendants" or "Kaiser"), asserting nine

claims related to Kaiser's alleged mishandling of a kidney

transplant for Rodney Clay. See Notice of Removal, Docket No. 1,

Ex. A ("Complaint"). Defendants removed the action from the

Alameda County Superior Court to this Court, asserting

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1The Health Care Financing Administration was renamed the

Centers for Medicare & Medicaid Services ("CMS"). Hall Decl. ¶ 2. 

The Medicare Risk Contract was renamed Medicare+Choice Contract in

1999, and then renamed again as Medicare Advantage. Id. ¶ 3. The

Court will use the current terms, CMS and Medicare Advantage.

2

jurisdiction pursuant to the Medicare Act, 42 U.S.C. § 1395

et seq., and the Employee Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. § 1001, et seq. See id. Defendants now move

the Court to compel arbitration of all claims other than the claim

for injunctive relief, and to stay this action pending

arbitration. Mot. to Compel Arbitration ("Motion"), Docket No. 8. 

Plaintiffs filed an Opposition to the Motion, and Defendants filed

a Reply. See Docket Nos. 27, 28. The parties appeared before the

Court and argued the merits of the Motion on November 30, 2007.

Having considered all of the arguments and submissions of the

parties, the Court hereby GRANTS Defendants' Motion.

II. BACKGROUND

In November 1991, Deborah Clay enrolled herself and her

husband Rodney Clay as members of the Health Plan, pursuant to an

agreement between the Health Plan and her employer, Integrated

Device Technology. Dean Decl. ¶ 3. In 1994, the Health Plan

entered into a Medicare Risk Contract with the Health Care

Financing Administration to provide medical and hospital services

for enrolled Medicare beneficiaries.1

 See Hall Decl. ¶¶ 2, 4.

When a Health Plan member expressed interest in enrolling in

the Health Plan Senior Advantage program (Health Plan's name for

its Medicare Advantage offering), Health Plan sent the member

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copies of the Health Plan Senior Advantage Election form and the

Health Plan Senior Advantage Membership Agreement, also known as

the Evidence of Coverage ("EOC"). Hall Decl ¶ 5. The EOC

summarizes the Health Plan Senior Advantage coverage, and is

subject to the Health Plan's Medicare Advantage contract with the

CMS. Id. The Health Plan Senior Advantage EOC has always

contained an arbitration clause. Id. 

The Health Plan revises the EOC annually. Id. ¶ 6. Each

year, the Health Plan submits to the CMS its proposed changes to

the EOC for the following year. Id. Once CMS approves the

changes, Health Plan mails a copy of the EOC and a letter

summarizing the revisions to all Health Plan Senior Advantage

enrollees. Id. 

In July 2000, Rodney Clay enrolled as a member of the Health

Plan Senior Advantage. See Dean Decl. ¶ 4. On the Senior

Advantage Election form which Mr. Clay signed, the following text

appears above his signature:

I have read, understand, and agree to the statements on

the reverse side of this Election Form including the

restrictions on the use of non-Plan providers. I hereby

apply for Kaiser Permanente Senior Advantage membership. 

I understand that except for Small Claims Court cases

and claims subject to the Medicare Appeals Procedure,

any claim that I, my heirs, or other claimants

associated with me, assert for alleged violation of any

duty arising out of or relating 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 a lawsuit or

resort to court process except as California 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.

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Id. Ex. C. Mr. Clay's coverage under the Health Plan Senior

Advantage program became effective on August 1, 2000. Id. ¶ 4. 

Plaintiffs are the wife and grown children of Rodney Clay. 

Compl. ¶¶ 3-7. Plaintiffs allege as follows. In early 2000, Mr.

Clay suffered kidney failure. Because Kaiser did not at that time

operate its own kidney transplant center, Kaiser referred Mr. Clay

to the UCSF Medical Center's kidney transplant program. Id. ¶¶

29, 31. UCSF informed Mr. Clay that the typical wait was two to

three years for a replacement kidney. Id. ¶ 31. Four years later,

when Mr. Clay was supposedly near the top of the UCSF transplant

list, Kaiser informed Mr. Clay that it had opened a transplant

center and that he would be transferred to the Kaiser program that

September. Id. ¶¶ 32, 33. Finally, Plaintiffs allege that in the

year following Mr. Clay's transfer to the Kaiser transplant

program, Kaiser repeatedly delayed the transplant, only to refer

him back to UCSF. Id. ¶ 37. Before Kaiser completed the

paperwork necessary for the transfer, Rodney Clay died of chronic

renal failure. Id. ¶ 39.

Based on these allegations, Plaintiffs brought nine causes of

action against Kaiser: (1) survival and wrongful death based on

negligence; (2) fraud, deceit, and fraudulent concealment; (3)

negligent misrepresentation; (4) negligence per se; (5)

intentional infliction of emotional distress; (6) negligent

infliction of emotional distress; (7) violation of California

Business & Professions Code section 17200, et seq.; (8) violation

of California Business & Professions Code section 17500, et seq.;

and (9) wrongful death due to breach of contract and tortious

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breach of the implied covenant of good faith and fair dealing. 

See id. Plaintiffs seek to recover compensatory and punitive

damages, attorneys' fees and costs, and injunctive relief.

Defendants asked if Plaintiffs would agree to submit this

dispute to arbitration. Plaintiffs refused. Lamb Decl. ¶ 2. 

Defendants therefore brought this Motion.

III. ANALYSIS

A. Applicability of the Federal Arbitration Act

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

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. Kaiser

asserts that Health Plan's Senior Advantage Election Form involves

commerce, and that the arbitration provision in that document is

therefore enforceable under the FAA. See Mot. at 5-6. The

Supreme Court has interpreted the phrase "involving commerce" very

broadly, holding that it extends beyond "persons or activities

within the flow of interstate commerce" to include anything that

affects commerce. See Allied-Bruce Terminix Cos. v. Dobson, 513

U.S. 265, 273, 277 (1995). In certain circumstances, the Health

Plan pays for its members to receive medical services when they

are traveling outside of California. See Hall Decl. Ex. A at 11,

16. Health Plan also provides coverage authorized by Medicare, a

federal statute exercising the Commerce power. Applying the broad

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legal standard described above, the Court concludes that Health

Plan's Senior Advantage Election form evidences a transaction

involving commerce, and that the FAA is therefore applicable. 

Other courts have reached the same conclusion. See Schlegel v.

Kaiser Found. Health Plan, Inc., No. 07-CV-00520-MCE, 

2007 U.S. Dist. LEXIS 64299, *3-4 (E.D. Cal. Aug. 30, 2007);

Mannick v. Kaiser Found. Health Plan, Inc., No. C 03-5905 PJH,

2005 U.S. Dist. LEXIS 40405, *6-7 (N.D. Cal. Dec. 16, 2005);

Toledo v. Kaiser Permanente Med. Group, 987 F. Supp. 1174, 1180

(N.D. Cal. 1997). 

Where a valid and enforceable written arbitration agreement

governs a dispute in litigation, the FAA authorizes the Court to

"stay the trial of the action until such arbitration has been had

in accordance with the terms of the agreement. . . ." 9 U.S.C. §

3. "[Q]uestions of arbitrability must be addressed with a healthy

regard for the federal policy favoring arbitration. . . . The

Arbitration Act establishes that, as a matter of federal law, any

doubts concerning the scope of arbitrable issues should be

resolved in favor of arbitration . . . ." Moses H. Cone Mem'l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1., 24-25 (1983). 

B. California Health & Safety Code Section 1363.1

The FAA encourages arbitration where there is a valid and

enforceable agreement. Here, Plaintiffs argue that the

arbitration agreement contained in the enrollment form Mr. Clay

signed is unenforceable because it violates the notice and

disclosure requirements of California Health & Safety Code section

1363.1.

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Section 1363.1 establishes conditions for any health care

service plan that "includes terms that require binding arbitration

to settle disputes and that restrict, or provide for a waiver of,

the right to a jury trial. . . ." Cal. Health & Safety Code §

1363.1. Plaintiffs assert that Defendants' arbitration agreement

violates Section 1363.1(b), which requires that the arbitration

agreement be "prominently displayed on the enrollment form signed

by each subscriber or enrollee;" Section 1363.1(c), which requires

that the arbitration agreement be "substantially expressed in the

wording provided in subsection (a) of Section 1295 of the Code of

Civil Procedure;" and Section 1363.1(d), which requires that the

disclosure be displayed "immediately before the signature line for

the individual enrolling in the health care plan." Id. 

Under California law, compliance with Section 1363.1 is

mandatory, and failure to comply voids an arbitration agreement:

Section 1361.1, therefore, establishes the requirements

that must be satisfied in order to arbitrate disputes

involving a health care service plan. Accordingly, even

though section 1363.1 is silent on the effect of

noncompliance, because the disclosure requirements are

mandatory, the failure to comply with those requirements

renders an arbitration provision unenforceable.

Malek v. Blue Cross of Cal., 121 Cal. App. 4th 44, 64 (Ct. App.

2004) (emphasis in original). 

C. The Medicare Act Preempts Section 1363.1

Although Defendants assert that their enrollment form and EOC

comply with Section 1363.1, their primary position is that the

Court need not consider Section 1363.1 because it is preempted by

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2

Defendants initially took the position that the FAA also

preempts application of Section 1363.1, but abandoned this argument

in their Reply and did not assert it at oral argument. See Reply

at 1 ("Defendants acknowledge that the McCarran-Ferguson Act

immunizes section 1363.1, Calif. Health & Safety Code, from what

would otherwise be a clear-cut case of preemption by the Federal

Arbitration Act."); see also Smith v. Pacificare Behavioral Health

of Cal., Inc., 93 Cal. App. 4th 139, 162 (Ct. App. 2001) ("[T]he

FAA, a federal statute of general application, which does not

'specifically relate' to insurance, is foreclosed from application

to prevent the operation of section 1363.1.").

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the Medicare Act.2 The Court agrees. 

1. Preemption Standards

"Where (as here) Congress regulates a field historically

within the police powers of the states (public health), we proceed

from the assumption that state law is not superseded unless there

is a 'clear and manifest purpose of Congress' to foreclose a

particular field to state legislation." Pagarigan v. Sup. Ct. of

Los Angeles County, 102 Cal. App. 4th 1121, 1128 (Ct. App. 2002)

(citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)).

Preemption may be either express or implied. Id. "[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)). Implied preemption may

take either of two forms:

Absent explicit pre-emptive language, we have recognized

at least two types of implied pre-emption: field

pre-emption, where the scheme of federal regulation is so

pervasive as to make reasonable the inference that

Congess left no room for the States to supplement it, and

conflict pre-emption, where compliance with both federal

and state regulations is a physical impossibility, or

where state law stands as an obstacle to the

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accomplishment and execution of the full purposes and

objectives of Congress.

Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992)

(internal citations and quotations omitted).

Where there is a question about the scope of a statute's

preemptive effect, courts look to the congressional purpose, "as

revealed not only in the text, but through the reviewing court's

reasoned understanding of the way in which Congress intended the

statute and its surrounding regulatory scheme to affect business,

consumers, and the law." Medtronic, 518 U.S. at 485.

2. Applicable Law

The Court examines the Medicare Act "as it read at the time

relevant to this case." See McCall v. Pacificare of Cal., 25 Cal.

4th 412, 422 (2001). Congress amended the preemption provisions

of the Medicare Act in 2000 and in 2003. See Medicare, Medicaid,

and SCHIP Benefits Improvement and Protection Act of 2000, H.R.

5661, enacted by Pub. L. No. 106-54, 114 Stat. 2763 (2000)

("BIPA"); Medicare Prescription Drug, Improvement, and

Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066

(2003) ("MMA"). 

Mr. Clay enrolled in the Health Plan Senior Advantage program

in July, 2000. The front of the enrollment form mentions binding

arbitration in a block of text immediately preceding Mr. Clay's

signature, but it also says, "Please read the Conditions of

Election and Authorization to Exchange Information on the back of

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3This text appears in bold print, in a different font from

other parts of the enrollment form, and is surrounded by a black

box which separates it from the rest of the form. See Dean Decl.

Ex. C. At oral argument, Plaintiffs' counsel repeatedly drew the

Court's attention to this box as an example of Defendants' ability

to highlight important text on the enrollment form, purportedly to

support Plaintiffs' claim that the arbitration provision was not

itself prominently displayed.

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this form." Dean Decl. Ex. C.3 On the back of that form, the

first paragraph appears as follows:

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.

Id. Ex. D. The Court interprets this text to mean that the full

terms of the enrollee's agreement with Defendants, including the

arbitration provision, are set forth in the Senior Advantage Group

Disclosure Form and Evidence of Coverage. Jason Hall, Health

Plan's Director of Medicare Compliance, testified by declaration

that Health Plan sends the current EOC to any Health Plan member

who expressed interest in the Senior Advantage Program. Hall

Decl. ¶ 5. Hall further states that the EOC has always contained

an arbitration provision. Id. Each year, when Health Plan sends

its proposed revisions to the EOC to CMS for review, it sends an

Annual Notice of Changes describing the revisions to each Senior

Advantage enrollee, followed by a copy of the final, approved EOC. 

Id. ¶ 6.

The series of events purportedly giving rise to Plaintiffs'

claims appears to have begun on June 22, 2004, when Defendants

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told Mr. Clay he would have to transfer out of the UCSF transplant

program and into Kaiser's program. See Compl. ¶ 33. The

operative version of the EOC, then, is the version that took

effect on June 1, 2004. See Hall Decl. Ex. A. The Health Plan

submitted this version to the CMS for review during 2004. See id.

Because the events giving rise to this suit took place in

2004, and the arbitration provision governing the suit was

executed in that year (by CMS-approved amendment to the prior

EOC), the Court concludes that the applicable version of the

Medicare Act is that which was in effect in June of 2004, and

which remains in effect today. 

3. Preemption Analysis

The Medicare Act explicitly preempts application of state law

to the arbitration agreement at issue here. After the most recent

amendment, the Medicare Act preempts all state regulation of

Medicare Advantage plans not relating to licensing or plan

solvency: 

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 include 42 C.F.R. § 422.80, "Approval of marketing

materials and election forms," and 42 C.F.R. § 422.111,

"Disclosure requirements." These regulations set forth the rules

governing approval and distribution of Medicare Advantage

information to enrollees.

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

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for CMS review of Medicare Advantage marketing 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). 

These regulations apply to all "marketing materials," as that

term is defined in 42 C.F.R. § 422.80(b). This includes any

informational materials targeted at Medicare Advantage

beneficiaries which, among other things, "explain the benefits of

enrollment in an MA plan, or rules that apply to enrollees." Id.

§ 422.80(b)(3) (emphasis added). The regulation provides a number

of examples of marketing materials, including, "[m]embership

communication materials such as membership rules, subscriber

agreements (evidence of coverage), member handbooks and wallet

card instructions to enrollees." Id. § 422.80(b)(5)(v) (emphasis

added).

The operative arbitration provision in this dispute is

contained in the June 2004 EOC. By federal regulation, the EOC is

considered "marketing material" and must be approved by the CMS. 

The CMS has a set of standards it uses in evaluating marketing

materials, including the adequacy of the formatting and font size

and the adequacy of the description of any grievance procedures. 

Pursuant to 42 U.S.C. § 1395w-26(b)(3), these regulations

supersede any state law or regulation with respect to Medicare

Advantage plans such as the Health Plan Senior Advantage plan in

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which Mr. Clay was enrolled. To the extent California Health &

Safety Code section 1363.1 purports to regulate the adequacy of

any disclosures in the EOC, it is superseded by federal law, and

its application here is preempted.

Congressional intent confirms this result. The Conference

Report accompanying the MMA clearly demonstrates that, in amending

42 U.S.C. 1395w-26, Congress intended to broaden the preemptive

effects of the Medicare statutory regime, and that it intended to

apply the new rules to all subsequent litigation:

The conference agreement clarifies that the MA program

is a federal program operated under Federal rules. State

laws, do not, and should not apply, with the exception

of state licensing laws or state laws related to plan

solvency. There has been some confusion in recent court

cases. This provision would apply prospectively; thus,

it would not affect previous and ongoing litigation.

H.R. Rep. No. 108-391, at 557 (2003).

At oral argument, Plaintiffs' counsel advanced two arguments

against preemption. First, counsel asserted that because Section

1363.1 does not conflict with federal law – that is, compliance

with one does not require violation of the other – federal law

does not preempt. Second, counsel relied on the decision in

Pagargigan, where the California Court of Appeal, on very similar

facts, found that the Medicare Act did not preempt application of

Section 1363.1. See 102 Cal. App. 4th at 1135-36. Both arguments

fail because they rely on older versions of the Medicare Act.

Prior to the passage of the BIPA in 2000, Congress had not

explicitly preempted state regulation of Medicare Advantage

marketing materials. As such, preemption analysis required a

court to consider whether compliance with both federal and state

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law was possible. In that situation, it was permissible for

states to impose higher standards than federal law did. 

Because the preemption is now explicit, the state regulations must

fall. See Jones, 430 U.S. at 525.

The Pagarigan court followed the implied preemption analysis

in reaching its conclusion that Section 1363.1 was not preempted. 

See 102 Cal. App. 4th at 1147 ("As Congress has expressly stated,

state standards regarding matters outside the specified areas are

superseded only to the extent any state regulation is

'inconsistent' with such federal regulations." (citing previous

version of 42 U.S.C. § 1395w-26(b)(3)(A)) (emphasis in original). 

Under the facts of that case, application of the older preemption

statute was appropriate. Pagarigan had enrolled in the Medicare

program in 1995, the governing EOC had been approved in January

2000, and Pagarigan died in June 2000. Id. at 1149. All of this

preceded passage of the BIPA, when Congress first made the

decision to explicitly preempt state regulation of Medicare

marketing materials such as the EOC. Id. The same was true in

Zolezzi v. Pacificare of Cal., 105 Cal. App. 4th 573 (Ct. App.

2003), on which Plaintiffs also rely. Id. at 588 ("However, that

provision was added by BIPA's amendment of the Act on December 21,

2000, which was subsequent to all of the relevant or operative

acts and omissions of which Zolezzi complains in her first amended

complaint."). Here, the explicit preemption was well-established

before the CMS reviewed and approved the governing EOC, and before

Defendants are alleged to have committed any of the wrongful acts

identified in the Complaint. Nothing in Pagarigan compels a

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4

The EOC includes other requirements not material to this

dispute.

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different result.

D. Applicability of the Arbitration Agreement to Plaintiffs

Plaintiffs argue that because they are not signatories to the

arbitration agreement, even if the Court finds that agreement

enforceable, it should not apply to them. Opp'n at 11. 

Defendants argue that the arbitration provisions in the applicable

EOC extend to the enrollee's heirs or personal representatives

(i.e., Plaintiffs), and that because Plaintiffs bring claims on

behalf of the estate, they stand in Mr. Clay's shoes and are bound

by his agreement.

The EOC includes the following provisions regarding the 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

relating to this EOC or a Member Party's

relationship to Kaiser Foundation 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. A (2004-2005 EOC), at 35-36.4 The EOC further

defines "Member Parties" to include the plan member, the member's

heir or personal representative, or any "person claiming that a

duty to him or her arises from a Member's relationship to one or

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more Kaiser Permanente Parties." Id. at 36.

Because Mr. Clay agreed to the terms of the EOC, his estate

is bound by its terms. Therefore, the various causes of action in

the Complaint which are brought on behalf of the estate must be

submitted to arbitration. At a minimum, this includes the first,

second, third, and fourth causes of action, each of which alleges

that Defendants caused some financial injury to Mr. Clay and seeks

to recover for that injury. See County of Los Angeles v. Super.

Ct., 21 Cal. 4th 292, 304 (1999) ("In a survival action by the

deceased plaintiff's estate, the damages recoverable expressly

exclude 'damages for pain, suffering, or disfigurement.' . . .

They do, however, include all 'loss or damage that the decedent

sustained or incurred before death, including any penalties or

punitive or exemplary damages.'") (citing Cal. Code Civ. Proc. §

377.34). 

Plaintiffs correctly identify a split in the California

Courts of Appeals regarding the applicability of binding

arbitration provisions to non-signatory adult heirs. Two lines of

cases may apply. The first follows Rhodes v. California Hospital

Medical Center, 76 Cal. App. 3d 606 (Ct. App. 1978); the second

follows Herbert v. Superior Court of Los Angeles County, 169 Cal.

App. 3d 718 (Ct. App. 1985). Though Plaintiffs identify the

split, they fail to provide any reason the Court should follow one

line of cases over the other in this matter. 

Plaintiffs rely on Rhodes and its progeny. For the reasons

set forth in Herbert, on which Defendants rely, Rhodes is

distinguishable. Unlike the arbitration provision in Herbert and

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the one in the EOC, the agreement in Rhodes did not have a

provision through which the signing party intended to bind her

heirs. See Herbert, 169 Cal. App. 3d at 725 n.2; Rhodes, 76 Cal.

App. 3d at 608-09. It is also relevant that in Rhodes, the estate

was not a plaintiff and there were no survival claims at issue. 

See Rhodes, 76 Cal. App. 3d at 609 ("This arbitration proceeding

does not, at this stage, involve any question as to the existence

of a cause of action in Mrs. Rhodes. . . . We are here concerned

solely with the forum in which a new cause of action in the heirs

may be brought."). 

Similarly, in Baker v. Birnbaum, 202 Cal. App. 2d 288, 292

(Ct. App. 1988), which follows Rhodes, there was "nothing on the

face of the . . . contract that extend[ed] it to any claim by" the

plaintiff. Other facts in Baker distinguish it from the present

matter as well. The suit did not involve a claim for wrongful

death, and the plaintiff, who was not required to arbitrate, was

not suing on behalf of a decedent's estate. Id. at 290. As

discussed below, in reference to Herbert, each of these factors is

significant. In Baker, a husband and wife each brought claims

against the wife's doctor. The wife's claim was for negligence,

the husband's for loss of consortium. Id. at 290. The court

compelled arbitration of Mrs. Baker's claim because she had signed

the arbitration agreement, but not Mr. Baker's claim. Id. at 292. 

Plaintiffs' final authority, Buckner v. Tamarin, 98 Cal. App.

4th 140 (Ct. App. 2002), is also distinguishable. In Buckner, the

decedent had signed an arbitration agreement purporting to bind

his heirs. Id. at 141. His grown children brought an action for

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wrongful death. Id. Unlike the present action, the decedent's

spouse was not a co-plaintiff and the plaintiffs did not bring any

claims on behalf of the estate. Here, the Plaintiffs include, in

addition to Mr. Clay's grown children, his wife, suing

individually and on behalf of his estate. As noted above, the

estate must submit to arbitration. The Buckner court

distinguished its facts from those in the Herbert line of cases in

part because there was no plaintiff or group of plaintiffs in

Buckner that was required to arbitrate, so there was no concern of

splitting a wrongful death suit across forums or reaching

inconsistent results. Id. at 142-43.

The Court finds the facts in Herbert more analogous, and

adopts the reasoning of that case and its progeny. The Herbert

plaintiffs were the wife, five minor children, and three adult

children of the decedent. 169 Cal. App. 4th at 720. They brought

a suit for wrongful death, fraud, and negligent infliction of

emotional distress against hospital, health plan, and doctors

involved in Mr. Herbert's care. Id. at 721. The decedent's

estate also filed claims for medical negligence and fraud, but

those claims were dropped after the defendants filed a motion to

compel arbitration. Id. As here, the arbitration agreement in

Herbert applied to any claim brought by the health plan member or

his heir or personal representative. Id. at 720. The court found

that the decedent's wife was bound by the arbitration agreement. 

Id. at 723. The court relied on a prior decision which found that

the fiduciary relationship between spouses establishes the power

to contract for health care on one another's behalf, which implies

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the authority to agree on one another's behalf to arbitrate claims

arising out of that health care. Id. (citing Hawkins v. Super.

Ct., 89 Cal. App. 3d 413, 418-19 (Ct. App. 1979)). Here, Rodney

and Deborah Clay were both enrolled in the Health Plan through

Deborah Clay's employer, and Deborah Clay remains enrolled. Dean

Decl. ¶ 3. That is sufficient basis to bind Mrs. Clay to the

arbitration provisions. 

The Herbert court found that because some of the plaintiffs

were bound by the arbitration agreement, the remaining plaintiffs

had to submit their wrongful death claims to arbitration,

regardless of the fact that they had signed the agreement. 169

Cal. App. 3d at 725. Under the "one action rule," "there may be

only a single action for wrongful death, in which all heirs must

join. There cannot be a series of such suits by individual

heirs." Gonzales v. S. Cal. Edison Co., 77 Cal. App. 4th 485, 489

(Ct. App. 1999). "Because a wrongful death cause of action may

not be split, the case must be tried in a single forum." Herbert,

169 Cal. App. 3d at 722. 

In addition to the one action rule requiring that all the

heirs litigate together, the Herbert court identified other policy

concerns favoring arbitration of all the heirs' claims:

[I] it is obviously unrealistic to require the

signatures of all the heirs, since they are not even

identified until the time of death, or they might not be

available when their signatures are required. 

Furthermore, if they refused to sign they should not be

in a position possibly to delay medical treatment to the

party in need. Although wrongful death is technically a

separate statutory cause of action in the heirs, it is

in a practical sense derivative of a cause of action in

the deceased. 

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Id. at 725. The Herbert facts are very similar to those now

before the Court, and the Herbert reasoning is persuasive. The

Court therefore holds that the arbitration agreement in the EOC,

which binds the estate and Mrs. Clay, also binds the remaining

Plaintiffs.

IV. 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 other

than that seeking injunctive relief 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.

December 14, 2007

 

 UNITED STATES DISTRICT JUDGE

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