Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-03334/USCOURTS-cand-3_15-cv-03334-1/pdf.json

Parties Involved:
Aetna Health of California, Inc.
Defendant
Aetna Inc.
Defendant
Anna M. Sanzone-Ortiz
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ANNA M. SANZONE-ORTIZ,

Plaintiff,

v.

AETNA HEALTH OF CALIFORNIA, INC., 

et al.,

Defendants.

Case No. 15-cv-03334-WHO 

ORDER REGARDING MOTION TO 

COMPEL ARBITRATION

Re: Dkt. No. 14

INTRODUCTION

This case concerns a challenge under the Employee Retirement Income Security Act of 

1974 (“ERISA”) to defendants Aetna Health of California, Inc. (“Aetna California”) and Aetna, 

Inc.’s healthcare plan. Plaintiff Anna Sanzone-Ortiz (“Ortiz”) alleges that defendants’ “benefits 

cap” for the treatment of autism violates the Parity in Mental Health and Substance Use Disorder 

Benefits provision of ERISA and California’s Mental Health Parity Act. The question I must 

decide is whether to enforce the arbitration agreement that Ortiz signed. Because her challenge is 

statutory, Ortiz argues that ERISA does not require her to arbitrate her claims. But she 

misunderstands precedent on this issue and she is bound by the arbitration agreement she signed. I 

GRANT defendants’ motion to compel arbitration.

BACKGROUND

Oritz is a plan participant under an ERISA-governed health benefit plan sponsored by her 

employer and insured by Aetna California. Compl. ¶6. Ortiz’s son, a beneficiary under the plan, 

has been diagnosed with autism. His treating provider recommended 36 hours per week of 

Applied Behavior Analysis (“ABA”) treatment. Compl. ¶6. Ortiz sought coverage for 36 hours of 

ABA therapy, but Aetna California authorized only 20 hours, stating that “[m]edical necessity for 

more than 20 hours is not met.” Compl. ¶29. Ortiz internally appealed the decision, which Aetna 

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California affirmed on March 11, 2015. Compl. ¶30. That same day, Ortiz appealed the decision 

to the California Department of Managed Health Care, which increased her son’s coverage to 25 

hours per week. Compl. ¶31.

Ortiz alleges Aetna California applies, and is subject to, a 12-page guideline written by 

Aetna Inc. that “would consider no more than 20 hours per week for 60 consecutive days” of 

therapy. Compl. ¶4. She asserts that Aetna California’s original decision to cover only 20 hours 

per week of her son’s therapy was based on this 20 hour “benefit cap,” which she contends 

violates the Mental Health Parity and Substance Use Disorder provision of ERISA, 29 U.S.C. §

1185a, and California’s Mental Health Parity Act, codified at California Health & Safety Code § 

1374.71. Compl. ¶¶42-59.

Ortiz brings her complaint as a class action under Federal Rule of Civil Procedure 23 on 

her own behalf and on behalf of two classes. The California Class is defined as:

All current and former participants and beneficiaries of any ERISAgoverned Aetna Health of California health plan who were denied 

benefits for ABA treatment for autism based on the 20-hour 

limitation at any time after June 30, 2011, excluding officer, 

directors, and managing agents of either Defendant. 

Compl. ¶33. The National Class is defined as:

All current and former participants and beneficiaries of any ERISAgoverned health plan that has adopted the Aetna, Inc. 12-page set of 

guidelines for determining coverage limits for ABA treatment, who 

have been denied benefits for ABA treatment for autism based on 

the 20-hour limit since June 30, 2011, excluding officer, directors, 

and managing agents of either Defendant. 

Compl. ¶34.

Defendants move to compel arbitration. Mot. [Dkt. No. 14]. The arbitration provision in 

the Enrollment Request Ortiz completed when enrolling her son provides, in part, that “ANY 

DISPUTE ARISING FROM OR RELATED TO HEALTH PLAN MEMBERSHIP MAY 

BE DETERMINED BY SUBMISSION TO BINDING ARBITRATION, AND NOT BY A 

LAWSUIT OR RESORT TO COURT PROCESS EXCEPT AS CALIFORNIA LAW 

PROVIDES FOR JUDICIAL REVIEW.” Lauderdale Decl., Ex. 1 (emphasis in original). [Dkt. 

No. 14-2]. Ortiz’s Evidence of Coverage (“EOC”) sets out the terms of her coverage and also 

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contains a section titled “Binding Arbitration” which states, in part, that: “Binding arbitration is 

the final process for resolving any disputes between Interested Parties arising from or related to 

HMO coverage, whether stated in tort, contract or otherwise.” Compl., Ex. B at 52. I heard 

argument on December 16, 2015.

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) governs the motion to compel arbitration. 9 U.S.C. 

§§ 1 et seq. Under the FAA, a district court determines (1) whether a valid agreement to arbitrate 

exists and, if it does, (2) whether the agreement encompasses the dispute at issue. Lifescan, Inc. v. 

Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). “To evaluate the validity of 

an arbitration agreement, federal courts should apply ordinary state-law principles that govern the 

formation of contracts.” Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003) 

(citation omitted). If the court is satisfied “that the making of the arbitration agreement or the 

failure to comply with the agreement is not in issue, the court shall make an order directing the 

parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. 

“Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” 

Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999). 

DISCUSSION

Defendants contend that Ortiz is required to arbitrate her claim pursuant to the arbitration 

provisions in the Enrollment Request and EOC because it “arises from” or “relates to” her “HMO 

coverage” and “Health Plan membership.” Mot. at 2. Ortiz makes three primary arguments in 

opposition: (1) Aetna California’s arbitration provision violates ERISA; (2) she did not agree to 

arbitrate her claims; and (3) Aetna Inc. is not a party to any agreement and thus cannot enforce 

arbitration. 

I. WHETHER ARBITRATION OF STATUTORY CHALLENGES VIOLATES 

ERISA

A. 29 C.F.R. § 2560.503-1

29 C.F.R. § 2560.503-1(a) “sets forth minimum requirements for employee benefit plan 

procedures pertaining to claims for benefits by participants and beneficiaries.” 29 C.F.R. § 

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2560.503-1. The claims procedures of a group health plan will be deemed to be “reasonable” only 

if they comply with a series of procedural requirements. 29 C.F.R. § 2560.503-1(c). Those 

requirements include that “[t]he claims procedures do not contain any provision for the mandatory 

arbitration of adverse benefit determinations, except to the extent that the plan or procedures 

provide that: (i) [t]he arbitration is conducted as one of the two appeals described in paragraph 

(c)(2) of this section and in accordance with the requirements applicable to such appeals; and (ii) 

[t]he claimant is not precluded from challenging the decision under section 502(a) of the Act or 

other applicable law.” 29 C.F.R. § 2560.503-1(c)(4). Ortiz contends that defendants’ arbitration 

agreement violates this provision because it requires arbitration after internal appeals are 

exhausted. Opp. at 6 [Dkt. No. 21]. But as defendants correctly point out, 29 C.F.R. § 2560.503-

1, as highlighted by the first words in subdivision(c), applies only to the plan’s “claims 

procedures” that defendants define as the “administrative procedures that a plan fiduciary uses in 

conducting its own review of a claim.” Reply at 5 [Dkt. No. 22].

A plain reading of 29 C.F.R. § 2560.503-1(c)(4) indicates that the limitations on 

arbitrability apply only to “claims procedures” and “provision[s therein] for the mandatory 

arbitration of adverse benefit determination.” 29 C.F.R. § 2560.503-1(c)(4). The Department of 

Labor explains that subsection (c)(4) “provides that a plan may require arbitration as one (or both) 

of the permitted levels of review of a denied claim.” Rules and Regulations for Administration 

and Enforcement; Claims Procedure, 65 Fed. Reg. 70246-01 (November 21, 2000) (codified at 29 

C.F.R. pt. 2560). Ortiz’s complaint does not directly concern the adverse benefit determination 

regarding her son’s therapy that she has already appealed twice, once internally through Aetna 

California and thereafter through the California Department of Managed Health Care. Compl. 

¶¶30, 31. Instead, as Ortiz asserts in her papers, her claims concern “defendants’ violations of 

ERISA and the parallel California statute.” Opp. at 11. Accordingly, because 29 C.F.R. § 

2560.503-1(c) applies to the administrative claims procedure that a plan uses to conduct reviews 

of claims determinations, not the process through which statutory challenges should be litigated 

after all administrative appeals have been exhausted, it is inapplicable to her claims. 

The cases on which Ortiz relies do not provide support for her interpretation that the 

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regulations bar arbitration after the claim procedures have been completed. All four cases involve 

the arbitrability of adverse benefits decisions. See Snyder v. Federal Insurance Co., No. 08-cv153, 2009 WL 700708, at *5 (S.D. Ohio Mar. 13, 2009); Sosa v. PARCO Oilfield Services, Ltd., 

No. 05-cv-153, 2006 WL 2821882, at *1 (E.D. Tex. Sept. 27, 2006); Williams v. Ass'n De 

Prevoyance Interentreprises, No. 11-cv-1664, 2012 WL 1752687, at *1 (E.D. La. May 16, 2012); 

Coleman v. Supervalu, Inc. Short Term Disability Program, 920 F. Supp. 2d 901, 903 (N.D. Ill. 

2013). For example, in Snyder, the plaintiff sued under 29 U.S.C. § 1132 to enforce her alleged 

right to an arbitration of her benefits claim under the ERISA-governed plan. 2009 WL 700708, at 

*5. Consideration of 29 C.F.R. § 2560.503-1, which the court repeatedly described as “regarding 

the arbitration of adverse benefits decisions,” was therefore appropriate. Id. at *5 (referring to 29 

C.F.R. § 2560.503-1(c)(4)); see also Id. (“[T]he Secretary of Labor has promulgated a regulation 

prescribing the procedures that a plan provider must follow, after an adverse benefit decision, to 

provide a full and fair review of the decision.”). Unlike the plaintiffs in those cases, Ortiz is not 

challenging her adverse benefits determination. Therefore, the limitations promulgated in the

regulations are inapplicable.

Ortiz also asserts Aetna California “intentionally seeks to limit the claimant from 

challenging the decision under section [502(a)] of [ERISA]” in violation of 29 C.F.R. § 2560.503-

1(c)(4)(ii). Opp. at 6. However, defendants’ arbitration agreement does not prohibit Ortiz from 

challenging that section in arbitration. The Supreme Court has rejected the idea that arbitration of 

a claim is akin to having no claim at all. See e.g., Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985) (“By agreeing to arbitrate a statutory claim, a party does 

not forgo the substantive rights afforded by the statute; it only submits to their resolution in an 

arbitral, rather than a judicial, forum.”); Shearson/American Express Inc. v. McMahon, 482 U.S. 

220, 229-30 (1987) (hereinafter “McMahon”). There is nothing in the record before me to indicate 

that the arbitral system would not provide Ortiz with all of the full and fair rights to which she is 

entitled under ERISA. See Bird v. Shearson Lehman/Am. Exp., Inc., 926 F.2d 116, 121 (2d Cir. 

1991) (agreeing with appellees that there was “no reason why the substantive rights guaranteed by 

ERISA will be jeopardized if the arbitration agreement is enforced.”).

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B. ERISA’s Statutory Provisions

Ortiz relies heavily on Graphic Communications Union, District Council No. 2, AFL-CIO 

v. GCIU-Employer Retirement Benefit Plan, 917 F.2d 1184 (9th Cir. 1990) to argue that an ERISA 

plaintiff who has exhausted her administrative remedies and whose claims arise because of an 

ERISA violation does not have to arbitrate her claims. Opp. at 9-10. In Graphic, an employee 

benefit plan sought to enforce an arbitration provision contained within the plan documents. 

Plaintiff, a union, challenged the plan administrator’s interpretation of special vesting rules. 

Graphic, 917 F. 2d at 1185. The union declined to appeal the plan administrator’s decision to 

arbitration and instead filed suit in federal court. Id. 

According to the Graphic court, “the fundamental question here is whether the claim the 

[u]nion seeks to assert arises under the employee benefit plan or under ERISA.” Id. at 1188 

(citing Amaro, 724 F.2d at 748, 751 (adherence to an “agreement [which] mandate[d] final and 

binding arbitration of contractual disputes” was not required because the disputed issue was 

“solely ... an alleged violation of a protection afforded by ERISA”)). The Ninth Circuit ultimately 

held that “because the underlying disputed question here... arises under the plan, ERISA does not 

forbid enforcement of an agreement to arbitrate the question.” Id. Ortiz seeks to rely on the 

court’s distinction between claims arising out of ERISA versus the benefits plan to argue that 

“arbitration isn’t required where –as here—the ERISA participant challenges the defendants’ 

violation of the ERISA statute itself, as opposed to an ERISA plan provision.” Opp. at 1. 

Graphic’s applicability is called into question by more recent Ninth Circuit decisions. As 

the court pointed out in Chappel v. Lab. Corp. of Am., 232 F.3d 719, 725 n.4 (9th Cir. 2000), the 

provision at issue in Graphic “was not governed by the FAA and therefore did not consider the 

pro-arbitration policy of the FAA.”1 Furthermore, in an even more recent decision, the Ninth 

Circuit recognized that “in the past, [it has] expressed skepticism about the arbitrability of ERISA 

claims, see Amaro v. Cont'l Can Co., 724 F.2d 747, 750 (9th Cir.1984), but those doubts seem to 

have been put to rest by the Supreme Court's opinions in [McMahon, 482 U.S. at 226] and 

 

1 Defendants assert, and Oritz does not dispute, that the FAA governs this case. 

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[Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 481 (1989)].” Comer v. 

Micor, Inc., 436 F.3d 1098, 1100 (9th Cir. 2006). Citing Graphic as an example, the Ninth Circuit 

stated that “[c]uriously,” it has “echoed the doubts expressed in Amaro without taking account of 

the intervening Supreme Court cases.” Id. I will not make the same mistake.

The Supreme Court has declared that the FAA “was intended to reverse centuries of 

judicial hostility to arbitration agreements.” McMahon, 482 U.S. at 225 (internal quotation marks, 

citations, and modifications omitted). The “duty to enforce arbitration agreements is not 

diminished when a party bound by an agreement raises a claim founded on statutory rights.” Id. at 

226; see also Mitsubishi Motors Corp., 473 U.S. at 626 (“There is no reason to depart from these 

guidelines [favoring arbitration] where a party bound by an arbitration agreement raises claims 

founded on statutory rights.”); Comer, 436 F.3d at 1100-01 (“In fact, on the force of McMahon, 

we have held other statutory claims arbitrable.”). Congress may override the presumption 

favoring arbitration agreements by a contrary congressional command. McMahon, 482 U.S. at 

226; CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012) (The FAA requires “courts to 

enforce agreements to arbitrate according to their terms,” “even when the claims at issue are 

federal statutory claims, unless the FAA's mandate has been overridden by a contrary 

congressional command.”) (internal citations and quotation marks omitted). The burden of 

demonstrating congressional intent to preclude waiver rests on the party opposing arbitration. 

McMahon, 482 U.S. at 227; Rodriguez de Quijas, 490 U.S. at 483. Applying these standards, the 

Supreme Court has upheld arbitration agreements involving various statutory claims. See, e.g,

Rodriguez de Quijas, 490 U.S. at 483 (claims under the Securities Act of 1993); Mitsubishi 

Motors Corp, 473 U.S. at 640 (claims under the Sherman Antitrust Act).

Ortiz urges me to find that Congress overrode the FAA because ERISA seeks “to 

protect...participants in employee benefit plans and their beneficiaries...by providing for 

appropriate remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001(b). 

This evidence is insufficient to constitute a clear congressional command to the contrary. See

CompuCredit, 132 S. Ct. at 669; see also Jasso v. Money Mart Exp., Inc., 879 F. Supp. 2d 1038, 

1045 (N.D. Cal. 2012) (“CompuCredit holds that, absent a clear statement in a federal statute 

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showing Congressional intent to override the use of arbitration, in the FAA prevails.”). “It does 

not follow that by permitting a federal judicial forum Congress also intended to override the 

[FAA’s] aim of ensuring the enforcement of privately made agreements in which parties have 

chosen to forego an available judicial forum in favor of arbitration.” Bird, 926 F.2d at 120 

(internal citations, quotation marks, and modifications omitted). “It is utterly commonplace for 

statutes that create civil causes of action to describe the details of those causes of action, including 

the relief available, in the context of a court suit.” CompuCredit, 132 S. Ct. at 670. However, the 

“mere formulation” of the cause of action is insufficient to establish “contrary congressional 

command” overriding the FAA. Id. 

In line with courts across the country, including within this circuit, I find that 29 U.S.C. § 

1001(b) does not provide the requisite congressional command necessary to override the FAA. 2 

See, e.g., Bird, 926 F.2d at 120 (holding that 29 U.S.C. § 1001(b) “does not speak to whether 

Congress to require that parties avail themselves of that forum.”); Arnulfo P. Sulit, Inc. v. Dean 

Witter Reynolds, Inc., 847 F.2d 475, 478 (8th Cir. 1988) (not persuaded that Congress “intended 

affirmatively to prevent waiver of the judicial forum for ERISA dispute resolution” by allowing 

“ERISA plaintiffs ready access to the federal courts if they choose to sue.”); Fabian Fin. Servs. v. 

Kurt H. Volk, Inc. Profit Sharing Plan, 768 F. Supp. 728, 732 (C.D. Cal. 1991) (“[S]ection 

1001(b) fails to support plaintiff's argument that claims arising under ERISA cannot be submitted 

to arbitration.”). 

II. WHETHER ORTIZ AGREED TO ARBITRATE HER CLAIMS

Ortiz argues that “she (and not her minor autistic son) is the plaintiff here” and therefore to 

 

2 At the hearing, Ortiz’s counsel directed my attention to McLeod v. Gen. Mills, Inc., No. 15-cv494, 2015 WL 6445672 (D. Minn. Oct. 23, 2015). In McLeod, the Minnesota district court 

interpreted the Older Workers Benefit Protection Act of 1990 (“OWBPA”) to find that the 

inclusion of a provision that provided “the party asserting the validity of a waiver shall have the 

burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary” 

demonstrated that a party seeking to enforce the arbitration agreement had to defend the validity of 

the agreement in court, not in arbitration. 2015 WL 6445672, at *8 (emphasis in original). 

However, the court’s conclusion was limited by the “narrow circumstances presented in this case: 

a dispute over the validity of a waiver of substantive claims under the OWBPA's waiver 

requirements found in Section 626(f)(1).” Id. Because the case at bar does not involve the 

OWBPA, Ortiz does not point to comparable language in the ERISA statute, and multiple courts 

have interpreted 29 U.S.C. § 1001(b) to find it amenable to arbitration, McLeod is unpersuasive.

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the “extent that the [signed Enrollment Request] is enforceable, it is enforceable – by its terms –

only against the minor son, and not against [Ortiz].” Opp. at 11. Additionally, while her 

employer agreed to arbitrate though the EOC, she did not. Id. 

As defendants point out, the Enrollment Request, through which she requested to add her 

dependent child, was signed by Ortiz herself (not her son). Dkt. No. 14-2. By signing she 

affirmed that “[o]n behalf of myself and the dependents listed,” the “plan documents [including 

the EOC] will determine the rights and responsibilities of member(s).” Id. The EOC, in turn has 

an arbitration provision which provides that “[b]inding arbitration is the final process for resolving 

any disputes between Interested Parties arising from or related to HMO coverage.” Compl., Ex. B 

at 52. Additionally, the signed Enrollment Request states that she “understand[s] that [she] is 

giving up the constitutional right to have disputes decided in a court of law before a jury, and 

instead accepting the use of binding arbitration.” Dkt. No. 14-2. 

Ortiz’s argument that she is not bound by the EOC is unsubstantiated. Citing Comer, Ortiz

contends that she cannot be held to EOC’s arbitration agreement because she does not “knowingly 

exploit[] the agreement containing the arbitration clause” because her claims are not premised on 

enforcing the plan. Opp. at 11(citing Comer, 436 F. 3d at 1101). But this argument contradicts 

allegations present throughout her complaint, including the assertion that she “brings this action 

under ERISA to... enforce her son’s rights under [defendants’] benefit plan” and “because this 

policy affects all of its insureds (a) with autism (b) who seek coverage for ABA treatment,” she 

also brings the action on behalf of a putative class. Compl. ¶8; see also Compl. ¶¶ 24-25 (quoting 

the EOC to define what is “medically necessary” under the policy). Moreover, Comer involved a 

contract the plaintiff “didn't sign and is not even entitled to enforce.” 436 F.3d at 1102. Here, 

Ortiz cannot rely on a contract she signed that incorporated the EOC “while simultaneously 

attempting to avoid the burdens that contract imposes.” Id. at 1101.

III. WHETHER AETNA INC. CAN ENFORCE THE ARBITRATION AGREEMENT

Ortiz argues that the arbitration agreement controls disputes concerning “Interested 

Parties,” which the EOC defines as “Contract Holder Members, their heirs-at-law or personal 

representatives(s) of a Member, a Participating Provider and HMO, including affiliates, agent, 

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employees or subcontractors of an Interested Party.” Compl., Ex. B at 2. Ortiz claims that 

because “HMO” is specifically defined and limited to Aetna California, Compl., Ex. B. at 66, 

Aetna Inc. is a “non-party to the agreement and cannot enforce it.” Opp. at 12. 

Ortiz’s limited reading of the agreement ignores that the arbitration provision applies to 

HMO affiliates as well. Affiliate, as defined by Black’s Law Dictionary, is a “corporation that is 

related to another corporation by shareholdings or other means of control; a subsidiary, parent or 

sibling corporation.” Black’s Law Dictionary (10th ed.). Ortiz acknowledges that Aetna Inc. is 

the corporate parent of Aetna California in both her complaint and brief. Compl. ¶18 (“Defendant 

Aetna Health of California, Inc. is an incorporated subsidiary of Aetna Inc.”); Opp. at 2 (“Codefendant Aetna Inc. is the corporate parent of Aetna Health of California, Inc.”). Accordingly, 

Aetna Inc. is an “Interested Party” within the definition provided in the EOC and can enforce the 

agreement.

CONCLUSION

Ortiz’s agreement with Aetna requires arbitration. Defendants’ motion to compel 

arbitration is GRANTED.

IT IS SO ORDERED.

Dated: December 22, 2015

______________________________________

WILLIAM H. ORRICK

United States District Judge

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