Opinion ID: 1251628
Heading Depth: 1
Heading Rank: 3

Heading: The board, as agent for the employees, had implied authority to provide for arbitration of malpractice claims.

Text: (1) Government Code sections 22774, 22790 and 22793 authorize the board to negotiate contracts for group medical plans for state employees. In negotiating such agreements and amendments the board acts as the agent or representative of the employees. ( Blos v. Bankers Life Co. (1955) 133 Cal. App.2d 147, 150 [283 P.2d 744]; see Boseman v. Insurance Co. (1937) 301 U.S. 196, 204-205 [81 L.Ed. 1036, 1040-1041, 57 S.Ct. 686, 110 A.L.R. 732]; Elfstrom v. New York Life Ins. Co. (1967) 67 Cal.2d 503, 512, fn. 5 [63 Cal. Rptr. 35, 432 P.2d 731].) [5] The acts of an agent within the scope of his authority bind the principal (see Civ. Code, § 2330); application of this rule in the present context yields the conclusion that contract provisions, as well as amendments to the contract, [6] negotiated by the board within the scope of its authority as an agent, bind those employees who enroll under the contract. (2) This preliminary doctrinal recitation sets the stage for the principal issue of this appeal: whether the board, as agent of the employees, had implied authority to agree to a contract which provided for arbitration of all disputes, including malpractice claims, arising under that contract. That issue turns on the application of Civil Code section 2319, which authorizes a general agent To do everything necessary or proper and usual ... for effecting the purpose of his agency. For the reasons explained below, we conclude that arbitration is a proper and usual means of resolving malpractice disputes, and thus that an agent empowered to negotiate a group medical contract has the implied authority to agree to the inclusion of an arbitration provision. In Crofoot v. Blair Holdings Corp. (1953) 119 Cal. App.2d 156, 183-184 [260 P.2d 156], [7] Justice Peters summarized the evolution of legal attitudes toward arbitration. Arbitration has had a long and troubled history. The early common law courts did not favor arbitration, and greatly limited the powers of arbitrators. But in recent times a great change in attitude and policy has taken place. Arbitrations are now usually covered by statutory law, as they are in California. Such statutes evidence a strong public policy in favor of arbitrations, which policy has frequently been approved and enforced by the courts. Subsequent decisions confirm the self-evident fact that arbitration has become an accepted and favored method of resolving disputes ( Ware v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1972) 24 Cal. App.3d 35, 43 [100 Cal. Rptr. 791]; Federico v. Frick (1970) 3 Cal. App.3d 872, 875 [84 Cal. Rptr. 74]; Roberts v. Fortune Homes, Inc. (1966) 240 Cal. App.2d 238, 244 [49 Cal. Rptr. 429]), praised by the courts as an expeditious and economical method of relieving overburdened civil calendars ( Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal. App.3d 526, 534 [96 Cal. Rptr. 149]). The transformation of legislative and judicial attitudes toward arbitration has encouraged a dramatic development in the use of this procedure. A 1952 study estimated that aside from personal injury cases and cases in which the government is a party, more than 70 percent of the total civil litigation is decided through arbitration rather than by the courts (Mentschikoff, The Significance of Arbitration  A Preliminary Inquiry (1952) 17 Law & Contemp. Prob. 698). In the following decades arbitration further expanded its role to encompass in certain circumstances disputes requiring evaluation of personal injury claims: California and many other states now require arbitration of uninsured motorist claims (see Ins. Code, § 11580.2), and proposals for no-fault automobile insurance frequently provide for arbitration (see Judicial Council of Cal., Study of the Role of Arbitration in the Judicial Process (1973) pp. 71-73). Plaintiff nevertheless recites judicial authority holding that a provision for arbitration frames an extraordinary method of resolving disputes and that consequently the authority of an agent to agree to arbitration must be specially conferred. The only decisions which support that proposition, however, are cases from other states which date from an era of judicial hostility to arbitration. ( Pope v. Wheatley (Tex.Civ.App. 1932) 54 S.W.2d 846; Dunn v. Moore (1938) 22 Tenn. App. 412 [123 S.W.2d 1095]; Manufacturers' & Builders' Fire Ins. Co. v. Mullen (1896) 48 Neb. 620 [67 N.W. 445].) [8] That judicial era has long since receded into a remote past. (See Gear v. Webster, supra, 258 Cal. App.2d 57, 61; Henderson, Contractual Problems in the Enforcement of Agreements to Arbitrate Medical Malpractice (1972) 58 Va.L.Rev. 947, 956.) The agent today who consents to arbitration follows a proper and usual practice for effecting the purpose of the agency; he merely agrees that disputes arising under the contract be resolved by a common, expeditious, and judicially favored method. The matter becomes even clearer if we narrow our focus to arbitration of disputes arising under group contracts. In collective bargaining agreements, which, like the present contract, are negotiated by elected representatives on behalf of a group of employees, arbitration has become a customary means of resolving disputes. (See, e.g., Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608, 622 [116 Cal. Rptr. 507, 526 P.2d 971]; Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888 [95 Cal. Rptr. 53, 484 P.2d 1397]; Posner v. Grunwald-Marx, Inc., supra, 56 Cal.2d 169, 180.) Negotiators have invariably accepted without question the authority of the union representative to agree to such arbitration provisions. (See Code Civ. Proc., § 1280.) A New York decision confirms the equivalent right of a trade association representative to agree to an arbitration clause on behalf of the employers. ( Mencher v. B. & S. Abeles & Kahn (1948) 274 App.Div. 585 [84 N.Y.S.2d 718, 733].) The viability of these thousands of agreements for arbitration should certainly not be sacrificed on the altar of an exotic and arid legalism that in all these years has not even occurred to the parties. Finally, we observe the growing interest in and use of arbitration to cope with the increasing volume of medical malpractice claims. (See Judicial Council Study, op. cit., supra, pp. 70-71 and references there cited; Butler, Arbitration: An Answer to the Medical Malpractice Crisis (Sept.-Oct. 1975) 9 Beverly Hills Bar J. 41; Henderson, op. cit., supra, 58 Va.L.Rev. 947; Note, Rx for New York's Medical Malpractice Crisis (1975) 11 Colum.J.L. & Soc. Prob. 467, 500-503.) [9] The authority of an agent to agree to the arbitration of such claims finds an illustration in our decision in Doyle v. Giuliucci (1965) 62 Cal.2d 606 [43 Cal. Rptr. 697, 401 P.2d 1]. In Doyle, the father of an injured minor entered into a contract with the Ross-Loos Medical Group which provided for arbitration of tort and contract claims arising under the contract. In an unanimous opinion authored by Chief Justice Traynor, we held that the minor was bound by the provision of the agreement to submit her malpractice claim to arbitration. [T]he power to enter into a contract for medical care that binds the child to arbitrate any dispute arising thereunder, we stated, is implicit in a parent's right and duty to provide for the care of his child. (P. 610.) Rejecting the contention that the arbitration clause unreasonably limited the minor's rights, we replied, The arbitration provision in such contracts is a reasonable restriction, for it does no more than specify a forum for the settlement of disputes. ( Ibid. ) [10] We do not believe Doyle can be distinguished from the instant case because it involves a parent contracting on behalf of a child instead of an agent contracting on behalf of its principal. Both parent and agent serve as fiduciaries with limited powers, and if, as Doyle holds, the implied authority of a parent includes the power to agree to arbitration of the child's malpractice claims, we perceive no reason why the implied authority of an agent should not similarly include the power to agree to arbitration of the principal's malpractice claims. We therefore conclude that an agent or other fiduciary who contracts for medical treatment on behalf of his beneficiary retains the authority to enter into an agreement providing for arbitration of claims for medical malpractice. [11]