Health And Safety Code Section 1363.1 Is The Relevant Provision.
Section 1361.1 provides that "[a]ny 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 shall include, in clear and understandable language, a disclosure that meets" certain conditions. Among other things, there must be a clear statement as to whether the plan requires binding arbitration and the "contract or enrollment agreement for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan."
The requirements of § 1363.1 were at issue in Baglione v. Health Net of California, Inc., B319659 (2/8 filed 11/27 pub. 12/6/23) (Stratton, Grimes, Viramontes). The court holds that the requirements must be satisfied in the employee's enrollment form as well as in the contract between Health Net and the County of Santa Clara; that the requirement is for the benefit of the employee in the contract with the contract with the County, so that the employee has standing to sue if Health Net's agreement with the County did not meet the requirements; and that § 1363.1 will be strictly interpreted. Here, the statutory requirements were not satisfied.
The court also rejected the argument that the FAA preempted the application of the California statute. The court explained: "'The McCarran-Ferguson Act deprives Congress of the power to invalidate state law “regulating the business of insurance.' (15 U.S.C. § 1012(b).) Section 1363.1 'does regulate the business of insurance within the meaning of McCarranFerguson'."
Thus, there is no preemption, and the trial court's order denying the request to arbitrate is affirmed.
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