California Mediation and Arbitration

Awards, Jurisdiction: Interim Award Dismissing Claims While Allowing Additional Submissions Was Not Final.

On The Difference Between A Final Award And An Interim Award Dismissing Claims But Leaving The Door Open For Additional Claims.

        In Ortiz v. Elmcrest Care Center, LLC, B330377 (2/3  pub. 11/7/24) (Egerton, Adams, Bershon), Ericka Ortiz, representing the Estate of Jose de Jesus Ortiz, sued Elmcrest Care Center and its staff, alleging elder abuse, neglect, negligence, and fraud. The trial court compelled arbitration. The arbitrator issued an initial "First Interim Award" dismissing the claims, but allowing for additional submissions if issues were identified. Following the Estate’s submission, the arbitrator issued a "Second Interim Award," finding Elmcrest liable for pre-death pain and suffering and awarding damages.

        Elmcrest contested this award, arguing the first was final, and the arbitrator’s amendment was outside her authority. The trial court sided with Elmcrest, confirming the First Interim Award and vacating the Final Award. On appeal, the Court of Appeal reversed the decision, holding that the arbitrator retained jurisdiction to amend the award to resolve omitted issues and directed the trial court to confirm the Final Award, which included the damages awarded for pre-death pain and suffering.

        COMMENT: An interim arbitration award expressly leaving open the door for additional submissions identifying additional issues is not a final award. 

Arbitration, Health Care: An LPS Conservatorship Only Confers Authority To Make Health Decisions, Not To Bind The Patient To Arbitrate

An LPS Conservatorship Only Created Authority To Make Decisions Concerning Health Care And Treatment, Not Authority To Agree To Arbitration.

        Health care facilities are a fertile breeding ground for problems enforcing arbitration agreements. The problems usually stem from deciding who has authority to agree to arbitration, who has capacity, and whether the claims to be arbitrated are survival actions or wrongful death actions. Our next case, a tragic case, involves such issues.

        In Enmark v. KC Community Care, LLC, B333022 (2/2  9/25/24) (Lui, J.), the plaintiffs, Scott Enmark and Marilyn Warhol, sued KC Community Care following the death of their daughter, Lisa Enmark, who was under an LPS (Lanterman-Petris-Short) conservatorship due to mental illness. Lisa was a resident at Community Care Center, where Scott signed two arbitration agreements on her behalf. After Lisa was sexually assaulted at the facility and died days later, her parents brought both wrongful death and survivor claims against the facility. The defendants moved to compel arbitration based on the agreements Scott signed.

        The trial court denied the motion to compel arbitration, finding that Scott lacked the authority to bind Lisa to arbitration under the LPS conservatorship order and that the wrongful death claim was not subject to arbitration since neither Scott nor Marilyn signed the agreements in their individual capacities. The appellate court affirmed the ruling, holding that the LPS conservatorship did not grant Scott the authority to sign arbitration agreements on Lisa’s behalf as it did not involve health care decisions. The court also ruled that wrongful death claims could not be compelled into arbitration under the agreements.

        COMMENT: Survival actions are brought by the personal representative of the deceased's estate for injury to the deceased. Here, however, Lisa did not sign an arbitration agreement that would have bound her estate representative to arbitrate her claims.  As for the wrongful death claims, those were personal to Lisa's surviving family members. However, Marilyn hadn't signed an arbitration agreement. And Scott did not sign in his individual capacity. He signed under the LPS conservatorship to admit Lisa for care. An LPS conservatorship is a legal arrangement where a conservator is appointed for individuals who are gravely disabled due to mental illness, allowing the conservator to make decisions regarding the person's care and treatment but not to waive legal rights such as jury trials through arbitration agreements​.

        What solution would have worked to create a binding arbitration agreement? Perhaps Lisa could have signed an arbitration agreement, but she suffered from mental disability, for which a conservatorship was necessary. Had she signed, this could have created an issue of capacity. Scott and Marilyn could have signed an agreement in their personal capacities, which would have bound them to arbitrate personal wrongful death claims.

Arbitration, Health Care, Agents: Trial Court Must Reconsider Arbitration Agreements In Light Of Harrod Case

Health Care Cases Continue To Generate Problematic Arbitration Agreements.

        The case James Maxwell v. Atria, A168043 (1/1  9/19/24) (Siggins, J.) involves the death of 93-year-old Trudy Maxwell, a resident at Atria Park of San Mateo, who passed away after drinking industrial-strength cleaner mistakenly served by an Atria employee. Trudy's children, including James Maxwell III, filed a lawsuit against Atria, alleging negligence, wrongful death, and elder abuse. A central issue in the case was James III's authority to sign an arbitration agreement on behalf of his mother, as he held a durable power of attorney, while his sister, Marybeth, held the health care power of attorney. The trial court denied Atria's motion to compel arbitration, ruling James III lacked the authority to sign the agreement and the wrongful death claims by Trudy’s heirs were not bound by it. Atria appealed, arguing James III was authorized to sign the arbitration agreement and all claims should be arbitrated. 

        The Court of Appeal reversed the trial court's denial of the motion to compel arbitration and remanded the case. The appellate court held that it was necessary for the trial court to reconsider the enforceability of the arbitration agreement in light of Harrod v. Country Oaks Partners, LLC, which clarified that signing an arbitration agreement may not constitute a health care decision under a health care power of attorney. The case was sent back for further proceedings to resolve the remaining issues.

        COMMENT. In Harrod v. Country Oaks Partners, LLC, the California Supreme Court held signing an optional arbitration agreement with a skilled nursing facility is not considered a "health care decision" under a health care power of attorney. The court reasoned decisions regarding arbitration agreements involve legal rights, including waiving the right to a jury trial, and are distinct from decisions necessary for the patient's well-being or medical care. Therefore, even if a person holds a health care power of attorney, they may not have authority to bind the patient to an arbitration agreement unless the power to make such decisions is explicitly granted. We blogged about Harrod on 7/1/24.

Internet Commerce: Clickwrap Arbitration Agreement Was Unenforceable Because Seller "Undid" Notice

An Effective Clickwrap Agreement Provides Notice Of Arbitration, Which, However, Can Be Undone.

        Plaintiffs, who purchased the Dexcom G6 Continuous Glucose Monitoring System to manage their diabetes, and sued the manufacturer alleging the the Dexcom G6 was defective and caused injuries. Dexcom moved to compel arbitration, based on a clickwrap agreement referring to arbitration. After the trial court granted motions to compel, Plaintiffs appealed. Herzog v. Superior Court of San Diego County (Real Party In Interest Dexcom, Inc.), D082847 (4/1  5/16/24) (Do, Kelety; Irion dsst).

        The majority opinion authored by Justice Do concluded that the clickwrap here did not constitute unambiguous acceptance of Terms of Use, including an arbitration agreement, because Dexcom "undid whatever notice it might have provided" by telling the customer that clicking "constituted authorization for Dexcom to collect and store the user's sensitive, personal health information."

Health Care: Parents Had To Arbitrate Their Claims Where Son Agreed To Arbitration Of Medical Malpractice Claims

The Outcome Relied On Ruiz v. Podolsky, 50 Cal.4th 838 (2020) (Ruiz).

        Parents sued Asistencia, a skilled nursing facility, alleging survivor claims for dependent adult abuse and negligence on behalf of their son Skyler as well as their own claim for wrongful death. An arbitration agreement existed between Skyler and Asistencia, so Astincencia moved to compel arbitration. The trial court granted Asistencia’s motion as to the survivor claims, but not as to the wrongful death claim, reasoning that the parents, who had not signed the arbitration agreement, did not have an enforceable agreement. Asistencia appealed -- successfully. Jonie A. Holland v. Silverscreen Healthcare, Inc. (Asistencia), 101 Cal. App. 5th 1125 (2/2  4/16/24) (Ashmann-Gerst, Chavez, Hoffstadt).

        In Ruiz, the California Supreme Court held that CCP § 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death. The Court in Asistencia agreed that the parents' claims were essentially for medical negligence, and were governed by Ruiz, requiring that the parents' claims be arbitrated.

Health Care: Provider Complied With Arbitration Disclosure Requirements In Health & Safety Code Section 1363.1

Necessary Disclosures Were Found In The Group Subscriber Agreement And Enrollment Form.

        Dougherty v. U.S. Behavioral Health Plan, 101 Cal. App. 5th 682 (4/2  4/24/24) (Codrington, Miller, Fields) involves the application of Health & Safety Code § 1363.1 to determine whether a dispute had to be arbitrated with a health care provider. While reading the legal analysis, it is very easy to skip by the human tragedy in the case.

        Christine Dougherty enrolled herself and her son Ryan in a health care plan. Ryan had a severe addiction problem. He admitted himself to a treatment facility which the plan initially agreed to cover, but denied coverage three days later on the ground that Ryan could be treated at home. Shortly after discharge, Ryan fatally overdosed.

        Defendant USB moved to compel arbitration. The trial court denied the motion on the ground that USB had failed to comply with § 1363.1(d), which requires that, "In any 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.” 

        USB's argument that the issue of arbitrability had been delegated to the arbitrator had been forfeited. However, the Court of Appeal determined that the necessary disclosures were included in the Group Subscriber Agreement and enrollment form. USB's argument that 1363.1 was preempted by federal law did not need to be addressed.

Arbitration, Agents, Health Care: Arbitration Provision Failed Because Health Care Agent Was Not Making Health Care Decision

California Health Care Decisions Law Allows For Appointment Of A Health Care Agent.

        The problem in Harrod v. Country Oaks Partners, LLC, S276545 (CA S.Ct. 3/28/24) (Jenkins, J.)  is that the health care agent who signed an agreement with a skilled nursing home facility containing an arbitration clause was acting outside the scope of the agency.

        The California Health Care Decisions Law enables  a principal to "appoint a health care agent to make health care decisions should the principal later lack capacity to make them." That happened in the Harrod case. The "health care agent" signed two separate agreements with the nursing care facility. The first allowed the patient to enter and be cared for. The second agreement, which contained the arbitration provision, was optional, and required all disputes to be decided in arbitration. The California Supreme Court holds that the agent was not making a health care decision when executing the agreement with the arbitration provision, and thus the agreement does not bind the principal.

 

Health Care, Unconscionability: First District Div. 3 Agrees Residential Care Facility's Arbitration Agreement Was Unconscionable

Health Care Facilities Continue To Generate Disputes About Enforceability Of Arbitration Provisions.

        Sometimes you can predict the conclusion in a court opinion after reading the recitation of facts. Here, the evidence pointed to a 74 year old women, suffering from dementia, who entered a residential care facility between December 29, 2022, and January 1, 2023, and who alleged that she had been sexually assaulted in the care facility. She had signed an agreement that was 44 pages long, and included several appendices and other material. The agreement and arbitration clause were in 8 to 10 point font, and included multiple and confusing signature blocks. The trial judge credited the testimony in the declaration of Haydon's daughter that Haydon had been placed under considerable time pressure to sign, under pain of losing a discounted price. The agreement also contained a confidentiality clause providing not only that the proceedings would be confidential, but also that the existence, contents, and results of the arbitration would remain secret -- a troubling provision in an Elder Abuse situation, as it would be in the interest of subsequent residential care applicants to know if the facility was implicated in elder abuse. Additionally, there were restrictions on discovery, and plaintiff was required to bear her own fees and costs, despite the nature of the consumer arbitration and Elder Abuse case. Small surprise that the trial court found the arbitration agreement to be unconscionable, and the Court of Appeal affirmed. Haydon v. Elegance at Dublin, A168767 (1/3  12/19/23) (Petrou, Fujisaki, Rodriguez).

        COMMENT: The opinion mentions that Haydon suffered from dementia. It does not, however, say that she was mentally incompetent. In a case where the record is developed and establishes incompetence, it should be unnecessary to address substantive and procedural unconscionability, for the issue would simply be whether a contract had been formed.

 

Health Care, FAA: Second District Div. 8 Holds That Health Net And County Arbitration Provisions Failed To Comply With Statutory Requirements

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.

 

Arbitration, Authentication, Standard Of Review, Employment: First District Div. 5 Agrees That Employer Failed To Authenticate Electronic Signature On Arbitration Agreement

Authentication Of Electronic Signatures Continues To Trip Up Employers.

        The trial court denied the employer's motion to compel arbitration, because the employee Bannister "presented evidence that she never saw the [arbitration] agreement during the  onboarding process and did not affix her  electronic signature to it," and the  Court of Appeal affirmed. Maureen Bannister v. Marinidence Opco, LLC, et al., A159815 (1/5  5/21/21) (Burns, Simons, Rodriguez).

        When an appeal from a denial of a  motion to arbitrate turns on undisputed facts, the Court of Appeal reviews the trial court's ruling for  substantial evidence. If the facts are undisputed, then the  review  of the  trial court's finding can be a  question of  law. Here, the court  agreed that  the outcome is  the same regardless of  the  standard applied. The trial court concluded that, given conflicting evidence, the employer failed to  prove by "a preponderance of the evidence" the existence of an arbitration agreement. And the Court of  Appeal defers to the trial court's determination of the credibility of witnesses and weight of the evidence.

        COMMENT: Civil Code section 1633.9, subdivision (a), governs the authentication of electronic signatures. It provides: "(a) An electronic record or electronic signature is attributable to a person if it was the act of the person.  The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable."