Opinion
A148326
07-09-2018
DISTRICT COUNCIL #16 NORTHERN CALIFORNIA HEALTH AND WELFARE TRUST FUND, Plaintiff and Respondent, v. SUTTER HEALTH et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG15753647)
District Council #16 Northern California Health and Welfare Trust Fund (District Council #16 or plaintiff) sued a group of defendants, referred to collectively as "Sutter." Sutter moved to compel arbitration, asserting District Council #16 was bound by an arbitration provision in a contract between defendant Sutter Health and Anthem Blue Cross of California (Anthem)—even though District Council #16 was not a party to the contract and had no notice of the arbitration provision.
These defendants are Sutter Health, Sutter Health Sacramento Sierra Region, Eden Medical Center, Sutter East Bay Hospitals, Marin General Hospital, Sutter Coast Hospital, Sutter West Bay Hospitals, Sutter Central Valley Hospitals, Palo Alto Medical Foundation, Sutter Gould Medical Foundation, and Mills-Peninsula Heath Services.
The trial court denied Sutter's motion to compel arbitration, following UFCW & Employers Benefit Trust v. Sutter Health (2015) 241 Cal.App.4th 909 (UFCW). Sutter appeals, contending District Council #16 is bound to the terms of the contract between Sutter and Anthem (including the arbitration provision) by operation of law under Health and Safety Code section 1375.7, subdivision (d) (section 1375.7(d)). Sutter acknowledges that Division Five of this court rejected this very contention in UFCW, supra, 241 Cal.App.4th at pages 918, 928, but argues UFCW was wrongly decided.
Further undesignated statutory references are to the Health and Safety Code.
We granted the applications of the California Hospital Association (CHA) and the California Medical Association (CMA) to file briefs in support of defendants as amici curiae. We also granted defendants' motion for judicial notice of documents filed on January 12, 2017.
FACTUAL AND PROCEDURAL BACKGROUND
District Council #16 is a non-profit, voluntary employee benefit association governed by the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.). It is a self-funded health benefit plan, meaning it acts as the insurer for its plan participants. District Council #16 provides its plan participants and their spouses and beneficiaries benefits for medical services, and makes payments to medical providers for the services provided.
Plan participants are members of the District Council 16 International Union of Painters and Allied Trades of Northern California and Northern Nevada.
Defendant Sutter Health is a not-for-profit system of health care providers based in Sacramento, California. It includes hospitals, surgery centers, medical foundations, and long-term care providers. Anthem (not a party in this case) is a health care service plan. There are two contracts at issue in this case.
A "[h]ealth care service plan" is statutorily defined to include "[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees." (§ 1345, subd. (f)(1).)
The Provider Agreement Between Sutter Health and Anthem
In 2012, Sutter Health and Anthem entered into an agreement called the Anthem Blue Cross of California and Sutter Health Systemwide Amendment, referred to as the "Provider Agreement" by Sutter. According to Sutter's Chief Contracting Officer, the Provider Agreement "governs all aspects of Sutter's relationship with Anthem, including . . . the discounted rates Anthem agreed to pay and Sutter agreed to accept for the healthcare services Sutter provides to members of Anthem's benefit plans."
The Provider Agreement provides generally that "all disputes arising between Sutter and [Anthem] shall be resolved in accordance with the dispute resolution process outlined in this Section . . . and Exhibit 13." Exhibit 13, in turn, requires that disputes between the parties be submitted to binding arbitration "in lieu of litigation in any court." Exhibit 13 also purports to bind certain third parties (that is, entities other than signatories Sutter and Anthem) to the arbitration provision as well. Exhibit 13 states that binding arbitration shall apply to all disputes between Sutter and any "Other Payer," with "Other Payer" defined as an entity that contracts with Anthem for access to Anthem's provider network. The Provider Agreement requires Anthem to "assure that Other Payers . . . have agreed to be bound by the terms of this Agreement, including, without limitation the Dispute Resolution and Binding Arbitration Process set forth in Exhibit 13." (Sutter claims District Council #16 is an "Other Payer" for purposes the enforcing the Provider Agreement, but Sutter does not dispute District Council #16 was unaware of the arbitration provision in the Provider Agreement and never agreed to be bound to the terms of the Provider Agreement.)
The ASA Contract Between Anthem and District Council #16
District Council #16 and Anthem signed an agreement called the Administrative Services Agreement for Jointly Administered Arrangements in August 2013. Plaintiff refers to this agreement as the "ASA Contract" or payor contract. Under the ASA Contract, District Council #16 pays Anthem a fee for administrative services and for access to Anthem's network of health care providers, including defendants. Underlying Lawsuit
The parties to the ASA Contract are District Council #16, Anthem, and a third-party administrator.
On January 6, 2015, District Council #16 filed this action against Sutter. Plaintiff sought recovery under California's Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) for defendants' alleged "routine practice of submitting and receiving payment from Plaintiff and the Class—self-funded health benefit plans—on fraudulent, unlawful, and unfair bills for supposed 'anesthesia services' provided during medical procedures at their facilities, when such services were (a) not provided, (b) separately billed by a third-party anesthesiologist, or (c) reimbursed through other charges on the hospitals' bills."
Sutter's Motion to Compel Arbitration
On June 18, 2015, Sutter moved to compel arbitration, relying on the arbitration provision in the Provider Agreement (including Exhibit 13) and section 1375.7(d).
On October 2, 2015, the trial court issued an interim continuance order. It was undisputed that Anthem had not disclosed any portion of the Provider Agreement, including the arbitration provision, to District Council #16 until Sutter's motion to compel arbitration was filed. The trial court indicated it was inclined to find that District Council #16 was bound to arbitrate based on the Provider Agreement and section 1375.7(d), but continued the matter because the same issue was raised in a case scheduled for oral argument with the Court of Appeal later that month.
That pending appeal was UFCW, supra, 241 Cal.App.4th 909. In UFCW, the Court of Appeal rejected the argument that section 1375.7(d) operated to bind a nonsignatory third party to an arbitration provision found in a provider contract between a health care provider and a heath care service plan. (UFCW, supra, 241 Cal.App.4th at pp. 924-928.) Our Supreme Court denied review in UFCW on January 13, 2016.
Trial Court Order Denying the Motion to Compel
In its post-UFCW briefing with the trial court, Sutter changed tack, urging enforcement of the arbitration provision on theories of agency and acceptance of benefits. The trial court rejected these arguments and, in light of UFCW, determined that Sutter's "statutory imputation theory" based on section 1375.7(d) was not viable. The court denied Sutter's motion to compel arbitration by order dated April 22, 2016.
DISCUSSION
The only issue on appeal is whether the arbitration provision in the Provider Agreement is enforceable against District Council #16 by operation of law under section 1375.7(d). We begin with a discussion of the statute at issue. Then, since this issue has already been addressed by our colleagues in Division Five in UFCW, we closely examine that case. A. Statutory Background
On appeal, Sutter has abandoned its alternative theories (agency, equitable estoppel, and acceptance of benefits) for enforcing the arbitration provision.
Section 1375.7 is part of the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act) (§ 1340 et seq.). The Knox-Keene Act is " ' "a comprehensive system of licensing and regulation under the jurisdiction of the Department of Managed Health Care." ' " (UFCW, supra, 241 Cal.App.4th at p. 914, fn. 1.) "All aspects of the regulation of health plans are covered [by the Knox-Keene Act], including financial stability, organization, advertising and capability to provide health services." (Van de Kamp v. Gumbiner (1990) 221 Cal.App.3d 1260, 1284.)
Section 1375.7 was first added to the Knox-Keene Act in 2002 by Assembly Bill No. 2907. (Stats. 2002, ch. 925, § 1.) The statute was named the "Health Care Providers' Bill of Rights," and it prohibited (and continues to prohibit) certain specified contract terms from being included in contracts between a health care service plan and a health care provider. (§ 1375.7, subds. (a) and (b).) "Prohibited terms include, among others, provisions allowing the [health care service plan] to unilaterally change a material term of the contract without meeting specified requirements and provisions requiring the provider to accept additional patients beyond the contracted number or so as to endanger patient care." (2 Witkin, Summary of Cal Law (11th ed. 2017) Insurance, § 196, citing § 1375.7, subd. (b)(2).) In his signing message for Assembly Bill No. 2907, Governor Gray Davis explained the bill would help "level the playing field" for health care providers during contract negotiations with health care service plans to help ensure consumers have continuity of care. (Cal. Business, Transportation & Housing Agency, Enrolled Bill Rep. on Assem. Bill No. 2907 (2001-2002 Reg. Sess.) p. 15.)
The California Supreme Court has "routinely found enrolled bill reports, prepared by a responsible agency contemporaneous with passage and before signing, instructive on matters of legislative intent." (Elsner v. Uveges (2004) 34 Cal.4th 915, 934, fn. 19.)
Subdivision (d) of section 1375.7, the statutory provision at issue, was added to the Health Care Providers' Bill of Rights in 2003 by Assembly Bill No. 175. (Stats. 2003, ch. 203, § 2.) Section 1375.7(d)(1) provides, "When a contracting agent sells, leases, or transfers a health provider's contract to a payor, the rights and obligations of the provider shall be governed by the underlying contract between the health care provider and the contracting agent."
" 'Contracting agent' " is defined in the statute to mean "a health care service plan . . . while engaged, for monetary or other consideration, in the act of selling, leasing, transferring, assigning, or conveying, a provider or provider panel to payors to provide health care services to beneficiaries." (§ 1395.6, subd. (d)(2); see § 1375.7(d)(2)(A).)
For purposes of the Knox-Keene Act, a "[h]ealth care service plan" means either "[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees" or "[a]ny person, whether located within or outside of this state, who solicits or contracts with a subscriber or enrollee in this state to pay for or reimburse any part of the cost of, or who undertakes to arrange or arranges for, the provision of health care services that are to be provided wholly or in part in a foreign country in return for a prepaid or periodic charge paid by or on behalf of the subscriber or enrollee." (§ 1345, subd. (f).)
" 'Health care provider' " is defined as "any professional person, medical group, independent practice association, organization, health care facility, or other person or institution licensed or authorized by the state to deliver or furnish health services." (§ 1375.7, subd. (h)(1).)
" '[P]ayor' means a health care service plan, including . . . a self-insured employer that is responsible to pay for health care services provided to beneficiaries." (§ 1395.6, subd. (d)(3)(A); see § 1375.7, subd. (d)(2)(B).) A self-funded health care employee benefits trust that contracts with a "contracting agent" for administrative services and access to the contracting agent's health care provider network is an example of a "payor" under the statute. (UFCW, supra, 241 Cal.App.4th at pp. 914-916, 921.)
The phrase "sells, leases, or transfers" is left undefined in the statute. (UFCW, supra, 241 Cal.App.4th at pp. 920-921.)
According to the bill's author, Assembly Bill No. 175 was "needed to prevent the improper use of a health provider's contract when a plan or contracting agent sells, leases or transfers the right to use the plan's network of health care providers to a third party [payor] . . . for use in obtaining discounted rates. Currently, when these arrangements are made, the third party [payor] may try to impose different terms on the provider than those that are in the underlying original contract between the provider and contracting agent. This bill simply states that when the provider's contract is used by a third party [payor], the terms of the contract the provider actually agreed to will govern regardless of the terms of the contract between the plan or contracting agent and the third party [payor]." (Sen. Com. on Insurance, Analysis of Assem. Bill No. 175 (2003-2004 Reg. Sess.) as amended Apr. 28, 2003, p. 2.)
According to the legislative history, the bill was intended to address a "problem" described as follows. "[H]ealth care providers spend considerable time and administrative expense in attempting to enforce the terms of their contracts. The author notes that it is difficult to enforce contract terms when there are no contract remedies related to the third party [payor]. The problem is further exacerbated by the fact that, since there is no direct contract, the third parties are rarely regulated by the state. Furthermore, the amounts in question—small but high in volume—do not make it worthwhile for the provider to take legal action directly against the third party [payor]." (Sen. Com. on Insurance, Analysis of Assem. Bill No. 175, supra, as amended Apr. 28, 2003, p. 3.)
Sutter further asserts Assembly Bill No. 175 was intended to address the problem of payors "reaping the benefits of negotiated rates without having to abide by the terms that made it possible for providers to offer those rates." "For instance," Sutter continues, "third-party Payors could impose their own payment, claims processing, and utilization review polices on the provider even when [those terms] differed materially from those agreed upon in the provider's contract with the contracting agent."
In addition, amicus curiae CMA asserts the Health Care Providers' Bill of Rights generally was intended to address problems stemming from the "silent PPO." According to CMA, a "silent PPO" refers generally to any situation in which a third-party payor takes advantage of a contract between a health care service plan and a health care provider for the provision of health care services at discounted reimbursement rates. CMA states that in the usual silent PPO, a payor makes arrangements with a health care service plan "to access the plan's provider network (with or without the knowledge or consent of the provider) and utilize medical services at negotiated discount rates." The problem of the "silent PPO," however, was largely addressed by section 1395.6, enacted in 1999. (See UFCW, supra, 241 Cal.App.4th at pp. 922-923 ["Section 1395.6 addresses the 'silent PPO [preferred provider organization] scheme,' which involves a payor who has an agreement with a network vendor and claims the discounted preferred provider organization rate for services but without providing any incentives to channel clients to that provider."].)
In describing what Assembly Bill No. 175 would do, its author explained, "The plan or contracting agent will be required to make the relevant contract terms of both contracts consistent with each other." (Assem. Health Com., Background Information Worksheet on Assem. Bill No. 175 (2003-2004 Reg. Sess.) Mar. 11, 2003, pp. 1, 3.) In his signing message for Assembly Bill No. 175, Governor Davis wrote, "This bill clarifies in contract law that when a health plan sells or leases its provider network, the rights and obligations of the original contract between a health plan and a provider will apply to the terms of a sale or lease arrangement with any health plan buying or leasing the provider network," and, as with Assembly Bill No. 2907, the bill would "help to level the playing field for providers during contract negotiations with health plans. . . ." (Cal. Business, Transportation & Housing Agency, Enrolled Bill Rep. on Assem. Bill No. 175 (2003-2004 Reg. Sess.) p. 11.)
B. UFCW
In UFCW, the plaintiff, UFCW & Employers Benefit Trust (UEBT), was a health care employee benefits trust; it had a contract with Blue Shield for administrative services and for access to Blue Shield's network of health care providers at negotiated rates (ASO Contract). Blue Shield had a contract with Sutter Health, which provided reduced service rates to Blue Shield and to third parties that contracted with Blue Shield (Provider Contract). The Provider Contract contained an arbitration clause. (UFCW, supra, 241 Cal.App.4th at pp. 914-915.)
UEBT sued Sutter Health for alleged anticompetitive conduct, and Sutter moved to compel arbitration, relying on the Provider Contract and section 1375.7(d). The trial court denied the motion, and Sutter Health appealed. (UFCW, supra, 241 Cal.App.4th at pp. 917-918.)
On appeal, Sutter Health acknowledged that UEBT had never seen the Provider Contract, but argued UEBT was bound to arbitrate by virtue of section 1375.7(d). (UFCW, supra, 241 Cal.App.4th at p. 920.) Again, section 1375.7(d)(1) provides, "When a contracting agent sells, leases, or transfers a health provider's contract to a payor, the rights and obligations of the provider shall be governed by the underlying contract between the health care provider and the contracting agent."
The UFCW court agreed with Sutter Health that Blue Shield was a "contracting agent," Sutter Health was a "health care provider," and UEBT was a "payor" under section 1375.7(d). (UFCW, supra, 241 Cal.App.4th at p. 921.) The court further assumed that the ASO Contract was a sale, lease, or transfer of a health provider's contract for purposes of section 1375.7(d). The court found, however, a "fundamental problem with [Sutter Health's] statutory construction." (Id. at p. 924.)
Sutter Health argued that section 1375.7(d) meant that, when a "sale, lease, or transfer" of a health care provider's contract to a payor occurs, the payor is bound by all the terms in the health care provider's contract with the contracting agent (Blue Shield in that case) by operation of law. (UFCW, supra, 241 Cal.App.4th at pp. 924-925.) But, the court explained, "that is not what section 1375.7, subdivision (d), provides." (Id. at p. 925.) "[S]ection 1375.7, subdivision (d), does not regulate the payor. Rather, section 1375.7, subdivision (d), merely protects health care providers from being forced to abide by contract provisions to which they did not agree. [¶] Section 1375.7, subdivision (d), speaks only of the 'rights and obligations of the provider' and mandates that those rights and obligations are governed by the contract signed by the provider. . . . In arguing that the rights and obligations of a nonsignator third party payor are also governed by the Provider Contract, Sutter [Health] and [amicus curiae] the California Hospital Association seek to turn section 1375.7 on its head." (Ibid., italics added and original italics omitted.)
The UFCW court held, "[T]he Legislature has not indicated any intent to alter the obligations of third party payors, like UEBT, either in the plain language or legislative history of section 1375.7, subdivision (d). Nor has it delegated the power to bind such third party payors to 'contracting agents,' such as Blue Shield. UEBT cannot be deemed to have agreed to arbitrate by virtue of the statute." (UFCW, supra, 241 Cal.App.4th at p. 928.)
While Assembly Bill No. 175 "was intended 'to prevent the improper use of a health provider's contract,' " the court reasoned, "it was also intended that 'the plan [or contracting agent] will be required to make the relevant contract terms of both contracts consistent with each other,' so as to be 'consistent with basic contract law and fairness.' (Sen. Com. on Insurance, Analysis of Assem. Bill No. 175 (2003-2004 Reg. Sess.) as amended Apr. 28, 2003, p. 3, italics added.) The Legislature clearly intended that the 'contracting agent' would have the responsibility for making the two contracts consistent in their relevant terms. This history contradicts Sutter [Health]'s and the California Hospital Association's assertion that the Legislature intended to simply bind the third party to undisclosed terms, with no action required of the contracting agent. The trial court aptly pointed out the irony of Sutter [Health]'s argument that a statute designed to bar the imposition of terms on unwitting providers should actually impose an undisclosed arbitration term on another unwitting party—UEBT. Without a clear indication that the Legislature intended such an ironic result, we decline ' "to insert what has been omitted." ' " (UFCW, supra, 241 Cal.App.4th at p. 925.)
The court further observed there were "several indications in the legislative history that Assembly Bill No. 175 . . . was intended to simply clarify existing contract law—that a provider could not be forced to accept rates for services to which it had never agreed . . . ." (UFCW, supra, 241 Cal.App.4th at p. 926, citing analyses by the Senate Committee on Insurance and the Department of Finance and the Enrolled Bill Report, among other things.)
The UFCW court also relied on changes made to the language of the proposed bill, which showed the Legislature declined to adopt the language Sutter Health argued should be read into the statute. (Sutter makes the same argument in this appeal.) "As amended by the Assembly on April 21, 2003, Assembly Bill No. 175 (2003-2004 Reg. Sess.) would have added the following language to section 1375.7: 'In order to prevent the improper use of a health provider's contract when being sold, leased, or transferred, every arrangement that results in a payor paying a health care provider a reduced rate from billed charges for health care services based on the health care provider's participation in a network or panel shall be governed by the underlying contract between the health care provider and the contracting agent, regardless of the terms of the contract between the contracting agent and the payor.' (Assem. Bill. No. 175 (2003-2004 Reg. Sess.) § 2 as amended Apr. 21, 2003, italics added.) This language, which would have supported Sutter [Health]'s position, was not adopted. (Assem. Bill No. 175 (2003-2004 Reg. Sess.) § 2 as amended Apr. 28, 2003; § 1375.7, subd. (d).) 'When the Legislature chooses to omit a provision from the final version of a statute which was included in an earlier version, this is strong evidence that the act as adopted should not be construed to incorporate the original provision.' [Citation.] The previously referenced enrolled bill report explains why the broader language was not adopted: 'Blue Cross and Blue Shield are the two health plans that lease their provider networks to ERISA self-funded insurance health plans and their provider contracts are the underlying reason for this bill. Because ERISA self-funded employer health plans are preempted from state regulation by the federal ERISA, changing California law in a manner that would cause those contracts to be amended would be preempted by federal law. . . . The proposed amendments will not have this effect.' (Cal. Business, Transportation & Housing Agency, Enrolled Bill Rep. on Assem. Bill No. 175 (2003-2004 Reg. Sess.) p. 5.) The legislative history makes clear section 1375.7, subdivision (d), was not intended to change the ASO Contract's terms by operation of law." (UFCW, supra, 241 Cal.App.4th at pp. 926-927.)
To summarize, the Court of Appeal in UFCW rejected Sutter Health's proposed interpretation of section 1375.7(d) that when a payor contracts with a health care service plan (i.e., a "contracting agent") for administrative services and network access, that payor is automatically bound to the terms of all the provider contracts between that health care service plan and its network of providers with no action required by the health care service plan. (UFCW, supra, 241 Cal.App.4th at p. 925.) Instead, the court construed section 1375.7(d) as imposing an obligation on the health care service plan to make its provider contracts and payor contracts "consistent in their relevant terms." (Ibid.) C. Analysis
We agree with UFCW and follow its holding. Here, Anthem is a "contracting agent," Sutter is a "health care provider," and District Council #16 is a "payor" for purposes of section 1375.7(d). We will also assume without deciding that the ASA Contract between District Council #16 and Anthem was a sale, lease, or transfer of the Provider Agreement between Anthem and Sutter for purposes of section 1375.7(d).
In UFCW, the court assumed without deciding that the agreement between UEBT and Blue Shield was a sale, lease, or transfer of the provider contract between Blue Shield for purposes of section 1375.7(d). (UFCW, supra, 241 Cal.App.4th at p. 924.)
Applying UFCW's interpretation of 1375.7(d) to this case means that, after Anthem and Sutter entered the Provider Agreement, Anthem (as the contracting agent) was obligated to make its subsequent payor contracts (with third parties such as District Council #16) consistent with the terms of the Provider Agreement. But section 1375.7(d) does not mean that, when District Council #16 later entered into the ASA Contract with Anthem and Sutter, it automatically became bound to all the terms of the existing Provider Agreement between Sutter and Anthem with no action required by Anthem and no notice to District Council #16 of the terms of the Provider Agreement.
Sutter's arguments for rejecting UFCW are not persuasive. It argues the plain language and legislative history of section 1375.7(d) require us to adopt its proposed interpretation of the statute. We disagree. Our task in construing a statute "is to ascertain and give effect to the legislative intent. [Citation.] 'We begin by examining the words of the statute, giving them their usual and ordinary meaning and construing them in the context of the statute as a whole. [Citations.] If the plain language of the statute is unambiguous and does not involve an absurdity, the plain meaning governs.' " (Eel River Disposal and Resource Recovery, Inc. v. Humboldt (2013) 221 Cal.App.4th 209, 225 (Eel River).) "Ambiguity exists when a statute is capable of being understood by reasonably well-informed persons in two or more different senses." (Ibid.) Here, section 1375.7(d) could be interpreted to mean, as Sutter advocates, when a payor (such as District Council #16) makes a contract for network access from a health care service plan (such as Anthem or Blue Shield), the terms of the various provider contracts between that health care service plan and health care providers (such as Sutter) are imposed on that payor automatically by operation of law. But section 1375.7(d) could also reasonably be interpreted to mean, as UFCW concluded, when a health care service plan makes an agreement with a payor for network access, the health care service plan is required to negotiate a payor agreement that comports with its existing provider contracts.
When "the statutory language is susceptible of more than one reasonable interpretation, ' " ' "we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part." ' " ' [Citations.] Our responsibility is to ' "select the construction that comports most closely with the apparent intent of the Legislature, with a view toward promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences." [Citation.]' [Citation.] 'In addition, we are required to harmonize statutes by considering a particular clause or section in "the context of the . . . statutory scheme of which it is part." [Citation.]' " (Eel River, supra, 221 Cal.App.4th at p. 227.)
In this case, subdivision (d) of section 1375.7 is part of a statute, the Health Care Providers' Bill of Rights, that regulates the negotiation of provider contracts between health care service plans (such as Anthem and Blue Shield) and health care providers (such as Sutter) with the purpose of "level[ing] the playing field" for health care providers. (Cal. Business, Transportation & Housing Agency, Enrolled Bill Rep. on Assem. Bill No. 2907, supra, p. 15.) Other than in subdivision (d), section 1375.7 does not mention payors at all. Rather, the other subdivisions of section 1375.7 control the behavior of health care service plans by prohibiting them from imposing certain terms in provider contracts. (See § 1375.7, subds. (b)(1)-(5) and (c)(1)-(3).) Given this context, we agree with UFCW that section 1375.7(d) was not intended to impose new obligations and responsibilities on payors, but was intended to impose an obligation on health care service plans when negotiating payor contracts to ensure the relevant terms are consistent with their existing provider contracts. (UFCW, supra, 241 Cal.App.4th at p. 925.) This construction of the statute comports with the apparent intent of the Legislature and avoids an interpretation that would lead to absurd consequences.
Sutter's proposed interpretation of section 1375.7(d), on the other hand, upends basic principles of contract law. " ' "In California, '[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.' [Citations.]" [Citation.] "An essential element of any contract is the consent of the parties, or mutual assent." ' " (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787-788.) Here, there is no dispute that District Council #16 did not consent to the arbitration provision in the Provider Agreement between Sutter and Anthem and, indeed, did not even know of its existence until Sutter filed its motion to compel arbitration, yet Sutter argues section 1375.7(d) operates to impose on District Council #16 a contractual obligation to arbitrate pursuant to the Provider Agreement.
Sutter claims the court in UFCW ignored the clear evidence of legislative intent and focused on an out-of-context comment by CMA that Assembly Bill No. 175 would require the contracting agent " 'to make the relevant contract terms of both contracts consistent with each other.' " (UFCW, supra, 241 Cal.App.4th at p. 925, italics omitted.) This argument is not persuasive. Asked what the bill would do, the author of Assembly Bill No. 175 responded, in part, "This bill simply states that when the provider's contract is used by a third party, the terms of the contract the provider actually agreed to as evidenced by their signature will govern regardless of the terms of the contract between the plan or contracting agent and the third party. The plan or contracting agent will be required to make the relevant contract terms of both contracts consistent with each other." (Assem. Health Com., Background Information Worksheet on Assem. Bill No. 175, supra, p. 3, italics added.) It does not appear the UFCW court took CMA's identical statement out of context or misunderstood the import of the statement. The author of the bill believed Assembly Bill No. 175 would have the effect of requiring the contracting agent "to make the relevant contract terms of both contracts consistent with each other."
Sutter's remaining arguments on the legislative history of Assembly Bill No. 175 do not convince us that UFCW was wrongly decided. --------
Finally, Sutter's examples of cases in which arbitration agreements were enforced against nonsignatory parties are beside the point. There is no dispute that "there are doctrines under which nonsignatories to an arbitration agreement can be compelled to arbitrate." (UFCW, supra, 241 Cal.App.4th at p. 919.) But the issue here is one of statutory interpretation, and we have concluded section 1375.7(d) does not operate to bind District Council #16 to the terms of the Provider Agreement. The cases Sutter cites are not relevant to the interpretation of section 1375.7(d).
We need not address District Council #16's alternative reasons to uphold the denial of Sutter's motion to compel arbitration.
DISPOSITION
The order denying Sutter's motion to compel arbitration is affirmed.
/s/_________
Miller, J. We concur: /s/_________
Richman, Acting P.J. /s/_________
Stewart, J.