Opinion
G036253
4-27-2007
JERRY JAY MARTIN et al., Plaintiffs and Respondents, v. PACIFICARE OF CALIFORNIA et al., Defendants and Appellants.
K&R Law Group, Eric S. Fisher; Cooley Godward, William E. Grauer, Michael A. Attanasio, Chaise R. Bivin; Sedgwick, Detert, Moran & Arnold, David M. Humiston, Douglas J. Collodel and Edward A. Stumpp for Defendants and Appellants. Shernoff Bidart & Darras, Michael J. Bidart, Ricardo Echeverria; The Ehrlich Law Firm and Jeffrey Issac Ehrlich for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
Defendants PacifiCare of California, doing business as Secure Horizons, and PacifiCare Health Systems, Inc. (collectively, PacifiCare) challenge the trial courts order denying their petition to compel arbitration. PacifiCare contends the arbitration clause in its 2003 evidence of coverage booklet (2003 EOC) controls, and is binding on decedents heirs despite noncompliance with California Health and Safety Code section 1363.1 because federal law preempts the state statute. PacifiCare further contends the trial court erred in determining the decedents enrollment form and 2001 evidence of coverage (2001 EOC) controlled, and did not require nonsignatory heirs and assigns to arbitrate claims against them. Also, plaintiffs contend PacifiCare waived its right to compel arbitration by filing demurrers and a motion to strike, and participating in discovery in the court action.
We conclude the arbitration agreement in the 2001 enrollment form controls, and did not bind decedents heirs. Accordingly, we affirm the trial courts order denying PacifiCares petition to compel arbitration.
I
FACTUAL AND PROCEDURAL BACKGROUND
Medicare is a federal health insurance program for those 65 years or older, disabled, or in end-stage renal disease. Under traditional Medicare programs, beneficiaries seek services from health care providers, which are paid directly by the government at Medicare-approved rates. Beneficiaries must pay deductibles and coinsurance for covered services, and are also financially responsible for services not covered under Medicare.
As an alternative to traditional Medicare, beneficiaries may enroll in "Medicare manages care plans" offered by private organizations. Under these plans, the beneficiary participates in an HMO-type plan, using network doctors. In return, the beneficiary will receive benefits not available under traditional Medicare. One of these plans is PacifiCares Secure Horizons. When a Medicare recipient enrolls in Secure Horizons, the members Medicare benefits are assigned to PacifiCare, which is paid directly by the government.
Elsie Martin enrolled in Secure Horizons in 2001, and received the 2001 EOC. The enrollment form contained a clause requiring Martin to arbitrate "any differences between myself and Secure Horizons, relating to the health plan or its performance . . . ." The clause did not purport to bind the members heirs. In June 2003, PacifiCare sent Martin the 2003 EOC purporting to amend the arbitration agreement to bind both the member and the members heirs and assigns.
In August 2003, Martin was diagnosed with a brain aneurysm. Due to PacifiCares alleged delays in treatment and improper denials of Martins doctors requests for referrals to specialists outside of the plan, Martin died on January 16, 2004, before PacifiCare approved treatment for the aneurysm. In April 2005, Elsies husband and her children filed suit against PacifiCare for insurance bad faith and wrongful death arising from the denial of timely care.
The trial court sustained PacifiCares demurrers to the second amended complaint without leave to amend as to Martins children, but overruled them as to her husband. Plaintiffs took the depositions of persons involved with Elsies care. Although PacifiCare participated in seven of these depositions, which included its questioning of the deponents, it did not initiate any discovery. On August 19, 2005, PacifiCare filed a motion to compel arbitration. The trial court denied the motion, and PacifiCare now appeals.
II
DISCUSSION
A. The Arbitration Provisions in the Enrollment Form and 2001 EOC Control the Present Case
PacifiCare contends the present case is governed by the 2003 EOC, which purports to bind not only Martin, but also her heirs and assigns. We disagree.
As plaintiffs note, the federal statutes and regulations governing Medicare managed care programs are completely silent on the issue of arbitration. Thus, PacifiCares right to compel arbitration is governed by general contract principles. As observed in Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787: "The initial step in determining whether there is an enforceable ADR agreement . . . involves applying ordinary state law principles that govern the formation and interpretation of contracts in order to ascertain whether the parties have agreed to some alternative form of dispute resolution. Under both federal and California state law, arbitration is a matter of contract between the parties."
PacifiCare argues it was entitled to enlarge the scope of the initial arbitration provision by simply sending Martin the 2003 EOC. But PacifiCare fails to identify where Martin agreed PacifiCare could unilaterally do so. The enrollment form Martin executed in 2001 bound Secure Horizons to the terms of the effective evidence of coverage. The 2001 EOC provides: "Secure Horizons costs and benefits may change from year to year, and we would notify you before any changes were made." (Italics added.) PacifiCare does not contend it sent any notice to Martin regarding the change to the arbitration clause before it became effective. The 70-page 2003 EOC sent to Martin did not constitute notice because (1) it became effective on January 1, 2003, but was not sent out until June of that year, and (2) it does not state the arbitration clause represents a change from the prior agreement. Indeed, the federal regulations governing plan documents contemplates subscribers would receive not only evidences of coverage, but also "[l]etters to members about contractual changes . . . ." (42 C.F.R. § 422.80(b)(5)(vi) (2005).) Absent evidence Martin agreed to the expanded arbitration clause in the 2003 EOC, the 2001 enrollment form controls our decision here.
B. The Enrollment Form Does Not Purport to Require Martins Spouse or Heirs to Arbitrate Their Claims
The enrollment forms arbitration clause purports to cover "any differences between myself and Secure Horizons . . . ." PacifiCare contends this is sufficient to bind not only Martin, but also her heirs and assigns. We disagree.
We recognize in some instances a person seeking health care may bind not only herself, but also her husband, children, and other heirs and assigns without their notice or consent. For example, in Mormile v. Sinclair (1994) 21 Cal.App.4th 1508, upon which PacifiCare relies, we held a husbands loss of consortium claim was subject to arbitration even though only the wife executed the subject agreement. We based this conclusion in part on the language of the arbitration clause, which expressly covered "`all parties whose claims may arise out of or relate to treatment or services provided by the physician, including any spouse or heirs of the patient." (Id. at p. 1510.) True, in Mormile we disagreed with Baker v. Birnbaum (1988) 202 Cal.App.3d 288 when it declared "`the "policy [in favor of arbitration] does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing such an agreement."" (Mormile, at p. 1514.) But we agreed with Bakers conclusion denying enforcement of an arbitration provision against the signatorys husband because the arbitration clause in Baker did not purport to bind anyone other than the signatory. (Mormile, at p. 1514.)
The other cases PacifiCare rely on do not support its position. Herbert v. Superior Court (1985) 169 Cal.App.3d 718, enforced an arbitration provision against nonsignatory heirs pursuing wrongful death claims against a hospital. The court noted the "key issue" there was the language of the contract itself, which provided that "any member or a members heir or personal representative must arbitrate any claim arising from the rendition or failure to Kaiser to render services provided under the agreement." (Id. at p. 725, original italics.) The court noted that the provisions language binding heirs distinguished the situation from that in Rhodes v.California Hospital Medical Center (1978) 76 Cal.App.3d 606, where "[t]here was no provision in the agreement whereby the signing party intended to bind his or her heirs to the arbitration clause." (Herbert, at p. 725 fn. 2.) Similarly, Gross v. Recabaren (1988) 206 Cal.App.3d 771, 780-782, which expressly relied on Herbert, held "that where, as here, a patient expressly contracts to submit to arbitration `any dispute as to medical malpractice, . . . it must be deemed to apply to all medical malpractice claims arising out of the services contracted for, regardless of whether they are asserted by the patient or a third party." (Gross, at p. 781, original italics.)
The clause at issue here, limited to cover "any differences between myself and Secure Horizons . . . ." does not purport to cover Martins spouse or other heirs. Accordingly, the trial court did not err in denying PacifiCares arbitration petition.
III
DISPOSITION
The order is affirmed. Plaintiffs are entitled to their costs of this appeal.
We concur:
SILLS, P. J.
BEDSWORTH, J. --------------- Notes: We grant plaintiffs request for judicial notice.