# Winninger v. Scott

> District Court, N.D. California · July 5, 2022

URL: https://www.frixlaw.com/law-library/cases/10072024

## Case

- **Court:** District Court, N.D. California
- **Decided:** July 5, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10072024

## How later opinions describe it (automated extraction)

- noting 20 federal policy favoring arbitration

## Opinion text

1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 MOLLIE WINNINGER, Case No. 21-cv-04689-HSG

8 Plaintiff, ORDER GRANTING MOTION TO
COMPEL ARBITRATION
9 v.
Re: Dkt. No. 44
10 CASSIUS SCOTT, et al.,
11 Defendants.

12
13 Pending before the Court is the motion to compel arbitration filed by Defendants Kaiser
14 Foundation Hospitals and The Permanente Medical Group, Inc. (together, “Kaiser”) and joined by
15 Defendant Cassius Scott. Dkt. Nos. 44 and 51. The Court held a hearing on April 21, 2022. See
16 Dkt. No. 61. For the reasons detailed below, the Court GRANTS the motion to compel
17 arbitration.
18 I. BACKGROUND
19 Medicaid is a joint federal-state program that pays for medical services for eligible
20 individuals with limited income. In California, Medicaid is administered through Medi-Cal,
21 which offers medical services through managed-care plans contracted for by state and local
22 governments. See 42 U.S.C. § 1396a; 42 U.S.C. § 1396u-2(a)(1)(A)(i); Cal. Welf & Inst. Code §§
23 14200, et seq.
24 Plaintiff is a Medi-Cal beneficiary. Defendants assert that Plaintiff was deemed eligible
25 for Medi-Cal by the state and subsequently enrolled by the state in Partnership HealthPlan of
26 California (“PHC”). See Dkt. Nos. 44 at 3, 44-2 (“Eno Decl.”) ¶ 3. According to a declaration
27 from PHC’s custodian of records submitted by Defendants, “PHC is a non-profit community
1 benefits (California’s Medicaid program) through local care providers to ensure Medi-Cal
2 recipients have access to high-quality comprehensive cost-effective health care.” Eno Decl. ¶ 2.
3 Defendants allege that it is PHC’s practice to send new members a packet instructing the
4 individual on how to select a health plan from PHC’s array of options. Id. ¶ 7.
5 Under the Affordable Care Act (“ACA”), 42 U.S.C. § 18001, et seq, states are required to
6 create “streamlined procedures” for enrollment. See, e.g., 42 U.S.C. § 1396w-3(b)(3). As part of
7 that streamlining, Medi-Cal beneficiaries must have the option to enroll in a health plan over the
8 phone, which is what Plaintiff did. See 42 U.S.C. § 18083(b). In March 2018, Plaintiff called
9 PHC and requested to be enrolled in the Kaiser Foundation Health Plan, Inc. Medi-Cal Managed
10 Care Plan (the “Health Plan”), and her coverage began May 1, 2018. Dkt. Nos. 44 at 3-4, 54 at 1.
11 Plaintiff alleges that in June 2018, Defendant Cassius Scott, an obstetrician practicing out
12 of the Kaiser Permanente San Rafael Medical Center, sexually assaulted her during a medical
13 examination. Dkt. No. 54 at 2. Plaintiff filed this suit in June 2021, but Defendants contend that
14 Plaintiff’s claims must be resolved through arbitration because the Health Plan through which she
15 sought treatment contains a mandatory arbitration provision.
16 II. LEGAL STANDARD
17 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring
18 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable,
19 and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting
20 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
21 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect,
22 or refusal of another to arbitrate under a written agreement for arbitration may petition any United
23 States district court . . . for an order directing that . . . arbitration proceed in the manner provided
24 for in such agreement.” 9 U.S.C. § 4. This federal policy is “simply to ensure the enforceability,
25 according to their terms, of private agreements to arbitrate.” Volt Info. Scis., Inc. v. Bd. of
26 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any
27 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id.
1 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.”
2 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The
3 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is
4 limited to determining whether there is clear and unmistakable evidence that the parties agreed to
5 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either
6 instance, “before referring a dispute to an arbitrator, the court determines whether a valid
7 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524,
8 530 (2019) (citing 9 U.S.C. § 2).
9 III. DISCUSSION
10 A. The Health Plan Plaintiff enrolled in contains a binding arbitration provision.
11 Defendants assert that PHC is responsible for enrolling individuals in Kaiser’s Health Plan.
12 Dkt. No. 44 at 3; see also Velarde Decl. Exhibit D at 28. According to Defendants, Kaiser does
13 not have a role in the process until after PHC informs Kaiser of the individual’s enrollment in the
14 Kaiser Health Plan. See id. at 3-4; Velarde Decl. ¶¶ 3-4. Defendants explain that once PHC
15 informs Kaiser of an enrollment, it is Kaiser’s practice to mail the new enrollee a copy of the
16 Health Plan Member Handbook. Dkt. No. 44 at 5; Velarde Decl. ¶ 4.
17 The Member Handbook Disclosure Form and Evidence of Coverage (the “Medi-Cal
18 EOC”) sets out the Health Plan terms. To create the handbook, Kaiser is required to use the model
19 template created by the California Department of Health Care Services, and then must obtain final
20 approval for the handbook from PHC. Velarde Decl. ¶ 3. Page 91 of the Medi-Cal EOC, under
21 the large, bold heading “Binding Arbitration,” states, in relevant part:
22
“You must use binding arbitration if the claim is related to this
23 Member Handbook or your membership with us, if all of the
following requirements are met:
24 • The claim is for: malpractice (a claim that medical
services or items were unnecessary or unauthorized or
25 were improperly, negligently, or incompetently
rendered); or delivery of services or items; or premises
26 liability
• The claim is brought by: you against us; or us against
27 you
• The claim cannot be settled through Small Claims
1 court[.]”
2 Velarde Decl. Exhibit D at 91 (emphasis in original signifies defined term).1 “Services” are
3 defined as “[h]ealth care services or items (‘health care’ includes both physical health care and
4 mental health care) and behavioral health treatment . . . .” Id. at 26. As used in this provision,
5 “us” includes Kaiser Foundation Hospitals, The Permanent Medical Group, Inc., and its doctors,
6 among others. Id. at 92.
7 B. Defendants did not waive their right to arbitrate.
8 As an initial matter, Plaintiff argues that Defendants waived their right to arbitrate by
9 waiting over six months to bring a motion to compel arbitration. See Dkt. No. 54 at 4-5.
10 Determining whether a party has waived its right to arbitrate “is presumptively for a court and not
11 an arbitrator to decide.” Martin v. Yasuda, 829 F.3d 1118, 1123 (9th Cir. 2016). A party asserting
12 waiver must demonstrate: “(1) knowledge of an existing right to compel arbitration; (2) acts
13 inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting
14 from such inconsistent acts.” Id. at 124 (citation omitted). Waiver of the right to arbitration is
15 disfavored, and any party arguing waiver bears a heavy burden of proof. Id. (citation omitted).
16 Defendants’ actions did not amount to a waiver under this standard. Defendants raised the
17 binding arbitration provision in the September 2021 joint case management statement, see Dkt.
18 No. 26 at 1, 5, and 7, and represent that the filing of the motion to compel arbitration was delayed
19 while necessary documentation was gathered from Plaintiff and PHC. See Dkt. No. 55 at 6.
20 Defendant Scott withdrew his motion to strike portions of the first amended complaint on the same
21 day the case management statement was filed, see Dkt. No. 24, and the Court has not decided any
22 motions going to the merits of the case. Although the parties have taken discovery, the arbitration
23 proceedings allow for similar discovery, so Plaintiff has not been prejudiced by discovery moving
24 forward in this case. Dkt. No. 44-5, Likar Decl. Exh. F (“Rules for Kaiser Permanente Member
25 Arbitrations”) at 16 (“Discovery shall be conducted as if the matter were in California state
26 court.”). The Court finds that Plaintiff has not met her burden to show that Defendants waived
27
1 their right to arbitrate.
2 C. The arbitration agreement is valid and enforceable.
3 A plain reading of the Medi-Cal EOC shows that it contains an agreement to arbitrate that
4 encompasses the disputes in this case.2 However, Plaintiff argues that (i) because the agreement
5 does not comply with California law it is not valid and (ii) because the agreement is
6 unconscionable it should not be enforced. As explained below, the Court disagrees, and finds the
7 agreement to be valid and enforceable.
8 i. California statutes that require specific arbitration disclosures in HMO
enrollment forms do not apply here.
9
Plaintiff argues that the arbitration agreement is not valid because her enrollment in the
10
Health Plan did not comply with Title 10, Section 6470 of the California Code of Regulations.
11
Section 6470, part of Chapter 12, entitled “California Health Benefit Exchange,” is one of a
12
number of provisions governing California’s Exchange. See also 10 C.C.R. § 6410 (“‘California
13
Health Benefit Exchange’ or the ‘Exchange’ means the entity established pursuant to government
14
Code Section 100500. The Exchange also does business as and may be referred to as ‘Covered
15
California.’”). Under Section 6470 all individuals “who are selecting and enrolling into a health
16
insurance plan shall agree to, sign, and date the agreement for binding arbitration . . . .” 10 C.C.R.
17
§ 6470(f)(2). The Section details the exact wording that must be used in the agreement, including
18
specific wording for a Kaiser Medi-Cal health plan. Id.
19
Given the language in the regulation and the structure of Title 10, Chapter 12, the Court
20
agrees with Defendants that Section 6470 applies only to enrollments through Covered California.
21
See Dkt. No. 55 at 2-3. Plaintiff enrolled on the phone with PHC, not through Covered California,
22
and therefore the requirements of Section 6470 do not apply here.
23
Moreover, even if Section 6470 did apply to Plaintiff’s phone enrollment, it would be
24
preempted by federal law. “There are three types of preemption: (1) express preemption, (2) field
25
preemption, and (3) conflict preemption.” McClellan v. I-Flow Corp., 776 F.3d 1035, 1039 (9th
26
Cir. 2015). Conflict preemption occurs where “there is an actual conflict between state and
27
1 federal law,” such as it being impossible to comply with both or where state law “stands as an
2 obstacle to the accomplishments and execution of the full purposes and objectives of congress.”
3 Id. (citations and quotations omitted).
4 As Defendants point out, one of the goals of the ACA was to simplify the Medicaid
5 enrollment process. See 42 U.S.C. § 18083(b); Dkt. No. 55 at 4. Under the ACA, states must use
6 a “single, streamlined enrollment form” either created by the United States Department of Health
7 and Human Services or consistent with standards promulgated by the federal government. See 42
8 U.S.C. § 18083(b). The form must be “structured to maximize an applicant’s ability to complete
9 the form satisfactorily, taking into account the characteristics of individuals who qualify for
10 applicable State health subsidy programs,” and states must allow beneficiaries to enroll using this
11 form “online, in person, by mail, or by telephone.” See id.
12 In Hunter v. Kaiser Foundation Health Plan, Inc., another court in this District examined
13 the relationship between the ACA and a California law governing the formation of insurance
14 contracts. 434 F. Supp. 3d 764 (N.D. Cal. 2020). Section 1363.1 of California’s Health and
15 Safety Code requires that health care service plans with arbitration provisions include a clear
16 disclosure regarding arbitration immediately before the signature line for plan enrollees. Cal. Civ.
17 Code § 1363.1. The defendant in Hunter argued that Section 1363.1 conflicted with several
18 mandates of the ACA, including requirements that individuals be allowed to enroll online and
19 through call center agents. Id. at 772. The court agreed that Section 1363.1 did not apply to
20 Plaintiff’s enrollment because it was pre-empted by the ACA and California’s efforts to
21 implement it. See id. at 773.
22 Here, Plaintiff invokes a different California regulation, Section 6470, but the Court finds
23 the reasoning in Hunter persuasive and applicable. Section 6470 requires that arbitration
24 provisions in health care plans be accompanied by specific disclosure language and a signature.
25 The ACA, on the other hand, requires a simplified enrollment procedure that individuals can
26 access through a variety of channels. Section 6470, like Section 1363.1, is clearly inconsistent
27 with the ACA mandate requiring a simplified telephone enrollment option. So to the extent these
1 with them is not a reason to invalidate Plaintiff’s arbitration agreement, because they are pre-
2 empted by the clear rules governing Medicaid enrollment established by the ACA.
3 ii. The agreement to arbitrate is not unconscionable.
4 Plaintiff also argues that the arbitration provision is unconscionable. Under California law,
5 an agreement is enforceable unless it is both procedurally and substantively unconscionable. See
6 Armendariz v. Foundation Health Psychcare Svcs. Inc., 24 Cal. 4th 83, 114 (Cal. 2000).
7 Procedural and substantive unconscionability need not be present in equal amounts. Id. Rather,
8 the two are evaluated on a “sliding scale,” such that the more evidence of procedural
9 unconscionability there is, the less evidence of substantive unconscionability is needed to render
10 the agreement unenforceable, and vice versa. Id. However, both forms of unconscionability must
11 be present in some amount “for a court to exercise its discretion to refuse to enforce a contract or
12 clause under the doctrine of unconscionability.” Stirlen v. Supercuts, Inc., 51 Cal. App. 4th 1519,
13 1521 (Cal. Ct. App. 1997), as modified (Feb. 10, 1997). Plaintiff contends that the arbitration
14 provision is both procedurally and substantively unconscionable, and therefore cannot be
15 enforced. See Dkt. No. 54 at 10-14.
16 Regarding procedural unconscionability, Plaintiff argues that the arbitration agreement is
17 oppressive, a surprise to her, and part of an adhesion contract. See id. at 12. Procedural
18 unconscionability “focus[es] on ‘oppression’ or ‘surprise’ due to unequal bargaining power . . . .”
19 Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 114, (Cal. 2000). Plaintiff
20 frames the relevant difference in bargaining power as the one between herself and Kaiser, arguing
21 that this imbalance precluded her from negotiating any of the terms. See Dkt. No. 54 at 12.
22 However, this framing fails to account for the fact that Plaintiff had powerful entities effectively
23 negotiating on her behalf: the state of California and PHC. See Dkt. No. 55 at 11. Having the
24 contracts negotiated on a system-wide level is a significant benefit of the Medi-Cal system. By
25 negotiating an array of health care plan options for individuals to choose from, Medi-Cal achieves
26 more favorable terms than an individual would be likely to negotiate on his or her own.
27 In Madden v. Kaiser Foundation Hospitals, the Supreme Court of California declined to
1 employer. 17 Cal. 3d 699, 711 (1976). The Court reasoned that the employee “benefitted from
2 representation by a board . . . which exerted its bargaining strength to secure medical protection
3 for employees on more favorable terms than any employee could individually obtain.” Id. The
4 Court distinguished the employer-negotiated health plan options from traditional adhesion
5 contracts, which lack “not only the opportunity to bargain but also any realistic opportunity to
6 look elsewhere for a more favorable contract[.]” Id. Like the plaintiff in Madden, Plaintiff here
7 “enjoyed the opportunity to select from among several medical plans negotiated and offered” by
8 PHC “or to contract individually for medical care.” See id. The typical concerns associated with
9 contracts of adhesion do not apply here.
10 Plaintiff also objects that the arbitration provision was “hidden at a depth of about 80 pages
11 within the Medi-Cal EOC.” Dkt. No. 54 at 12. Once again, Plaintiff’s argument fails to account
12 for the context in which she secured her health plan. Medi-Cal health plans are heavily regulated,
13 and, according to Defendants, the Medi-Cal EOC booklet Plaintiff received was drafted using a
14 template created by the California Department of Health Care Services and reviewed by PHC.
15 Moreover, the Medi-Cal EOC uses clear language and a readable font. It is possible to navigate to
16 the exact page of the arbitration provision by reading the table of contents, identifying the heading
17 “How to Solve Problems,” which appears in bold font, and then finding the subheading “Binding
18 Arbitration.” See Velarde Decl. Exhibit D at 11. The arbitration provision thus was not hidden.
19 Regarding substantive unconscionability, the Court does not find the fee provision as
20 articulated to be unconscionable. Plaintiff argues that she will be required to split the fees and
21 expenses of a neutral arbitrator, see Dkt. No. 54 at 13, but there is a straightforward process that
22 does not require Plaintiff to pay any arbitrator fees. As explained by Defendants, under OIA Rule
23 15, Kaiser will pay all of the neutral arbitrator’s fees and expenses if Plaintiff agrees to a single
24 neutral arbitrator (as opposed to a three-person panel) or waives the right to a party arbitrator. See
25 Dkt. No. 55 at 13. At the hearing on this motion, counsel for Kaiser explained that the vast
26 majority of claimants choose to proceed with one neutral arbitrator paid for by Kaiser. It is
27 therefore within Plaintiff’s control to participate in arbitration without it becoming cost-
1 The Court finds that the arbitration agreement here is not unconscionable.
2 || IV. CONCLUSION
3 The Court GRANTS Defendants’ motion to compel arbitration. The case is STAYED
4 || pending completion of arbitration. The parties are directed to file a joint status report regarding
5 the status of the arbitration proceeding 120 days from the date of this order and every 120 days
6 || thereafter unless otherwise ordered. The parties are also directed to notify the Court within 48
7 || hours of the completion of arbitration. The Clerk is directed to administratively close the case.
8 IT IS SO ORDERED.
9 || Dated: 7/5/2022
10 7 Hapucrrd 2 Md, ts
HAYWOOD S. GILLIAM, JR.
I United States District Judge
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10072024. Public record. Not legal advice.