Simon v. Blue Cross

• Decision Date: 01 November 2019
• Docket Number: B292118
• Court: California Court of Appeals Court of Appeals
• Parties: PAUL SIMON et al., Plaintiffs and Appellants, v. BLUE CROSS OF CALIFORNIA, Defendant and Respondent.

PAUL SIMON et al., Plaintiffs and Appellants, v. BLUE CROSS OF CALIFORNIA, Defendant and Respondent.

B292118

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE

November 1, 2019

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC639205)

APPEAL from an order of the Superior Court of Los Angeles County, Lisa Hart Cole, Judge. Affirmed.

Consumer Watchdog, Jerry Flanagan and Benjamin Powell; Shernoff Bidart Echeverria, Michael J. Bidart and Travis M. Corby, for Plaintiffs and Appellants.

Reed Smith, Kim M. Watterson, Kurt C. Peterson, Kenneth N. Smersfelt, Natasha Sung, and Todd S. Kim, for Defendant and Respondent.

In 2016, defendant Blue Cross of California, doing business as Anthem Blue Cross (Anthem), offered preferred provider organization (PPO) health insurance coverage both via "Covered California," California's health insurance exchange, and independently on its own. "On-exchange" consumers enrolled through the Covered California website or phone enrollment process. "Off-exchange" consumers enrolled by signing Anthem's hard copy enrollment application. The on-exchange and off-exchange plaintiffs in the lawsuit giving rise to this appeal brought a putative class action alleging Anthem illegally converted their PPO plans to exclusive provider organization (EPO) plans. The trial court granted Anthem's petition to compel arbitration, which killed the class-based claims. We consider (1) whether Health and Safety Code requirements for arbitration disclosures in health insurance contracts apply to the Covered California insurance enrollment process, and (2) whether the arbitration provision in Anthem's off-exchange enrollment application satisfies Health and Safety Code standards.

I. BACKGROUND

A. Plaintiffs' 2016 Enrollment in Anthem PPO Plans

On-exchange plaintiffs Leah Boyer (as guardian ad litem for her children), Lee Fintel, Lynelle Goodreau, and Rebecca Porrino enrolled through Covered California in Anthem PPO plans for 2016. At the end of the enrollment process, just before electronically endorsing the enrollment application, the on-exchange plaintiffs or their agents who initiated the Covered California enrollment process were presented with a "Binding Arbitration Agreement" disclosure. The language used in the disclosure was set by Title 10, California Code of Regulations,section 6470—a regulation promulgated in connection with California's establishment of Covered California. The disclosure reads:

"I understand that every participating health plan has its own rules for resolving disputes or claims, including, but not limited to, any claim asserted by me, my enrolled dependents, heirs, or authorized representatives against a health plan, any contracted health care providers, administrators, or other associated parties, about the membership in the health plan, the coverage for, or the delivery of, services or items, medical or hospital malpractice (a claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered), or premises liability. I understand that, if I select a health plan that requires binding arbitration to resolve disputes, I accept, and agree to, the use of binding arbitration to resolve disputes or claims (except for Small Claims Court cases and claims that cannot be subject to binding arbitration under governing law) and give up my right to a jury trial and cannot have the dispute decided in court, except as applicable law provides for judicial review of arbitration proceedings. I understand that the full arbitration provision for each participating health plan, if they have one, is in the health plan's coverage document, which is available online at CoveredCA.com for my review, or, I can call Covered California at 1-800-300-1506 (TTY: 1-888-889-4500) for more information."

(Cal. Code Regs., tit. 10, § 6470, subd. (f)(2)(A).) Before submitting the online application, plaintiffs (or their agents) were required to check a box to signify they had "Read And Agree[d] To The Binding Arbitration Agreement."

Off-exchange plaintiffs Paul Simon (Simon), Leonardo Costello (Costello), Melissa Wallace (Wallace), and Bonnie Shulman (Shulman) enrolled in Anthem PPO plans in 2016. They signed and submitted, either through a broker or directly to Anthem, a hard copy individual enrollment application drafted by Anthem.

The individual enrollment application includes an arbitration provision:

"REQUIREMENT FOR BINDING ARBITRATION

YOU AND ANTHEM BLUE CROSS AGREE TO BINDING ARBITRATION TO SETTLE ALL DISPUTES INCLUDING BUT NOT LIMITED TO DISPUTES RELATING TO THE DELIVERY OF SERVICE UNDER THE PLAN/POLICY AND/OR ANY OTHER ISSUES RELATED TO THE PLAN/POLICY AND CLAIMS OF MEDICAL MALPRACTICE, IF THE AMOUNT IN

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DISPUTE EXCEEDS THE JURISDICTIONAL LIMIT OF SMALL CLAIMS COURT AND THE DISPUTE CAN BE SUBMITTED TO BINDING ARBITRATION UNDER APPLICABLE FEDERAL AND STATE LAW, INCLUDING BUT NOT LIMITED TO, THE PATIENT PROTECTION AND AFFORDABLE CARE ACT. IT IS UNDERSTOOD THAT ANY DISPUTE INCLUDING DISPUTES RELATING TO THE DELIVERY OF SERVICES UNDER THE PLAN/POLICY AND/OR ANY OTHER ISSUES RELATED TO THE PLAN/POLICY, INCLUDING ANY DISPUTE AS TO MEDICAL MALPRACTICE, THAT IS AS TO WHETHER ANY MEDICAL SERVICES RENDERED UNDER THIS CONTRACT WERE UNNECESSARY OR UNAUTHORIZED OR WERE IMPROPERLY, NEGLIGENTLY OR INCOMPETENTLY RENDERED, WILL BE DETERMINED BY SUBMISSION TO ARBITRATION AS PERMITTED AND PROVIDED BY FEDERAL AND CALIFORNIA LAW, INCLUDING BUT NOT LIMITED TO, THE PATIENT PROTECTION AND AFFORDABLE CARE ACT AND NOT BY A LAWSUIT OR RESORT TO COURT PROCESS EXCEPT AS CALIFORNIA LAW PROVIDES FOR JUDICIAL REVIEW OF ARBITRATION PROCEEDINGS. BOTH PARTIES TO THIS CONTRACT, BY ENTERING INTO IT, ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE ANY SUCH DISPUTE DECIDED IN A COURT OF LAW BEFORE A JURY, AND

INSTEAD ARE ACCEPTING THE USE OF ARBITRATION. YOU, ANTHEM BLUE CROSS AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. THIS MEANS THAT YOU AND ANTHEM BLUE CROSS ARE WAIVING THE RIGHT TO A JURY TRIAL AND/OR TO PARTICIPATE IN A CLASS ACTION FOR BOTH MEDICAL MALPRACTICE CLAIMS, AND ANY OTHER DISPUTES INCLUDING DISPUTES RELATING TO THE DELIVERY OF SERVICE UNDER THE PLAN/POLICY OR ANY OTHER ISSUES RELATED TO THE PLAN/POLICY."

Immediately following the disclosure as quoted above is a signature line for the application. The arbitration provision is as formatted in this opinion, i.e., it is printed in all capital letters and set off by a heading in bold typeface.

B. Plaintiffs' Lawsuit and Anthem's Motion to Compel Arbitration

Near the end of 2016, Anthem converted plaintiffs' PPO plans to EPO plans, which eliminated coverage for out-of-network care. Simon sued, alleging Anthem was required to continue to provide out-of-network coverage because the company discontinued the PPO plans without sufficient notice. Simon further alleged Anthem misled consumers by characterizingautomatic enrollment in an EPO plan as a "'renewal'" of their existing PPO plans.

Soon after he filed his complaint, Simon sought a temporary restraining order to enjoin Anthem from discontinuing affected PPO plans. The trial court denied the application, reasoning Simon lacked standing to seek injunctive relief because he was "not a victim of any alleged Anthem deception."

Simon, then joined by the other on- and off-exchange plaintiffs in this appeal, filed a first amended class action complaint in February 2017. The amended complaint elaborated on the ways in which Anthem allegedly misled and harmed consumers who enrolled in PPO plans in 2016 by converting their coverage to EPO plans in 2017.

Anthem responded by filing a petition to compel arbitration, enforce a class action waiver, and stay the proceedings pending resolution of the arbitration. Anthem contended both the on- and off-exchange plaintiffs agreed to individual arbitration upon enrollment.

Plaintiffs opposed Anthem's request to compel arbitration, chiefly relying on Health and Safety Code section 1363.1 (Section 1363.1) to argue the on-exchange and off-exchange arbitration disclosures were defective. That statute, enacted in 1994 and not amended since, provides "[a]ny health care service plan that includes terms that require binding arbitration to settle disputes . . . shall include . . . a disclosure" that "shall clearly state whether the plan uses binding arbitration to settle disputes, including specifically whether the plan uses binding arbitration to settle claims of medical malpractice"; that "shall appear as a separate article in the agreement . . . and shall be prominently displayed on the enrollment form signed by each subscriber orenrollee"; that "shall clearly state [in the wording provided by Code of Civil Procedure section 1295] whether the subscriber or enrollee is waiving his or her right to a jury trial"; and that "shall be displayed immediately before the signature line . . . provided for the individual enrolling in the health care service plan." (§ 1363.1.) Plaintiffs also argued, as to the on-exchange insurance enrollees, that Anthem had not introduced sufficient evidence to show they actually electronically signed the online enrollment agreement at all, and plaintiffs further contended, in the alternative, that even if they were bound to arbitrate disputes concerning their 2016 coverage, they were not bound to arbitrate claims concerning the marketing of their 2017 coverage.

The trial court granted Anthem's petition (with the caveat that if public injunctive...