Victoria v. Superior Court

• Decision Date: 30 December 1985
• Citation: 222 Cal.Rptr. 1,710 P.2d 833,40 Cal.3d 734
• Court: California Supreme Court
• Parties: , 710 P.2d 833 Imelda VICTORIA, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent; KAISER FOUNDATION HOSPITALS et al., Real Parties in Interest. L.A. 32081.

Page 1

222 Cal.Rptr. 1

40 Cal.3d 734, 710 P.2d 833

Imelda VICTORIA, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent KAISER FOUNDATION HOSPITALS et al., Real Parties in Interest.

L.A. 32081.

Supreme Court of California In Bank.

Dec. 30, 1985.

Rehearing Denied March 18, 1986.

Gantz & Forer, Frank Munoz, Emmett J. Gantz and Steven B. Stevens, Beverly Hills, for petitioner.

No appearance for respondent.

Thelen, Marrin, Johnson & Bridges, Curtis A. Cole and Mary R. Barnett, Los Angeles, for real parties in interest.

BIRD, Chief Justice.

Does the arbitration provision in a health service agreement, which covers any claim "arising from rendition or failure to render services," apply to a claim against the health care provider for negligent employment of an orderly accused of sexually assaulting a patient?

I.

Petitioner, Imelda Victoria, was admitted to a hospital owned by real party in interest, Kaiser Foundation Hospitals (hereafter Kaiser), for brain surgery in August of 1984. According to the allegations of petitioner's complaint, she was repeatedly sexually assaulted, raped and sodomized during her recovery from the surgery by real party in interest, Haynes, a hospital orderly.

Petitioner sued both the alleged perpetrator and Kaiser. Her complaint stated two causes of action against Kaiser, one for the negligent infliction of emotional distress and the other for the negligent selection, employment, retention and supervision of the employee who committed the alleged assaults. ¹ Specifically, petitioner contends that Kaiser knew that the employee had sexually assaulted female patients on at least two prior occasions.

Kaiser answered the complaint and moved to stay the action and compel arbitration. Kaiser argued that the allegations of petitioner's complaint fell within the scope of an arbitration clause contained in the Group Medical and Hospital Service Agreement (Agreement) between Kaiser and Southern California Edison Company, the firm through which petitioner became a Kaiser member. ² Respondent superior court granted Kaiser's motion, stayed the action and ordered that the matter proceed to arbitration. This petition followed.

II.

Petitioner seeks a writ of mandate directing the superior court to set aside its order compelling arbitration and to exercise its jurisdiction to hear the case. She argues that her causes of action against Kaiser are outside the scope of the arbitration clause. She has requested expedited review because, she asserts, her life expectancy is short.

This case requires the court to balance the general policy favoring arbitration against ordinary principles of contract, which require that agreements be interpreted to reflect the intent of the parties. Ambiguities in contract language are to be resolved against the drafter.

The arbitration clause in this contract provides that, "Any claim arising from alleged violation of a legal duty incident to this Agreement shall be submitted to binding arbitration if the claim is asserted: (1) by a Member ...[;] (2) On account of death, mental disturbance or bodily injury arising from rendition or failure to render services under this Agreement, irrespective of the legal theory upon which the claim is asserted; (3) For monetary damages exceeding the jurisdictional limit of the Small Claims Court; and (4) Against one or more of the following ...: (a) Health Plan, (b) Hospitals, (c) Medical Group, (d) Any Physician, or (e) Any employee of the foregoing." (Emphasis added.)

"[A]rbitration has become an accepted and favored method of resolving disputes [citations], praised by the courts as an expeditious and economical method of relieving overburdened civil calendars. [Citation.]" (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 706-707, 131 Cal.Rptr. 882, 552 P.2d 1178, see also Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 322, 197 Cal.Rptr. 581, 673 P.2d 251 [hereafter Ericksen].) However, judicial enthusiasm for alternative methods of dispute resolution must not in all contexts override the rules governing the interpretation of contracts.

Certain basic principles of contract interpretation are applicable. First, "the policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate." (Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345, 356, 133 Cal.Rptr. 775, emphasis added; accord Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 535 P.2d 341.) In addition, "[h]owever broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract." (Civ.Code, § 1648, emphasis added.)

Finally, ambiguities in standard form contracts are to be construed against the drafter. (Baker v. Sadick (1984) 162 Cal.App.3d 618, 625, 208 Cal.Rptr. 676; Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 533, 96 Cal.Rptr. 149; Civ.Code, § 1654.) This court must apply these basic principles to determine whether the petitioner's causes of action fall within the scope of the arbitration clause.

Many arbitration provisions between health care providers and patients are governed by Code of Civil Procedure section 1295. Enacted as a part of the Medical Injury Compensation Reform Act (MICRA), section 1295 provides that any contract for medical services which contains an arbitration provision must include certain specified language alerting the patient to the scope and nature of the arbitration. ³ Certain "health care service plans" are exempted from these requirements if they comply with alternative statutory notice requirements. (Code Civ.Proc., § 1295, subd. (f).)

Kaiser is an exempt health care service plan. As such, it is not required to utilize the specific language of Code of Civil Procedure section 1295. However, it is required to include in its disclosure forms a statement that the plan utilizes arbitration to settle disputes. (Health & Saf.Code, § 1363, subd. (a)(10).) The plan contracts must also "set forth the type of disputes subject to arbitration, the process to be utilized, and how it is to be initiated." (Health & Saf.Code, § 1373, subd. (i), emphasis added.)

Kaiser claims it intended to encompass "everything it does" within the scope of the arbitration clause. It argues that both of petitioner's causes of action fall within the scope of the arbitration clause and that the parties could not have drafted a clause which more clearly expressed the intent to include such claims. ⁴

Petitioner contends that her causes of action against Kaiser are outside the scope of the arbitration clause. She claims that the boilerplate language drafted by Kaiser is not specific enough to satisfy the statutory requirement. Essentially, she argues that a clause purporting to waive the patient's constitutional right to trial by jury, and her opportunity for appeal and judicial review, should be much more explicit if it is to be given effect.

Specifically, petitioner contends that the language of the arbitration clause calls for a two-step analysis. First, to be covered by the clause, a claim must arise from "a legal duty incident to" the Agreement. Second, it must arise from "the rendition or failure to render services" under the Agreement. Petitioner argues that her claims do not meet this second requirement.

The term "services" in the arbitration clause must be defined by looking to the "Definitions" in section 1, subparts K and L of the Agreement, according to petitioner. Subpart K defines "Medical Services" and subpart L defines "Hospital Services."

The definitions to which petitioner refers are as follows: "K. Medical Services: Except as expressly limited or excluded by this Agreement, those medically necessary professional services of physicians and surgeons, other health professionals and paramedical personnel, including medical, diagnostic, therapeutic and preventative services which are (1) generally and customarily provided in Southern California and (2) performed, prescribed, or directed by the Attending Physician.

"L. Hospital Services: Except as expressly limited or excluded by this Agreement, those medically necessary services for registered bed patients which are (1) generally and customarily provided by acute general hospitals in Southern California and (2) prescribed, directed or authorized by the Attending Physician."

Throughout the Agreement, the term "services" is used in various contexts from which it is clear that the term refers primarily to Medical and Hospital Services. ⁵ It is reasonable to assume that the term "services" in the arbitration clause refers to Medical and Hospital Services as defined and used elsewhere in the Agreement. (See Civ.Code, § 1641 ["The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other"].)

Petitioner contends that her claims against Kaiser do not involve rendition of or failure to render Medical or Hospital Services, as defined in subparts K and L, and are, therefore, not covered by the arbitration clause.

Section 11 of the Agreement gives further insight into the definition of "Hospital Services." It provides in part, "When prescribed, the following Hospital Services are provided without charge: room and board; general nursing care; services and supplies; use of operating room; private room; intensive care room and related hospital services; special diet; special duty nursing; medications ...; and medical supplies." Kaiser argues that the services provided by an orderly are included in this definition of "Hospital Services."

Kaiser stresses that plaintiff's primary claim against the hospital is for the negligent employment of the orderly. Kaiser's employment of the orderly, it argues, arose out of its duty to provide Hospital Services. The only means by which the...