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Warren-Guthrie v. Health Net11/6/2000
APPEAL from the Superior Court of Riverside County. Dallas Holmes, Judge.
Reversed with directions.
Defendant Health Net appeals from the denial of its motion to compel arbitration of a coverage dispute between plaintiff Carlo A. Warren-Guthrie and Health Net. We conclude the trial court erred in denying Health Net's motion to compel arbitration under Code of Civil Procedure section 1281.2, subdivision (c) because, under the circumstances of this case, section 1281.2 (c) is preempted by the Federal Arbitration Act (FAA).
Furthermore, the choice of law provision in the Health Net plan expressly limits application of California law to the manner in which the arbitration is to be conducted and does not apply to the determination as to whether arbitration is required. We reverse with directions to grant Health Net's motion to compel arbitration.
1. Factual and Procedural Background
In July 1997, plaintiff was allegedly bitten on her leg by a spider. Over the course of several years she received medical treatment for the serious wound. Plaintiff claims she did not receive timely appropriate treatment and coverage, and this resulted in her condition worsening. During the period of her treatment, plaintiff was insured under Health Net's plan. Health Net refused to cover certain recommended treatment. As a consequence, plaintiff filed a civil action in August 1999 against Health Net and various entities which allegedly provided benefit determinations and or utilization review services to Health Net during plaintiff's treatment. Plaintiff's complaint alleged the following theories of recovery: (1) breach of the duty of good faith and fair dealing, (2) breach of contract, (3) negligence, (4) fraud, and (5) injunctive relief.
Health Net responded to plaintiff's lawsuit by filing a motion to compel binding arbitration, in which Health Net asserted that the Health Net plan contained an arbitration clause requiring binding arbitration of the claims alleged against Health Net in plaintiff's civil action. In opposition, plaintiff argued that the court should deny arbitration because it would risk inconsistent rulings between those of the arbitrated claims against Health Net and the remaining claims in the civil action against the other defendants. The trial court agreed, and accordingly denied Health Net's motion to compel arbitration of plaintiff's claims against Health Net.
2. Section 1281.2 (c)
The trial court denied Health Net's motion to compel arbitration on the ground that, under section 1281.2 (c), it had the discretion to disregard the Health Net plan's arbitration clause and order joinder of the arbitration claim and civil action so as to avoid potential inconsistent rulings. The trial court relied on Prudential Property & Casualty Ins. Co. v. Superior Court (1995) 36 Cal.App.4th 275 and Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, in which the California Court of Appeal and the California Supreme Court ruled that, despite the existence of an uninsured motorist provision requiring binding arbitration, under section 1281.2, the trial court had the authority to stay arbitration or order consolidation of the arbitration and civil action to avoid the possibility of conflicting rulings.
Section 1281.2 (c) "generally authorizes a trial court to consolidate, that is, to `order intervention or joinder of all parties in a single action or special proceeding . . . as to all or only certain issues' (id., foll. subd. (c)), if it determines that a `party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of th
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