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Berman v. Health Net5/26/2000
CERTIFIED FOR PUBLICATION
APPEAL from an order of the Superior Court of Los Angeles County. J. Stephen Czuleger, Judge. Affirmed.
Defendants and appellants Health Net and Health Systems International, Inc. (Health Net) appeal from an order of the trial court denying their petition to compel arbitration of claims by plaintiff and respondent Peter Berman in connection with Health Net's handling of health care benefits for his late wife Renee. Health Net argues the discovery it conducted prior to filing its motion to compel arbitration was not enough, in the absence of any other factor, to establish prejudice to the Bermans, and thus was insufficient to support a finding it waived its right to compel arbitration. We disagree and find substantial evidence supports the trial court's implied finding of prejudice, and its consequent finding of waiver by Health Net. We therefore affirm the judgment based on Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205.
FACTUAL AND PROCEDURAL BACKGROUND
Renee Berman, now deceased, was diagnosed with colon cancer in June 1992. She had surgery and chemotherapy in July, receiving medical care under her husband Peter's insurance, obtained through his employment as a deputy district attorney in Los Angeles County. In the fall of 1992, the Bermans' health insurance coverage was changed when Los Angeles County changed the companies with which it contracted to provide health care for its employees. Peter chose a medical plan offered through Health Net, and signed an enrollment form which included his agreement, by enrolling in a medical plan, "to have any dispute decided by arbitration in lieu of a jury or court trial." (Emphasis in original.) The plan document contained a clause requiring arbitration of "any dispute or controversy concerning the construction, interpretation, performance or breach of this Evidence of Coverage," except for claims of medical malpractice.
Renee's cancer spread, and in 1996 the Bermans filed their FAC against Health Net, Associated Physicians of St. John's (APSJ), and a number of individual doctors. The First Amended Complaint alleged many difficulties getting Health Net to approve appropriate treatments, and asserted causes of action against Health Net for breach of the duty of good faith and fair dealing, breach of contract, breach of fiduciary duty, negligent and intentional infliction of emotional distress, and unfair competition under section 17200 of the Business and Professions Code (in the last case, seeking equitable and injunctive relief on behalf of the general public).
Health Net filed a demurrer to the complaint on May 3, 1996. Beginning on May 8, 1996, Health Net served extensive discovery requests on the Bermans, as well as third-party subpoenas for Renee's medical records. On May 9, 1996 and May 13, 1996, respectively, counsel for Health Net and the Bermans signed a stipulation confirming a telephone conversation between counsel, whereby Health Net "shall not be accused of having waived or be deemed to have waived any right to seek an order compelling binding arbitration . . ." by reason of "the filing of any motion or pleading challenging the sufficiency" of the complaint, and providing they would have thirty days after the date on which their answer was due to seek an order compelling arbitration. The Bermans served discovery responses in July 1996, and also served Health Net with their own discovery requests.
After two demurrers and subsequent amendments to the complaint, Health Net answered the Third Amended Complaint on October 22, 1996. On November 12, 1996, Health Net filed a petition to compel arbitration. The petition was ultimately den
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