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Coast Plaza Doctors Hospital v. Blue Cross of California8/10/2000
APPEAL from an order of the Superior Court of Los Angeles County, John Ouderkirk, Judge and Morris B. Jones, Judge. Reversed and remanded with directions.
In this case, the appellant Blue Cross of California ("Blue Cross") attacks the trial court's denial of its motion to compel the arbitration of a dispute with the respondent Coast Plaza Doctors Hospital ("Coast Plaza"). After Coast Plaza filed an action against Blue Cross on numerous tort theories, all related to the reimbursement rates paid by Blue Cross pursuant to a service agreement with Coast Plaza, Blue Cross filed a petition to compel arbitration of Coast Plaza's claims. The service agreement contained an arbitration clause, but Coast Plaza argued that it did not apply because (1) Coast Plaza had terminated the agreement two days before filing suit, (2) its action sought injunctive relief which, as a matter of law, is not arbitrable and (3) the arbitration provision was unconscionable and therefore unenforceable. The trial court denied Blue Cross' motion.
After a review of the record, we are persuaded that the arbitration clause does apply to this dispute and is enforceable. Coast Plaza's claim for injunctive relief can be severed and stayed pending the conclusion of the arbitration which may have the effect of resolving all issues between the parties. We therefore will reverse the order denying Blue Cross' petition, issue an order staying all further proceedings in the trial court, including all discovery, pending completion of the arbitration, and remand for appropriate proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
Coast Plaza is an acute care hospital operating in Norwalk, California. Blue Cross is a managed health care services provider. On January 1, 1996, Coast Plaza and Blue Cross entered into a Comprehensive Contracting Service Agreement ("Service Agreement") under which Blue Cross agreed to reimburse Coast Plaza at set rates (hereinafter, the "Reimbursement Rates") for specified health care services supplied by Coast Plaza to patient members of Blue Cross' health care plans. The Service Agreement was for an initial fixed term of two years, but was terminable thereafter upon 180 days written notice by either party. The Service Agreement also had a very broad arbitration clause.
For several months beginning in the Fall of 1998 and ending in January 1999 Coast Plaza sought to renegotiate Blue Cross' Reimbursement Rates. Coast Plaza claimed that it needed an increase in such rates if it were going to continue serving patients who were Blue Cross members; at the rates specified in the Service Agreement Coast Plaza lost money with respect to Blue Cross patients. When Blue Cross refused to negotiate satisfactorily higher Reimbursement Rates, Coast Plaza, in December of 1998, "informed" Blue Cross that it was terminating the Service Agreement, effective February 28, 1999.
Two days later, on March 2, 1999, Coast Plaza filed the instant action and alleged causes of action for (1) unfair trade practices in violation of Business and Professions Code, section 17020, et seq., (2) unfair trade practices based on acts of intimidation, (3) intentional, and (4) negligent interference with prospective economic advantage and (5) unfair business practices in violation of Business and Professions Code, section 17200.
The basic charging allegations upon which each of these causes of action is based are that Blue Cross' reimbursement rates, as specified in the Service Agreement, are too low to allow Coast Plaza to recover its costs, much less make a profit. When Coast Plaza sought in, good faith, to renegotiate these rates Blue Cross unreasonably refused to consider or agree
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