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Kaiser Foundation Hospitals Inc. v. Superior Court of Los Angeles County

9/15/1993

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION TWO.


No. B073890


1993.CA.42434 ; 19 Cal. App. 4th 513; 23 Cal. Rptr. 2d 431


Decided: September 15, 1993.


KAISER FOUNDATION HOSPITALS, INC., ET AL., PETITIONERS,
v.
THE SUPERIOR COURT OF LOS ANGELES COUNTY, RESPONDENT; LENA COBURN ET AL., REAL PARTIES IN INTEREST


Superior Court of Los Angeles County, No. BS020369, William W. Huss, Judge.


Quinn, Kully & Morrow, Margaret M. Morrow and Lawrence A. Cox for Petitioners.


No appearance for Respondent.


Michael P. Dacquisto, Robie & Matthai and Pamela E. Dunn for Real Parties in Interest.


Opinion by Gates, J., with Boren, P. J., and Fukuto, J., Concurring.


Gates


Petitioners, Kaiser Foundation Hospitals, Kaiser Foundation Health Plan, Inc., and Southern California Permanente Medical Group (Kaiser), seek a writ of mandate directing the superior court to set aside its order of January 20, 1993, granting real parties' motion to vacate an arbitration award.


Real parties' wrongful death action against Kaiser was submitted to binding arbitration pursuant to the provisions of Kaiser's medical and hospital service agreement with the decedent. That agreement required that each party select one arbitrator, and that these two would then choose a neutral arbitrator. Kaiser's appointed arbitrator suggested, and the Coburns agreed, that retired Judge Ralph Drummond be appointed as the neutral arbitrator. Drummond did not communicate to real parties his past relations with Kaiser. The subsequently held proceedings resulted in an award in favor of Kaiser.


Thereafter, upon the filing of Neaman v. Kaiser Foundation Hospital (1992) 9 Cal. App. 4th 1170 [11 Cal. Rptr. 2d 879], real parties discovered that, in truth, Drummond had served as Kaiser's party arbitrator on a number of prior occasions. Therefore, they moved the trial court to vacate the instant award, as the appellate court had done in Neaman, when it concluded that Drummond's "relationship with Kaiser was a substantial business relationship," which "should have been fully disclosed to the Neamans." ( at p. 1177.)


In opposing this motion, Kaiser necessarily acknowledged Drummond's failure to disclose his past services for Kaiser. It sought instead to rely upon a letter its counsel had sent real parties' counsel approxmiately two years after Drummond had been selected as the neutral arbitrator. When this effort proved unsuccessful at the trial level, it was continued here.


In the hope of converting the routine factual hearing conducted below into a "cause" warranting relief by extraordinary writ, Kaiser elected to phrase its contentions in this petition, and in its petition for review in our Supreme Court, in the following manner:


"[I.] The trial court abused its discretion in vacating the arbitration award in favor of Kaiser. A. The ability to waive objection to an arbitrator's 'possible bias' has been universally recognized by courts seeking to protect the finality of arbitration proceedings. B. No absolute rule mandates vacation of an arbitration award rendered by a neutral who neglected to disclose a prior business relationship with a party. 1. A 'per se' rule is not consistent with existing case law. 2. A 'per se' rule would not further appropriate policy considerations.

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