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Engalla v. Permanente Medical Group, Inc.

Supreme Court of California

June 30, 1997, Decided

No. S048811.

Case Summary

Procedural Posture

Plaintiff family members and estate representatives appealed an order from the Court of Appeals of California, First Appellate District, Division Two (California), reversing the denial of defendant health maintenance organization's petition to compel arbitration in an underlying medical malpractice action. Plaintiffs claimed that defendant's dilatory actions in delaying arbitration constituted grounds for denial of defendant's petition.

Overview

An employee brought a medical malpractice suit. The suit was submitted to arbitration, pursuant to his medical plan. The plan was administered by defendants, health maintenance organizations (HMOs) and hospital. Defendant HMO brought a petition to compel arbitration. Plaintiffs claimed that defendant HMO's self-administered arbitration system was biased, and that defendant HMO engaged in a course of dilatory conduct to postpone the employee's arbitration hearing until after his death. The trial court found for plaintiffs. The appellate court reversed. Plaintiffs appealed. The reviewing court reversed and remanded, finding that there was evidence to support the trial court's initial findings that defendant HMO engaged in fraudulent conduct justifying a denial of its petition to compel arbitration. The court did not find that defendant HMO's arbitration program was unconscionable upon its face where it did not lack minimum levels of integrity. However, because there were questions of fact regarding whether defendant HMO's conduct was actually fraudulent and whether defendant HMO's actions constituted a waiver of its right to compel arbitration, the case was reversed.

Outcome

The reviewing court reversed and remanded the appellate court's judgment compelling plaintiffs, family members and estate representatives, to submit to arbitration with defendant health maintenance organization (HMO). Because material fact questions existed as to whether defendant HMO's conduct in delaying arbitration was actually fraudulent and constituted a waiver of its right to compel arbitration, reversal was required.

LexisNexis® Headnotes

 

 

Business & Corporate Compliance > ... > Arbitration > Federal Arbitration Act > Arbitration Agreements

International Trade Law > Dispute Resolution > International Commercial Arbitration > Arbitration

Civil Procedure > Pretrial Matters > Alternative Dispute Resolution > General Overview

Civil Procedure > ... > Alternative Dispute Resolution > Arbitration > General Overview

Civil Procedure > ... > Arbitration > Federal Arbitration Act > General Overview

Business & Corporate Compliance > ... > Contracts Law > Contract Conditions & Provisions > Arbitration Clauses

HN1  Federal Arbitration Act, Arbitration Agreements

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general.

 

Business & Corporate Compliance > ... > Contracts Law > Contract Conditions & Provisions > Arbitration Clauses

Civil Procedure > ... > Alternative Dispute Resolution > Arbitration > General Overview

Evidence > Burdens of Proof > General Overview

Civil Procedure > Pretrial Matters > Alternative Dispute Resolution > General Overview

Business & Corporate Compliance > ... > Pretrial Matters > Alternative Dispute Resolution > Mandatory ADR

Business & Corporate Compliance > ... > Pretrial Matters > Alternative Dispute Resolution > Validity of ADR Methods

Civil Procedure > Trials > Jury Trials > Province of Court & Jury

Labor & Employment Law > Collective Bargaining & Labor Relations > Labor Arbitration > Enforcement

HN2  Contract Conditions & Provisions, Arbitration Clauses

Cal. Code Civ. Proc. §§ 1281.2 and 1290.2 create a summary proceeding for resolving petitions to compel arbitration. The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination. No jury trial is available for a petition to compel arbitration.

 

Civil Procedure > Appeals > Standards of Review > De Novo Review

Civil Procedure > Judgments > Summary Judgment > General Overview

HN3  Standards of Review, De Novo Review

In a quasi-summary-judgment motion, the appellate court undertakes an independent review of the evidence presented to the trial court to determine whether any triable issues of fact were presented.

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15 Cal. 4th 951 ; 938 P.2d 903 ; 64 Cal. Rptr. 2d 843 ; 1997 Cal. LEXIS 2971 ; 97 Daily Journal DAR 8384; 97 Cal. Daily Op. Service 5206; 21 Employee Benefits Cas. (BNA) 1407

NIDA ENGALLA et al., Plaintiffs and Respondents, v. PERMANENTE MEDICAL GROUP, INC., et al., Defendants and Appellants. PERMANENTE MEDICAL GROUP, INC., et al., Petitioners, v. THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; NIDA ENGALLA et al., Real Parties in Interest. WILLIS F. McCOMAS et al., Petitioners, v. THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; NIDA ENGALLA et al., Real Parties in Interest.

Subsequent History:  [1]  As Modified July 30, 1997.

Prior History: Court of Appeals of California, First Appellate District, Division Two. A062642. A063427. A063547. Superior Court of Alameda County, Super. Ct. No. H154976-4. Joanne C. Parrilli, Judge.

Disposition: For the foregoing reasons, the judgment of the Court of Appeal is reversed with directions to remand the case for proceedings consistent with this opinion.