Baglione v. Health Net of California, Inc. (Nov. 27, 2023, B319659) __ Cal.5th __ [2023 WL 8446102]
Salvatore Baglione obtained his medical insurance through his employer, the County of Santa Clara, which contracted with insurance provider Health Net. Baglione signed an enrollment form for Health Net, as well as a group contract between the County and Health Net. A few months later, Baglione was diagnosed with a chronic condition requiring a monthly injectable medication. While the drug qualified for coverage under Baglione’s health plan, Health Net repeatedly refused to authorize the medication. Baglione sued, alleging breach of contract and bad faith causes of action. Health Net moved to compel arbitration. The trial court denied Health Net’s motion, ruling that the arbitration provision was unenforceable because the group contract failed to comply with the disclosure requirement in Health and Safety Code section 1363.1, subdivision (d). Health Net appealed.
The Court of Appeal affirmed, holding the arbitration provision unenforceable because neither the enrollment form nor the group contract complied with section 1363.1’s mandatory clarity-of-disclosure requirements. The enrollment form was insufficiently clear because it included references to additional documents and inapplicable laws; it also failed to specify which disputes were subject to arbitration. Additionally, the references to additional documents and inapplicable laws were located in between the arbitration disclosure and the signature line, which violated another section 1363.1 requirement, and the group contract violated section 1363.1 for the same reason. Health Net argued that Baglione lacked standing to enforce section 1363.1, subdivision (d), reasoning that the County alone had standing to contest enforceability of the arbitration provision in the group contract. But the court rejected Health Net’s argument on standing, as well as its contention that noncompliance with section 1363.1 merely rendered the arbitration provisions voidable rather than void. Finally, the court held that the Federal Arbitration Act did not require reversal of the trial court’s order.
