BILL ANALYSIS Ó
SB 1065
Page 1
Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
SB
1065 (Monning) - As Amended March 28, 2016
SENATE VOTE: 26-9
SUBJECT: PETITIONS TO COMPEL ARBITRATION: APPEALS
KEY ISSUE: IN ORDER TO ALLOW VICTIMs OF ELDER ABUSE TO
VINDICATE tHEiR RIGHTS IN COURT, SHOULD the ONE-SIDED STATUTORY
RIGHT TO appeal AN INTERLOCTORY COURT ORDER, DENYING A PETITION
TO COMPEL ARBITRATION, BE LIMITED IN CASES WHERE THERE is a
CLAIM OF ELDER ABUSE AND WHERE THE ELDER HAS BEEN GRANTED A
trial PREFERENCE BECAUSE of FAILING health?
SYNOPSIS
According to the author, when there is an allegation of elder
abuse in a nursing home and the elder abuse victim is granted a
speedy trial preference, it is routine for a defendant nursing
home to file a motion to compel arbitration as a way to avoid
jury trial or to stall litigation proceedings. Because appeals
take anywhere from one to two years, the victim of elder abuse
may very likely die while awaiting for the court of appeal to
render a decision, which in most cases, will be to uphold the
trial court's decision and send the case back to trial. When a
victim of elder abuse passes away, the defendant's damages are
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reduced. The elder's surviving family members do not have the
right to collect damages under EADACPA. Nor, obviously, does
the victim. Under existing law, the ability to appeal an
interlocutory order relating to arbitration is only available
for orders denying a petition to compel, but not available for
orders granting appeal - which seems particularly unfair if the
appeal right is being used by a defendant as a litigation tactic
to reduce a defendant's damages.
This narrow bill prohibits a party from appealing an
interlocutory court order denying a petition to compel
arbitration in a case involving a claim under the Elder and
Dependent Adult Civil Protection Act where the claimant has been
granted a trial preference because of poor or failing health.
The bill is sponsored by California Advocates for Nursing Home
Reform, California Alliance for Retired Americans, Congress of
California Seniors, Consumer Attorneys of California, and is
supported by SEIU California.
The coalition of opponents, led by California Association of
Health Facilities, raises several arguments against this bill.
The opponents of the bill raises a series of arguments,
contending that this bill frustrates arbitration, California's
Medical Injury Compensation Reform Act (MICRA), and will
increase the cost of insurance premiums for doctors, hospitals
and nursing homes. The other opponents include the California
Assisted Living Association, California Association of Physician
Groups, California Dental Association, California Hospital
Association, California Medical Association, Californians Allied
for Patient Protection, Civil Justice Association of California,
LeadingAge California, and The Doctors Company.
SUMMARY: Prohibits an opposing party from appealing an
interlocutory order that denies the validity of an arbitration
clause when a party has filed certain elder abuse claims and has
been granted expedited trial preference. Specifically, this
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bill provides that if a party has filed a claim pursuant to the
Elder and Dependent Adult Civil Protection Act and has been
granted a trial preference, an opposing party may not appeal an
order dismissing or denying a petition to compel arbitration.
EXISTING LAW:
1)Provides that an appeal may be taken from a judgment except an
interlocutory judgment unless provided otherwise. (Code of
Civil Procedure Section 904.1 (a)(1). Unless otherwise
stated, all further statutory references are to the Code of
Civil Procedure.)
2)Provides that when a court denies a petition to compel
arbitration, the aggrieved party has the right to immediately
appeal the order denying the petition. (Section 1294.)
3)Provides that when a court grants a petition to compel
arbitration, the aggrieved party does not have the right to
immediately appeal the order granting the petition. (Ibid.)
4)Provides that an aggrieved party may appeal from the
following:
a) An order dismissing or denying a petition to compel
arbitration.
b) An order dismissing a petition to confirm, correct or
vacate an award.
c) An order vacating an award unless a rehearing in
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arbitration is ordered.
d) A judgment entered pursuant to this title.
e) A special order after final judgment. (Ibid.)
5)Provides that a party seeking review of an order either
denying or granting a petition to compel arbitration may file
a writ of mandate with the court of appeal. (Section 1085.)
6)Establishes the California Arbitration Act which provides that
agreements to arbitrate shall be valid, irrevocable, and
enforceable, except such grounds as exist at law or in equity
for the revocation of any contract. (Section 1280 et seq.)
7)Similarly establishes the Federal Arbitration Act (FAA) which
provides that agreements to arbitrate shall be valid,
irrevocable, and enforceable, except such grounds as exist at
law or in equity for the revocation of any contract. (9
U.S.C. Section 1 et seq.)
8)Provides on petition of a party to an arbitration agreement
alleging the existence of a written agreement to arbitrate a
controversy and that a party thereto refuses to arbitrate such
controversy, the court shall order the petitioner and the
respondent to arbitrate the controversy if it determines that
an agreement to arbitrate the controversy exists, unless it
determines that:
a) The right to compel arbitration has been waived by the
petitioner;
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b) Grounds exist for the revocation of the agreement; or
c) A party to the arbitration agreement is also a party to
a pending court action or special proceeding with a third
party, arising out of the same transaction or series of
related transactions and there is a possibility of
conflicting rulings on common issue of law or fact.
(Section 1281.2.)
9)Provides that specified civil parties may petition a court to
grant a trial preference, which upon granting, requires the
court to set the matter for trial not more than 120 days from
that date from the granting of the motion. (Section 36 et
seq.)
10)Provides that in a hearing and decision in the Court of
Appeal, a party seeking calendar preference must promptly
serve and file a motion for preference in the reviewing court.
"Calendar preference" means an expedited appeal schedule,
which may include expedited briefing and preference in setting
the date of oral argument. (Rule of Court 8.240.)
11)Establishes the Elder Abuse and Dependent Adult Civil
Protection Act (EADACPA), which provides civil protections and
remedies for victims of elder and dependent adult abuse and
neglect. (Welfare and Institutions Code Section 15600 et
seq.)
12)Provides that in any action for injury against a health care
provider based on professional negligence, the injured
plaintiff shall be entitled to recover noneconomic losses to
compensate for pain, suffering, inconvenience, physical
impairment, disfigurement and other nonpecuniary damage.
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Provides that in no action shall the amount of damages for
noneconomic losses exceed two hundred fifty thousand dollars.
(Civil Code Section 3333.2.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: Justice Brennan once said that, "courts are the
central dispute-setting institutions of our society. They are
bound to do equal justice under the law, to rich and poor
alike." It comes as no surprise then that the phrase, "Equal
Justice Under Law," is engraved above the entrance to our
nation's highest court. And so it seems, we put a great deal of
faith in our courts - but would we expect any less? We
anticipate our courts to apply the law in a fair, neutral, and
open manner. We hold judges to high standards, and ask that
they avoid even the appearance of impropriety. We count on our
judiciary to advance the law, issue orders, and render written
opinions. And yet, we acknowledge that our system isn't perfect
and that despite their best efforts, courts sometimes get it
wrong. Acknowledging the imperfection of our justice system is
undoubtedly one reason why it has safeguards. We remember that
decisions of courts are reviewed by appellate courts and indeed,
reviewed by our elected branches. In order to facilitate the
right to appeal, we provide a record of the proceedings, in
criminal matters at least. And so, when our families, friends,
and neighbors are injured, wronged, or have a dispute, we rely
upon that faith that our courts-the institution we trust upon to
promote fairness-will deliver equal justice under the law.
As this Committee is well-aware, arbitration is a form of
alternative dispute resolution held outside of courts where a
third-party (rather than a judge) makes a binding (and rarely
appealable) award. Because most arbitration is created by
entering into a contract (usually a contract that is adhesive or
take-it-or-leave-it), the arbitration agreement will lay-out the
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procedures that will be followed during the arbitration hearing.
For example, the terms of the arbitration agreement may
stipulate that the award need not be written or justified
(unlike in court), and that the entire process be kept in secret
(rather than in public view). Arbitrators do not need to be
lawyers, nor do they need to be trained in the law. Arbitrators
who issue favorable awards to a particular company can be
repeatedly-hired by that same company to serve as the
arbitration-neutral without ever notifying the public about that
award-history. It's easy to predict the calls if you can hire
the umpire.
Last year, the New York Times issued a three-part series titled,
"Beware the Fine Print" - a special report examining how
arbitration clauses buried in contracts deprives Americans of
their fundamental constitutional rights:
Over the last 10 years, thousands of businesses across the
country - from big corporations to storefront shops - have
used arbitration to create an alternate system of justice.
There, rules tend to favor businesses, and judges and juries
have been replaced by arbitrators who commonly consider the
companies their clients. The change has been swift and
virtually unnoticed, even though it has meant that tens of
millions of Americans have lost a fundamental right: their day
in court. (Silver-Greenberg & Corkery, In Arbitration, a
Privatization of the Justice System, N.Y. Times (Nov. 1,
2015).)
In fact, some legal scholars have stated that, arbitration
"amounts to the whole-scale privatization of the justice
system." (Ibid.) In an effort to protect consumers and
workers, this Legislature has worked on legislation aimed at
leveling the playing field, a turf that has been used by
corporate interests to evade public scrutiny, and even, avoid
the law. This is because arbitrators do not need to be trained
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in the law, or even apply the law, or render a decision
consistent with the evidence presented to them. What evidence
is presented may, in fact, be incomplete because parties in
arbitration have no legal right to obtain evidence in support of
their claims or defenses, or the claims or defenses of the other
party, contrary to the longstanding discovery practice in public
courts. Advocates continue to debate about the benefits and
harms of mandatory-arbitration. Proponents of arbitration say
that arbitration produces quicker results and reduces litigation
costs. Opponents argue that arbitration harms consumers and
workers because arbitration proceedings render unfair awards.
A brief review of recent court decisions on arbitration. Given
the preemptive issues surrounding the Federal Arbitration Act
(FAA) and the U.S. Supreme Court's interpretation of the FAA,
the ability to legislate around the issue of arbitration is
difficult. In 2005, the California Supreme Court held that in
certain adhesive take-it-or-leave-it consumer contracts, a
contractual provision requiring the consumer to waive
class-action is unconscionable and void. This is known as the
Discovery Bank rule (herein the Rule). (36 Cal. 4th 148, 159.)
In the well-known Concepcion decision, the U.S. Supreme Court
struck down the Rule. (AT&T Mobility LLC v. Concepcion (2011)
563 U.S. 333, 344-47.) In that case, Vincent and Liza
Concepcion entered into a cellphone contract that required
claims to be brought in an "individual capacity, and not as a
plaintiff or class member in any purported class or
representative proceeding." (Id. at 336.) Relying on Discovery
Bank, the Concepcions challenged the class-action waiver as an
unconscionable contract provision. (Id. at 338.) In abrogating
the Rule, the Court held that the Rule stood "as an obstacle to
the accomplishment and execution of the full purposes and
objectives of Congress" because it "interferes with fundamental
attributes of arbitration." (Id. at 344-47.) Although the
Supreme Court has not defined a "fundamental attribute of
arbitration," the Court did say that there were potential
advantages of arbitration: lower costs, greater efficiency and
speed, and the ability to choose expert adjudicators to resolve
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specialized disputes. (Id. at 348.) Indeed, the Court
analogized to several examples on the kinds of rules or laws
that would amount to "interference" with the "fundamental
attribute of arbitration." For example, a rule to require
arbitration agreements and proceedings to provide
judicially-monitored discovery, or to follow the Federal Rules
of Evidence would clearly violate the FAA. (Id. at 342.) In
those instances, those additional protections and
procedures-admirable as they are-would increase costs, reduce
efficiency and speed, and prevent an arbitrator from applying
the rules he or she wants to apply; accordingly, states and
courts are limited in crafting certain rules.
Despite what some may say, California may regulate issues that
affect arbitration. Relying on these principles in Concepcion,
some argue that anything that interferes with arbitration is
preempted by the FAA, as interpreted under Concepcion; however,
this argument is mistaken. Federal law does not preempt states
from enacting basic protections around the principles of
contract law. While federal preemption is broad, states are
permitted to set rules that are consistent with certain contract
law principles. Additionally, states may establish specific
arbitration rules in their states. As the Supreme Court has
stated, "parties are generally free to structure their
arbitration agreements as they see fit?[Where] parties have
agreed to abide by state rules of arbitration, enforcing those
rules according to the terms of the agreement is fully
consistent with the goals of the FAA." (Volt Information
Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
Univ. (1989) 489 U.S. 468, 479.) Accordingly, states can enact
legislation that affects arbitration without offending the FAA.
How do courts settle a dispute over whether there is a valid
arbitration clause? When there is a disagreement between
parties about whether the parties agreed to arbitration, a court
resolves the dispute by examining whether there was an agreement
by applying contract law principles. Because the resolution of
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that question does not resolve the merits of the case-in-chief,
the court's decision is issued through an interlocutory order.
This is significant because there is generally no right to
appeal interlocutory orders, which are often issued throughout a
case. Generally, the right to appeal attaches upon a final
judgment. According to one California court, there are sound
reasons for the final judgment rule:
Interlocutory appeals burden the courts and impede the
judicial process in a number of ways: (1) They tend to clog
the appellate courts with a multiplicity of appeals; (2) Early
resort to the appellate courts tends to produce uncertainty
and delay in the trial court; (3) Until a final judgment is
rendered the trial court may completely obviate an appeal by
altering the rulings from which an appeal would otherwise have
been taken; (4) Later actions by the trial court may provide
a more complete record which dispels the appearance of error
or establishes that it was harmless; (5) Having the benefit of
a complete adjudication will assist the reviewing court to
remedy error (if any) by giving specific directions rather
than remanding for another round of open-ended proceedings.
(Vivid Video, Inc. v. Playboy Entertainment Group, Inc. (2007)
147 Cal.App.4th 434, 442-444 [citations omitted].)
Current statute creates a one-sided interlocutory appellate
right. Despite the general rule requiring finality prior to
appeal, current law creates a one-sided interlocutory appeal in
the arbitration context. Currently, parties can appeal an
interlocutory order denying (a petition to compel) arbitration,
but parties may not appeal an interlocutory order compelling
arbitration. In other words, if a court orders the parties to
go to arbitration, the parties cannot appeal that decision; if a
court denies arbitration and orders the parties go to trial, the
injured parties can appeal. Indeed, in an attempt to equalize
the appellate rights for all parties contesting the validity of
an arbitration clause, this Committee previously considered and
approved AB 1062 (Dickinson, 2001), which would have eliminated
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the interlocutory appeal for arbitration orders altogether.
Although this Committee passed AB 1062 (Dickinson) out of the
Committee, the bill was held on the Assembly Floor.
Author's statement: In explaining the need for this bill, the
author writes:
When there is an allegation of elder abuse in a nursing home
and the elder abuse victim is granted a speedy trial
preference, it is routine for the defendant nursing home to
file a motion to enforce arbitration as a way to avoid jury
trial or to stall litigation proceedings. This is because the
nursing facility drafts the arbitration provisions and coerces
the victim into signing the arbitration clause during
enrollment.
If the trial court finds that the agreement's terms are
unconscionable and unreasonably one-sided, it may deny the
defendant's motion to compel arbitration, allowing the elder
to proceed to a jury trial in regular court. Under current
law, a nursing care facility - who has lost in court - will
delay an elder's speedy trial by filing an unnecessary appeal.
This appeal causes a delay in the matter for another 1-3
years. The delay caused by the appeal is done in the hope
that the elder will not survive long enough for the appeal to
be decided, thereby reducing the defendant's liability if the
victim dies before trial.
SB 1065 helps seniors get a more timely trial in Elder Abuse
Act claims by stating that if seniors obtain a legal
preference for court because they are sick and dying, they can
continue to trial without waiting for an appeal, and it gives
both plaintiffs and defendants equal appellate rights. This
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bill will help victims of elder abuse who are old and dying
and who need a speedy resolution of the elder abuse case.
Victims should be able to proceed to the speedy hearing that
was originally ordered by the court, but under current law,
they cannot. SB 1065 fixes that injustice by eliminating that
automatic right to appeal after a judge has found the contract
illegal.
Summary of the bill: In comparison to AB 1062, this bill takes
a far more narrow approach. In summary, this bill prohibits a
party from appealing an interlocutory court order that denies a
petition to compel arbitration only if (1) the party has filed a
claim under the Elder and Dependent Adult Civil Protection Act,
and (2) the party has been granted a trial preference.
Examples of violations under the Elder and Dependent Adult Civil
Protection Act. As mentioned, this bill limits a party from
filing an interlocutory appeal in instances when the plaintiff
has asserted violations under the Elder and Dependent Adult
Civil Protection Act (EADACPA). EADACPA was enacted to protect
elder and dependent adults from abuse and exploitation. EADACPA
recognizes that elders and dependent adults may have
disabilities and cognitive impairments, such as Alzheimer's
disease and other dementia disorders, which often leave elders
incapable of seeking help and protection from others. These
elders and dependent adults suffer from physical impairments and
poor health, which places them in a dependent and vulnerable
position. In enacting EADACPA, the Legislature found that
criminal cases of elder and dependent adult abuse are seldom
prosecuted, and that civil cases brought in connection with this
abuse face problems of proof, court delays, and the lack of
incentives to litigate these suits. EADACPA was enacted to
expand and enhance the remedies available to elders, their
families, and their advocates to encourage the civil prosecution
of elder abuse cases. For example, under EADACPA, a defendant
who is found liable for physical elder abuse may also be liable
for damages for pain, suffering, and disfigurement. If a
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defendant is found liable for elder abuse and engaged in
recklessness, oppression, fraud, or malice in the commission of
the abuse, EADACPA mandates attorney's fees and costs. But if
the elder passes away before the claim is resolved, the elder
obviously cannot any of these EADACPA damages. Nor can the
deceased elder's surviving family members.
Certain parties may obtain a trial preference. In civil
litigation, shortly after the parties have filed their
pleadings, the court holds an initial case management conference
to schedule the timeline for the litigation, which includes
setting a trial date. Because the trial date largely controls
the pace of the litigation proceedings, some parties seek to
have expedited proceedings by obtaining a trial preference.
Generally, a court will grant a trial preference if the trial
preference serves the interests of justice. Existing law also
specifically authorizes a court to grant a trial preference in
certain instances and requires trial preference in other
instances. The purpose behind trial preference for elders is to
acknowledge that older litigants should have the right to go to
trial, and obtain a full measure of damages during the
litigant's lifetime. (Rice v. Superior Court (1982) 136
Cal.App.3d 81.) For parties over seventy, the court must grant
a trial preference if the court finds that the health of the
party makes it necessary for the court to grant a trial
preference. Another instance of when the court may grant a
trial preference is when there is clear and convincing medical
documentation that one of the parties suffers from an illness or
condition that raises substantial medical doubt about the
survival of that party beyond six months. If a party obtains a
trial preference, the court must set that matter for trial
within six months, which may be postponed (or continued) for a
date no later than six months. Essentially, a party granted a
trial preference is expected to have their dispute resolved in
six months to one year.
Although this bill is far narrower than other similar bills
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passed out of this Committee, this bill promotes the public
policy of curbing elder abuse and ensures that elder litigants
have their day in court. Given that this Committee has
previously passed out a broader bill - AB 1062 (Dickinson)-the
scope of this bill appears quite reasonable. Indeed, this bill
only prevents an interlocutory appeal of an order denying a
motion to compel arbitration when there are claims of elder
abuse (EADACPA) and when the party is granted a trial
preference. In response to an inquiry from this Committee about
why this bill does not include other plaintiffs or other causes
of action, the author and sponsors believe that this
narrowly-tailored bill is aimed at addressing the most egregious
cases where parties file meritless appeals as a litigation
tactic in order to reduce their damages from the death of a
victim of elder abuse. Furthermore, this bill is consistent
with the public policy of allowing elders to have their day in
court. When balancing the interests of arbitration and the
interest of elders, one court has stated that "the competing
interests of the arbitration statute must yield in order to
ensure older litigants have their day in court." (Vinokur v.
Superior Court (1988) 198 Cal.App.3d 503.)
Arguments raised by the opponents. The coalition of opponents,
led by California Association of Health Facilities, raises
several arguments against this bill. In summary, the opponents
of the bill contend that this bill (1) eliminates a "due process
right" [of a party seeking to compel arbitration] and frustrates
the goals of arbitration; (2) increases the cost of insurance
premiums for doctors, hospitals and nursing homes; (3) sends
more cases to overburdened courts; (4) weakens one of the main
tenets of California's Medical Injury Compensation Reform Act;
and (5) ignores the existing law that allows elders a priority
in court. This Committee addresses each of the arguments in
turn.
This bill does not eliminate a due process right nor does this
bill appear to frustrate the goals of arbitration. As
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previously stated in this analysis, the right to appeal an
interlocutory order is purely statutory, and is not a
constitutionally-based due process right. In a 1948 case, the
California Supreme Court noted that interlocutory orders
relating to arbitration are not appealable:
California cases hold that neither an order directing
arbitration nor an order refusing to stay trial pending
arbitration is appealable?An appeal is allowed if the order is
a final judgment against a party in a collateral proceeding
growing out of the action. It is not sufficient that the
order determine finally for the purposes of further
proceedings in the trial court some distinct issue in the
case; it must direct the payment of money by appellant or the
performance of an act by or against him?.If appellants have a
right to arbitration they may assert it on the appeal from the
final judgment in the contract action. Thus no greater
hardship will result than in any case where a party is forced
to stand trial because of an erroneous ruling of the trial
court." (Sjoberg v. Hastorf (1948) 33 Cal. 2d 116, 118-119
[citations omitted].)
Consistent with this rule, California courts have found that the
state's procedural rules relating to appeals of arbitration
orders are not preempted by the FAA. Although Section 16 of the
FAA allows parties to appeal an interlocutory order that denies
a motion to compel arbitration, a California court found that
California's appellate rules could be different:
At issue is not a federal substantive right to appeal, but
only the procedural matter of 'the timing of the exercise of
the right of appeal from an order compelling arbitration?The
timing of the appeal of the order compelling arbitration does
not stand as an obstacle to the accomplishment and execution
of the full purposes and objectives of Congress. The object
that Congress sought to achieve by enacting section 16 of the
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FAA is simply that the aggrieved party has a right to appeal
at some time. [A party] will have the opportunity to
challenge the order compelling arbitration on appeal from the
judgment entered on the arbitration award." (Muao v.
Grosvenor Properties (2002) (99 Cal.App.4th 1085, 1092.)
While this bill does indeed limit the right to appeal an
interlocutory order in certain matters, this bill does nothing
to affect the appellate rights of either party after a court has
entered a final judgment. If anything appears unfair, it is the
current statutory framework that allows parties the right to
appeal an interlocutory order denying a petition to compel,
while, conversely, not allowing the same right to appeal an
interlocutory order granting a petition to compel. As
previously stated, it seems that it would probably be more
equitable if this statutory right was eliminated altogether,
similar to the approach adopted under AB 1062 (Dickinson, 2011).
However, as stated, this bill does not go that far and is quite
narrow in scope because it only limits the appeal right in
instances where an elder has alleged an EADACPA claim, and the
elder has been granted a trial preference.
Furthermore, this bill does not appear to affect arbitration
when it is validly agreed to by all parties to the contract. As
stated, it is well-settled that the Federal Arbitration Act does
not require parties to arbitrate when they have not agreed to do
so. (Volt, supra, 489 U.S. at 478.) If there is disagreement
between parties about whether there was ever an agreement to
arbitrate, a court will analyze the terms of the contract. If a
valid agreement to arbitrate exists, the court must compel
arbitration; generally, however, if there is no valid agreement,
the court will deny the petition to compel which may give rise
to an interlocutory appeal, which this bill seeks to limit.
Accordingly, if the goal of the opposition is to ensure that
parties go to arbitration, the solution is to ensure that its
contracting parties voluntarily and knowingly agree to
arbitration in the first instance.
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The bill does not appear to support the opponent's contention
that it will increase the cost of insurance premiums. Opponents
argue that this bill will increase medical liability costs by
undermining the enforcement of valid arbitration agreements.
Specifically, the opponents argue that this bill allows an
individual, who voluntarily signed an agreement to arbitrate
future disputes, to sue regardless of the agreement they signed,
and would prohibit the other party from appealing a court's
decision to allow that decision to proceed. Therefore, it will
increase insurance costs. Proponents of the bill argue that
this bill simply provides expedited relief for a very small
group of plaintiffs who are age seventy years or older and who
are sick or dying. Additionally, the proponents argue that
Medi-Cal pass-through rates for liability insurance are limited
by the aggregate payment caps built into the Medi-Cal rate
system for skilled nursing facilities, and this bill has no
impact on Medi-Cal rates. The rates on substandard skilled
nursing facilities could increase regardless of this bill if
those facilities continue to provide poor care that injures
residents.
Based on the arguments above, the Committee's staff is not
convinced that this bill undermines the enforcement of valid
arbitration agreements - especially, those that are voluntarily
signed by individuals. As previously discussed, when there is a
disagreement between parties about whether there was ever an
agreement to arbitrate, a court will analyze the terms of the
contract. It is well-settled that the FAA does not require
parties to arbitrate when they have not agreed to do so. (Volt,
supra, 489 U.S. at 478.) However, if a valid agreement to
arbitrate exists, the court must compel arbitration. In fact,
as troubling as this is, courts have held that when there is
doubt about whether an arbitration clause applies, the dispute
is resolved in favor of sending parties to arbitration.
(Engineers & Architects Assn. v. Community Development Dept.
(1994) 30 Cal.App.4th 644, 652.) So, if what the opponents are
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saying is true, it would seem to imply that courts-when
presented with a valid arbitration agreement that is voluntarily
signed by all the parties-are nonetheless denying arbitration,
and thus violating principles of well-established law. And yet,
the opponents have not presented any evidence that trial courts
are applying the law incorrectly (indeed, this Committee has no
reason to believe that trial courts are getting it wrong).
Furthermore, even if trial courts are getting it wrong, the
opponents have not presented any evidence that; 1) Courts of
Appeal are also getting it wrong, or that 2) Courts of Appeal
are significantly reversing lower court decisions - evidence
that could be easily ascertained since appellate decisions are
publicly available. Accordingly, if we safely assume that trial
courts are getting it right, and that upon appeal (which are
costly to file), courts of appeal are agreeing with lower courts
and sending parties back to trial to litigate (which this bill
seeks to do), it seems curious that the opponents would argue
that this bill increases medical liability costs.
Will this bill send more cases to court? Opponents of the bill
contend that since this bill limits appeals, this bill will send
more cases to court. While this argument may be true, it is
important to put this into perspective. It is certainly true
that this bill - by limiting the appeal to certain elder abuse
cases - will likely result in more cases being reviewed in court
at trial. However, this is true because those cases probably
should have gone to trial in the first place (rather than to
appeal). As previously stated, if a trial court issues an order
denying a motion to compel arbitration, the parties proceed to
trial. If the interlocutory order is appealed, and an appellate
court upholds a lower court's order denying a petition to compel
arbitration, the parties continue where they left off, and
proceed to trial. Evidently, if the party seeking an appeal
wants to avoid trial, it seems that there is little risk (and
potentially, a lot to gain) for the party to appeal an
interlocutory order.
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According to the Judicial Council, the statewide average to
process a civil appeal is 498 days - nearly one year and a half
- while the statewide average to process a civil appeal of 90%
of cases is 807 days - a little over two years. When a court
grants an elder a trial preference, it is because the health of
the elder is in question. Indeed, for most other parties
seeking trial preference, a court will grant a trial preference
if there is clear and convincing evidence of substantial medical
doubt that the party won't survive beyond six months. Could it
be that defendants alleged with elder abuse file a civil appeal
after an interlocutory order denying arbitration - with the hope
that the plaintiff will die during the appellate process, and
thus, face potentially less damages? Possibly. Thus, the
appropriate question is not whether this bill will send more
cases to trial, but whether defendants of elder abuse should be
able to use a litigation tactic, while waiting for the impending
death of the elder abuse victim, so that defendants potentially
face less civil damages?
The opposition has not provided sufficient evidence to show how
this bill weakens (or is even related to) MICRA. California's
Medical Injury Compensation Reform Act (MICRA) restricts
litigation against health care providers and places caps on
damages and attorney's fees that may be awarded. The opponents
argue that this bill will weaken one of the main tenets of
MICRA, which, according to the opposition, is intended "to
ensure that injured patients receive fair compensation while
preserving access to health care by keeping doctors, nurses and
health care providers in practice and keeping hospitals and
clinics open." In response, proponents of the bill write that
"the MICRA cap on non-economic damages set forth under Civil
Code Section 3333.2 specifically applies to claims for injury
resulting only from acts of 'professional negligence' and would
be entirely inapplicable under circumstances where there is a
finding that an elder's injury or death occurred as a result of
acts which constitute elder abuse/neglect" as defined under
certain provisions of EADACPA.
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Although the opposition has not proffered evidence to this
Committee about how this bill actually weakens or even affects
MICRA, the California Supreme Court has made clear that claims
alleged under EADACPA are separate and distinct from acts of
elder abuse and neglect. In 1999, the California Supreme Court
held that a licensed health care provider who engages in
reckless abuse or neglect against an elder within the meaning of
EADACPA is liable to a plaintiff for enhanced remedies under
EADACPA. (Delaney v. Baker (1999) 20 Cal.4th 23, 41-42.) The
Court also stated that although MICRA applies to professional
negligence causes of action, the professional negligence defined
under EADACPA is different. (Ibid.) Accordingly, Committee
staff is still unclear about how this bill affects MICRA. Be
that as it may, the author may wish to consider, in an abundance
of caution, to accept a clarifying amendment to specify that
nothing in this bill should be construed to affect an action
against a health care provider based on professional negligence,
provided under Civil Code Section 3333.2.
Contrary to the opponent's contention, this bill does appear to
create a more expeditious process for parties to resolve their
disputes. The opponents of the bill contend that this bill
ignores the expeditious procedures available under existing law.
California Association of Health Facilities, in opposition,
writes:
SB 1065 ignores provisions in law that already allow elderly
litigants to seek priority on appeal. There is a process
already in place that allows a petitioner to seek preference
on appeal if they are entitled to preference in the trial
court pursuant to the California Rules of Court Section 8.240.
Additionally, California Code of Civil Procedure Section
1291.5 provides that arbitration matters are entitled to
preference over other civil actions or proceedings in setting
the matter for hearing and determination.
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To avoid the issues outlined above and to help ensure that
there is a speedy resolution to these complaints and disputes,
CAHF and other have offered amendments that would directly
address the sponsor's concerns, without completely dismantling
the arbitration.
During discussions with the author and the sponsors, the
opposition has offered two different proposals in lieu of this
bill. The first proposal would essentially provide parties
seeking an appeal to an interlocutory order a preference before
the court of appeal:
Amend Section 36 of the Code of Civil Procedure to read:
(h) If a party has filed a claim pursuant to the Elder and
Dependent Adult Civil Protection Act (Chapter 11 (commencing
with Section 15600) of Part 3 of Division 9 of the Welfare and
Institutions Code) and has been granted a preference pursuant
to this section, any appeal made by an opposing party from an
order dismissing or denying a petition to compel arbitration
pursuant to subdivision (a) of Section 1294 arising from that
claim shall be given preference in hearing in the courts of
appeal and placed on the calendar in the order of their date
of issue, next after cases in which the people of the state
are parties. Such calendar preferences shall include those
elements provided for in California Rule of Court 8.240,
including expedited briefing and preferences is setting the
date for oral argument.
In response to the first proposal, the Consumer Attorneys of
California write:
The opposition is recommending codification of existing law,
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found in California Rule of Court 8.240, which states that the
court may grant a preference on the appellate court level if
the person is over seventy and in ill-health. However,
codifying current law does nothing for the elder abuse victim
since the appellate courts currently take about one to two
years even to hear appeals that have received a preference,
assuming there are no extensions granted for briefings. The
trial court's initial determination that the case should be
heard within four months should take precedent. Even with
priority, appeals will take over a year?The CAHF "compromise"
is just more delay.
The second proposal (which was provided to this Committee after
its submission deadline) would essentially require courts of
appeal to issue an appellate decision within 180 days following
the appellant's notice of appeal. According to Judicial Council
staff, a 180-day turn-around is unworkable and would likely
cause the courts significant concern. As previously mentioned,
data from the Judicial Council notes that the statewide average
to process a civil appeal is 498 days - nearly one year and half
- while the statewide average to process a civil appeal of 90%
of cases is 807 days - a little over two years.
While Committee staff appreciates the opposition's attempt to
come to a resolution with the proponents, Committee staff tends
to agree that neither solution resolves the author's and
supporters' valid concerns. As for the first solution, a party
given a trial preference does not necessarily result in
significant savings in time. Indeed, existing law provides
calendar preferences to various matters - however, if many cases
are given a preference, no case really has one. As for the
second solution, requiring an appellate court to render a
decision within a certain time frame is unreasonable and would
set an untenable precedent. In either solution, the
consideration should be the role of our appellate courts, which
is to render decisions thoughtfully and methodically and may not
have the resources to do so in a more expeditious manner. It
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would seem then that any solution that would violate these
principles by rushing judgment would ultimately harm parties -
both plaintiffs and defendants.
ARGUMENTS IN SUPPORT: California Alliance for Retired Americans
supports this bill because it stops a nursing home facility from
filing an appeal to avoid a jury trial:
In cases where there is elder abuse by a nursing home or elder
care facility, and an ill or dying elder abuse victim is
granted a speedy trial preference, it is very common for the
defendant nursing home who wants to avoid a jury trial to file
a motion to enforce an arbitration provision which the
facility drafted and then coerced the victim into signing this
upon entering the facility - basically waiving their rights to
a speedy trial if one becomes necessary. SB 1065 helps
seniors get to trial more quickly in an Elder Abuse Act claim
by stating that if the senior obtains a legal preference for
court because she is sick and dying, she can continue to court
without waiting years for an appeal in the middle of the case.
In sum, it gives both plaintiffs and defendants equal
appellate rights.
ARGUMENTS IN OPPOSITION: Civil Justice Association of
California opposes this bill, arguing that the bill is contrary
to California's public policy favoring arbitration and is also
largely unnecessary. In opposition, CJAC writes:
This bill is "contrary to California's strong public policy
favoring arbitration and the enforcement of valid arbitration
agreements. It is also unnecessary to expedite resolution of
the complaint. California Rules of Court Rule 8.240 allows a
party to seek an expedited appeal schedule on the same grounds
that satisfy Code of Civil Procedure § 36. If a litigant has
been granted a preference by the trial court, she should have
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no difficulty obtaining calendar preference from the appeals
court.
REGISTERED SUPPORT / OPPOSITION:
Support
California Advocates for Nursing Home Reform (co-sponsor)
California Alliance for Retired Americans (co-sponsor)
Congress of California Seniors (co-sponsor)
Consumer Attorneys of California (co-sponsor)
SEIU California
Opposition
California Assisted Living Association
California Association of Health Facilities
California Association of Physician Groups
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California Dental Association
California Hospital Association
California Medical Association
Californians Allied for Patient Protection
Civil Justice Association of California
LeadingAge California
The Doctors Company
Analysis Prepared by:Eric Dang / JUD. / (916)
319-2334