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In rejecting the argument that an arbitrator was obligated to disclose his membership in a health plan that was not a party to the dispute, a California appeals court stated: “Our review of the cases addressing judge recusal and jury disqualification demonstrate that mere membership in a health plan is insufficient to cause a reasonable person to doubt the member’s ability to be impartial.”
In Eckstein v. Kaiser Foundation Health Plan, Inc., No. A114315, 2007 WL 2433151 (Cal. Ct. App. 1 Dist. Aug. 29, 2007), Bushra and David Eckstein (“the Ecksteins”) filed a medical malpractice claim against Kaiser, claiming negligence of a Kaiser physician.
The parties used one of two options available under the arbitration administrator’s rules to select a neutral arbitrator. They selected Richard Patsey. Patsey did not disclose his Kaiser Health membership, which had been previously disclosed in another arbitration involving Kaiser. In the subsequent arbitration, Patsey decided in favor of Kaiser.
The Ecksteins moved to vacate the arbitrator’s award on grounds that Patsey violated disclosure requirements arguing that Patsey’s Kaiser Health membership was grounds for disqualification.
The trial court disagreed and denied the Eckstein’s petition to vacate the arbitration award. It also granted Kaiser’s motion to confirm the award. The Ecksteins appealed.
This Court agreed with the trial court. Section 1281.9 requires disclosure of anything that would cause a person to “reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.”
The Court considered a prior decision of the U.S. Supreme Court which interpreted this standard to require disclosure of “‘any dealings that might create an impression of possible bias.’” Commonwealth Corp. v. Casualty Co., 393 U.S. 145 (1968).
The California Court of Appeals adopted this standard in numerous decisions. See Johnston v. Security Ins. Co., 6 Cal.App.3d 839, 841 (Cal. Ct. App. 1970); Michael v. Aetna Life & Casualty Ins. Co., 88 Cal.App.4th 925, 936 (Cal. Ct. App.2d 2001).
In 2001, the arbitration statutes were amended to add failure to disclose such matters to grounds for vacatur.
The Court rejected the Ecksteins’ contentions that the Court could not rely on California case law decided prior to the 2001 amendment. The legislature proclaimed that the 2001 amendments were “declarative of existing case law.” (internal citations omitted).
It further rejected the Ecksteins’ argument that the impression of bias standard developed in Betz was improper because it required a showing of actual bias. See Betz v. Pankow, 31 Cal.App.4th 1503, 1508 (Cal. Ct. App. 1 Dist. 1995).
First, the impression of bias standard has no requirement of proving actual bias. Rather, it questions whether possible bias of the arbitrator has been established.
Next, the Court held that Patsey’s health membership would not cause a reasonable person to doubt Patsey’s impartiality, stating: “Our review of the cases addressing judge recusal and jury disqualification demonstrate that mere membership in a health plan is insufficient to cause a reasonable person to doubt the member’s ability to be impartial.”
Additionally, the Eckstein’s conceded that Patsey’s membership would not give him a financial interest in the arbitration’s outcome. Moreover, there was no evidence of contact between Patsey and the physician involved in this arbitration.
Finally, the Court refused to speculate about possible scenarios that may create an impression of bias. It concluded that the trial court did not err in denying the Ecksteins’ petition to vacate the award.
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