A California appellate court determined that a health plan provider’s arbitration agreement was unenforceable because the form failed to comply with the California Health and Safety code.

In Burks v. Kaiser Foundation Health Plan, Inc., No. C054374, 2008 WL 590872 (Cal. Ct. App. Mar. 5, 2008), Burks sued Kaiser for alleged egregious treatment he received from Kaiser while suffering from renal failure and awaiting a kidney transplant.

Kaiser petitioned to compel arbitration under the enrollment form between Burks and Kaiser. Burks opposed Kaiser’s petition on the ground that the arbitration provision on the form did not comply with California state law. The lower court concluded that the arbitration provision violated the California Health and Safety Code because the provision was not prominently displayed on the enrollment form.

On appeal, the Court described the form. The arbitration provision appeared in a single paragraph at the bottom of the form, immediately above the space provided for the enrollee’s signature. The provision was printed in typeface substantially the same or smaller than the typeface used on the rest of the form. Further, the typeface was not highlighted, italicized, bolded, or indented.

The Court noted that the California Health and Safety Code requires that if a health care service plan requires arbitration to settle disputes with its members, the plan must disclose the arbitration requirement in a separate article in the issued agreement. Further, the Code requires the provision to be displayed immediately before the signature line. The Court noted that a violation of this provision renders the arbitration provision unenforceable.

Kaiser argued that the Code does not prescribe or dictate a particular means for achieving the required prominence. The Court agreed that the Legislature wanted to give flexibility to health plans in choosing how to give prominence to the arbitration provision.

Kaiser further argued that because the arbitration provision was exactly above the signature line, its form complied with the Code. The Court determined that by requiring prominence, in addition to placement immediately above the signature line, the Legislature intended to require something more than placement to make the to notice prominent.

Further, if the Legislature thought it appropriate to comply with only one of the regulations, it simply would have said that. The Court was not persuaded that the arbitration provision complied with the Code, given the plain, small typeface, without any heading used by Kaiser.