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Under California law, arbitration agreements within health care service plans must the "prominently displayed" to be enforceable.
In Zembsch v. Superior Court, No. A114157, 2006 WL 3791297 (Cal. App. Dec. 27, 2006), Zembsch brought an action against Health Net of California, his HMO, when Health Net refused to issue a standing referral for Zembsch's son to receive care from a specialist.
Health Net asked the Court to compel arbitration of the dispute pursuant to an arbitration clause on the signed enrollment form. Zembsch argued that the arbitration agreement was unenforceable because it did not comply with the requirements of Cal. Health & Safety Code § 1363.1(b).
Section 1363.1(b) requires that arbitration disclosures such as the one signed by Zembsch be "prominently displayed," which California courts had previously defined as "standing out or projecting beyond a surface or line" or "readily noticeable."
In this case, the Court held that the arbitration disclosure did not meet the requirements of being "prominently displayed." The arbitration disclosure was printed in the same small, condensed font as most of the form. Moreover, other sections of the form were in boldface or capital letters, indicating that Health Net could have more prominently displayed the arbitration disclosure.
Therefore, the Court held that Health Net failed to comply with the requirements of § 1363.1(b), making the arbitration agreement unenforceable, and refused to compel arbitration.
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