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A California appellate court held that arbitration agreements in health insurance agreements must comply with strict statutory requirements to be enforceable.
In Organization of Women Architects & Design Professionals v. Health Net of California, Nos. A108832, A109222, 2007 WL 66363 (Cal. App. Jan. 11, 2007), Health Net provided health insurance coverage for the Organization of Women Architects & Design Professionals (OWA). When Health Net refused to renew coverage, the OWA brought an action alleging breach of contract and other claims.
Health Net asked the court to compel arbitration of the dispute pursuant to an arbitration clause in the coverage agreement; however, OWA argued that the arbitration clause was invalid because it did not comply with the requirements of CAL. HEALTH & SAFETY CODE § 1363.1.
The Court agreed with OWA and held that the arbitration clause was unenforceable because it failed to comply with the requirements of § 1363.1, which requires that binding arbitration clauses in health care plans be "prominently displayed" and placed "immediately before the signature line."
In reaching its decision, the Court relied on its previous decision interpreting § 1363.1 in Robertson v. Health Net of California, 34 Cal.Rptr.3d 547 (Cal. App. 2005). The Court noted that the arbitration clause at issue in this case was nearly identical to the clause struck down as unenforceable in Robertson.
Like the clause in Robertson, which was in the same font as the rest of the agreement except for the words "Arbitration Agreement" in bold, this clause was in the same font as the rest of the agreement, except for the words "Arbitration Agreement" in italics. Also like the clause in Robertson, which was not immediately before the signature line, this clause was not immediately before the signature line.
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