Daily Blast June 23, 2016

The Court of Appeal issued a notable ruling affecting the application of California’s medical malpractice arbitration statute. The Second District Court of Appeal, Division Five (Los Angeles) ruled that the Federal Arbitration Act (“FAA”) preempts the 30-day rescission right provided by Code of Civil Procedure, section 1295, subdivision (c) (“section 1295”). (Scott v. Yoho (Jun 23, 2016, B265641) __ Cal.App.4th __.) The court held that where there is a sufficient nexus with interstate commerce, the California 30-day rescission window is preempted because it is an arbitration-specific rule that conflicts with the FAA. (Slip. opn., pp. 11, 18.)

The plaintiffs, relatives of the decedent, sued defendants for wrongful death, medical malpractice, and survivorship. (Slip opn., p. 2.) The defendants moved to compel arbitration based on agreements signed by the decedent, arguing the FAA preempted the 30-day rescission window in section 1295, subdivision (c). (Id. at p. 3.) The trial court denied defendants’ motions to compel arbitration, finding the agreements to be unenforceable pursuant to section 1295, subdivision (c) because the decedent died before the 30-day rescission window closed. (Id. at p. 7.) The court further found that the surgical procedure “did not affect interstate commerce such that federal preemption would apply.” (Ibid.)

The Court of Appeal reversed. (Slip opn., p. 20.) It held that factors such as medical supplies shipped from out of state, internet advertisements, out-of-state patients and contacts with out-of-state companies created “a sufficient nexus” between defendant’s business and interstate commerce for the FAA to apply. (Id. at pp. 10-11.) The Court also held that section 1295, subdivision (c) conflicted with the FAA because it established rules applicable to arbitration only rather than contracts in general. (Id. at p. 18.) “Because the 30-day rescission period applies only in the context of arbitration of medical care disputes, it is preempted” by the FAA. (Ibid.) The court distinguished Rodriguez v. Superior Court (2009) 176 Cal.App.4th 1461 on the basis that while factually similar, it did not deal with federal preemption. (Id. at p. 19.)

Related Attorneys

Related Practices

• Appellate