Engalla v. Permanente Medical Group, Inc.

Facts

Ps were the surviving family of Wilfredo Engalla who as part of his employment was enrolled in D's health maintenance organization. D as part of its standard insurance agreement provided for binding arbitration. Ps alleged that D lost X-Rays, failed to follow its physicians' recommendations, and otherwise negligently failed to diagnose Wilfredo's cancer until it was inoperable. Prior to his death, Wilfredo was engaged in a medical malpractice dispute in arbitration with D, but that was unsuccessfully concluded prior to Wilfredo's death. Ps filed suit and D motioned to compel arbitration. P opposed that motion by claiming that D's self-administered arbitration system was corrupt and that D fraudulently misrepresented the expedition of its arbitration system and engaged in dilatory conduct in order to postpone Wilfredo's arbitration hearing until Wilfredo was dead all of which should be grounds to refuse to enforce the arbitration agreement. The fact that D's arbitration system was administered by D and that was not disclosed to members of subscribers and that they represented that the arbitration would be fair and done within several months' time was the basis for P's complaint with respect to the fraud. Wilferdo made his request for arbitration and during the next six months nothing happened and then Wilfredo died. Statistics showed that delays occurred in 99 percent of all of D's arbitrations and those delays were known to D and were well in excess of any reasonable time frame as promised by D under the contract of no more than 60 days for selection of the arbitrators. The delay and Wilfredo’s death caused P’s claim of loss of consortium to merge with the wrongful death action thus reducing the amount of potential damages. The trial court found evidence to support P's claim of fraud but ruled against P. P appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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