Crowell v. Downey Cmty. Hosp. Found.,

Crowell v. Downey Cmty. Hosp. Found.,
No. B148291 (Cal. Ct. App. Jan. 28, 2002)

A physician who had contracted with a county hospital to provide emergency
medical services brought suit against the hospital to enforce his contract’s
binding arbitration clause. The arbitration clause included a provision allowing
for judicial review to determine whether an award was supported by law or substantial
evidence. After the hospital told the physician to "cease operations,"
the physician wrote a letter to the hospital seeking arbitration of certain
disputes. Although the hospital initially agreed to arbitration, two years passed
before any action was taken by the physician. However, the physician did not
seek arbitration, but instead filed a complaint for declaratory relief seeking
a judicial determination that the arbitration agreement was "valid and
enforceable" and that the parties were obligated to arbitrate. The trial
court sustained the hospital’s demurrer, holding that the judicial review included
in the agreement was contrary to the statute that authorized the arbitration
and was therefore unenforceable.

Affirming the trial court’s decision, the California Court of Appeals held
that the state’s Arbitration Act represented a comprehensive statutory scheme
regulating private arbitration. It further held that expanding the judicial
review of arbitration would tend to deprive the parties of the arbitration of
the advantages of finality that the arbitration process is intended to produce.
The court stated that the general rule regarding arbitration is that the merits
of a controversy between parties who have agreed to arbitration are not subject
to judicial review. The Act, said the court, which does provide an exclusive
set of circumstances in which judicial review of arbitration is appropriate,
does not allow for the blanket judicial review of the merits of the controversy.
Thus, the court ruled that parties cannot expand the jurisdiction of the court
to review arbitration awards beyond that provided by statute. Dismissal of the
complaint affirmed.