Hsu v. Prime Healthcare Servs. III, LLC – Sept. 2015 (Summary)

ARBITRATION

Hsu v. Prime Healthcare Servs. III, LLC, E060953 (Cal. Ct. App. Sept. 14, 2015)

The Court of Appeal for the Fourth District of California affirmed the denial of an entity’s motion to compel arbitration with a physician, holding the physician’s advocacy for patient care and participation in a lawsuit against a hospital that was owned by the Employer, were outside the scope of the arbitration clause set forth in the physician’s employment contract.

The physician, who was the head of a medical group, became the medical director of a hospital owned by the Employer in 2008. The physician’s medical director agreement provided that “[a]ny dispute or controversy concerning non-professional issues…shall be determined and settled by arbitration.” In 2013, the physician raised concerns on behalf of his medical group that a second hospital owned by the Employer was allegedly increasing its revenue by admitting patients of the medical group to the second hospital instead of placing them in observation status. The medical group filed suit against the second hospital with the help of the physician medical director. One month after the suit was filed, the Employer terminated the physician from his medical director position at the first hospital. The physician alleged he was terminated for advocating on behalf of his patients at the second hospital, and filed a whistleblower action in response.

The Employer filed a motion to compel arbitration of the whistleblower action, arguing the physician’s advocacy at the second hospital was a “non-professional” issue, requiring arbitration. The trial court disagreed and the appellate court affirmed the trial court’s decision, holding that the physician’s claims under the whistleblower statute “necessarily relates” to the physician’s standards of professional practice, and thus were not covered by the arbitration provision.