UNFAIR COMPETITION AND CLRA ACTION NOT SUBJECT TO ARBITRATION
CRUZ V. PACIFICARE
A state court of appeal has held that a lawsuit alleging unfair competition and violations of the state Legal Remedies Act against a health plan was not subject to the mandatory contractual arbitration clause of the plan.
In Cruz v. Pacificare Health Systems, Inc. (01 CDOS 7516), a health plan member sued his health plan in a class action over the plan's failure to disclose alleged financial incentives to its providers that purportedly reduced the quality of health care delivered to its members. The member sought relief under the state Business and Professions Code for unfair competition and false advertising, and under the Consumer Legal Remedies Act. The health plan argued that the class action was subject to arbitration under the arbitration clause in the plan.
The Court held that because the class action sought only injunctive relief and restitution, the health plan could not compel arbitration of the lawsuit. The Court noted that the class action sought equitable relief pursuant to statute to protect the public by punishing wrongdoing and deterring future violations, and not to compensate individual plaintiffs.
