Wednesday, January 23, 2013
C.A. Orders Award Vacated in Medical Malpractice Arbitration
Panel Says Arbitrator Must Disclose That Attorney Is Member of Dispute Resolution Agency
By JACKIE FUCHS, Staff Writer
The losing party in an arbitration was entitled to have the judgment vacated because the neutral arbitrator failed to disclose that counsel for one of the defendants was a member of the administering dispute resolution agency, this district’s Court of Appeal ruled yesterday.
Div. Six unanimously held that the California Arbitration Act and the California Ethics Standards for Neutral Arbitrators in Contractual Arbitrations impose upon a neutral arbitrator a continuing obligation to disclose such a relationship to the parties.
In January 2009, Deborah Gray and her husband, Tom Gray, filed a complaint for medical malpractice against John Chiu, California Back Specialist Medical Group, California Minimally Invasive Surgical Center, Inc., and Thousand Oaks Spine Medical Group, based on the defendants’ alleged negligence during and following spinal disc surgery on Deborah Gray.
The Grays’ complaint was submitted to binding arbitration before a three-member panel pursuant to the parties’ “Physician-Patient Arbitration Agreement.” The panel was to consist of one arbitrator chosen by each of the plaintiff and the defense, and a neutral arbitrator selected by the party arbitrators.
Attorney Eugene Locken represented the Grays. William Ginsburg, who was of counsel to the firm of Peterson & Bradford, represented Chiu and served as the lead trial attorney for the defense team.
In September 2009, after arbitration proceedings were commenced, but prior to the hearing, Ginsburg announced his plans to retire from Peterson & Bradford and become an arbitrator. Ginsburg remained involved with the case as Chiu’s personal counsel, but George Peterson, a partner at Peterson & Bradford, took his place as lead trial counsel for the defense.
The party arbitrators selected retired Los Angeles Superior Court Judge Alan Haber as the neutral arbitrator. In January 2010, Haber sent the parties a disclosure statement, which he supplemented in April 2010.
In both statements, Haber reported that he had no significant personal relationship or other professional relationship with any party or lawyer for a party.
In March 2010, Ginsburg began providing arbitration services through ADR Services, Inc. He subsequently attended all arbitration sessions as personal counsel for Chiu, and used the defense team’s private room to speak with Chiu and Peterson.
Several weeks after the arbitration sessions concluded, Haber issued his decision in favor of the defendants. Deborah Gray appealed and asked for vacation of the award.
Santa Barbara Superior Court Judge Timothy Staffel declined to vacate the award, saying that Ginsburg’s ADR relationship “may not have been disclosed at the arbitration, but it wasn’t hidden.”
Defendants had argued that the Grays knew or should have known of Ginsburg’s association with ADR because the hallways and meeting areas of the ADR Century City office, where the arbitration was held, displayed posters with photographs and names of ADR panel members, including Ginsburg.
In addition, Ginsburg claimed that during the arbitration he had seen Locken and the plaintiff party arbitrator looking at ADR brochures, which listed Ginsburg’s name.
In responsive declarations, however, Locken and the plaintiff party arbitrator disputed such contentions, saying that prior to the arbitration, they had no knowledge that Ginsburg was a member of ADR.
De Novo Review
The panel, applying the de novo standard of review applicable to issues concerning arbitrator disclosure, reversed Staffel’s decision, based on the Arbitration Act and the Ethics Standards established by the Judicial Commission to “guide the conduct of arbitrators, to inform and protect participants in arbitration, and to promote public confidence in the arbitration process.”
Justice Steven Perren, writing for the panel, said that the plain language of Ethics Standard 8 compels an arbitrator to disclose that a lawyer in the arbitration is a member of the administering dispute provider resolution organization.
Ethics Standard 8 provides, in relevant part:
“[I]n a consumer arbitration . . . in which a dispute provider resolution organization is coordinating, administering, or providing the arbitration services, a person who is nominated or appointed as an arbitrator . . . must disclose . . . [that] … a lawyer in the arbitration, or a law firm with which a lawyer in the arbitration is currently associated is a member of the dispute provider resolution organization.”
Perren said that Haber knew who Ginsburg was and was aware that Ginsburg “would be working through the ADR offices.”
Under the Arbitration Act, he said, a neutral arbitrator is required, within 10 days of receiving notice of his or her nomination, to “disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.” Based upon these disclosures, the parties are afforded an opportunity to disqualify the proposed neutral arbitrator.
Under Sec. 1286.2(a)(6)(A) of the Arbitration Act, if an arbitrator fails “to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware,’” the trial court must vacate the arbitration award.
Accordingly, the panel held, Staffel erred by failing to vacate the arbitration award based upon Haber’s failure to disclose Ginsburg’s ADR membership.
“While that rule seems harsh,” Perren wrote, “it is necessary to preserve the integrity of the arbitration process.”
The panel was unswayed by the defendants’ argument that Gray had waived her right to object to the award because she knew or should have known of Ginsburg’s ADR membership. With one exception that did not apply in the instant case, Ethics Standard 8 requires that a neutral arbitrator disclose such membership, Perren said.
Justice Kenneth Yegan and Los Angeles Superior Court Judge Brian Hoffstadt, sitting on assignment, concurred in the opinion.
Locken represented Gray on appeal.
David Hillings and Jack Reinholtz of Prindle, Amaro, Goetz, Hillyard, Barnes & Reinholtz argued on behalf of California Minimally Invasive Surgery Center. George Peterson of Peterson Bradford Burkwitz represented John Chiu, California Back Specialist Medical Group and Thousand Oaks Spine Medical Group.
The case is Gray v. Chiu; 1 S.O.S. 291.
Copyright 2013, Metropolitan News Company