Latest 3 Cases: Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co. (Antitrust & Trade Regulation), Lonky v. Patel (Arbitration & ...

Reflections on the Movement in California to Repeal the State’s Ban on Affirmative Action

VIKRAM DAVID AMAR

Illinois law dean and professor Vikram David Amar offers three observations on a measure recently approved by the California legislature that would, if approved by the voters, repeal Proposition 209, the voter initiative that has prohibited affirmative action by the state and its subdivisions since its passage in 1996. Amar praises the California legislature for seeking to repeal Prop 209 and for seeking to do so using the proper procedures, and he suggests that if Prop 209 is repealed, legal rationales for the use of race should be based not only on the value of diversity (as they have been for some time now), but also on the need to remedy past wrongs against Black Americans.

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Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co.

Docket: A152080(First Appellate District)

Opinion Date: July 2, 2020

Judge: Peter J. Siggins

Areas of Law: Antitrust & Trade Regulation, Business Law, Insurance Law

Ben-E-Lect, a third-party insurance claim administrator, developed a medical expense reimbursement plan; employers could buy a group policy of medical insurance with a high deductible and self-fund to pay for the healthcare expenses employees incurred within the annual deductible or any copay requirement. The practice of employers’ using such plans in conjunction with a high-deductible health plan is called “wrapping.” Ben-E-Lect was the state’s largest third-party administrator for small group employers who wrapped their employee medical policies. Anthem provides fully insured health plans to the California small group employer market. Beginning in 2006, Anthem announced a series of policies that limited wrapping. In 2014, Anthem prohibited wrapping all Anthem plans. Employer groups who used Anthem plans certified they would not wrap Anthem policies, and agents certified they would not advise employers to enter into any employer-sponsored wrapping plan. Ben-E-Lect sued Anthem. The court of appeal affirmed that Anthem’s policy to prohibit wrapping its health insurance products violated the Cartwright Act (Bus. & Prof. Code, 16700); interfered with Ben-E-Lect’s prospective business relationships; and was an illegal, coercive, vertical group boycott under the antitrust rule of reason (Bus. & Prof. Code, 17200), because Anthem told its insurance agents that if they wrapped any Anthem policies they would be subject to termination loss of sales commissions. The court affirmed an award of $7.38 million and an injunction. The trial court considered sufficient evidence of market power and market injury.

Lonky v. Patel

Docket: B295314(Second Appellate District)

Opinion Date: July 2, 2020

Judge: Brian M. Hoffstadt

Areas of Law: Arbitration & Mediation

Where, as here, an arbitrator issues a series of rulings during an arbitration proceeding, a court determines which rulings constitutes an "award" by (1) asking whether the ruling (a) determines all issues necessary to resolve the entire controversy and (b) leaves unaddressed only those issues incapable of resolution at that time because those issues are potential, conditional or contingent, and (2) answering those questions by looking to the specific procedures adopted in the arbitration at issue. In this case, the parties trifurcated the arbitration proceedings and the arbitrator's second of three rulings did not determine all issues necessary to the controversy and left unaddressed issues that could have been addressed at that time. Therefore, the Court of Appeal held that the arbitrator acted within her authority in modifying that second ruling prior to issuing her third and final ruling that constituted an "award" and the trial court erred in refusing to confirm that award on the ground that the arbitrator had exceeded her powers in incorporating a modification of the second ruling into the award. The court vacated with instructions to enter a new and different judgment, rejecting the parties' further attorney fees-based challenges and awarding attorney fees on appeal to the prevailing party on appeal.

Mize v. Mentor Worldwide LLC

Docket: B295829(Second Appellate District)

Opinion Date: July 2, 2020

Judge: Tangeman

Areas of Law: Drugs & Biotech, Personal Injury, Products Liability

Plaintiffs filed suit against Mentor, alleging causes of action for negligence and negligence per se based on Mentor's negligent failure to warn and negligent manufacturing of breast implants, strict products liability for failure to warn, and strict products liability for manufacturing defects. The Court of Appeal reversed the trial court's judgment and entered an order overruling the demurrer to the third amended complaint. The court held that the tort claims in this case survive preemption because they are premised on conduct that both violates the Medical Device Amendments (MDA) to the Food, Drug, and Cosmetics Act and would give rise to a recovery under state law even in the absence of the MDA. The court also held that plaintiffs pleaded the requisite causal connection between their injuries and Mentor's tortious acts to survive a demurrer. Finally, the trial court erroneously sustained Mentor's demurrer to the loss of consortium claim because it was derivative of the other claims.