Sarchett v. Blue Shield of California

LUCAS, J.,

Concurring and Dissenting. I concur with the majority’s holding that the retrospective review provisions of the policy at issue here are unambiguous and enforceable. I dissent, however, from the majority’s extension of the holding in Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418 [158 Cal.Rptr. 828, 600 P.2d 1060].

First, I note that Davis dealt only with whether Blue Cross had waived its right to compel its insureds to submit their disputes to the arbitration process. It did not address the question of whether the insurer’s conduct gave rise to damages for a breach of the duty of good faith and fair dealing. The majority assumes that such relief may be available.

Moreover, as the majority acknowledges, the arbitration provision under review in Davis “was obscurely placed in fine print, whereas here it was adequately set out with a bold-face heading.” (Ante, at p. 10.) Nonetheless, the majority finds that because Blue Shield “had reason to know that Sarchett was uninformed of his rights” (ibid.), it was further required affirmatively to assure that Sarchett knew of his remedial rights. Sarchett testified, however, that he had a copy of his insurance policy booklet outlining his rights and that he had reviewed the booklet before deciding to select Blue Shield as his insurer. The information was at hand and Sarchett’s failure to make use of it was not due to any fault of, or deception by, the insurer.

My colleagues first observe that the arbitration clause here was indeed “clear and conspicuous,” but nonetheless find that although Sarchett is *17therefore bound by its terms, Blue Shield had a further duty to explain the terms and conditions of the insurance contract. The majority’s conclusion that Blue Shield breached its duty of good faith relies on Blue Shield’s statement to Sarchett that “We are sorry that we cannot be of more help to the subscriber in this instance” and its attempts to “place conditions” on the insured’s access to peer review when such review was a matter of right under the contract. The situation here, however, differed from that in Davis because the arbitration clause was “adequately” displayed in the actual policy of insurance to which Sarchett unquestionably had access. The court in Davis noted that “The trial court. . . found that in the absence of timely and adequate advice as to the arbitration procedure the average insured in all likelihood would not know of a right to arbitration buried in an obscure provision of a hospitalization policy.“ (25 Cal. 3d at p. 429, italics added.) As the majority concludes, however, the provision here simply did not suffer from the same disability.

Moreover, in Davis, the trial court “found that Blue Cross knew that in many instances its insureds would not be aware of the arbitration clause and that, despite this knowledge, Blue Cross deliberately decided not to inform its insureds of the arbitration procedure.” (Id., at p. 430.) This practice effectively turned arbitration into a unilaterally available procedure effectively utilized only when the insurer deemed it appropriate. (Ibid.) In this case, however, there was no similar finding by the court, which instead focused in this context solely on the content of Blue Shield’s letters of denial. If, indeed, the arbitration clause contained in the insurance policy here was “adequately set out” as the majority agrees, then it seems to me that the insurer sufficiently discharged its duty to inform the insured of his rights.

Will the next “logical” step in the majority’s progression be to require an insurer to monitor its insureds to assure that they take advantage of every possible benefit of their policies? For example, if an insurer is aware that an insured has regular treatments and regularly submits bills for those treatments, is the insurer obligated to contact and remind the insured of coverage if the pattern of submitting bills is interrupted? Should insurers routinely send reminder notices to insureds advising them that they should submit their bills for insurance purposes? These suggestions seem all too consistent with the majority’s approach here, with which I cannot agree. Once the insurer has provided adequate notification of the appropriate benefits and procedures in the policy, in my opinion it has fulfilled its affirmative responsibilities absent any active misrepresentation or fraud.

In sum, Blue Shield informed Sarchett of his rights in adequate fashion. Once it had done so, it was not required to further monitor its insured’s *18conduct. The role of an insurer should be to provide clear, accurate and adequate information to its insureds; once it has done so, it should not have to act as a paternalistic overseer.

I would reverse the trial court’s judgment in its entirety without the qualification adopted by the majority.