The California Court of Appeal has issued a ruling in the case of Kerlan-Jobe Orthopaedic Clinic v. Cedars-Sinai Medical Care Foundation (B348166), impacting how arbitration agreements are enforced in medical disputes. The court's decision, filed on November 2, 2026, clarifies which claims should proceed to arbitration and which should remain in court. This ruling primarily affects the Kerlan-Jobe Orthopaedic Clinic and its physicians, who have been embroiled in a legal battle with Cedars-Sinai Medical Foundation over the termination of their professional relationship.

The dispute began when Cedars-Sinai terminated its professional services agreement with Kerlan-Jobe, leading the clinic and its physicians to file a lawsuit. The case raises important questions about the enforceability of arbitration clauses in contracts and whether certain claims can be compelled to arbitration.

Background

The parties involved in this case include the Kerlan-Jobe Orthopaedic Clinic, a prominent sports medicine and orthopaedic surgery center, and Cedars-Sinai Medical Care Foundation, a well-known healthcare provider. The legal conflict originated from a series of agreements made in 2014, which established a professional services relationship between the two entities. These agreements included arbitration provisions that would later become central to the dispute.

In March 2023, Cedars-Sinai notified Kerlan-Jobe of its intent not to renew the service agreement, claiming it was acting in accordance with the contract's terms. Following this, Kerlan-Jobe and two of its physician shareholders, Dr. Daniel Kharrazi and Dr. Ronald Kvitne, filed a lawsuit against Cedars-Sinai and several individuals, alleging wrongful termination and other claims. The trial court initially ordered two of the clinic's causes of action to arbitration but declined to compel arbitration on the remaining 17 claims, prompting the appeal.

The Ruling

The California Court of Appeal ruled that the trial court's decision to compel arbitration of only two claims was incorrect. The court found that 13 of the remaining claims should also proceed to arbitration. The ruling stated, "We hold most of the causes of action (13 of the 17 not already ordered to arbitration) are within the scope of the agreements and should have been ordered to arbitration." The court also clarified that the parties did not clearly delegate questions of arbitrability to the arbitrator, which is a crucial aspect of arbitration agreements.

The appellate court noted that while the arbitration provisions in the agreements included delegation clauses, the language was not clear and unmistakable. The court pointed out that the service agreement's severability provision suggested that courts could also rule on enforceability issues, undermining the argument for arbitration. The judge's ruling emphasized that the arbitration agreements could be enforced by nonsignatory defendants under the doctrine of equitable estoppel.

Impact

This ruling has significant implications for the medical and legal communities. It underscores the importance of clear language in arbitration agreements, particularly regarding the delegation of authority to determine arbitrability. The decision may set a precedent for how similar disputes are handled in the future, especially in cases involving complex contractual relationships in the healthcare sector.

The ruling also affects how medical professionals approach contractual agreements with healthcare institutions. With the court's clarification on the enforceability of arbitration provisions, medical groups may need to reevaluate their contracts to ensure that their rights and obligations are clearly defined, particularly regarding dispute resolution.

What's Next

The defendants in this case may seek to appeal the ruling to a higher court, but details regarding any potential appeal were not specified in the court filing. There may also be related cases pending that could further clarify the enforceability of arbitration agreements in similar contexts.