Health Net v. Stanford University Hospital

Filed 11/29/05 Health Net v. Stanford University Hospital CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

HEALTH NET, INC., AFFILIATES, Plaintiff and Appellant, v. STANFORD UNIVERSITY HOSPITAL AND STANFORD HOSPITAL AND CLINICS, Defendant and Respondent.

A107128 (San Francisco County Super. Ct. No. CPF 04-503976)

Appellant Health Net, Inc., Affiliates appeals from the trial court’s judgment confirming an arbitration award in favor of respondent Stanford University Hospital and Stanford Hospital and Clinics.[1] Appellant contends that the award should be vacated, or the matter remanded for the arbitrator’s further consideration, because the arbitrator exceeded his powers by considering parol and other extrinsic evidence, and by remaking, a written agreement that the arbitrator himself found to be unambiguous, and by failing to issue a sufficient written opinion stating his findings of fact and conclusions of law. We affirm the trial court’s judgment.

BACKGROUND

In his written “Reasons for Award,” the arbitrator noted, and the parties do not challenge, that “the sole issue presented at this arbitration is whether Claimant’s multiple charges for the same revenue code are correctly billed according to the contract.” Accordingly, we limit our discussion to the facts and procedural history relevant to this issue.[2]

In 2002, appellant and respondent entered into the written “Hospital Provider Services Agreement,” in which appellant agreed, among other things, to reimburse respondent, the “Provider,” for hospital medical services provided to members of various benefits programs covered by the agreement. The agreement contains rates and formulae for reimbursement at Addendum D-1 and E.

A number of provisions in the agreement appear to contemplate, or at least suggest, that respondent will provide, and be compensated for, different levels of care. Addendum E states that “Reimbursement shall be based exclusively on Medically Necessary services and authorized levels of care.” Addendum E-1 states, among other things, under a section headed “COMPENSATION” that Health Net “shall compensate Provider for medically necessary services as the rates defined in Addendum E”; lists what is to be included in per diem rates “for all levels of service”; states that the “[l]evel of service determination is done on a case-by-case basis and is contingent on the level of functional impairment and medical acuity of the patient”; and lists five levels of service.[3] The next section, entitled “CONDITIONS,” states that “PROVIDER shall indicate Level of care on claim. Failure to indicate Level of care shall result in payment at lowest level of care.” In addition, other provisions of the agreement regarding the Utilization/Care Management Program and Sub-Acute Care per diem rate contemplate different levels of care.

Nonetheless, Addendum E-2 contains a list of service categories along with the rate payable for such services based on an applicable revenue code. Except for the references to four levels of codes for Neo-Natal Intensive Care Unit (NICU) services, however, Addendum E-2 does not list different levels for the service categories.

The agreement contains a “Binding Arbitration” clause, which provides that any controversy “shall be settled by final and binding arbitration . . . . [¶] . . . The parties agree that the decision of the arbitrator shall be final and binding as to each of them.” The clause also states in relevant part:

“[T]he arbitrator shall be bound by applicable state and federal law, and shall issue a written opinion setting forth findings of fact and conclusions of law. . . . The arbitrator shall have no authority to make material errors of law or to award punitive damages or to add to, or modify, or refuse to enforce any agreements between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award which could not have been made by a court of law.”

The agreement also contains an integration clause. It states:

“Except as expressly provided in the applicable Addendum, this Agreement including its Addendum supersedes any and all other agreements, either oral or written, between the parties with respect to the subject matter hereof, and no other agreement, statement or promise relating to the subject matter of this Agreement shall be valid or binding.”

The parties disputed whether the agreement required appellant to reimburse respondent according to certain different levels of care appellant billed under the same revenue code. In October 2002, respondent filed a demand for arbitration for breach of contract. An arbitration hearing was subsequently held in San Francisco, after which the arbitrator found that respondent had breached the agreement and awarded respondent $427,872.22 in damages.

Among other things, the arbitrator stated in his “Reasons for Award” that the “uncontradicted testimony” of a respondent’s representative was that in the 1970’s respondent established eight “ranges of care levels (depending upon nursing needs of patient) for each of its rooms” and had used this “acuity system” since 1981, which “sometimes results in different levels of charges for a patient’s use of the same room.” Respondent billed appellant according to these eight ranges of charges although the universal billing form used did not separately account for them. The arbitrator also stated:

“6. [Appellant] argues that nothing in the contract provides for any ranges of payment for ICU and surgery, let alone 8 different rates, and that these differing levels of payments were never agreed to by [appellant]. [Appellant] bolsters this argument by citing to Appendix E-3 which does set forth different rates for the neo-natal intensive care unit (NICU), which is one revenue code. Thus, [appellant] urges that if the parties had agreed to charge and to pay different rates for ICU they would have set forth the different levels just as they did for NICU. This principle of contract and statutory interpretation that if you include one you exclude the others is so revered that first year law students commit it to memory in Latin: inclusion unis ist [sic] exclusion alterius.

“7. Were this a new relationship between the parties, that principle would undoubtedly carry the day for [appellant]. However these parties have a long history of contracting together. The undisputed evidence is that [respondent] employed the acuity system of billing multiple rates for the same room depending upon the level of care necessary for the patient since the early 1980s, and [appellant] did not communicate any objection to multiple charges for the same revenue code until November 20, 2001.”

The arbitrator further found that appellant did not formally dispute respondent’s claims, but “just started in the fall of 2001 paying multiple charges for the same revenue code at the lowest rate charged per patient.” He found that in September 2001, appellant issued a “Claims Operations Users Manual” internally which stated, “When providers bill different room rates within the same level of care, allow the lowest room rate for all days within that level of care.” The arbitrator found that this directive was never communicated to respondent, which first discovered it in the course of an examination of one of appellant’s witnesses.

The arbitrator did find, however, that representatives of appellant and respondent spoke in a November 20, 2001 telephone call about a claim filed by respondent, and that respondent “learned for the first time that [appellant] was concerned that the claim has multiple charges with same revenue code.” However, the arbitrator also found no evidence that appellant communicated its concerns about respondent’s charging of multiple rates at any time during the negotiations that lead to the agreement.

The arbitrator also found that appellant’s conduct for almost two decades was persuasive evidence of the parties’ intent regarding appellant’s payment for services under the agreement. The arbitrator found that appellant breached its agreement with respondent unilaterally by secretly determining that it would honor only a part of its contractual obligation.

After the arbitrator issued the award, appellant moved for reconsideration. Appellant argued that “the Reasons for Award do not support the Award” and that the arbitrator had made his decision by improperly relying on irrelevant, parol evidence, and “made a material error of law for which he had no authority under the terms of the contract between the parties.” The arbitrator denied the motion. Among other things, he found that he had “interpreted the parties’ agreement under the contract based upon the parties’ decades of experience together in billing and paying (i.e., their conduct).”

Appellant subsequently filed a petition to vacate, and respondent filed a petition to confirm, the arbitration award in trial court, which the court consolidated into one action. Appellant argued that the arbitrator’s statement in his “Reasons for Award” that appellant would “undoubtedly carry the day” if the parties were entering into a new relationship, based on the maxim of inclusion unis est exclusion alterius, indicated that the arbitrator found that the agreement unambiguously provided that respondent was not allowed to bill multiple charges for the same revenue code. Therefore, in light of the agreement’s integration clause, the arbitrator could not consider parol evidence or other extrinsic evidence of the parties’ customs and usages under previous contracts. He had committed material legal error by doing so, which error was beyond the scope of his authority pursuant to the agreement, requiring that the court vacate the award.

The trial court rejected appellant’s arguments, finding that the arbitrator did not find the agreement to be unambiguous, and that he did not exceed his powers by considering the parties’ course of conduct over time. The court confirmed the arbitration award, and ordered appellant to pay interest on the award, plus fees and costs. Appellant subsequently filed a timely appeal.

DISCUSSION

Appellant argues on appeal that the arbitrator exceeded his authority by considering parol and other extrinsic evidence despite his finding that the integrated agreement was unambiguous, and by modifying, or adding to, the agreement’s terms; issuing an award that is irrational and/or amounts to a remaking of the agreement; considering parol and extrinsic evidence to interpret an unambiguous contract; and because he made material errors of law.

Appellant’s arguments are somewhat redundant. Essentially appellant contends that the arbitrator’s award is subject to our de novo review, and must be vacated because the arbitrator committed material errors of law by considering parol and other extrinsic evidence to change the terms of an integrated agreement that the arbitrator himself determined was unambiguous, which errors exceeded the scope of his authority pursuant to the agreement’s arbitration clause and California law. Appellant also contends reversal is merited because the arbitrator failed to issue appropriate findings of law and fact in violation of his contractual duties. As we discuss below, appellant’s arguments lack merit.

I. The Arbitrator Did Not Exceed the Scope of His Authority

A. Standards of Review

Before examining the arbitrator’s actions, we must first determine our standards of review, both as to the arbitrator’s own determination of the scope of his contractual authority and the possible bases for vacating an arbitration award. In both cases, appellant asserts standards that we do not apply here. Although our decision would be no different if we followed appellant’s proposed standards, we nonetheless address them.[4]

1. We Must Give Substantial Deference to the Arbitrator’s Determinations of the Scope of His Contractual Authority

To the extent that appellant contends we are to review de novo the arbitrator’s own determination that he had the contractual authority to interpret the parties’ agreement by referring to parol and other extrinsic evidence, this is not correct. Our Supreme Court has stated that “courts should generally defer to an arbitrator’s finding that determination of a particular question is within the scope of his or her contractual authority.” (AMD, supra, 9 Cal.4th at p. 372.) We follow this instruction here.

“In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 . . . our Supreme Court made it clear that the grounds for judicial review of a contractual arbitration award are extremely limited. Under Moncharsh, we cannot review the merits of the underlying controversy, the arbitrator’s reasoning, or the sufficiency of the evidence supporting the award. (Id. at p. 11.) Even ‘an error of law apparent on the face of the award that causes substantial injustice does not provide grounds for judicial review.’ (Id. at p. 33.)” (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087.)

“Code of Civil Procedure sections 1286.2 and 1286.6 provide the only grounds for challenging an arbitration award. [Footnote omitted.] (Moncharsh, supra, 3 Cal.4th at p. 33.)” (Alexander v. Blue Cross of California, supra, 88 Cal.App.4th at p. 1087.) “These rules ‘vindicate[] the intentions of the parties that the award be final’ [Moncharsh, supra, 3 Cal.4th at p. 11] and support the ‘ “strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.” ’ (Id. at p. 9 [citation omitted].)” (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 943-944.) Code of Civil Procedure section 1286.2, subdivision (a)(4) provides in relevant part that “the court shall vacate the award if the court determines . . . [¶] . . . [¶] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.”

Appellant is correct that we review de novo the trial court’s determinations about the scope of the arbitrator’s powers. However, courts have a limited appellate review of the arbitrator’s own determinations. “On issues concerning whether the arbitrator exceeded his powers, we review the trial court’s decision de novo, but we must give substantial deference to the arbitrator’s own assessment of his contractual authority.” (Alexander v. Blue Cross of California, supra, 88 Cal.App.4th at p. 1087.) “Although section 1286.2 permits the court to vacate an award that exceeds the arbitrator’s powers, the deference due an arbitrator’s decision on the merits of the controversy requires a court to refrain from substituting its judgment for the arbitrator’s in determining the contractual scope of those powers.” (AMD, supra, 9 Cal.4th at p. 372 [regarding the arbitrator’s scope of authority to fashion remedies].)

This limited review is based upon the very purpose of arbitration. Our Supreme Court has instructed:

“Giving substantial deference to the arbitrators’ own assessments of their contractual authority is consistent with the general rule of arbitral finality we recently reaffirmed in Moncharsh v. Heily & Blase, supra, 3 Cal.4th at pages 8-13 . . . . As we stated there, parties to private, nonjudicial arbitration typically expect ‘ “their dispute will be resolved without necessity for any contact with the courts.” ’ (Id. at p. 9 [citation omitted].) The decision to arbitrate disputes is motivated in part by the desire to avoid the delay and cost of judicial trials and appeals. ‘Ensuring arbitral finality thus requires that judicial intervention in the arbitration process be minimized.’ (Moncharsh, supra, 3 Cal.4th at p. 10.) A rule of judicial review under which courts would independently redetermine the scope of an arbitration agreement already interpreted by the arbitrator would invite frequent and protracted judicial proceedings, contravening the parties’ expectations of finality. (See Van Tassel v. Superior Court [(1974)12 Cal.3d 624, 627] [trial ‘de novo’ of jurisdictional facts would defeat purposes of choosing arbitration].)” (AMD, supra, 9 Cal.4th at p. 373.)

In the present case, the parties expressly agreed to submit their disputes to “final and binding arbitration. . . . [¶] . . . [¶] The parties agree that the decision of the arbitrator shall be final and binding as to each of them.” (Cf. AMD, supra, 3 Cal.4th at p. 369, italics added.) The arbitrator plainly determined it was within the scope of his contractual authority to interpret the parties’ agreement with parol and other extrinsic evidence, both in determining the award itself and in rejecting appellant’s request for reconsideration. In light of the case law discussed herein, the parties’ agreement about the finality of any arbitration, and the arbitrator’s own determinations about the scope of his authority, we must give “substantial deference” to his assessments of this scope.

2. Our Review of the Award is Very Limited

Appellant, in addition to its arguments that the arbitrator exceeded the scope of his contractual authority, urges us to vacate the arbitrator’s award because it does not draw its “essence” from the agreement, is “completely irrational,” and “amounts to an arbitrary remaking of the contract.” These are questionable bases for the vacating of the arbitration award, which we do not need to consider here in light of our conclusion that the arbitrator’s actions were proper. Therefore, we only briefly address appellant’s contentions.

Our Supreme Court has made clear that, as we have already discussed, an arbitrator’s award generally is not subject to judicial review even if there is “an error of law apparent on the face of the award that causes substantial injustice.” (Moncharsh v. Heily & Blase, supra, 3 Cal.4th at p. 33.) Thus, the only grounds for vacating an award are stated in Code of Civil Procedure section 1286.2, one of which is when “an arbitrator exceeds his powers.” (Ibid.) The Supreme Court has not provided a comprehensive definition of what is an excess of an arbitrator’s power in circumstances such as the present case, although it has indicated that “the courts retain the ultimate authority to overturn awards as beyond the arbitrator’s powers, whether for an unauthorized remedy or decision on an unsubmitted issue.” (AMD, supra, 9 Cal.4th at p. 375.) It has also stated that “[e]very intendment of validity must be given the award.” (Grunwald-Marx, Inc. v. L.A. Joint Board (1959) 52 Cal.2d 568, 589, quoted in American & Nat. Etc. Baseball Clubs v. Major League Baseball Players Assn. (1976) 59 Cal.App.3d 493, 498; accord Paramount Unified School Dist. v. Teachers Assn. of Paramount (1994) 26 Cal.App.4th 1371, 1381 [“ ‘ “Every reasonable intendment must be indulged in favor of the award.” [citation omitted.]’ ”].)

Appellant’s arguments that an award may be vacated because it does not draw its “essence” from the agreement, is “completely irrational,” and “amounts to an arbitrary remaking of the contract” are based on AMD, supra, 9 Cal.4th 362. There, the Supreme Court adopted a standard for reviewing an arbitrator’s fashioning of remedies for breach of contract along the lines urged by appellant. However, the AMD court expressly declined to do so with regard to an arbitrator’s interpretation of a contract, which is the only issue before us in the present case. The court stated:

“We need not decide here whether an arbitrator’s interpretation of a contract is subject to review for ‘irrationality’ or ‘arbitrariness.’ The present case involves an arbitrator’s choice of remedies, rather than interpretation of the agreement. We reiterate, however, that an award generally may not be vacated or corrected, under California law, for errors of fact or law. For this reason, one Court of Appeal has referred to the ‘completely irrational’ standard as ‘a questionable pre-Moncharsh statement of law.’ [Citation omitted.]” (AMD, supra, 9 Cal.4th at p. 377, fn. 10.)

Appellant cites some cases issued by our appellate courts after AMD, supra, 9 Cal.4th 362, in which they have grappled further with defining the parameters of an arbitrator’s powers in contractual disputes. (See Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 433; California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 953; Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 592-593.) However, we do not need to further address appellant’s proposed bases for vacating the award in the present case because, as we discuss further below, the arbitrator’s award was based upon his proper consideration of parol and other extrinsic evidence in order to interpret an agreement he found to be ambiguous. He was plainly within his powers to do so under the parties’ agreement and California law.

B. The Arbitrator’s Interpretation of the Parties’ Agreement

Appellant’s arguments fail for the simple reason that it bases each of them on the incorrect assertion that the arbitrator found the agreement to be unambiguous, yet went beyond the agreement’s “four corners” to improperly consider parol and other extrinsic evidence. To the contrary, the arbitrator, as indicated by his rulings, found the relevant provisions to be ambiguous and, therefore, turned to interpretive tools to determine their meaning, which appellant concedes the arbitrator was entitled to do. Therefore, we reject appellant’s contentions, regardless of the standards of review that apply.

Specifically, appellant contends the arbitrator’s reference to the maxim of inclusion unis est exclusion alterius indicates that the arbitrator himself found the contract to be unambiguous. The opposite is the case. The arbitrator’s reference to this maxim indicates that he found the contract to be ambiguous, as the maxim is only used to interpret ambiguous provisions of a contract or statute. As our Supreme Court stated regarding the essentially identical maxim of expressio unius est exclusio alterius (the mention of one matter implies the exclusion of all others), “[t]he maxim serves as an aid to resolve the ambiguities of a contract. . . . if the applicability of a contract provision can be determined only by use of the maxim expressio unius, the contract is ambiguous, and extrinsic evidence is therefore admissible to prove the intent of the parties.” (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862 , 871; see also Williams v. Los Angeles Metropolitan Transit Authority (1968) 68 Cal.2d 599, 603 [referring to the maxim’s “proper role” as “resolving ambiguity,” in statutes]; In re Christopher T. (1998) 60 Cal.App.4th 1282, 1290 [doctrine a mere guide to be utilized when statutes are ambiguous].)

Furthermore, the arbitrator made clear in his denial of appellant’s motion for reconsideration that he considered and rejected appellant’s argument that his consideration of extrinsic evidence was a material error of law and, therefore, beyond the scope of his contractual authority. The arbitrator, in referring to this argument, states: “that is simply not so. The arbitrator interpreted the parties’ agreement under the contract based upon the parties’ decades of experience together in billing and paying (i.e., their conduct) and found that multiple levels of billing for the same revenue code was an accepted practice by both sides.”

The arbitrator’s statements indicate that he considered the agreement’s relevant provisions to be ambiguous, and that he turned to standard interpretive tools to determine their meaning in light of his finding. The arbitrator was well within his powers to do so.

As respondent correctly notes, when an integrated contract is ambiguous, “[t]he terms of a writing can . . . ‘be explained or supplemented by course of dealing or usage of trade or by course of performance.’ (Code Civ. Proc. § 1856, subd. (c).) Indeed, where there is a fixed and established usage and custom of trade, the parties are presumed to contract pursuant thereto. [Citations omitted.] Thus, courts can rely on usage and custom to imply a term where the contract itself is silent in that regard. [¶] Extrinsic evidence on all these circumstances and matters can be offered where it is obvious that a contract term is ambiguous, but also to expose a latent ambiguity.” (Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1240-1241.) Furthermore, “[g]eneral usages of trade and course of dealing may . . . explain an agreement.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 853.) “ ‘Usage or custom may be looked to, both to explain the meaning of language and to imply terms, where no contrary intent appears from the terms of the contract.’ [Citations.] Generally, ‘[u]sage can be invoked only to interpret, not create contractual terms [citations]. But a reasonable usage may supply an omitted term or otherwise supplement an agreement.’ [Citation.]” Varni Bros. Corp. v. Wine World, Inc. (1995) 35 Cal.App.4th 880, 889.) A court may consider, among other things, the parties’ conduct in previous agreements and in their negotiations, the parties’ other agreements, and general trade usage. (Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc., supra, 74 Cal.App.4th at pp. 1243-1245.)

Moreover, appellant acknowledges that the arbitrator was entitled to consider extrinsic evidence to interpret what he considered to be ambiguities in the agreement, despite the agreement’s integration clause. As appellant states in its appellate briefing, “[i]t is true that extrinsic evidence is admissible to explain an ambiguity. (Heston v. Farmers Insurance Group (1984) 160 Cal.App.3d 402, 412.)” Appellant also correctly states that “[u]nder the parol evidence rule extrinsic evidence may be admitted provisionally in order that [sic] to determine if it is relevant to establish an interpretation of the instrument to which it is reasonably susceptible.” (Tahoe National Bank v. Phillips (1974) 4 Cal.3d 11, 22-23.) Indeed, “[t]he test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Id. at p. 17, fn. 5.)

The arbitrator acted appropriately in the present case in light of the agreement’s ample ambiguity. As indicated in our review of the contract’s provisions in the background section above, the agreement contains multiple references to different levels of services in its billing and payment provisions that suggest the parties anticipated respondent would bill, and appellant would pay, different amounts for different levels of service provided. The fact that multiple levels of service were not indicated for many of the categories referred to in the section of the addendum referring to particular revenue codes is hardly dispositive in light of this other language. The language of the agreement was reasonably susceptible to respondent’s interpretation, the evidence offered by respondent was relevant, and no contrary intent existed on the face of the agreement that barred consideration of the parties’ two decades of dealings with one another. Thus, even if our standard of review were entirely de novo, we would conclude that the arbitrator was correct in his approach to interpreting the parties’ agreement.

Appellant correctly notes that the arbitrator did not expressly state in his “Reasons for Award” that the agreement was ambiguous. To the extent appellant asserts this argument as a basis for vacating the award (a dubious one in light of its contention that the arbitrator’s “Reasons for Award” contained a finding that the contract was unambiguous), it lacks merit. The arbitrator’s finding of ambiguity is implicit in all of his rulings. Analogizing the arbitrator’s “Reasons for Award” to a lower court judgment, we note the longstanding rule that a “judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.” (Denham v. Superior Court (1970) 2 Cal.3d 557, 564 [record did not reflect what showing was made below that supported the court’s ruling], cited in Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140 [in regard to the argument that the trial court did not provide a “reasoned explanation” for denying certain objections].) We are also mindful that “[e]very intendment of validity must be given the award.” (Grunwald-Marx, Inc. v. L.A. Joint Board, supra, 52 Cal.2d at p. 589.) Appellant has failed to establish any error here. Accordingly, we reject any contention that the arbitrator’s failure to expressly state that the parties’ agreement was ambiguous is a basis for vacating the award, or for remanding this matter to the arbitrator for his further consideration.

Appellant’s case citations in support of its contention that the arbitrator could not consider extrinsic evidence are unpersuasive. For example, appellant urges us to consider Bonshire v. Thompson, 52 Cal.App.4th 803. The parties there had included an integration clause in their agreement which stated, among other things, that “ ‘no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this agreement.’ ” (Id. at p. 806.) Nonetheless, the arbitrator considered extrinsic evidence in fashioning an award which the Court of Appeal vacated. The court found that the award was not rationally related to the contract in light of the contractual prohibition, and that the arbitrator had exceeded his powers pursuant to Code of Civil Procedure section 1286.2, subdivision (d). (Id. at p. 811.) The case has no relevance to the present case, however, because the integration clause here does not limit the arbitrator’s consideration of extrinsic evidence in the same unqualified terms.

Similarly, in California Faculty Assn. v. Superior Court, supra, 63 Cal.App.4th 935, another case appellant cites, the Court of Appeal vacated an arbitration award where the collective bargaining agreement limited the arbitrator’s authority to overturn faculty tenure denials to situations where the decision was “ ‘not based on a reasoned judgment,’ ” because the arbitrator had “substituted his own judgment for the [university] president’s.” (Id. at p. 952.) However, there were no exceptions to that contractual limitation. In the present case, appellant freely acknowledges that, pursuant to the agreement’s integration clause, the arbitrator could consider extrinsic evidence to interpret an ambiguous provision.

Appellant also argues that the arbitrator’s interpretation of the agreement was wrong because “the arbitrator’s statement [in his “Reasons for Award”] that Health Net did not communicate its concern about Stanford charging multiple rates for the same revenue code on or after November 20, 2001 demonstrates that Stanford was on notice that Health Net disputed how Stanford now construes the agreement.” Appellant ignores the fact that the arbitrator also found that there was no evidence that appellant communicated its concerns about respondent’s charging of multiple rates at any time during the negotiations that lead to the agreement. In any event, appellant’s argument amounts to a request that we find the arbitrator’s factual findings were wrong. As we have already discussed, “a court may not review the sufficiency of evidence supporting the arbitrator’s award.” (Moncharsh v. Heily & Blase, supra, 3 Cal.4th at p. 11.)

Appellant makes various other arguments for why the arbitrator’s interpretation of the agreement was “irrational” and “bizarre,” including that he relied on an “interpretation of prior agreements and/or arrangements between the parties” and “proceeded to improperly ‘remake’ the parties’ agreement by basing his award on factors extrinsic to the contract, including custom under earlier contracts, and pre-contract negotiations.” Appellant’s arguments are premised, however, on the incorrect assertion that the arbitrator found the agreement to be unambiguous. The language of the agreement contains sufficient ambiguity to support the arbitrator’s approach. As we have also indicated, it is proper to consider past dealings, custom and usage, and pre-contract negotiations in order to interpret such ambiguous agreements.

In short, we are required to give substantial deference to the arbitrator’s determinations about the scope of his contractual authority. Regardless of our standard of review, the arbitrator employed standard interpretative tools to determine provisions in an agreement that he found to be ambiguous, as appellant concedes he was entitled to do under both the agreement and California law. We have no reason to disturb his award based on his interpretation of the parties’ agreement.

C. The Arbitrator’s Findings of Facts and Conclusions of Law

Appellant also contends that the award should be vacated, or at least remanded to the arbitrator for further consideration, because the arbitrator exceeded his authority by his failing to issue findings of fact and conclusions of law as required by the agreement, contending that the arbitrator’s “Reasons for Award” did not satisfy this contractual requirement. This too is incorrect.

As we have already discussed, we must give substantial deference to the arbitrator’s determination of the scope of his own authority (Alexander v. Blue Cross of California, supra, 88 Cal.App.4th at p. 1087), which includes what findings and conclusions he should state in support of his award, and are mindful that “[e]very intendment of validity must be given the award.” (Grunwald-Marx, Inc. v. L.A. Joint Board, supra, 52 Cal.2d at p. 589.)

The agreement states that “the arbitrator shall issue a written opinion setting forth findings of fact and conclusions of law.” The fact that the arbitrator did not expressly label his findings and conclusions as such is not determinative in light of the agreement’s failure to specify any specific form for his written opinion.

Appellant does not provide any facts or authority to the contrary. It claims to find support in Western Employers Ins. Co. v. Jefferies & Co. (9th Cir. 1992) 958 F.2d 258. That case did involve a contractual requirement that the arbitrator issue findings of fact and conclusions of law, but it just as clearly involved arbitrators who expressly stated they were not bound by this requirement and did not issue any findings or conclusions with their award. (Id. at pp. 261-262.) Therefore, the case is inapposite here.

Appellant also contends that the arbitrator’s findings and conclusions were required to “address all material issues raised by the pleadings and the evidence.” Appellant fails to provide a record containing all of the pleadings and evidence upon which it bases this statement. Furthermore, the record indicates that the arbitrator was asked to determine whether or not a breach of contract had occurred, and his ruling addresses this issue and makes appropriate factual findings. Regardless, the only authority cited by appellant to support its contention that the arbitrator was required to do more involves litigants’ rights to findings and conclusions in court, not in an arbitration guided by contractual language. To the extent that the arbitrator was not as explicit as appellant contends was required, such as by failing to declare the agreement to be ambiguous, or by failing to sufficiently address the rules of contract interpretation, the parol evidence rule, or the scope of the integration clause, appellant does not cite any evidence or authority establishing that the arbitrator violated his contractual duty, which was expressly limited to the requirement that he “issue a written opinion setting forth findings of fact and conclusions of law.” The agreement does not state, for example, that the arbitrator must articulate “all” of his findings of fact or conclusions of law, nor that he must follow any requirement for such findings and conclusions that might be imposed upon the courts of our state.

Accordingly, in light of the arbitrator’s written “Reasons for Award,” which contains statements that are in substance findings of fact and conclusions of law, we find no reason to vacate the award.[5]

DISPOSITION

The trial court’s judgment confirming the arbitration award is affirmed. Respondent is awarded costs.

_________________________

Lambden, J.

We concur:

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Kline, P.J.

_________________________

Haerle, J.

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[1] The parties’ appellate papers suggest that they disagree as to whether Stanford University Hospital and Stanford Hospital and Clinics constitutes one or two respondents. We refer to “respondent” in this opinion because the singular is used in the arbitration award and the trial court judgment.

[2] The facts stated herein are taken from the arbitrator’s “Reasons for Award” and subsequent denial of appellant’s motion for reconsideration, and from the terms of the agreement itself. We have no authority to review the sufficiency of evidence supporting the arbitrator’s award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.) “We therefore take the arbitrator’s findings as correct without examining a record of the arbitration hearings themselves. . . .” (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 367, fn. 1 (AMD).)

[3] The levels of service listed are “basic skilled nursing,” “intensive skilled nursing,” “skilled nursing rehabilitation,” “extensive skilled nursing,” and “subacute skilled nursing.”

[4] Respondent does not rely on our Supreme Court’s instruction that an arbitrator’s errors of law are not normally reviewable (Moncharsh, supra, 3 Cal.4th at p. 33) to challenge appellant’s argument that we should vacate the arbitration award on the ground that, as stated in the parties’ agreement, the arbitrator had “no authority to make material errors of law.” We do not intend by anything in this opinion to indicate whether or not it is appropriate to review and vacate such an arbitration award. We do not reach this issue because we find that the arbitrator did not make any material errors of law.

[5] In light of our ruling, we need not address respondent’s argument that appellant waived his right to raise the arbitrator’s purported failure to issue findings of fact and conclusions of law on appeal for the first time, or appellant’s opposition to this waiver argument.