The family withdrew the lawsuit and in May 2012 filed a medical-malpractice lawsuit. A judge in Los Angeles County Superior Court threw out the lawsuit, ruling that it was filed past the one-year statute of limitations.
However, the appellate court said the family had "absolutely no reason" to suspect that the woman was alive until the pathologist gave his expert opinion. The case now returns to the lower court for further proceedings.
The hospital has not addressed the allegation that Arroyo was prematurely declared dead, the Times said, citing court records.
A call seeking comment from a hospital representative on Wednesday was not immediately returned.