Academy of Medicine v. Aetna Health, Inc., No. 2004-0001.

CourtUnited States State Supreme Court of Ohio
Writing for the CourtPfeifer
Citation842 N.E.2d 488,108 Ohio St.3d 185,2006 Ohio 657
Decision Date01 March 2006
Docket NumberNo. 2004-0001.
PartiesACADEMY OF MEDICINE OF CINCINNATI et al., Appellees, v. AETNA HEALTH, INC. et al.; United Healthcare of Ohio, Appellant.

Page 488

842 N.E.2d 488
108 Ohio St.3d 185
2006-Ohio-657
ACADEMY OF MEDICINE OF CINCINNATI et al., Appellees,
v.
AETNA HEALTH, INC. et al.; United Healthcare of Ohio, Appellant.
No. 2004-0001.
Supreme Court of Ohio.
Submitted February 2, 2005.
Decided March 1, 2006.

Page 489

Waite, Schneider, Bayless & Chesley Co., L.P.A., Stanley M. Chesley, Paul M. DeMarco, Terrence L. Goodman, and Jean M. Goeppinger, Cincinnati; Strauss & Troy, Richard S. Wayne, Thomas P. Glass, Joseph J. Braun, and Nicole M. Lundrigan, Cincinnati; Barrett & Weber, L.P.A., and Michael R. Barrett, Cincinnati, for appellees.

Thompson Hine and Stephen J. Butler, Cleveland; Weil, Gotshal & Manges, L.L.P., Gregory S. Coleman, Debra J. Pearlstein, and Elizabeth M. Avery, for appellant.

Tucker Ellis & West, L.L.P., and Irene C. Keyse-Walker, Cleveland, urging reversal for amicus curiae America's Health Insurance Plans.

Issac, Brant, Ledman & Teetor, L.L.P., and Mark Landes, Columbus, urging reversal for amicus curiae Ohio Manufacturers' Association.

C. Luther Heckman, urging reversal for amicus curiae Ohio Council of Retail Merchants.

Rich, Crites & Wesp, L.L.C., and E. Joel Wesp, Columbus; Cooper & Kirk, P.L.L.C., David H. Thompson, and Charles

Page 490

J. Cooper; National Chamber Litigation Center, Inc., Robin S. Conrad, and Stephanie A. Martz, urging reversal for amici curiae United States Chamber of Commerce and Ohio Chamber of Commerce.

PFEIFER, J.


Factual and Procedural Background

{¶ 1} Plaintiffs-appellees, Academy of Medicine of Cincinnati, Butler County Medical Society, Luis Pagani, M.D., Paul Jennewine, M.D., Bradford H. Woodall, M.D., William Randall Cox, M.D., and Newton H. Bullard, M.D., allege that defendant-appellant, United Healthcare of Ohio ("United"), one of the largest providers of group health-insurance policies in Hamilton, Warren, Clermont, and Butler Counties, engaged in a conspiracy with other such providers to maintain artificially low reimbursement rates paid to physicians in the region in violation of the antitrust provisions of the Valentine Act, R.C. Chapter 1331.

{¶ 2} In response to appellees' complaint filed in Hamilton County Common Pleas Court, appellant moved to stay the trial court proceedings and compel arbitration of the antitrust claims. The motion was based on the arbitration clause in the physician-appellees' provider agreements with appellant. The clause requires binding arbitration of disputes "about [the parties'] business relationship."

{¶ 3} The trial court denied the motion to stay and to compel arbitration, reasoning that since the plaintiffs alleged a conspiracy of price fixing by the defendant and other providers, that dispute "[did] not arise out of or relate to the contracts between the Plaintiffs and Defendant[ ], nor [did] it involve disputes about the parties' business relationships." The court found that "[t]he parties never agreed to arbitrate claims that were independent of any breach of contract."

{¶ 4} The court of appeals affirmed the trial court, finding that the appellees' antitrust claims were not within the scope of the arbitration provisions in the provider agreements. Relying on this court's decision in Council of Smaller Enterprises v. Gates, McDonald & Co. (1998), 80 Ohio St.3d 661, 687 N.E.2d 1352, the appellate court set forth the test for determining the arbitrability of a given dispute:

{¶ 5} "`[T]he Ohio Supreme Court has adopted four rules, common to both state and federal courts, for reviewing decisions concerning a dispute's "arbitrability": (1) that "arbitration is a matter of contract and a party cannot be required to so submit to arbitration any dispute which he has not agreed to so submit"; (2) that the question whether a particular claim is arbitrable is one of law for the court to decide; (3) that when deciding whether the parties have agreed to submit a particular claim to arbitration, a court may not rule on the potential merits of the underlying claim; and (4) that when a "contract contains an arbitration provision, there is a presumption of arbitrability in the sense that `[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'"'" 155 Ohio App.3d 310, 2003-Ohio-6194, 800 N.E.2d 1185, ¶ 12, quoting Cohen v. Paine-Webber, Inc., Hamilton App. No. C-010312, 2002 WL 63578, quoting Council of Smaller Enterprises, 80 Ohio St.3d at 665-666, 687 N.E.2d 1352, quoting AT & T Technologies, Inc. v. Communications Workers of Am. (1986), 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648.

Page 491

{¶ 6} This case revolves around the application of the first rule enunciated in Council of Smaller Enterprises, i.e., whether the parties agreed to submit the dispute at issue to arbitration. In determining whether a claim based upon an alleged conspiracy to set artificially low reimbursement rates was within the scope of the arbitration agreements between the parties in this case, the appellate court relied upon a federal case, Fazio v. Lehman Bros., Inc. (C.A.6, 2003), 340 F.3d 386. In Fazio, the Sixth Circuit Court of Appeals held that "a proper method of analysis * * * is to ask if an action could be maintained without reference to the contract or relationship at issue. If it could, it is likely outside the scope of the arbitration agreement." Id. at 395, citing Ford v. NYLCare Health Plans of Gulf Coast, Inc. (C.A.5, 1998), 141 F.3d 243, 250-251.

{¶ 7} Applying Fazio, the appellate court concluded that "the doctors' antitrust claim could be maintained without reference to their individual provider agreements." 155 Ohio App.3d 310, 2003-Ohio-6194, 800 N.E.2d 1185, ¶ 5. The court found that "[t]he allegations that the HMOs, which controlled a majority of the health-care market in this region, colluded to fix reimbursement rates to medical practitioners arose out of actions that occurred prior to the existence of the underlying provider agreements or business relationships between the doctors and HMOs. The allegations did not even presume the existence of an underlying provider agreement." Id. at ¶ 6.

{¶ 8} Since the court found that the doctors' cause of action could be maintained without reference to the individual provider agreements, it held that the antitrust claims were not subject to the arbitration provision in the provider agreements.

{¶ 9} Appellant appealed. This court granted appellant's jurisdictional motion on a limited basis, ordering briefing only on the following issue: "In determining whether a cause of action is within the scope of an arbitration agreement, may a state court in Ohio base that determination on a federal standard that inquires whether the `action could be maintained without reference to the contract or relationship at issue?' Fazio v. Lehman Bros., Inc. (C.A.6, 2003), 340 F.3d 386, 395, citing Ford v. NYLCare Health Plans of Gulf Coast, Inc. (C.A.5, 1998), 141 F.3d 243, 250-251." 102 Ohio St.3d 1407, 2004-Ohio-1860, 806 N.E.2d 559.

Law and Analysis

{¶ 10} "Ohio and federal courts encourage arbitration to settle disputes," ABM Farms, Inc. v. Woods (1998), 81 Ohio St.3d 498, 500, 692 N.E.2d 574, and Ohio has generally relied at least in part on federal law in developing its own jurisprudence. This court enunciated the four principles that guide determinations of arbitrability in Council of Smaller Enterprises v. Gates, McDonald & Co., 80 Ohio St.3d 661, 687 N.E.2d 1352, relying heavily on AT & T Technologies, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648. This court held:

{¶ 11} "The first principle is that `"arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." * * * This axiom recognizes the fact that arbitrators derive their authority to resolve disputes only because the parties have agreed to submit such grievances to arbitration.' AT & T Technologies, 475 U.S. at 648-649, 106 S.Ct. at 1418, 89 L.Ed.2d at 655, quoting [United Steelworkers of Am. v.] Warrior & Gulf [Navigation Co. (1960)], 363 U.S. [574] at 582, 80 S.Ct. [1347] at 1353, 4 L.Ed.2d [1409] at 1417.

Page 492

{¶ 12} "The second principle is that `the question of arbitrability — whether a[n] * * * agreement creates a duty for the parties to arbitrate the particular grievance — is undeniably an issue for judicial determination. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.' Id., 475 U.S. at 649, 106 S.Ct. at 1418, 89 L.Ed.2d at 656.

{¶ 13} "The third rule is, `in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims.' Id., 475 U.S. at 649, 106 S.Ct. at 1419, 89 L.Ed.2d at 656.

{¶ 14} "The fourth principle is that `where the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that "[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage."' Id., 475 U.S. at 650, 106 S.Ct. at 1419, 89 L.Ed.2d at 656, quoting Warrior & Gulf, supra, 363 U.S. at 582-588, 80 S.Ct. at 1353, 4 L.Ed.2d at 1417." Council of Smaller Enterprises, 80 Ohio St.3d at 665-666, 687 N.E.2d 1352.

{¶ 15} Thus, with its reliance on federal precedent, this court has itself abundantly shown that a state court may rely on a federal standard in applying Ohio law on the issue of arbitrability. However, that standard must be consistent with Ohio law and must reflect a correct statement of the applicable federal jurisprudence. The appellate court's reliance on Fazio is...

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114 practice notes
  • Taylor v. Ernst & Young, L.L.P., No. 2010–1324.
    • United States
    • United States State Supreme Court of Ohio
    • October 18, 2011
    ...E & Y's failure to perform its obligations as required by Ohio law. {¶ 70} In Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 18, this court held that a provision that mandates the arbitration of claims or controversies “arising ......
  • Arnold v. Burger King, No. 101465.
    • United States
    • United States Court of Appeals (Ohio)
    • October 29, 2015
    ...643, 648–649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). See also 48 N.E.3d 76 Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 11–14 (in order for an arbitration agreement to be enforceable, the agreement must apply to the disputed i......
  • Lichon v. Morse, 159492
    • United States
    • Supreme Court of Michigan
    • July 20, 2021
    ...could be maintained without reference to the contract or relationship at issue." Academy of Med. of Cincinnati v. Aetna Health, Inc. , 108 Ohio St. 3d 185, 186, 842 N.E.2d 488 (2006), citing Fazio v. Lehman Bros., Inc. , 340 F.3d 386 (C.A. 6, 2003). Accord Jones v. Halliburton , 583 F.3d 22......
  • Litsinger v. Forest River, Inc., CAUSE NO. 3:18-CV-613 DRL-MGG
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • April 30, 2021
    ...broadly capture most claims in the usual case and certainly all claims against Sirpilla here, see Acad. of Med. v. Aetna Health, Inc., 842 N.E.2d 488, 492-93 (Ohio 2006) (calling this "the paradigm of a broad clause"), but it curiously omits the often-standard language "without regard to co......
  • Request a trial to view additional results
114 cases
  • Taylor v. Ernst & Young, L.L.P., No. 2010–1324.
    • United States
    • United States State Supreme Court of Ohio
    • October 18, 2011
    ...E & Y's failure to perform its obligations as required by Ohio law. {¶ 70} In Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 18, this court held that a provision that mandates the arbitration of claims or controversies “arising ......
  • Arnold v. Burger King, No. 101465.
    • United States
    • United States Court of Appeals (Ohio)
    • October 29, 2015
    ...643, 648–649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). See also 48 N.E.3d 76 Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 2006-Ohio-657, 842 N.E.2d 488, ¶ 11–14 (in order for an arbitration agreement to be enforceable, the agreement must apply to the disputed i......
  • Lichon v. Morse, 159492
    • United States
    • Supreme Court of Michigan
    • July 20, 2021
    ...could be maintained without reference to the contract or relationship at issue." Academy of Med. of Cincinnati v. Aetna Health, Inc. , 108 Ohio St. 3d 185, 186, 842 N.E.2d 488 (2006), citing Fazio v. Lehman Bros., Inc. , 340 F.3d 386 (C.A. 6, 2003). Accord Jones v. Halliburton , 583 F.3d 22......
  • Litsinger v. Forest River, Inc., CAUSE NO. 3:18-CV-613 DRL-MGG
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • April 30, 2021
    ...broadly capture most claims in the usual case and certainly all claims against Sirpilla here, see Acad. of Med. v. Aetna Health, Inc., 842 N.E.2d 488, 492-93 (Ohio 2006) (calling this "the paradigm of a broad clause"), but it curiously omits the often-standard language "without regard to co......
  • Request a trial to view additional results

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