In re Managed Care Litigation

• Decision Date: 11 December 2000
• Docket Number: No. MDL 1334.,No. 00-1334-MD.,MDL 1334.,00-1334-MD.
• Citation: 132 F.Supp.2d 989
• Parties: In re MANAGED CARE LITIGATION. This Document Relates To All Cases.
• Court: U.S. District Court — Southern District of Florida

132 F.Supp.2d 989

In re MANAGED CARE LITIGATION This Document Relates To All Cases.

No. MDL 1334.

No. 00-1334-MD.

United States District Court, S.D. Florida, Miami Division.

December 11, 2000.

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ORDER GRANTING IN PART AND DENYING IN PART VARIOUS DEFENDANTS' MOTIONS TO COMPEL ARBITRATION

MORENO, District Judge.

This multi-district litigation involves two separate categories of plaintiffs who have filed suit against various insurance companies that provide managed care. One group of plaintiffs consists of subscribers (patients) who allege causes of action against managed care companies under RICO, ERISA, and common law civil conspiracy. The other group of plaintiffs consists of providers (doctors) who allege causes of action against managed care companies under various legal theories, including RICO, ERISA, quantum meruit, breach of contract, federal clean claim payment regulations, unjust enrichment, and state prompt pay statutes.

Certain defendants seek to compel certain plaintiffs to arbitrate the issues raised in this lawsuit, based upon arbitration clauses contained in the contracts that form the basis of the plaintiffs' claims. This Order shall determine which plaintiffs are bound by contract to use arbitration as the forum to resolve certain claims asserted against certain managed care companies.

WHETHER TO COMPEL ARBITRATION

I. Threshold Matters to Be Resolved Prior to Analyzing Each Arbitration Clause

Prior to deciding each of the defendants' motions to compel arbitration individually, the Court must address certain threshold matters that relate to all of the motions to compel arbitration. These are: (A) the Federal Arbitration Act's (the "FAA's" or the "Act's") strong presumption in favor of arbitration, (B) whether ERISA claims may be arbitrated, (C) whether allegations of conspiracy and aiding and abetting may be arbitrated, absent a contract to arbitrate between the parties, (D) whether a nonsignatory to an arbitration clause may be compelled to arbitrate due to the relationship between the nonsignatory and a signatory to the arbitration agreement, (E) the impact of the Eleventh Circuit decisions in Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054 (11th Cir. 1998), and Randolph v. Green Tree Fin. Corp., 178 F.3d 1149 (11th Cir.1999) rev'd in part Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), (F) whether class action implications affect whether to compel arbitration, and (G) whether the doctrine of unconscionability is useful in determining the validity of the arbitration clauses at issue. After addressing each of these matters, the Court shall analyze each motion to compel separately to determine which, if any, claims must be arbitrated.

A. The Federal Arbitration Act's Presumption in Favor of Arbitration

Section 4 of the FAA provides in relevant part:

A party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.... [T]he court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.

9 U.S.C. § 4.

The FAA establishes a strong federal policy in favor of arbitration and creates "a body of substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the act." Moses H. Cone Memorial Hosp. v. Mercury Contr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The scope of the Act's provisions concerning the validity of arbitration clauses reaches to the farthest limits of Congress' power under the Commerce Clause. Paladino, 134 F.3d at 1060. There is no dispute that the defendants in this action are engaged in interstate commerce, and accordingly, the Act applies to the present motions to compel arbitration.

Section 2 of the FAA provides that an arbitration agreement "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. As the Supreme Court in Cone instructs, this language reflects "a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary." Cone, 460 U.S. at 24, 103 S.Ct. 927. "Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration...." Id. at 24-25, 103 S.Ct. 927.

The strong federal policy in favor of arbitration applies to statutory claims with equal force. E.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). If the plaintiffs' allegations "touch matters" covered by the arbitration agreement, then those claims must be arbitrated, irrespective of how the allegations are labeled. Id. at 625 n. 13. This approach furthers the Act's strong presumption in favor of arbitration. Id. at 626, 105 S.Ct. 3346 ("[T]he parties' intentions control, but those intentions are generously construed as to issues of arbitrability.").

B. Whether ERISA Claims Are Subject to Arbitration

The first threshold issue presented by the various motions to compel arbitration, raised in both provider and subscriber track motions to compel, is whether ERISA claims may be arbitrated. While the Supreme Court has ruled that RICO and antitrust claims are subject to arbitration, Shearson/American Express v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (holding RICO claims arbitrable); Mitsubishi, 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (holding antitrust claims arbitrable), there has been no such determination with respect to ERISA claims. The Eleventh Circuit has not yet ruled upon the issue, but many circuit courts have ruled that ERISA claims are arbitrable. Williams v. Imhoff, 203 F.3d 758 (10th Cir.2000); Kramer v. Smith Barney, 80 F.3d 1080 (5th Cir.1996); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, 7 F.3d 1110 (3rd Cir.1993); Bird v. Shearson Lehman/American Express, Inc., 926 F.2d 116 (2nd Cir.1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, 847 F.2d 475 (8th Cir.1988).

Plaintiffs argue that the Eleventh Circuit would follow the Ninth Circuit decision, Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir.1984), which holds that ERISA claims are not arbitrable. The Amaro ruling rests upon the assumption that "[a]rbitrators, many of whom are not lawyers, ... lack the competence to interpret and apply statutes as Congress intended." Id. at 750 (citation omitted).

This Court rejects the plaintiffs' argument and finds that ERISA claims are subject to arbitration, in view of the Act's strong presumption in favor of arbitration discussed above. The Court also finds persuasive Supreme Court rulings finding that arbitration is an appropriate forum for RICO and antitrust injuries to be vindicated. An arbitrator can resolve ERISA claims with the same skill, precision, and competence as RICO or antitrust claims. Moreover, there is no language in ERISA that leads to a finding that Congress did not intend to have ERISA claims arbitrated.

The limiting factor with respect to this ruling that ERISA claims are subject to arbitration is that the arbitration clause at issue must afford the plaintiffs the opportunity of meaningful relief in an arbitration proceeding. Paladino, 134 F.3d at 1062. This limiting factor will be addressed below in Section I(E), where the Court will address the impact of two Eleventh Circuit decisions, Paladino and Randolph, upon the instant motions to compel arbitration. This limiting factor also will be addressed with respect to certain arbitration clauses individually in Section II of this Order.

C. Whether Allegations of Conspiracy and Aiding and Abetting May Be Arbitrated Where There is No Contract to Arbitrate Between the Parties

The next threshold issue presented by both subscriber and provider track motions to compel arbitration is whether conspiracy and aiding and abetting allegations may be arbitrated where there is no contract to arbitrate between the parties. This scenario occurs, for example, where Plaintiff A sues Defendants B, C, and D alleging conspiracy to violate 18 U.S.C. § 1962(a) and (c) in violation of 18 U.S.C. § 1962(d), and for seeking to aid and abet and for aiding and abetting violations of 18 U.S.C. § 1962(a) and (c) within the meaning of 18 U.S.C. § 2. Plaintiff A has agreed to resolve such claims with Defendant B through arbitration, but has no contractual relationship with Defendants C and D — who have no relation to Defendant B except that all three defendants are separate operators of separate managed care companies.

Plaintiffs posit that there can be no arbitration of the conspiracy and aiding and abetting claims against nonsignatories (Defendants C and D in the above example) because the plaintiffs have not contracted with these parties to arbitrate such disputes. E.g., Morewitz v. West of England, 62 F.3d 1356, 1363 (11th Cir.1995) (quoting In re Talbott Big Foot, Inc., 887 F.2d 611, 612 (5th Cir.1989) ("We are unaware of any federal policy that favors arbitration for parties who have not contractually bound themselves to arbitrate their disputes.")). Defendants argue that these claims must be arbitrated, relying upon the Eleventh Circuit reasoning in MS Dealer Service Corp. v. Franklin, 177 F.3d 942 (11th Cir.1999).

Notwithstanding the general rule that only parties who agree to arbitrate may be compelled to do so, the Eleventh Circuit has ruled that there exist limited circumstances where a matter will be compelled to arbitration, absent a signed agreement between the parties. Id. at 947 (citing Sunkist Soft Drinks, Inc. v. Sunkist Growers Inc., 10 F.3d 753 (11th Cir. 1993)). These are: (1) equitable estoppel, (2) agency or related...