Kansas City Urology v. United Healthcare
Decision Date | 15 July 2008 |
Docket Number | No. WD 67814.,No. WD 67815.,WD 67814.,WD 67815. |
Citation | 261 S.W.3d 7 |
Parties | KANSAS CITY UROLOGY, P.A., Midwest Neurosurgergy Associates, P.A., Kansas City Ob-Gyn of Kansas City, Cynthia Romito, Specialty Physicians Alliance, LLC., Rockhill Orthopedics, Dickson-Diveley Midwest Orthopedics Clinic, Respondents, v. UNITED HEALTHCARE SERVICES, United Healthcare of Missouri, United Healthcare of the Midwest, United Healthcare Insurance Company, Spectera, Inc., Ingenix, Inc., Blue Cross and Blue Shield of Kansas City, Goodhealth HMO, Inc., Appellants. |
Court | Missouri Court of Appeals |
Lynn McCreary, Kansas City, for appellants.
Robert Horn, Kansas City, for respondents.
Blue Cross and Blue Shield of Kansas City and United Healthcare Services separately appeal the circuit court's order to deny their motions to compel arbitration of the antitrust claims pending in a single case in circuit court and numbered 0516-CV04219. In this interlocutory appeal, Blue Cross and United Healthcare seek this court's immediate review pursuant to Section 435.440.1(1), RSMo 2000, and 9 U.S.C. Section 16(a)(1)(B) (1999). Because their appeals present identical issues, we consolidated them.
Kansas City area physicians and medical organizations entered into contracts with Blue Cross and United Healthcare. The contracts set the rate of reimbursement that Blue Cross and United Healthcare would pay the physician and medical organizations for their services. Each physician and medical organization signed a contract independently with either Blue Cross or United Healthcare. Each contract included an arbitration agreement.
The physicians and medical organizations sued Blue Cross and United Healthcare, asserting that the defendants had engaged in price fixing and monopolization in violation of antitrust provisions in Section 416.031, RSMo 2000. The defendants filed motions to compel arbitration of the dispute. The circuit court appointed a master to recommend whether or not the circuit court should compel arbitration. The master recommended that the circuit court compel arbitration, but the circuit court denied the motions despite the recommendation on the basis that the arbitration agreements did not encompass the physicians' antitrust claims, and, even if they did, the arbitration agreements were unconscionable.
In this interlocutory appeal, Blue Cross and United Healthcare assert that the circuit court erred in denying their motions to compel arbitration because the arbitration agreements are broad enough to cover the physicians' antitrust claims and they are not unconscionable. Before considering the merits of their claim, we determine whether the Federal Arbitration Act (FAA), 9 U.S.C. Section 1, or the Missouri Uniform Arbitration Act, Chapter 435 of Missouri Revised Statutes governs. "The FAA applies to [arbitration] contracts evidencing transactions `involving commerce.'" McIntosh v. Tenet Health Systems Hospitals, Inc., 48 S.W.3d 85, 88 (Mo.App.2001) (quoting 9 U.S.C. Section 2). The phrase, "involving commerce," is "broad" and is the "functional equivalent" of "affecting commerce," which is a phrase that "signals Congress" intent to exercise its Commerce Clause powers [enunciated in U.S. CONST. art. I, Section 8] to the full." Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 273-74, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). The courts have interpreted the phrase broadly. They have found that the FAA applies in cases in which the parties resided in different states, in which the parties used the United States Postal Service, or in which either employees or materials crossed state lines. Edward D. Jones and Company v. Schwartz, 969 S.W.2d 788, 793 (Mo.App. 1998). In this case, some of the plaintiffs and the defendants reside in different states and their activities affect interstate commerce; hence, the FAA applies.
The FAA says:
A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, 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. Section 2. This section creates substantive law enforceable in state courts. Sitelines, L.L.C. v. Pentstar Corporation, 213 S.W.3d 703, 706 (Mo.App.2007).
In considering a motion to compel arbitration under the FAA, the circuit court is obligated to apply federal law. Id. Because we are applying the FAA, opinions of the United States Supreme Court concerning the FAA are binding precedent. Scott v. Blue Springs Ford Sales, Inc., 215 S.W.3d 145, 171 (Mo.App.2006). Although the opinions of the lower federal courts are not binding, we consider them for their aid and guidance. Id.
The FAA expresses the United States Congress's policy favoring resolution of disputes by enforcement of arbitration agreements, instead of resorting to the judicial system. Estate of Athon v. Conseco Finance Servicing Corp., 88 S.W.3d 26, 30 (Mo.App.2002). This policy is not enough, standing alone, to extend an arbitration agreement beyond its intended scope because arbitration is a matter of contract. A party cannot be compelled to arbitration unless the party has agreed to do so. Whether or not a dispute is covered by an arbitration agreement is a question of law for the courts. Id. We review the circuit court's determination de novo. Id.
In determining whether or not a dispute is covered by an arbitration agreement, the circuit court first must decide whether the arbitration clause is narrow or broad. Id. A broad arbitration clause covers all disputes arising out of the arbitration agreement. A narrow clause limits arbitration to specific types of disputes. Id.
In this case, the physicians signed one of five variations of arbitration agreements with either Blue Cross or United Healthcare. These five arbitration agreements fit within two groups: those making no reference to the underlying reimbursement contracts and broadly stating that the parties agreed to arbitrate any disputes between them, and those that referred to the underlying reimbursement contracts.
Of those fitting within the group making no reference to the underlying reimbursement contracts, one of them required arbitration "if one of [the parties] does not agree with an action taken by the other[.]" Another required the parties to arbitrate "any and all disputes between them ... including but not limited to all questions of arbitrability, the existence, validity, scope or termination of the Agreement or any term thereof." Another agreement required the parties to arbitrate "any disputes about their business relationship." These agreements expressly covered more than disputes regarding the parties' contract. See Zink v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 13 F.3d 330, 332 (10th Cir.1993) ( );1 Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir.1982), overruled on other grounds by Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Hence, the physicians who signed these agreements agreed to arbitrate any dispute that they had with Blue Cross and United Healthcare, even if the dispute did not involve the contract.
In the other group, the agreements specifically referred to the parties' underlying reimbursement contracts. Of these agreements, some between the physicians and Blue Cross said that the parties must arbitrate any "dispute ... relating to or arising from this Agreement[.]"2 Others, between United Healthcare and the physicians, required the parties to arbitrate any dispute that arose out of or was "related to this Agreement." Although these arbitration clauses referred to the underlying reimbursement contracts, their scope was broad. Collins Aikman Products Company v. Building Systems, Inc., 58 F.3d 16, 20 (2d Cir.1995) ( ).3
The circuit court properly found that the clauses in this case were broad, but it relied primarily on Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185, 842 N.E.2d 488 (2006), to determine that they did not cover the physicians' antitrust claims because the physicians could maintain their actions without referring to the underlying contracts. The circuit court explained:
Of all the cases that have been cited, the most factually similar is Academy of Medicine of Cincinnati et. al., v. Aetna Health, Inc., et. al. , 842 N.E.2d 488 (Ohio 2006).... That case involved physicians and nonprofit medical societies who sued several health care organizations for a conspiracy to fix reimbursement rates as relates to doctors and hospitals in the Cincinnati, Ohio area. The Ohio Supreme Court affirmed the lower court's denial of a motion to compel arbitration. The court reasoned that the state antitrust claims could be pursued independent of the provider agreements. Thus, the claims of the physicians were not subject to a motion to compel arbitration, which was a creature of contract.
Indeed, the Supreme Court of Ohio did declare in Academy of Medicine of Cincinnati:
The Fazio test [found in Fazio v. Lehman Brothers Inc., 340 F.3d 386, 395 (6th Cir.2003)] applied by the court below helps determine whether the contractual relationship between parties is irrelevant or controlling. Since courts must sift through pleadings to determine whether a cause of action labeled as a tort or statutory claim is...
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