Prachun v. Cbiz Benefits & Ins. Servs., Inc.
| Decision Date | 03 September 2015 |
| Docket Number | Case No. 2:14-CV-2251 |
| Parties | PAUL AND LINDA PRACHUN, Plaintiffs, v. CBIZ BENEFITS & INSURANCE SERVICES, INC., et al., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court on Defendant Riverside Radiology and Interventional Associates, Inc.'s1 (hereinafter "RRIA") Motion to Stay Proceedings and to Compel Arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq. (Doc. 8). Defendant argues that negligence claims fall within their arbitration agreement with Dr. Prachun, and this Court should stay Plaintiffs' claims pending resolution of those claims in arbitration. Plaintiffs respond that their dispute with Defendant does not arise out of or relate to the employment agreements with Dr. Prachun, and thus they are not required to resolve such disputes pursuant to the arbitration clause within the employment agreement. For the reasons set forth herein, Defendant's Motion is GRANTED.
In May 2011, RRIA hired Dr. Paul Prachun as a radiologist. At the time Dr. Prachun was hired, and during the course of his employment, he signed two Employment Agreements (the "Agreements") with RRIA. Both parties signed and consented to the Agreements, and bothAgreements contain arbitration clauses. The first agreement2 was signed by both parties on March 15, 2011, wherein both agreed that:
any and all disputes, controversies or claims arising out of or relating to this Agreement or Employee's employment by the Company shall be settled by arbitration. The arbitration shall take place in Columbus, Ohio and shall be conducted pursuant to the then-existing Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be before the three-member panel, one appointed by Employee, one appointed by the Corporation, and the third appointed by the two so chosen, and all of whom shall be professionals experienced in the health care industry, either as physicians, administrators, attorneys, consultants or other advisors.
(Doc 8-1 at 14). Both parties signed the second agreement on May 9, 2012, wherein both parties agreed that:
any and all disputes, controversies or claims arising out of or relating to this Agreement or Physician's engagement by the Company shall be settled by arbitration. The arbitration shall take place in Columbus, Ohio and shall be conducted pursuant to the then-existing Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The arbitration shall be before a single neutral arbitrator, who shall be (i) a professional experienced in the health care industry, either as physician, administrator, attorney, consultant or other advisor, and (ii) selected by mutual agreement. Absent agreement, any party may petition AAA to appoint the arbitrator.
On May 9, 2013, Dr. Prachun retired from RRIA. (Doc. 2 at 3). On May 16, 2013, Dr. Prachun applied for Medicare Part B coverage during the Special Enrollment Period. Id. On or about July 12, 2013, Dr. and Mrs. Prachun were advised that Dr. Prachun was not eligible to enroll in Medicare Part B because he was not "actively employed" at RRIA. Id. Following the denial of medical benefits, Plaintiffs filed a complaint in the Franklin County Court of Common Pleas against RRIA, alleging Defendant breached a duty owed to Dr. Prachun to provide competent and informed advice with respect to his medical insurance coverage. Specifically,Plaintiffs claim Defendant was negligent in allowing him to "drop his Medicare Part B coverage while employed at RRIA, by failing to advise him that Continuation Coverage under COBRA would be secondary to Medicare and by failing to advise that he was not eligible for Medicare Part B benefits following his retirement." Id. In addition, Plaintiffs claim that Defendant breached an alleged duty to avoid causing Dr. Prachun and his spouse severe emotional distress. Id. Pursuant to Defendant's motion, this case was removed to federal court.
On February 2, 2015, the Magistrate Judge found, and this Court upheld, that the Employee Retirement Income Security Act ("ERISA") preempted Plaintiffs' claim for benefits, supporting the existence of federal jurisdiction in this case and the propriety of removal. (Doc. 21). Plaintiffs' "claim is for benefits by a plan participant; it is cognizable under [29 USC] §1132; and it is therefore completely preempted, even if phrased in terms of negligence." (Id. at 10).
Under the FAA, "[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle a controversy thereafter . . . 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. Courts have "described this provision as reflecting both a "liberal federal policy favoring arbitration." AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745-46, 179 L.Ed.2d 742 (2011) (citing Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983)). Except where "the parties clearly and unmistakably provide otherwise," it is "the court's duty to interpret the agreement and to determine whether the parties intended to arbitrate grievances concerning" a particular matter. Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 295 (2010) (citing AT & T Technologies, Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 651 (1986)). The courts "discharge this duty by: (1) applying thepresumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand; and (2) adhering to the presumption and ordering arbitration only where the presumption is not rebutted." Id. In examining the contract to determine whether arbitration must be compelled, the court:
[f]irst, must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2002)).
Under the terms of the FAA, "the Act leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original).
In evaluating motions to compel arbitration, "courts treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in a light most favorable to the non-moving party." Jones v. U-HAUL Co. of Mass. and Ohio, Inc., No. 2:13-CV-1265, 2014 WL 1670099, at *4 (S.D. Ohio April 23, 2014) (citing Raasch v. NCR Corp., 254 F. Supp. 2d 847, 851 (S.D. Ohio 2003)).
Pursuant to the FAA, Defendant moves this Court to stay the proceedings and to order arbitration in accordance with the parties' Agreements. (Doc. 8 at 1). In support of its motion, Defendant argues that the arbitration clauses in the Agreements must be enforced by this Court because: (1) Dr. Prachun's agreement to arbitrate is enforceable under the FAA; (2) thePlaintiffs' claims are within the scope of the Agreement; and (3) Mrs. Prachun's claim is a derivative of Dr. Prachun's potential claim and should be arbitrated. Id. Further, Defendant points to the language within the Agreement that states "any and all disputes, controversies or claims arising out of or relating to this Agreement or Employee's employment by the Company shall be settled by arbitration." (Doc. 8-1 at 14:23).
Plaintiffs respond that their dispute with the Defendant does not arise out of or relate to the Agreements or to Dr. Prachun's employment with RRIA. (Doc. 14 at 2). Instead, Plaintiffs argue that the disputes pertain to the Defendant's breach of its duty to properly advise Plaintiff with respect to medical coverage. Id. Plaintiffs contend that this duty is irrespective of the employment contracts. Id.
This Court must apply the four-part Stout test to determine whether arbitration must be compelled according to the employment Agreements between the parties.
Under the first prong of the Stout test, the Court must determine whether the parties agreed to arbitrate. 228 F.3d at 714. Enforceability of an arbitration agreement is reviewed "according to applicable state law of contract formation." Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 666 (6th Cir. 2003) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995)). Contract defenses such as "fraud, forgery, duress, mistake, lack of consideration or mutual obligation, or unconscionability, may invalidate arbitration agreements." Cooper v. MRM Inv. Co., 367 F.3d 493, 498 (6th Cir. 2004). If the Court is "satisfied that the making of the agreement for arbitration . . . is not [at] issue," the Court shall order the parties to arbitration "in accordance with the terms of the agreement." 9 U.S.C. § 4.
Plaintiffs do not allege that Dr. Prachun entered into the Agreement unknowingly or involuntary, or that Defendant ever threatened or coerced him. Furthermore, Plaintiffs do notassert any state contract defenses that would invalidate the arbitration agreement. Rather, Plaintiffs argue that the arbitration agreement should not be enforced under these circumstances because the underlying dispute...
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