Saltzman v. Thomas Jefferson Univ. Hosps., Inc.

• Decision Date: 30 June 2017
• Docket Number: No. 2593 EDA 2015,2593 EDA 2015
• Citation: 166 A.3d 465
• Parties: Leslie SALTZMAN, D.O., Appellee v. THOMAS JEFFERSON UNIVERSITY HOSPITALS, INC. and Jefferson Medical Care, Appellants
• Court: Pennsylvania Superior Court

166 A.3d 465

Leslie SALTZMAN, D.O., Appellee

v.THOMAS JEFFERSON UNIVERSITY HOSPITALS, INC. and Jefferson Medical Care, Appellants

No. 2593 EDA 2015

Superior Court of Pennsylvania.

Argued November 15, 2016

Filed June 30, 2017

Lee D. Moylan, Philadelphia, for appellant.

Rahul Munshi, Philadelphia, for appellee.

BEFORE: BENDER, P.J.E., MOULTON, J., and FITZGERALD, J.^*

OPINION BY MOULTON, J.:

Thomas Jefferson University Hospitals, Inc. and Jefferson Medical Care (together, "Jefferson") appeal from the July 17, 2015 order entered in the Philadelphia County Court of Common Pleas overruling Jefferson's preliminary objections to the complaint of Leslie Saltzman, D.O. and ordering Jefferson to file an answer within 20 days.¹ We reverse and remand.

The trial court set forth the following facts:

[Saltzman] began working for Jefferson in August 2014 at the Myrna Brind Center for Integrative Medicine. A few days prior to her start date, [Saltzman] signed an employment contract with Defendant, Jefferson Medical Care [ ("JMC") ]. This employment contract contains a portion that the parties refer to as the Physician Service Agreement [ ("Agreement") ], and it contains an arbitration clause that reads as follows:

Dispute Resolution . In the event of any controversy or claim between the parties hereto arising under or related to this Agreement or an[y] breach thereof, the parties shall confer in good faith in an attempt to resolve the dispute informally. If the controversy is not satisfactorily resolved at this level, then the grieving party shall inform the other party in writing of its intention to pursue arbitration, such notice stating the substance of the controversy. If the matter is not resolved within thirty (30) days after such notice, then the controversy shall be settled by binding arbitration in Philadelphia, Pennsylvania in accordance with the American Health Lawyers Association Alternative Dispute Resolution Services Rules of Procedure for Arbitration then in effect.

The Defendant, Thomas Jefferson University Hospital[s], Inc. [ ("TJUH") ], was not a party to the Physician Service Agreement, and no representative signed the Agreement on behalf of [TJUH].

[Saltzman] avers that while she was working at Myrna Brind Center for Integrative Medicine, she learned that [Jefferson was] engaging in wrongdoing. Specifically, [Saltzman] avers that [Jefferson] ... w[as] holding forth a chiropractor, George Zabrecky, as a licensed doctor of medicine, when he did not hold such credentials. She avers that [Jefferson] delegated medical responsibilities to Mr. Zabrecky despite [its] knowledge that he was not qualified, trained, experienced, licensed or certified to perform these duties. [Saltzman] avers that she reported this wrongdoing on or about October 15, 2014, October 24, 2014, and October 28, 2014. [Saltzman's] employment was terminated on November 11, 2014.

Opinion, 7/11/16, at 1–2 ("1925(a) Op.").

On May 8, 2015, Saltzman filed a complaint against Jefferson, alleging claims for retaliation in violation of the Pennsylvania Whistleblower Law, 43 P.S. §§ 1421 –28, and common law wrongful termination. Jefferson filed preliminary objections, seeking to compel arbitration pursuant to the Agreement. On July 17, 2015, the trial court overruled the preliminary objections and ordered Jefferson to file an answer within 20 days.

In its opinion, the trial court offered three reasons for denying Jefferson's preliminary objections. First, the trial court stated that "[t]he fact that [TJUH] was not a party to the Physician Service Agreement was a critical factor" in its decision not to compel arbitration. 1925(a) Op. at 3–4. The court explained that because TJUH "was not a party to the ... Agreement, [Saltzman] could not knowingly waive her right to sue [TJUH] in a court of law when she" signed the Agreement. Id. at 3.² Second, the trial court found that the "Agreement was an unconscionable contract of adhesion" that unreasonably favored Jefferson. Id. at 4. In making this determination, the court asserted that Jefferson failed to establish that Saltzman read and understood the consequences of the arbitration provision before signing the Agreement. Id. Third, the trial court concluded that "[c]ompelling arbitration in this matter would be fundamentally incompatible with the remedial and deterrent functions of the" Whistleblower Law, finding that "[t]he citizens of the Commonwealth of Pennsylvania, and the public at large, have an interest in the public resolution of" Saltzman's claims. Id. at 5. Jefferson timely appealed to this Court.

Jefferson raises the following issues on appeal:

1. Did the Trial Court abuse its discretion and/or err as a matter of law when it failed to consider, let alone apply, the liberal policy favoring arbitration agreements under the Federal Arbitration Act ("FAA") and Pennsylvania law and overruled Jefferson's preliminary objections seeking to compel arbitration, when there exists a valid enforceable agreement to arbitrate that both JMC and TJUH may enforce against Saltzman and when the claims asserted by Saltzman against Jefferson fall within the scope of the Arbitration Provision because the claims constitute "any controversy or claim between the parties to the [Agreement]" and "aris[e] under or relat[e] to [the Agreement] or any breach thereof"?

2. Did the Trial Court abuse its discretion or err as a matter of law in overruling Jefferson's preliminary objections based on the finding that the Arbitration Provision was an unenforceable unconscionable contract of adhesion, especially when the Trial Court:

a. did not determine both that: (i) one of the parties lacked a meaningful choice before accepting the terms of the provision (procedural unconscionability); and (ii) the provision unreasonably favors Jefferson (substantive unconscionability);

b. improperly placed the burden on Jefferson to present evidence disproving procedural unconscionability when Saltzman did not initially present such evidence, and, in the purported absence of such evidence from Jefferson, found the Arbitration Provision unconscionable and unenforceable; and

c. the evidence Jefferson presented (some of which the Trial Court erred in not considering) showed that the Arbitration Provision was not procedurally and/or substantively unconscionable?

3. Did the Trial Court abuse its discretion when it overruled the preliminary objections on the basis of public policy and/or the "nature of the claims," when:

a. There is no basis in the Whistleblower Law to do so (i.e., the Arbitration Provision is not in derogation of any right Saltzman has been provided by statute and there is no inherent conflict between arbitration and the Whistleblower Law's underlying purpose);b. The public policy on which the Trial Court relied—the right of the public to be privy to the litigation of Saltzman's claims—is not sufficiently well-defined and dominant, as the law requires, to justify rendering the Arbitration Provision unenforceable based on public policy;

c. In so doing, the Trial Court created an outright prohibition on arbitrating whistleblower claims, which is preempted by the FAA; and

d. The strong liberal policy favoring arbitration agreements clearly outweighs any purported public policy upon which the Trial Court relied.

4. Did the Trial Court abuse its discretion in finding that the [Agreement] was an "employment contract," and that Saltzman was "employed" by Jefferson?

Jefferson's Br. at 3–5 (trial court answers omitted).

Our review of an order overruling preliminary objections seeking to compel arbitration "is limited to determining whether the trial court's findings are supported by substantial evidence and whether the trial court abused its discretion in denying the petition." Callan v. Oxford Land Dev., Inc., 858 A.2d 1229, 1233 (Pa.Super. 2004). In making this determination, we consider the following principles:

(1) arbitration agreements are to be strictly construed and not extended by implication; and (2) when parties have agreed to arbitrate in a clear and unmistakable manner, every reasonable effort should be made to favor the agreement unless it may be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute.

Id. (quoting Highmark Inc. v. Hospital Serv. Ass'n of Northeastern Pa., 785 A.2d 93, 98 (Pa.Super. 2001) ). Whether a dispute is within the scope of an arbitration agreement is a question of law for which our scope of review is plenary. Provenzano v. Ohio Valley Gen. Hosp., 121 A.3d 1085, 1095 (Pa.Super. 2015).

Pennsylvania courts apply the liberal policy favoring arbitration agreements embodied in the FAA. See id. As our Supreme Court recently emphasized, courts are "obligat[ed] to consider questions of arbitrability with a ‘healthy regard for the federal policy favoring arbitration.’ " Taylor v. Extendicare Health Facilities, Inc., ––– Pa. ––––, 147 A.3d 490, 509 (2016) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ), cert. denied , ––– U.S. ––––, 137 S.Ct. 1375, 197 L.Ed.2d 555 (2017). "[T]he FAA binds state courts to compel arbitration of claims subject to an arbitration agreement." Id. (citing 9 U.S.C. § 2 ).³ "This directive is mandatory, requiring parties to proceed to arbitration on issues subject to a valid arbitration agreement, even if a state law would otherwise exclude it from arbitration." Id. "The only exception to a state's obligation to enforce an arbitration agreement is provided by the savings clause, which permits the application of generally applicable state contract law defenses such as fraud, duress, or unconscionability, to determine whether a valid contract exists." Id. ; see also Kindred Nursing Ctrs. Ltd. P'ship v. Clark, ––– U.S. ––––, 137 S.Ct. 1421, 1426, 197 L.Ed.2d 806 (2017) (stating that court may invalidate arbitration agreement only "based on ‘generally applicable contract...