Southwest Health Plan, Inc. v. Sparkman

• Decision Date: 14 March 1996
• Docket Number: No. 2-95-281-CV,2-95-281-CV
• Citation: 921 S.W.2d 355
• Parties: SOUTHWEST HEALTH PLAN, INC. and Aetna Health Plans of Texas, Inc., Appellant, v. Terry L. SPARKMAN, Appellee.
• Court: Texas Court of Appeals

Page 355

921 S.W.2d 355

SOUTHWEST HEALTH PLAN, INC. and Aetna Health Plans of Texas, Inc., Appellant, v. Terry L. SPARKMAN, Appellee.

No. 2-95-281-CV.

Court of Appeals of Texas,

Fort Worth.

March 14, 1996.

Rehearing Overruled April 25, 1996.

John B. Shely, Dimitri Zgourides, Andrews & Kurth, L.L.P., Houston, for appellant.

C. Douglas Calvert, Lynch & Calvert, Dallas, for appellee.

Before LIVINGSTON, DAUPHINOT and BRIGHAM, JJ.

OPINION

BRIGHAM, Justice.

Appellants Southwest Health Plan, Inc. and Aetna Health Plans of Texas, Inc. pursue the instant interlocutory appeal following the trial court's overruling of a Motion to Compel Arbitration. Because we find the action of the trial court constitutes an abuse of discretion, we reverse and remand for further proceedings in accordance with this opinion.

BACKGROUND

Appellants entered into an agreement with the Texas Department of Highways and Public Transportation, through the Employees' Retirement System of Texas, to provide health insurance coverage for its employees. Appellee Terry Sparkman, an employee of the Department of Transportation, signed up for health insurance coverage for himself and his son, Tyson Sparkman. In late September of 1989, Tyson became ill and was transferred to Littlest Angels, Inc., an Arlington, Texas facility for terminally ill children. Appellants denied claims submitted by Sparkman for Tyson's care, and on May 3, 1995, Sparkman filed suit over the denial of benefits ¹.

Appellants filed a Motion to Compel Arbitration and attached a copy of the arbitration clause included in the health plan. Sparkman, in response, contended that the arbitration provision in the health plan is unconscionable. He also asserted that his claims were for personal injury and therefore not subject to arbitration. The trial court conducted an evidentiary hearing on October 12, 1995, and it overruled Appellants' Motion to Compel Arbitration by written order on November 16, 1995.

POINT OF ERROR

Appellants contend the trial court abused its discretion by overruling their Motion to Compel Arbitration because all of Sparkman's claims are subject to arbitration under the health plan. Appellants' argument is fourfold: (1) every reasonable presumption favoring arbitration must be accepted; (2) all of Sparkman's claims are subject to arbitration; (3) Sparkman presented no evidence that the agreement was unconscionable at the time it was made; and (4) Sparkman was not entitled to an evidentiary hearing on the Motion to Compel Arbitration because Sparkman failed to raise a disputed material fact in his response.

Sparkman concedes that an arbitration clause is contained in the health plan between appellants and the Department of Highways, but he maintains that he was not a party to the agreement and that he did not receive a copy of the agreement at the time he signed up for insurance coverage. He avers that the trial court was within its discretion to conduct the October 12, 1995 evidentiary hearing, that as applied to him, the arbitration clause was unconscionable, and that the trial court's denial of arbitration as to his personal injury claims was proper.

To determine whether a trial court abused its discretion, we must decide "whether the trial court acted without reference to any guiding rules or principles; in other words, whether the act was arbitrary or unreasonable." Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990). Under an abuse of discretion standard, legal and factual insufficiency are relevant factors in assessing whether the trial court abused its discretion. See Beaumont Bank v. Buller, 806 S.W.2d 223, 226 (Tex.1991); D.R. v. J.A.R., 894 S.W.2d 91, 95 (Tex.App.--Fort Worth 1995, writ denied) (op. on reh'g); In re Driver, 895 S.W.2d 875, 877 (Tex.App.--Texarkana 1995, no writ); Mai v. Mai, 853 S.W.2d 615, 618 (Tex.App.--Houston [1st Dist.] 1993, no writ). Merely because a trial judge may decide a matter within its discretion in a different manner than an appellate court in a similar circumstance does not demonstrate that an abuse of discretion occurred. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986).

An abuse of discretion does not occur where the trial court bases its decisions on conflicting evidence. Davis v. Huey, 571 S.W.2d 859, 862 (Tex.1978); Kirkpatrick v. Memorial Hosp. of Garland, 862 S.W.2d 762, 776 (Tex.App.--Dallas 1993, writ denied). Furthermore, an abuse of discretion does not occur as long as some evidence of substantive and probative character exists to support the trial court's decision. Holley v. Holley, 864 S.W.2d 703, 706 (Tex.App.--Houston [1st Dist.] 1993, writ denied).

Appellants' health plan contains the following specific provision regarding arbitration:

This Part is subject to the Texas Arbitration Act, Articles 224-238, V. A.T.S. In the event of any dispute or controversy concerning the construction, interpretation, performance or breach of this Agreement arising between the Employer, a Subscriber or Family Member or the heir-at-law or personal representative of such person, as the case may be, and SOUTHWEST or any IPA, Contracting Physician or Contracting Hospital, such dispute or controversy shall be submitted to arbitration. [Emphasis added.]

Arbitration is strongly favored under federal and state law. Prudential Sec Inc. v. Marshall, 909 S.W.2d 896 (Tex.1995) (orig. proceeding). Every reasonable presumption favoring arbitration will be accepted. D. Wilson Constr. Co., Inc. v. McAllen ISD, 848 S.W.2d 226, 231 (Tex.App.--Corpus Christi 1992, writ dism'd w.o.j.). Such a presumption is particularly applicable where, as here, the clause provides for any controversy or claim arising out of or relating to the contract. See Babcock & Wilcox Co. v. PMAC, Ltd., 863 S.W.2d 225, 230 (Tex.App.--Houston [14th Dist.] 1993, writ denied) (citing AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986)). Although Sparkman correctly notes that the above authority involves situations where individuals or businesses signed the contracts containing the arbitration clause, he does not provide for us, nor have we found, any authority indicating that the presumption supporting arbitration is somehow weakened where the litigant is a third-party beneficiary of, rather than a party to, the contract containing such a clause.

We disagree with Sparkman's contention that his tort claims are personal injuries and therefore not subject to arbitration. Our Texas Supreme Court has made it clear that where tort claims are so interwoven that they cannot stand alone, an arbitration clause will encompass those claims as well as the ones for breach of contract. Jack B. Anglin Co., Inc. v. Tipps, 842...