United v. Aurora ( 2017 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
UNITED BEHAVIORAL HEALTH, INC., a California corporation,
Plaintiff/Appellee,
v.
AURORA BEHAVIORAL HEALTH CARE-TEMPE, LLC; and AURORA
BEHAVIORAL HEALTH SYSTEM, LLC, Defendants/Appellants.
No. 1 CA-CV 14-0421
FILED 1-4-2017
Appeal from the Superior Court in Maricopa County
No. CV2013-016433
The Honorable Douglas L. Rayes, Judge Retired
REVERSED AND REMANDED
COUNSEL
Brownstein Hyatt Farber Schreck, LLP, Phoenix
By John C. West and Robert M. Kort
Counsel for Plaintiff/Appellee
Clark Hill PLC, Scottsdale
By Russell A. Kolsrud and Mark S. Sifferman
Counsel for Defendants/Appellants
UNITED v. AURORA
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Andrew W. Gould delivered the decision of the Court, in
which Judge Maurice Portley (Retired) and Judge Jon W. Thompson joined.
G O U L D, Judge:
¶1 This has been remanded to us pursuant to the Arizona
Supreme Court’s decision in United Behavioral Health v. Maricopa Integrated
Health Sys., 240 Ariz. 118 (2016) (“United II”). On remand, we have been
directed to answer whether Appellant Aurora Behavioral Healthcare
(“Aurora”) may submit its ERISA-related claims to arbitration, or whether
arbitration is preempted by ERISA. Id. at 126, ¶ 29. For the reasons
discussed below, we hold that Aurora’s ERISA-related claims may be
submitted to arbitration and are not preempted by ERISA.
FACTS AND PROCEDURAL HISTORY
¶2 We provide an abbreviated discussion of the facts and
procedural history of this case; a more detailed version is contained in our
prior decision, United Behavioral Health v. Maricopa Integrated Health Sys., 237
Ariz. 559 (App. 2015) (“United I”), and in United II.
¶3 United Behavioral Health (“UBH”) administers various types
of health insurance plans, including ERISA benefit plans. Aurora owns
facilities that provide mental-health and substance-abuse treatment.
Aurora entered into a Facility Participation Agreement (“Facility
Agreement”) with UBH allowing it to participate in UBH’s mental health
care services network. The Facility Agreement contains an arbitration
clause stating the parties will “resolve any disputes about their business
relationship,” and if they are unable to do so, the dispute will be submitted
to binding arbitration.1
¶4 As relevant here, members of ERISA plans administered by
UBH received acute inpatient psychiatric care from Aurora. When Aurora
1 According to the record, although the Facility Agreement contained
a mandatory arbitration clause, the underlying ERISA Benefit Plans do not
contain arbitration provisions.
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UNITED v. AURORA
Decision of the Court
sought reimbursement for a portion of its services, UBH denied coverage
and refused payment.
¶5 In order to obtain reimbursement for its services, Aurora
sought to arbitrate the disputed claims, but UBH refused. Aurora then filed
an action in superior court to enforce the arbitration clause in the Facility
Agreement. In response, UBH filed a motion to stay arbitration on the
grounds Aurora’s ERISA-related claims were not arbitrable.
¶6 The superior court granted UBH’s motion to stay arbitration,
concluding that Aurora’s claims were not arbitrable, and must be resolved
through ERISA’s exclusive administrative claims procedures. Aurora
appealed the court’s order staying arbitration.
¶7 On appeal, we concluded that based on the language of the
arbitration clause in the Facility Agreement, as well as the Federal
Arbitration Act’s (“FAA”) strong presumption favoring arbitration, Aurora
could compel arbitration unless there was a contrary provision in “ERISA
expressing Congress’ intent that” Aurora’s claims were “nonarbitrable.”
United I, 237 Ariz. at 563, ¶ 15; see United II, 240 Ariz. at 122, ¶ 12. However,
we did not decide the arbitrability of Aurora’s ERISA claims because the
record was unclear as to its ERISA standing. United I, 237 Ariz. at 568, ¶ 38.
¶8 We have now received a mandate from our supreme court
directing that we decide whether “ERISA preempted arbitration through a
‘contrary congressional command.’” United II, 240 Ariz. at 126, ¶ 29 (quoting
CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012)). Our supreme
court has further directed:
Whether Aurora has standing to pursue its claim has no
bearing on whether Congress intended to preempt arbitration
for ERISA-related claims. The standing issue, and any other
defenses UBH might have to Aurora’s claim, must be left to
the arbitrator if the claim is subject to arbitration. . . . The court
must assume that Aurora has asserted a viable claim and
determine whether ERISA provides mandatory, exclusive
procedures for adjudicating that claim.
Id.
DISCUSSION
¶9 “Whether arbitration is preempted is a question of law we
decide de novo.” United II, 240 Ariz. at 122, ¶ 14 (citing Hutto v. Francisco,
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Decision of the Court
210 Ariz. 88, 90, ¶ 7 (App. 2005)). Here, the sole issue is whether Congress
has overridden the parties’ agreement to arbitrate and the FAA’s strong
presumption for arbitration by some contrary provision in ERISA. See
United II, 240 Ariz. at 126, ¶ 28.
¶10 Congress’ stated goals for ERISA are “to ensure uniform
administrative enforcement” of employee benefit plans and to protect plan
participants and beneficiaries. Bui v. American Telephone & Telegraph Co. Inc.,
310 F.3d 1143, 1148 (9th Cir. 2002); see also Gobeille v. Liberty Mut. Ins. Co.,
136 S. Ct. 936, 946 (2016); Satterly v. Life Care Centers of Am. Inc., 204 Ariz. 174,
177, ¶ 8 (App. 2003) (stating the objectives of ERISA include protecting
participants in employee benefit plans and “the creation of a uniform body
of benefits law to minimize administrative and financial burdens of
complying with varied state laws and the advancement of ERISA’s broad
remedial purpose”). To achieve those goals, ERISA provides
comprehensive regulation of employee welfare and pension benefit plans.
29 U.S.C. § 1001; New York State Conference of Blue Cross & Blue Shield Plans
v. Travelers Ins. Co., 514 U.S. 645, 650 (1995). This includes a civil
enforcement scheme that “completely preempts any state-law cause of
action that ‘duplicates, supplements, or supplants’ an ERISA remedy.”
Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 327 (2d Cir. 2011)
(citing Aetna Health, Inc. v. Davila, 542 U.S. 200, 209 (2004)); see also 29 U.S.C.
§ 1132(a).
¶11 Despite ERISA’s exclusive civil remedy provision, the
majority of courts have held that statutory ERISA claims can be “subject to
compulsory arbitration under the FAA and in accordance with the terms of
a valid arbitration agreement.” Pritzker v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 7 F.3d 1110, 1122 (3d Cir. 1993). The text and legislative history
of ERISA do not indicate that Congress intended to preclude arbitration of
claims brought pursuant to the statute. Bird v. Shearson Lehman/Am. Exp.,
Inc., 926 F.2d 116, 120 (2d Cir. 1991). “[N]o external legal restraints foreclose
the arbitration of ERISA claims.” Williams v. HealthAlliance Hosps., Inc., 158
F. Supp. 2d 156, 161 (D. Mass. 2001) (collecting cases of federal courts that
“have held that Congress did not intend to exclude actions arising under
both the remedial and substantive portions of ERISA from arbitration
pursuant to the FAA”); see, e.g., Williams v. Imhoff, 203 F.3d 758, 767 (10th
Cir. 2000); Kramer v. Smith Barney, 80 F.3d 1080, 1084 (5th Cir. 1996); Pritzker,
7 F.3d at 1111, 1116–21; Bird, 926 F.2d at 119–120, 122; Arnulfo P. Sulit, Inc.
v. Dean Witter Reynolds, Inc., 847 F.2d 475, 477-78 (8th Cir. 1988); but see
CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 178 (3d Cir. 2014) (holding
that ERISA plan participants and their assignees have the right to pursue
ERISA claims in court rather than through a mandatory arbitration clause).
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Decision of the Court
Indeed, in Chappel v. Lab. Corp. of Am., 232 F.3d 719, 724 (9th Cir. 2000), the
court held that “an ERISA plaintiff whose claim is governed by the
contractual terms of the benefits plan, rather than by the statutory
provisions of ERISA itself, must first exhaust the administrative dispute
resolution mechanisms of the benefit plan’s claims procedure,” including
any arbitration clause contained in the plan, before filing suit in federal
court.
¶12 Accordingly, we conclude Aurora’s ERISA-related claims can
be submitted to arbitration. However, in reaching this holding, we stress
that we do not resolve whether Aurora has standing to pursue its ERISA-
related claims, or whether its standing affects the arbitrability of its claims.
In addition, apart from arbitrability, we do not address whether Aurora’s
claims are otherwise preempted by ERISA.
CONCLUSION
¶13 For the reasons stated in this decision, we reverse the superior
court’s order staying arbitration, and we remand those claims for further
proceedings consistent with this decision. Additionally, in our discretion
we deny Aurora’s request for attorneys’ fees pursuant to A.R.S. § 12-341.01,
but award its request for costs on appeal subject to compliance with ARCAP
21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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