Kettering Health Network v. Caresource , 2017 Ohio 1193 ( 2017 )

[Cite as Kettering Health Network v. Caresource, 2017-Ohio-1193.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
KETTERING HEALTH NETWORK, :
et al. :
: Appellate Case No. 27233
Plaintiffs-Appellees :
: Trial Court Case Nos. 2013-CV-2016
v. : Trial Court Case Nos. 2015-CV-4512
:
CARESOURCE : (Civil Appeal from
: Common Pleas Court)
Defendant-Appellee :
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OPINION
Rendered on the 31st day of March, 2017.
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GARY J. LEPPLA, Atty. Reg. No. 0005541, and PHILIP J. LEPPLA, Atty. Reg.
No. 0089075, Leppla Associates, Ltd., 2100 South Patterson Boulevard, Dayton, Ohio
45409
Attorneys for Plaintiffs-Appellees
JEFFREY A. LIPPS, Atty. Reg. No. 0005541, JOEL E. SECHLER, Atty. Reg. No.
0076320, Carpenter Lipps & Leland, LLP, 280 North High Street, Columbus, Ohio 43215
And
MARK R. CHILSON, Atty. Reg. No. 0016511, CareSource, 230 North Main Street,
Dayton, Ohio 45402
Attorneys for Defendant-Appellant
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HALL, P.J.
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{¶ 1} CareSource appeals the trial court’s overruling of its application to vacate an
arbitration award in favor of Kettering Health Network. Finding no error, we affirm.
I. Background
{¶ 2} CareSource is a managed care payer that administers Medicaid payments
and services for certain Ohio Medicaid beneficiaries under a contract with the Ohio
Department of Job and Family Services (ODJFS). ODJFS pays CareSource a set amount
per beneficiary, and CareSource in turn contracts with health-care providers, like
Kettering, for the health care services. The plan and provider establish the terms of
service and payment in a contract between them.
{¶ 3} CareSource and Kettering entered into such agreements, which required
Kettering to provide medical care and services to CareSource beneficiaries in exchange
for payment from CareSource. Two of these agreements are relevant in this case. The
first one went into effect in 1987, and the parties entered into a replacement in 2005.
Among the services covered by these two agreements are unlisted outpatient surgical
procedures (UOSPs). In the 1987 Agreement, for these UOSPs, CareSource agreed to
pay Kettering “compensation that is equivalent to the amount that Hospital would have
received if the State of Ohio had not contracted with the DAHP [CareSource’s former
name] to administer the Medicaid program.” 1987 Agreement, Section 3.7. The 2005
Agreement provides that CareSource will pay Kettering “100% of the current prevailing
Ohio Medicaid fee schedule.” 2005 Agreement, Attachment A.1.1 The relevant line in the
1 The 2005 Agreement provides that Kettering is to be compensated for UOSPs “as set
forth in applicable Attachments attached hereto.” 2005 Agreement, Article 4.2.
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Medicaid fee schedule says that unlisted healthcare services are paid at “ ‘69% of
Charges.’ ” Interim Award, 5.
{¶ 4} Since 1987, for every UOSP that Kettering provided to a CareSource
member, Kettering submitted an invoice that broke down the charges into several line
items. One line item was the charge for the UOSP itself, and the other line items were
charges for related services. CareSource paid Kettering for the UOSP line item only,
paying Kettering nothing for the related services. Kettering alleges that CareSource
should have paid it for each line item. There are 588 UOSP underpayment claims at issue,
made between 2001 and 2011, arising under both the 1987 Agreement and the 2005
Agreement. In 2013, Kettering filed a complaint and a motion to compel partial arbitration.
CareSource responded by filing a motion to compel arbitration.
{¶ 5} The 1987 and 2005 Agreements each contains a dispute resolution
provision. Section 4.1 of the 1987 Agreement says that “to resolve disputes, including fee
disputes,” the parties will use a particular grievance procedure, described in an
attachment to the agreement. And Article 7.11 of the 2005 Agreement says that “[t]he
parties shall resolve complaints, grievances or disputes arising between parties * * * in
accordance with the dispute resolution procedures described in the arbitration
proceedings of the American Health Lawyers Association [AHLA].” The 2005 Agreement
also contains an integration clause, in Article 7.6, which pertinently states, “This
Agreement, Attachments, and Amendments hereto contain all the terms and conditions
agreed upon by the parties and supersedes all other agreements, express or implied,
regarding the subject matter hereof.” The question before the trial court was whether
Article 7.11 supersedes Section 4.1. The court concluded that it does, so it ordered the
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parties to arbitrate all of Kettering’s underpayment claims. Kettering appealed, and we
affirmed. We concluded that “Article 7.6 of the 2005 Agreement is reasonably susceptible
to CareSource’s interpretation that its effect is retroactive such that Article 7.11 of the
2005 Agreement supersedes the 1987 Agreement.” Kettering Health Network v.
Caresource, 2d Dist. Montgomery No. 25928, 2014-Ohio-956, ¶ 39.
{¶ 6} Kettering’s underpayment claims then went to arbitration under the auspices
of the AHLA, and an arbitration hearing was held over several days in March 2015. On
June 29, 2015, the arbitrator issued an “Interim Award” to Kettering ordering CareSource
to pay damages of $2,061,8032. The arbitrator then ordered the parties to submit post-
hearing briefs on the issue of prejudgment interest. Once the interest issue is resolved,
wrote the arbitrator, “a Final Award will be entered.” Interim Award, 34. On August 27,
2015, the arbitrator issued a “Final Award,” which “incorporates by reference * * * the
merits determinations of the Interim Award * * *, adds the decision on pre-award interest,
makes the costs allocation, and determines a total amount owed.” Final Award, 1. The
arbitrator awarded Kettering prejudgment interest totaling $756,660.
{¶ 7} On August 13, a couple of weeks before the arbitrator issued the Final Award,
CareSource notified the arbitrator and Kettering that it was terminating arbitration.
CareSource argued that the deadline for a final award was July 3 and that the arbitrator
was in violation of AHLA Rules. And on August 14, CareSource filed an application to
vacate the Interim Award. On August 27, Kettering filed an application to confirm the Final
Award. The cases were consolidated. Thereafter, CareSource filed an application to
2 This figure is rounded, as all figures are in this opinion.
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vacate the Final Award too. On August 22, 2016, the trial court denied the applications to
vacate and granted the application to confirm.
{¶ 8} CareSource appealed.
II. Analysis
{¶ 9} CareSource assigns four errors to the trial court. Each argues a particular
basis for why the court erred by not vacating the arbitration awards. The first assignment
of error argues that the Final Award was untimely and is invalid under the AHLA Rules.
The second argues that the awards conflict with provisions in the parties’ agreements.
The third argues that the arbitrator misinterpreted Ohio course-of-performance law. And
the fourth assignment of error argues that the prejudgment-interest award conflicts with
the parties’ agreements and disregards Ohio’s Prompt Pay Act. Before getting to the
assignments of error, we discuss our standard of review and the scope of the arbitrator’s
power.
{¶ 10} Under the Ohio Arbitration Act, the court of common pleas must confirm an
arbitration award unless the award is modified, corrected, or vacated. R.C. 2711.09. The
court’s confirmation or vacation decision may then be appealed. R.C. 2711.15. Ohio
district courts do not appear to agree on the appropriate standard of review for a decision
confirming an award. Some districts apply an abuse-of-discretion standard. See, e.g.,
Fresh Eggs Mgr., L.L.C. v. Ohio Fresh Eggs, 10th Dist. Franklin No. 12AP-1074, 2013-
Ohio-3454, ¶ 18. (“This court has recognized that a trial court’s judgment confirming an
arbitration award is subject to review using an abuse of discretion standard”); Marshall v.
Colonial Ins. Co., 11th Dist. Trumbull No. 2007-T-0013, 2007-Ohio-6248, ¶ 14 (“The
standard of review for judgments on arbitration awards is abuse of discretion.”). Other
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districts apply a de novo standard, reviewing a confirmation decision only to see if the trial
court erred as a matter of law. See, e.g., Bowden v. Weickert, 6th Dist. Sandusky No. S-
05-009, 2006-Ohio-471, ¶ 51 (“The standard of review to be employed on appeal is
whether the lower court erred as a matter of law in confirming the arbitration award.”);
Lauro v. Twinsburg, 9th Dist. Summit No. 23711, 2007-Ohio-6613, ¶ 7 (“[A]n appellate
court may only review the lower court’s order to discern whether an error occurred as a
matter of law.”). This Court too reviews decisions confirming an arbitration award de novo,
asking “whether the trial court erred as a matter of law,” Dayton v. Internatl. Assn. of
Firefighters, Local No. 136, 2d Dist. Montgomery No. 21681, 2007-Ohio-1337, ¶ 11.3
{¶ 11} Kettering argues that appellate review “is not a de novo review of the merits
of the dispute” but a review for abuse of discretion. We agree that a de novo review of
the merits would be incorrect, but so too is review for abuse of discretion. The Ohio
Arbitration Act does not give a trial court discretion in its review of an award. By statute,
a court must confirm if it does not modify, correct, or vacate. R.C. 2711.09. And a court
can vacate an award only for the reasons enumerated in R.C. 2711.10. Also, under the
analogous, substantively equivalent provisions in the Federal Arbitration Act,4 the U.S.
Supreme Court has said that there is “no special standard” (emphasis sic.) governing a
circuit court’s review of a district court’s decision to confirm an arbitration award, First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947, 115 S. Ct. 1920, 131 L. Ed. 2d 985
3 We have referred to this standard as de novo. Piqua v. Fraternal Order of Police, 185
Ohio App. 3d 496, 2009-Ohio-6591, 924 N.E.2d 876, ¶ 15 (2d Dist.); Sicor Secs., Inc. v.
Albert, 2d Dist. Montgomery No. 22799, 2010-Ohio-217, *2.
4 The Ohio Supreme Court has said that R.C. 2711.10 “is substantively equivalent to
the analogous provisions of the Federal Arbitration Act, and we have often used federal
law in aid of our application of the statute.” Cedar Fair, L.P. v. Falfas, 140 Ohio St. 3d
447, 2014-Ohio-3943, 19 N.E.3d 893, ¶ 5.
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(1995). “Rather,” said the Court, review “should proceed like review of any other district
court decision finding an agreement between parties, e.g., accepting findings of fact that
are not ‘clearly erroneous’ but deciding questions of law de novo.” Id. at 947-948.
{¶ 12} As for the scope of an arbitrator’s power, the basis for vacating an arbitration
award pertinent here is found in R.C. 2711.10(D), which provides that a court must vacate
an award if “[t]he arbitrators exceeded their powers, or so imperfectly executed them that
a mutual, final, and definite award upon the subject matter submitted was not made.” The
scope of an arbitrator’s power is determined by the parties. Cedar Fair at ¶ 5. Accordingly,
an arbitrator exceeds his power if the arbitrator goes beyond the authority given by the
parties. Id. at ¶ 7 (saying that “under R.C. 2711.10(D) arbitrators can exceed their powers
by going beyond the authority provided by the bargained-for agreement”).
A. The arbitrator’s interpretation of procedural rules
{¶ 13} The AHLA has its own procedural rules governing arbitration, the “Rules of
Procedure for Arbitration.” CareSource argues in the first assignment of error that the
Final Award was untimely and is invalid under the AHLA Rules. CareSource contends
that the arbitrator exceeded his power by interpreting (incorrectly, in CareSource’s view)
AHLA Rule 7.1 and Rule 6.8(b). Rule 7.1 concerns when an arbitrator must issue an
award and provides that “[a]n arbitrator must issue an award within 30 days after the
hearing is closed unless the arbitrator and all parties agree to extend this deadline.” Rule
6.8 concerns when a hearing closes, and Rule 6.8(b) provides that “[i]f the arbitrator sets
a schedule for the submission of post-hearing briefs or other documents, the arbitrator
will declare that the hearing is closed as of the final due date for such submissions.”
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{¶ 14} Here, the hearing ended on March 19, 2015, and the arbitrator set May 15
as the final due date for submitting post-hearing briefs. On May 22, the arbitrator asked
the parties via email for an extension of the 30-day deadline, and all agreed to extend the
deadline to July 3. The arbitrator issued the Interim Award on June 29. On August 13,
CareSource notified the arbitrator and Kettering that it was terminating arbitration
because no final award had been issued. The arbitrator issued the Final Award on August
27. CareSource argues that the Final Award was issued after the deadline, so it was
untimely and a violation of AHLA Rules.
{¶ 15} The arbitrator addressed this argument in his ruling on CareSource’s notice
of termination (Post-Hearing Order No. 1), finding no rule violation. The arbitrator first
found that the Interim Award satisfies Rule 7.1, pointing out that the rule says only that
“an award”—not a “final award”—must be issued by the deadline. Interim awards, said
the arbitrator, are often issued first to address the merits of a dispute, with questions of
fees, costs, and interest deferred until later. On the question of when the hearing closed,
the arbitrator said that the gist of Rule 6.8 is that it is the arbitrator who both decides when
to close a hearing and declares a hearing closed. See generally Rule 6.8(a) (“GENERAL
RULE. Except as provided in subparagraph (b), when the parties indicate that they have
no further evidence to present, or the arbitrator determines that the record is complete,
the arbitrator will declare the hearing is closed.”). Also, he said, Rule 6.8 is not limited to
one round of post-hearing submissions. An arbitrator may schedule a second round,
which is what the arbitrator said he did in this case on the interest issue. The arbitrator
also found that the deadline-extension agreement concerned only the Interim Award. The
May 22 email exchange about the extension, the arbitrator pointed out, “referred to the
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‘30-day award period’ under Rule 7.1 as expiring ‘if the hearing is closed as of May 15,’
when the initial post-hearing submissions were to be completed.” (Emphasis sic.) Post-
Hearing Order No. 1. This shows, said the arbitrator, that he did not declare the hearings
closed as of May 15. Indeed, the arbitrator pointed out that the Interim Award expressly
states, “This is an Interim Award only; it is not intended to be a Final Award. * * * The
hearing remains open solely to address the interest issue.” Interim Award, 34.
{¶ 16} AHLA Rule 4.1(a)(2) gives an arbitrator the power to “interpret the Rules to
the extent that they relate to his or her powers or duties.” Citing this rule, the trial court
found that the arbitrator had the power to interpret the AHLA Rules and that his
interpretation was reasonable. We agree. The parties gave the arbitrator the power to
interpret AHLA Rules by agreeing to arbitrate under the AHLA’s auspices. Compare
Piqua, 185 Ohio App. 3d 496, 2009-Ohio-6591, 924 N.E.2d 876, at ¶ 35 (saying that the
appellant gave the arbitrator the power to set the quantum of proof by agreeing to arbitrate
under the AAA rules, which gave the arbitrator the power to do this). Even if the arbitrator’s
interpretation of the Rules were unreasonable, this would not be grounds to vacate. An
unreasonable interpretation would show that the arbitrator “merely erred in executing his
powers” not that he “exceeded his powers.” (Emphasis sic.) Id. at ¶ 34.
{¶ 17} CareSource next argues that neither the Interim Award nor the Final Award
is effective, because the arbitrator failed to comply with the filing requirement in AHLA
Rule 1.2(a), which provides that the arbitrator “will transmit written messages and
documents regarding a case through AHLA’s Electronic Case Management System
(ECM).” CareSource says that the arbitrator never transmitted either award through the
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ECM. The court rejected this argument, pointing out that AHLA Rule 7.7 5 and R.C.
2711.086 require only that an award be in writing, signed by the arbitrator, and delivered
to the parties, which, said the court, happened here. We agree that CareSource fails to
show that transmitting an awards through the ECM is required for validity. Nothing in the
AHLA Rules suggests that an award is invalid if it is not so filed.
{¶ 18} CareSource argues that the arbitrator also violated AHLA Rule 7.9 by using
the Final Award to modify the Interim Award by adding prejudgment interest. Rule 7.9
provides that “[a]n arbitrator may not reconsider the merits of an award after it has been
issued” but “may alter the award only to correct inadvertent mistakes.” The trial court
found that the arbitrator did not reconsider the merits of the Interim Award. The Final
Award, said the court, incorporated the Interim Award without modification and added
new determinations about prejudgment interest and costs. We agree.
{¶ 19} Lastly, CareSource argues that the trial court erred as a matter of law by
saying that even if the Final Award were untimely, to vacate, CareSource must prove
unequivocally that the arbitrator lost his jurisdiction by issuing a decision more than 30
days after closing the hearing and must show prejudice from the untimely award. Because
we conclude that the trial court correctly determined that the Final Award was not
inconsistent with the arbitrator’s reasonable interpretation of the rules and procedure, we
need not decide what would happen if it were not. We note, however that at oral argument
CareSource took the position that upon their purported notice of termination of the
5 “An award must be in writing and signed by the arbitrator, in compliance with
applicable state and federal law.” AHLA Rule 7.7.
6 “The award made in an arbitration proceeding must be in writing and must be signed
by a majority of the arbitrators. A true copy of such award without delay shall be
delivered to each of the parties in interest. * * *” R.C. 2711.08.
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arbitration, the entire proceeding must cease and start all over again in a new arbitration.
Such a process would be antithetical to the concept of arbitration as efficient, economical
and effective means of dispute resolution.
{¶ 20} The first assignment of error is overruled.
B. The arbitrator’s interpretation of the parties’ agreements
{¶ 21} CareSource argues in the second assignment of error that the arbitrator
exceeded his powers by issuing awards that conflict with Article 4.7 and Article 7.6 of the
2005 Agreement and with Section 4.1 of the 1987 Agreement.
{¶ 22} Article 4.7 of the 2005 Agreement resembles a statute of limitations of sorts
for payment errors. It requires reimbursement for payments made in error, but it says that
“[i]n no event shall Hospital nor Payor go back more than two years from date of service
to make any adjustments made to incorrect paid or denied claims.” CareSource argues
that this provision renders almost all of Kettering’s claims untimely. The arbitrator rejected
this argument. “This is an issue of contract construction,” said the arbitrator, and under
his construction, Section 4.7 “does not impose either a liability or damages time limit for
these Arbitration claims.” Interim Award, 28.
{¶ 23} Article 7.6 of the 2005 agreement is an integration clause: “This Agreement,
Attachments, and Amendments hereto contain all the terms and conditions agreed upon
by the parties and supersedes all other agreements, express or implied, regarding the
subject matter hereof. Any amendments hereto and the terms contained therein shall
supersede those of other parts of this Agreement in the event of a conflict.” The arbitrator
concluded that the 2005 Agreement did not supersede all provisions of the 1987
Agreement. Rather, the arbitrator concluded that except for the means of dispute
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resolution in Section 4.1, the terms of the 1987 Agreement remain in effect to determine
the merits of Kettering’s underpayment claims arising under that agreement.
{¶ 24} CareSource contends that the arbitrator’s interpretations conflict with our
decision affirming the arbitrability of all Kettering’s underpayment claims. CareSource
asserts that we held that Article 7.6 is “an enforceable and unambiguous integration
provision.” CareSource is incorrect. The question before us was whether Article 7.6 meant
that the underpayment claims arising under the 1987 Agreement were subject to the
dispute resolution provision in Article 7.11 of the 2005 Agreement. We concluded that
they were:
[W]e conclude, as did the trial court, that Article 7.6 of the 2005 Agreement
is reasonably susceptible to CareSource’s interpretation that its effect is
retroactive such that Article 7.11 of the 2005 Agreement supersedes the
1987 Agreement. * * * In other words, while KHN [Kettering] asserts that the
subject matter of the 2005 Agreement encompasses “all claims arising on
the effective date and into the future,” Article 7.6 of the 2005 Agreement is
susceptible to an interpretation that the subject matter of both agreements
is the same, such that Article 7.11 of the 2005 Agreement supersedes the
1987 Agreement. Accordingly, as did the trial court, we resolve any doubt
regarding the application of Article 7.11 of the 2005 Agreement in favor of
arbitration.
Kettering at ¶ 39. On the question of arbitrability, then, the arbitrator’s determination
comports with ours. Article 7.11 of the 2005 Agreement, the dispute resolution provision,
applies to the underpayment claims arising under the 1987 Agreement. But the arbitrator
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found that the merits of these claims are determined under the terms of the 1987
Agreement. That is an issue we did not address, so we see no conflict.
{¶ 25} Section 4.1 of the 1987 Agreement refers to an informal grievance
procedure to resolve disputes. CareSource argued that Kettering did not follow the
procedure’s requirements. But the arbitrator found that the grievance process was
“ ‘ambiguous as to whether it creates a required process’ because the requirements under
Section 4.1 conflicted with the permissive language of the Grievance Procedure itself,
and because it set deadlines for CareSource too.” Interim Award, 27. The arbitrator said
that it was CareSource’s burden to prove noncompliance with Section 4.1 and that no
evidence was presented on the parties’ intent, scope, or mutual compliance with the
process. So the arbitrator said that he could not conclude that the process was a condition
precedent to Kettering’s recovery or that Kettering failed to satisfy it.
{¶ 26} In response to each of the above agreement-interpretation arguments, the
trial court determined that the arbitrator had acted within the scope of his power, and the
court declined to revisit those the arbitrator’s interpretations. The trial court is correct. The
parties’ gave the arbitrator the power to interpret and construe their agreements. An
arbitrator does not exceed his powers when he interprets a contract incorrectly. See
Cedar Fair, 140 Ohio St. 3d 447, 2014-Ohio-3943, 19 N.E.3d 893, at ¶ 6 (saying that “[a]n
arbitrator’s improper determination of the facts or misinterpretation of the contract does
not provide a basis for reversal of an award by a reviewing court”). Indeed, “ ‘[i]t is not
enough * * * to show that the [arbitrator] committed an error—or even a serious error.’ ”
Id., quoting Stolt-Nielsen, S.A. v. AnimalFeeds Internatl. Corp., 559 U.S. 662, 671, 130
S. Ct. 1758, 176 L. Ed. 2d 605 (2010). Rather, as the U.S. Supreme Court has said, in
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determining whether the arbitrator exceeded his powers, “the question for a judge is not
whether the arbitrator construed the parties’ contract correctly, but whether he construed
it at all.” Oxford Health Plans LLC v. Sutter, _U.S._, 133 S. Ct. 2064, 2071, 186 L. Ed. 2d
113 (2013). If the arbitrator interpreted the contract incorrectly, well, that was part of the
deal:
All we say is that convincing a court of an arbitrator’s error—even his grave
error—is not enough. So long as the arbitrator was “arguably construing”
the contract * * * a court may not correct his mistakes under § 10(a)(4)
[authorizing a federal court to vacate an award when an arbitrator exceeds
his powers]. The potential for those mistakes is the price of agreeing to
arbitration.
Id. at 2070, quoting Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62,
121 S. Ct. 462, 148 L. Ed. 2d 354 (2000). Here, the arbitrator was interpreting the parties’
agreements, which he had the power to do. So “[t]he arbitrator’s construction holds,
however good, bad, or ugly.” Oxford at 2071.
{¶ 27} The second assignment of error is overruled.
C. The arbitrator’s interpretation of Ohio law
{¶ 28} CareSource argues in the third assignment of error that the arbitrator
exceeded his powers by incorrectly interpreting Ohio course-of-performance law. The
arbitrator concluded that “the parties’ long-term payment history does not qualify as a
course of performance that shows the parties’ intent or alters their otherwise
unambiguous payment terms.” Interim Award at 25. “[F]or course of performance to
apply,” said the arbitrator, “Ohio law requires knowing acquiescence by [Kettering] of
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CareSource’s payment methodology.” Final Award at 22. CareSource contends that the
standard is not “knowing acquiescence” but constructive knowledge. It says that
established law says that it is one party’s constructive knowledge of the other party’s
manner of performance without objection that makes the performance part of the contract.
{¶ 29} The trial court declined to revisit this issue, concluding that the arbitrator
decided it within the scope of his authority. The court pointed out that CareSource is not
arguing that the arbitrator was without authority but that he made an error of law. The
court also noted that the arbitrator fully considered the parties’ arguments and thoroughly
evaluated and discussed the relevant Ohio course-of-performance law before reaching
his conclusion. The trial court got it right. “Courts * * * do not sit to hear claims of factual
or legal error by an arbitrator as an appellate court does in reviewing decisions of lower
courts.” Southwest Ohio Regional Transit Authority v. Amalgamated Transit Union, Local
627, 91 Ohio St. 3d 108, 110, 742 N.E.2d 630 (2001). “It is because arbitration is a
creature of private contract that courts must ignore errors of fact or law. Parties, by
agreeing to allow an arbitrator to resolve their disputes, also implicitly agree to be bound
by the mistakes the arbitrator makes while carrying out his charge.” (Citations omitted.)
Piqua, 185 Ohio App. 3d 496, 2009-Ohio-6591, 924 N.E.2d 876, at ¶18. “ ‘The arbitrators
are the sole judges of the law and of the evidence and no vacation of an award will be
had because of their misconstruction of the facts or of the law.’ ” Id., quoting Comments,
R.C. 2711.10. Here, the parties agreed that Ohio law governs the interpretation of their
agreements. See 2005 Agreement, Article VII, 7.3; 1987 Agreement, Section VII, 7.7. And
it was Ohio law that the arbitrator interpreted. It was within the arbitrator’s power to
interpret Ohio law, just like it was within his power to interpret the parties’ agreements.
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And like his interpretation of the agreement, his interpretation of the law does not concern
us.
{¶ 30} The third assignment of error is overruled.
D. Prejudgment-interest award
{¶ 31} Lastly, CareSource argues in the fourth assignment of error that the
arbitrator exceeded his powers by issuing the prejudgment interest award because the
award conflicts with the parties’ agreements and disregards Ohio’s Prompt Pay Act.
{¶ 32} CareSource argues that the Prompt Pay Act exclusively governs Kettering’s
underpayment claims under both agreements. And the Act, CareSource says, exempts it
from paying interest on Medicaid claims. The arbitrator disagreed, concluding after an
analysis of the law that the Prompt Pay Act does not apply at all. CareSource also argued
that the 1987 Agreement’s interest provision does not allow an interest payment in this
case and that the 2005 Agreement contains no interest provision at all. The arbitrator
disagreed with CareSource’s interpretation of the interest provision in the 1987
Agreement, and he used the provision to calculate the interest on the underpayment
claims arising under that agreement. As to the 2005 Agreement claims, the arbitrator
found that, while the 2005 Agreement does not contain an express interest provision,
AHLA Rule 7.5 permits an arbitrator to award “any relief authorized by contract or
applicable law that appears to be fair under the circumstances.” The arbitrator found
interest to be fair in this case and found that R.C. 1343.03 allows interest on contract
claims, and he used this statute to calculate interest for the underpayment claims arising
under the 2005 Agreement.
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{¶ 33} The trial court found that the parties’ agreements do not explicitly preclude
the arbitrator from deciding the issue of prejudgment interest. So under AHLA Rule 7.5,
said the court, the arbitrator had the authority to apply the law governing interest on the
award. The court declined to review either Kettering’s right to prejudgment interest or how
the arbitrator calculated the interest, calling them questions of law and fact that were left
in the arbitrator’s discretion.
{¶ 34} The trial court is again correct. “[A]rbitrators have ‘broad authority to fashion
a remedy, even if the remedy contemplated is not explicitly mentioned’ in the applicable
contract.” Cedar Fair, 140 Ohio St. 3d 447, 2014-Ohio-3943, 19 N.E.3d 893, at ¶ 6, quoting
Queen City Lodge No. 69, Fraternal Order of Police, Hamilton Cty., Ohio, Inc. v.
Cincinnati, 63 Ohio St. 3d 403, 407, 588 N.E.2d 802 (1992). The evidence supports the
trial court’s finding that neither of the parties’ agreements expressly precludes
prejudgment interest. AHLA Rule 7.5 permits an arbitrator to award any relief authorized
by law. The 2005 Agreements says that it is to be interpreted under Ohio law, and Ohio
law authorizes prejudgment interest on contract claims. As we have already said, the
arbitrator had the power to interpret the AHLA Rules, the parties’ agreements, and Ohio
law. An erroneous interpretation of any of these is simply not grounds for vacating the
arbitrator’s award.
{¶ 35} The fourth assignment of error is overruled.
III. Conclusion
{¶ 36} We have overruled each of the assignments of error presented. The trial
court’s judgment is therefore affirmed.
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FROELICH J., and TUCKER, J., concur.
Copies mailed to:
Gary J. Leppla
Philip J. Leppla
Jeffrey A. Lipps
Joel E. Sechler
Mark R. Chilson
Hon. Dennis J. Langer