Greenville Hospital System v. Employee Welfare Benefit Plan

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2170
GREENVILLE HOSPITAL SYSTEM,
Plaintiff - Appellant,
v.
EMPLOYEE WELFARE BENEFIT PLAN FOR EMPLOYEES OF HAZELHURST
MANAGEMENT COMPANY, Underwritten by Aetna Life Insurance
Company,
Defendant - Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. Timothy M. Cain, District Judge.
(6:14-cv-01919-TMC)
Argued: September 15, 2015 Decided: October 13, 2015
Before KING and HARRIS, Circuit Judges, and George Jarrod HAZEL,
United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by unpublished opinion. Judge Harris wrote the
opinion, in which Judge King and Judge Hazel joined.
ARGUED: Linda C. Garrett, LADDAGA – GARRETT, P.A., North
Charleston, South Carolina, for Appellant. Deborah Whittle
Durban, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South
Carolina, for Appellee. ON BRIEF: William C. Wood, Jr., NELSON
MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PAMELA HARRIS, Circuit Judge:
Greenville Hospital System (“Greenville”) and Aetna Health
Management, LLC (“Aetna”) entered into an agreement (the
“Agreement”) under which Greenville provides hospital services
to patients covered by Aetna insurance plans and then submits
claims directly to Aetna for payment. This case arose when
Aetna denied payment of a claim on the ground that Greenville
had not complied with Aetna’s “precertification” requirements,
as mandated by the Agreement.
The Agreement also includes an arbitration clause,
providing for binding arbitration of “[a]ny controversy or claim
arising out of or relating to” the Agreement. The district
court held that Greenville’s dispute with Aetna over payment of
its claim relates to the parties’ Agreement, and is thus covered
by the arbitration clause. We agree, and affirm the district
court’s dismissal of this case.
I.
A.
Greenville, a provider of health-care services, and Aetna,
an insurer, entered into their Agreement in 2004. Under the
Agreement, Greenville bills Aetna directly for the services it
provides to patients insured by Aetna-administered plans, and
Aetna pays those claims at rates established by the Agreement.
3
In most circumstances, Greenville may not seek reimbursement
directly from patients, even if Aetna denies payment on their
claims. The Agreement requires Greenville to facilitate this
direct-billing process by obtaining assignments of patients’
rights to be reimbursed for health services under their
insurance plans.
Two provisions of the Agreement are of particular relevance
here. First, under paragraph 5.1 of the Agreement, Greenville
generally must obtain “precertification” from Aetna before the
provision of services, as detailed in patients’ insurance plans,
and give Aetna notice before admissions for inpatient care.
Specifically, paragraph 5.1 provides:
Except when a [patient] requires Emergency Services,
[Greenville] agrees to comply with any applicable
precertification and/or referral requirements under
the [patient’s] Plan prior to the provision of
Hospital Services [and] . . . to notify [Aetna] within
two (2) business days, or as soon as reasonably
possible of all admissions of [patients], and of all
services for which [Aetna] requires notice.
J.A. 19.
Second, of course, is the Agreement’s arbitration clause.
The Agreement sets out in some detail how Greenville and Aetna
are to resolve disputes, beginning with Greenville’s
participation in Aetna’s internal grievance procedure and
continuing with mediation. And in the event that mediation is
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unsuccessful, “either party may submit the dispute to binding
arbitration.” J.A. 25. As set out in the Agreement:
Any controversy or claim arising out of or relating to
this Agreement or the breach, termination, or validity
thereof, except for temporary, preliminary, or
permanent injunctive relief or any other form of
equitable relief, shall be settled by binding
arbitration administered by the American Arbitration
Association (“AAA”) and conducted by a sole Arbitrator
(“Arbitrator”) in accordance with the AAA’s Commercial
Arbitration Rules (“Rules”).
Id. (emphasis added). Emphasizing the importance of the
arbitration provision, the top of every page of the Agreement
contains the following statement, in bold lettering:
NOTICE: THIS AGREEMENT IS SUBJECT TO MANDATORY
ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT
OR, IF THE FEDERAL ARBITRATION ACT IS DETERMINED TO BE
INAPPLICABLE, THE UNIFORM ARBITRATION ACT, § 15-48-10,
ET[] SEQ., CODE OF LAWS OF SOUTH CAROLINA (1976), AS
AMENDED.
J.A. 10–29.
B.
The dispute at issue here arose in August of 2011, when
Greenville treated a minor child. 1 The patient’s father worked
for Hazelhurst Management Company (“Hazelhurst”), so the patient
was a beneficiary of an employee insurance plan established by
1Greenville alleges these facts in its complaint. In
considering a motion to dismiss, we “accept as true all well-
pleaded allegations.” Mylan Labs., Inc. v. Matkari, 7 F.3d
1130, 1134 (4th Cir. 1993).
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Hazelhurst and fully insured by Aetna (the “Plan”). 2 As
contemplated by the Agreement, Greenville obtained from the
patient’s mother an assignment of the patient’s Plan benefits,
so that Greenville could submit claims for those benefits to
Aetna. Greenville began treating the patient on an outpatient
basis, but at some point admitted the patient to the hospital
for inpatient care.
After discharging the patient, Greenville submitted a claim
for benefits to Aetna. Aetna denied the claim for failure to
comply with precertification requirements, explaining that “pre-
certification/authorization [was] not received in a timely
fashion.” It is that denial that Greenville alleges to be
unreasonable under the Plan. Greenville also claims that it
requested from Aetna a copy of Plan documents related to the
dispute on March 15, 2012, and that Aetna did not provide those
documents until March 11, 2014.
C.
After unsuccessfully appealing the denial of its claim
through Aetna’s internal grievance process, in May of 2014
2 The corporate entity that insures the Plan is Aetna Life
Insurance Company. The Parties do not dispute that Aetna Life
Insurance Company is covered by the Agreement, which extends to
all affiliates of Aetna Health Management, LLC, and like the
parties, we use “Aetna” to refer to both.
6
Greenville filed suit against the Plan in the District of South
Carolina. It brought two derivative claims as the assignee of a
Plan beneficiary: one for failure to pay benefits and one for
failure to provide Plan documents in a timely manner. Aetna, as
the Plan’s underwriter, moved to compel arbitration and to
dismiss the suit, arguing that the Agreement’s arbitration
clause governed the parties’ dispute.
The district court agreed. Greenville filed its claim
pursuant to the Agreement, it reasoned, and Aetna denied that
claim under the Agreement, based on Greenville’s obligation to
comply with Plan precertification requirements. That is enough,
it held, to show that Greenville’s claims to payment are
“related” to the Agreement, particularly under the federal-law
presumption in favor of a broad construction of arbitration
agreements. Greenville Hosp. Sys. v. Emp. Welfare Benefits
Plan, C/A No. 6:14-1919-TMC, 2014 WL 4976588, at *4 (D.S.C. Oct.
3, 2014). Accordingly, the district court granted Aetna’s
motion to compel arbitration and to dismiss. Id. at *5. This
timely appeal followed.
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II.
A.
We review the district court’s arbitrability determination
de novo. Cara’s Notions, Inc. v. Hallmark Cards, Inc., 140 F.3d
566, 569 (4th Cir. 1998).
As the district court recognized, our evaluation of the
Agreement’s arbitration clause is guided by the “federal policy
favoring arbitration” established by the Federal Arbitration Act
(“FAA”), 9 U.S.C. § 1 et seq. (2012). Adkins v. Labor Ready,
Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Volt Info.
Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489
U.S. 468, 475–76 (1989)). We must construe the arbitration
clause broadly, resolving any “ambiguities as to [its] scope” in
favor of arbitration. Id. Put differently, where the parties
have agreed to an arbitration clause, a court should order
arbitration “unless it may be said with positive assurance that
the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.” United Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574, 582–83 (1960). If
a court determines, after applying this presumption in favor of
arbitration, that all of the issues presented are arbitrable,
then it may dismiss the case, as the district court did here.
Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252
F.3d 707, 709–10 (4th Cir. 2001).
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B.
We begin with the language of the arbitration clause, which
extends to “[a]ny controversy or claim arising out of or
relating to” the Agreement. As we have recognized before, the
“arising out of or relating to” formulation is a broad one,
“capable of an expansive reach.” Am. Recovery Corp. v.
Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.
1996) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395, 398 (1967)). Such a clause “does not limit
arbitration to the literal interpretation or performance of the
contract. It embraces every dispute between the parties having
a significant relationship to the contract regardless of the
label attached to the dispute.” J.J. Ryan & Sons, Inc. v. Rhone
Poulenc Textile, S.A., 863 F.2d 315, 321 (4th Cir. 1988)
(interpreting arbitration clause covering all disputes “arising
in connection” with the agreement). Even before we apply the
presumption in favor of arbitration, in other words, we start
here with a particularly comprehensive agreement to arbitrate.
On its face, that agreement to arbitrate plainly extends to
Greenville’s claims against Aetna. Whether Greenville is
entitled to payment from Aetna will turn on whether Greenville
complied with applicable precertification requirements, and, if
not, the appropriate penalty for that failure. The source of
Greenville’s obligation to comply with precertification
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requirements is the Agreement, paragraph 5.1 of which requires
Greenville to follow “any applicable precertification and/or
referral requirements under the [patient’s] Plan.” It follows,
as the district court concluded, that the dispute here has a
“significant relationship” to the Agreement, J.J. Ryan & Sons,
863 F.2d at 321, which is all that is needed to bring it within
the scope of the arbitration clause.
Greenville’s primary argument is that because its claim
cannot be resolved by the terms of the Agreement alone, and will
instead require reference to the precertification rules of the
patient’s insurance Plan, it does not “aris[e] out of or
relat[e] to” the Agreement. We disagree. We have no quarrel
with the premise of Greenville’s argument: Under paragraph 5.1
of the Agreement, the particular precertification rules that
apply in a given case will be elaborated by a patient’s
insurance plan. But it does not follow that a dispute over
precertification does not “relate” to the Agreement as well,
given that it is the Agreement that obliges Greenville to adhere
to precertification protocols at all.
In support of its argument, Greenville relies primarily on
out-of-circuit cases considering whether certain claims
involving health-care agreements arise under the Employee
Retirement Income Security Act of 1974 (“ERISA”), rather than
state contract law, for purposes of federal question
10
jurisdiction and preemption. In Lone Star OB/GYN Associates v.
Aetna Health Inc., for instance, the Fifth Circuit held that
disputes over a “right to payment” require determinations under
individual insurance plans covered by ERISA, whereas disputes
regarding the appropriate “rate of payment” call only for
interpretation of provider agreements that fall outside ERISA’s
scope and so may be heard in state court. 579 F.3d 525, 530
(5th Cir. 2009). 3 According to Greenville, its claim falls on
the “right to payment” side of the line, and thus arises under
the patient’s insurance plan rather than under its provider
agreement with Aetna.
We may assume the validity of Greenville’s premise here —
that its precertification dispute with Aetna would be treated as
a “right to payment” dispute arising under ERISA by Lone Star
and similar cases. But that does not mean that its dispute does
not also “relate to” the Agreement between Greenville and Aetna,
under the terms of the arbitration clause. The question in
cases like Lone Star is whether a claim has any connection to an
3Other circuits have used the same distinction between
“right to payment” and “rate of payment” claims to determine
whether ERISA applies. See, e.g., Montefiore Med. Ctr. v.
Teamsters Local 272, 642 F.3d 321, 331 (2d Cir. 2011); Conn.
State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337,
1350 (11th Cir. 2009); Pascack Valley Hosp. v. Local 464A UFCW
Welfare Reimbursement Plan, 388 F.3d 393, 403–04 (3d Cir. 2004);
Blue Cross v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d
1045, 1051 (9th Cir. 1999).
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ERISA-covered insurance plan, for purposes of establishing
federal jurisdiction, or whether it instead arises exclusively
under a provider agreement like the Agreement here. See 579
F.3d at 530–31. The arbitration clause, on the other hand, is
not limited to claims that arise exclusively — or indeed,
“arise” at all — under the Agreement; instead, it extends to any
claim “arising out of or relating to” the Agreement. Whether or
not Greenville’s precertification dispute with Aetna “arises out
of” the Agreement, it clearly “relates to” Greenville’s
commitment under that Agreement to abide by Aetna’s
precertification rules.
We are similarly unpersuaded by Greenville's second
argument: that the arbitration clause does not apply because
Greenville is bringing derivative, rather than direct, claims
against Aetna. The claims in this case originated with a
patient, before Greenville, consistent with its Agreement with
Aetna, obtained an assignment of those claims from the patient’s
mother. Because the arbitration clause would not bind the
patient in a suit against Aetna, Greenville argues, it also
should not bind Greenville when it steps into the shoes of that
patient to sue on his claim.
We disagree. Nothing about the arbitration clause suggests
that it is intended to exclude from its scope claims that
otherwise “aris[e] out of or relat[e] to” the Agreement solely
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because they rest on assignments. On the contrary: The
Agreement’s direct-payment system expressly contemplates
assignment, obligating Greenville to “obtain[] signed
assignments of benefits authorizing payment for Hospital
Services to be made directly to [Greenville].” J.A. 17.
Assignment is what the parties bargained for when they entered
into the Agreement, including its arbitration clause, and the
derivative nature of a claim does not preclude it from “relating
to” the Agreement. 4 At a minimum, the arbitration clause is
“susceptible of an interpretation that covers” derivative
claims, United Steelworkers, 363 U.S. at 582–83, and under the
presumption in favor of arbitration, that is enough for us to
conclude that it governs this dispute.
4 Our analysis is consistent with CardioNet, Inc. v. Cigna
Health Corp., 751 F.3d 165 (3d Cir. 2014), on which Greenville
principally relies. There, the Third Circuit considered a
provider-agreement arbitration clause limited to disputes over
“the performance or interpretation of the Agreement.” Id. at
173. The court held that this clause did not reach derivative
claims but expressly acknowledged that a different arbitration
clause might, if the clause “intimat[ed] that the parties
intended to arbitrate such claims.” Id. at 179. The
arbitration clause in front of us is significantly broader than
the one at issue in CardioNet, and the Agreement to which it
refers specifically provides for the assignment of claims.
Under those circumstances, and given both parties’ level of
sophistication, cf. Carnival Cruise Lines, Inc. v. Shute, 499
U.S. 585, 597–98 (1991) (Stevens, J., dissenting), we conclude
that Greenville had ample notice that its assigned claims would
be subject to arbitration to the extent they arose under or
related to the Agreement.
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III.
For the reasons set forth above we affirm the decision of
the district court in all respects.
AFFIRMED
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