Kettering Health Network v. Caresource
2014 Ohio 956
Ohio Ct. App.2014Background
- KHN filed suit against CareSource seeking damages, declaratory relief, and arbitration for underpaid Medicaid claims.
- 1987 Hospital Agreement required CareSource to pay KHN per Medicaid rates; 2005 Agreement amended terms and included dispute resolution.
- 1987 Agreement has no arbitration clause; 2005 Agreement contains broad arbitration (Art. 7.11) and an integration clause (Art. 7.6).
- KHN alleged CareSource underpaid claims since 2008, totaling about $4,060,967.05, violating Medicaid guidelines and contract terms.
- Trial court stayed litigation and compelled arbitration for all claims under both agreements, pending review.
- Appellate court held there is doubt about retroactive effect of 2005 Agreement's 7.6; nevertheless, arbitration favored, and case affirmed stay and arbitration of claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Retroactivity of 2005 7.6 against 1987 contract | KHN contends 7.6 is not retroactive to pre-2005 claims. | CareSource argues 7.6 retroactively supersedes 1987 terms. | Ambiguity remains; 7.6 supports retroactive effect, favoring arbitration. |
| Scope of arbitration for post-2005 claims | All post-2005 disputes fall under 7.11 broad arbitration. | 7.11 covers post-2005 disputes; supports arbitration of all such claims. | All post-2005 claims are arbitrable under 7.11. |
| Effect of parol evidence to defeat arbitration | Affidavits (Haibach, Roberts) show intent not to retroactively apply arbitration to pre-2005 claims. | Affidavits do not provide the most forceful evidence against arbitration. | Parol evidence insufficient to overcome strong presumption in favor of arbitration. |
Key Cases Cited
- Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185 (2006-Ohio-657) (uses federal standard to determine arbitrability; broad vs. narrow clauses)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court) (arbitration presumptions; arbitratability guided by contract language)
- Westerfield v. Three Rivers Nursing and Rehab. Ctr., LLC, 2013-Ohio-512 (2d Dist. Montgomery) (presumption in favor of arbitration; review is de novo for arbitrability)
- McManus v. Eicher, 2003-Ohio-6669 (2d Dist. Greene) (ambiguous arbitration clause should be resolved in favor of arbitration)
- Garcia v. Wayne Homes, LLC, 2002-Ohio-1884 (2d Dist. Clark) (determinants of arbitrability under contract interpretation)