127 F. Supp. 3d 138
S.D.N.Y.2015Background
- Plaintiffs Merrick and three other chiropractors sue UnitedHealth Group and affiliates under ERISA for alleged improper claims regulation practices and recoupment of payments.
- Merrick is an in-network provider with two Provider Agreements (Non-HMO and HMO) that include broad arbitration clauses for disputes arising from the agreements or business relationship.
- Plaintiffs allege United repeatedly sought records and offset funds after the 30-day Claims Regulation window, recouping paid amounts from Merrick and other providers.
- Merrick did not provide requested records; United allegedly offset overpayments against other payments to Merrick for different patients.
- The arbitration provisions in the Provider Agreements are asserted by United to compel arbitration of Merrick’s claims; other three plaintiffs are out-of-network and not subject to this motion.
- Court must decide whether Merrick’s claims arise under the Provider Agreements (arbitrable) or under ERISA/plan terms (not arbitrable).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Merrick's claims arbitrable under the Provider Agreements? | Merrick argues ERISA rights control; claims arise under plans, not the Provider Agreements. | Claims arise from Provider Agreements and related records requests; thus arbitrable. | Yes; Merrick's claims are subject to the Provider Agreements' arbitration provisions. |
| Do the Provider Agreements' arbitration clauses cover the asserted disputes with Merrick? | Arbitration should be limited to plan/regulation issues, not contract-based recoupment actions. | Arbitration broadly covers any dispute arising out of or relating to the Agreement and the business relationship. | Broad scope includes the Merrick dispute. |
| Do non-signatory patients prevent arbitration of Merrick's claims? | Plaintiff asserts patients’ rights preclude arbitration; patients are not parties to agreements. | Arbitration applies to the provider–plan relationship and disputes tied to the provider agreements. | Claims arise under Provider Agreements; non-signatory issue does not defeat arbitration. |
| Should the Merrick claims be stayed or dismissed after arbitration is compelled? | Not stated; focus is on arbitration. | Katz v. Cellco supports stay after all claims are referred to arbitration; dismissal is discouraged. | The action is stayed as to Merrick’s claims; other out-of-network claims remain. |
| Is United judicially estopped from asserting arbitration for Merrick's claims? | United previously argued ERISA claims preempted; should not now rely on Provider Agreements. | Positions are not inconsistent; different contexts govern provider-only disputes. | No; United is not judicially estopped from asserting arbitration. |
Key Cases Cited
- Murphy v. Can. Imperial Bank of Commerce, 709 F.Supp.2d 242 (S.D.N.Y.2010) (three-part arbitrability framework; gateway questions for arbitration)
- Wachovia Bank, Nat’l Ass’n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164 (2d Cir.2011) (arbitrability determination is Court's role absent agreement to submit to arbitrator)
- Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16 (2d Cir.1995) (presumption in favor of broadly construed arbitration clauses)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (presumption of arbitrability when clause ambiguous about coverage)
- CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165 (3d Cir.2014) (providers may not be compelled to arbitrate assigned ERISA rights absent explicit agreement)
- Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321 (2d Cir.2011) (right to payment vs. amount of payment framework for ERISA preemption and arbitration)
- Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir.2004) (distinguishing coverage determinations from independent contractual obligations)
- Rojas v. Cigna Health and Life Ins. Co., 793 F.3d 253 (2d Cir.2015) (providers are not beneficiaries under ERISA; standing questions in arbitration)