2018 Ohio 2839
Ohio Ct. App.2018Background
- Newborns received care at UH Rainbow Babies & Children’s Hospital in Feb–Apr 2014; mother had United coverage through Feb 28, 2014 and enrolled in Caresource (Medicaid managed care) on Mar 1, 2014.
- UH billed both United and Caresource; dispute arose over which insurer had primary responsibility for roughly 31 days of newborn care in March 2014.
- UH sued Caresource for breach of contract for unpaid medical bills; Caresource answered and filed a third-party complaint seeking declaratory relief and indemnification/contribution from United.
- United moved to stay, compel arbitration, and dismiss based on an arbitration clause in its Facility Participation Agreement (FPA) with UH; Caresource opposed, relying on the insured’s Certificate of Coverage (COC) and R.C. 3923.26 to establish primary coverage and noting the COC contains no arbitration clause.
- The trial court denied United’s motion, finding Caresource (a nonsignatory) did not benefit from the FPA and therefore was not estopped from refusing arbitration.
- The court of appeals affirmed, holding the coverage dispute is governed by the COC and statute, not the FPA, and Caresource could not be compelled to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Caresource (nonsignatory) must arbitrate claims against United under UH–United FPA | United: Caresource seeks to benefit from FPA (United paying UH), so equitable estoppel requires arbitration | Caresource: Dispute is a coverage determination governed by the insured’s COC and statute; Caresource did not accept benefits of the FPA | Court: Denied motion to compel — Caresource’s claims arise from the COC/statute, not the FPA; no estoppel to compel arbitration |
| Whether the third-party declaratory claim turns on interpretation of the FPA | United: Liability to UH would arise only through the FPA and its payment rules | Caresource: Primary-coverage question is independent of FPA and resolved by COC and R.C. 3923.26 | Court: The claim is a coverage dispute under the COC/statute, so the FPA is irrelevant |
| Burden on party seeking arbitration against nonsignatory | United: Argued it met burden by showing Caresource seeks benefit of FPA | Caresource: United provided only a redacted FPA; uncertain scope; burden not met | Court: United failed to establish that the FPA governs Caresource’s claims or that Caresource directly benefited |
| Scope of arbitration clause versus right to judicial forum | United: Arbitration clause covers "any and all disputes" between United and UH, should reach related third-party claims | Caresource: Arbitration clauses bind only parties who agreed; strong presumption against forcing nonsignatory to arbitrate | Court: Confirmed arbitration is contractual; presumption against compelling nonsignatory; held no contractual basis to force arbitration |
Key Cases Cited
- Gerig v. Kahn, 95 Ohio St.3d 478 (Ohio 2002) (equitable estoppel can bind an interested nonsignatory who seeks a declaration of signatories’ rights under a contract containing an arbitration clause)
- Taylor v. Ernst & Young, L.L.P., 130 Ohio St.3d 411 (Ohio 2011) (Gerig limited: nonsignatory estoppel applies when claims arise from the contract with the arbitration clause)
- Council of Smaller Entities v. Gates, McDonald & Co., 80 Ohio St.3d 661 (Ohio 1998) (arbitration is contractual; parties cannot be compelled to arbitrate disputes they did not agree to submit)
- Waffle House, Inc. v. Travelers, 534 U.S. 279 (U.S. 2002) (focus on whether parties agreed to arbitrate the issue; scope of arbitration clause is the controlling question)