AMENDED MEMORANDUM OPINION AND ORDER
Before the court is Baylor’s Motion to Reconsider, filed March 23, 2012. After careful consideration of the motion, briefing by the parties, record, and applicable law, the court grants Baylor’s Motion to Reconsider, vacates its March 15, 2012 memorandum opinion and order, and issues this amended memorandum opinion and order in its place. As herein explained, however, the court’s determination in this regard does not affect the outcome of the case or the court’s prior determination that the arbitration award should be affirmed. Although the court reaches the same result in affirming the arbitration award, it does so for different reasons after further review of the record. By this order, the court also determines the appropriate prejudgment interest rate and the date of accrual for prejudgment interest.
This action was filed on November 3, 2011, by Plaintiffs Baylor Health Care System, Baylor University Medical Center, and the Heart Hospital Baylor Plano (collectively “Plaintiffs” or “Baylor”) to vacate an arbitration award entered in favor of third-party health care claims administrator Defendant Equitable Plan Services, Inc. (“Defendant” or “EPS”). The case was referred to Magistrate Judge Renee Harris Toliver, who entered Findings, Conclusions and Recommendation of the United States Magistrate Judge (“Report”) on February 27, 2012,
Having reviewed the pleadings, file, and record in this case, and the findings and conclusions of the magistrate judge, the court determines that the findings аnd conclusions are correct, except for those pertaining to her determination that: (1) the HSA arbitration provision applies to the parties’ dispute, and (2) the TAA alone governs the parties’ arbitration agreement. In all other respects, the magistrate judge’s findings and conclusions are correct. The court therefore accepts in part and rejects in part the findings and conclusions of the magistrate judge as herein set forth. Accordingly, Baylor’s objections are overruled; Plaintiffs Motion to Vacate Arbitration Award (Doc. 2) is denied; Defendant’s Cross-Application to Confirm Arbitration Award (Doc. 15) is granted; and Defendant’s Motion to Unseal the Record (Doc. 14) is denied as moot.
I. Background
Plaintiffs are Texas corporations that provide health care in North Texas. Many of Baylor’s patients are members of health plans that gain access to Baylor’s services at discounted rates through contracts with insurance companies and preferred provider organizations (“PPOs”) such as HealthSmart Preferred Care. On July 1, 2002, Baylor Health Care System, as “Hospital,” entered a Hospital Services Agreement-PPO (“HSA” or “Hospital Agreement”) with North Texas Healthcare Network, as “PPO.” A May 1, 2004 Amendment to the HSA reflects the merger of North Texas Healthcare Network with PlealthSmart Preferred Care (“HealthSmart”).
EPS is a third-party claim administrator (“TPA”) that is located and incorporated in
On August 1, 2002, after HealthSmart entered the HSA with Baylor, EPS entered a Third Party Administrator Service Agreement for Provider Network and Utilization Management Services (“TPA Agreement”) with HealthSmart. Pursuant to the TPA Agreement, EPS agreed to join HealthSmart’s PPO Network that included Baylor. On March 1, 2007, HealthSmart and EPS executed an amendment to the TPA Agreement (“Amendment”), in which the parties acknowledged that HealthSmart’s provider contracts contain time payment parameters. Neither the TPA nor the Amendment refers to the HSA or the time parameters included in the HSA.
Baylor initiated the underlying arbitration on May 17, 2010, pursuant to the arbitration provision in the HSA, contending that EPS breached section 4 of the HSA that deals with payment of claims. According to Baylor, because EPS did not pay eight claims within forty-five days from receipt as required by section 4.4 of the HSA, the claims were not eligible for Baylor’s discounted rates. Baylor therefore contended that it was entitled to $64,829.41 for Baylor’s Normal Billed Charges, less the discounted amounts paid by EPS. The main bone of contention between the parties in the arbitration and this appeal is whether, under section 4.4 of the HSA, Baylor was permitted to send what the HSA refers to as a “Clean Claim” for “Covered Services” to EPS or HealthSmart as EPS’s agent to trigger the forty-five-day deadline for payment of claims. Baylor contends that it was entitled to send claims to either EPS or HealthSmart, whereas EPS contends, and the arbitrator agreed, that HealthSmart is not EPS’s agent, and to trigger the forty-five-day payment deadline in section 4.4(a) of the HSA, Baylor was required to submit a “Clean Claim” for “Covered Services” to EPS.
In response to Baylor’s initiation of the underlying arbitration, EPS contended that it had never seen the HSA before the dispute arose and was not provided with information regarding the payment deadline or surcharges claimed by Baylor. EPS therefore maintained that its payments were timely. EPS further disputed whether it was subject to the HSA, or the arbitration provision in the HSA, since it was not a party to the contract, and the TPA contained an arbitration provision that differed in scope from the HSA arbitration provision. EPS therefore proposed that the parties proceed with a “self-administer[ed]” arbitration, which according to EPS, was not subject to either the arbitration provision in the HSA or the TPA. Even if it was subject to the HSA payment requirements, EPS contends that it would not have known when HealthS-mart received claims from Baylor for purposes of calculating the payment deadlines.
After a one-day arbitration hearing in which three witnesses testified, including one Baylor witness, and other documentary evidence was admitted, the arbitrator
Baylor initiated this proceeding, based on diversity of citizenship jurisdiction, seeking to vacate the arbitration award on the grounds that the arbitrator exceeded his authority in interpreting the contracts at issue by adding to, subtracting from, or modifying the contracts in violation of section 7.5 of the HSA. The magistrate judge recommended that Baylor’s Application be denied and EPS’s Cross-Application be granted.
In reaching this determination, the magistrate judge concluded that the Texas Arbitration Act (“TAA”) governed the parties’ arbitration agreement. The magistrate judge also agreed with EPS that Baylor’s failure to provide a complete record on appeal of the arbitration proceeding, including a transcript of the proceedings and witness testimony, was fatal to its motion to vacate the arbitrator’s award. The magistrate judge disagreed with Baylor’s contention that the arbitrator’s interpretation of the agreements at issue could be conducted by simply reviewing the language of the agreements to determine whether the arbitrator had exceeded his authority by violating section 7.5 of the HSA because three witnesses testified at the unrecorded arbitration hearing regarding the agreements at issue and the parties’ conduct pertaining to breach of the agreements; only three of the 33 exhibits admitted and discussed extensively during the arbitration hearing were submitted to the court; and only four of the 21 pleadings filed during the arbitration proceeding were submitted in support of Baylor’s Application. Baylor filed objections to the Report, contending that a record of the arbitration was not necessary to review the arbitrator’s interpretation of the parties’ agreements, which, according to Baylor, could be reviewed as a matter of law.
On March 15, 2012,
The court also requested supplemental briefing as to whether Defendant was enti
II. Sufficiency of Baylor’s Objections A. The Parties’ Contentions
In summary, Baylor contends in its Motion to Reconsider that the court should have but did not consider all of the arguments previously raised in its November 16, 2011 Memorandum Brief in Support of Application to Vacate Arbitration Award (“Memorandum Brief’) (Doc. 8), which was filed thirteen days after Baylor initiated this action and moved to vacate the arbitration award (Doc. 2) on November 3, 2011. Specifically, Baylor states in its Motion to Reconsider:
[I]t appears that Baylor’s Memorandum Brief in Support of Application to Vacate Arbitration Award (“Memorandum Brief’) and appendix thereto, filed on November 16, 2011, may not have been considered by the Court in its review of the Findings, Conclusions and Recommendation of the United States Magistrate Judge (“Report”). The Memorandum Brief presented Baylor’s full explanation of the specific instances in the arbitration award (“Award”) whereby the arbitrator exceeded his authority in violation of Section 7.5 of the Hospital Services Agreement PPO (“Hospital Agreement”). Additionally, as the Memorandum Brief was filed more than a month before Equitable Plan Services, Inc. (“EPS”) submitted its Response in Opposition to Baylor’s Application to Vacate Arbitration Award (“Response”), EPS had the opportunity to and did specifically respond to Baylor’s arguments provided therein. For these reasons, Baylor respectfully moves the Court to reconsider its Order.
Pis.’ Mot. 2. Baylor’s contention in this regard is based on the following exсerpts, which are located at pages 7, 8, and 11 of the court’s March 15, 2012 memorandum opinion and order, and focuses on the language italicized:
Baylor’s Application to Vacate the Arbitration Award takes issue with Findings of Fact Nos. 5-lk, 2k, 25, 27, 28, 29, and Conclusion of Law Nos. 1 and 7 in the arbitration award but does not otherwise state why the arbitrator exceeded his authority in [] making these factual findings and legal conclusions. Baylor contends that the arbitrator exceeded his authority because these factual findings and legal conclusions violate Section 7.5 of the HSA that states: [i]n rendering such decision and award, the arbitrators shall not add to, subtract from or otherwise modify the provisions of this Agreement or any agreement entered into pursuant hereto.” Baylor, however, provided no explanation in its motion or application why it believes these factual findings and legal conclusions by the arbitrator subtract from or modify the HSA
Mem. Op. and Order 7 (emphasis added) (citations omitted).
Baylor contends that the arbitrator’s Findings of Fact No. 5 results in “[r]e-writing the definitions of ‘Covered Services’ and ‘Normal Billed Charge,’ despite their clear enunciation in Article I of the Hospital Agreement.” Findings of Fact No. 5 states: “[cjlaims of payment for medical services in excess of Baylor’s Normal Billing Rates are not ‘Covered Services’ under Baylor’s Hospital Services Agreement.” Article I ofthe HSA defines “Covered Services” as “care, treatment, services and supplies for which a benefit is payable under the applicable Health Plan.”
It is not entirely clear from the record, but it appears that the arbitrator concluded that medical services in excess of Baylor’s Normal Billing Rates do not constitute a benefit that is payable and thereforе do not qualify as Covered Services. Alternatively, it appears that the arbitrator agreed with EPS’s argument that even if the section 4.4(a) deadlines were triggered, and even if EPS missed the 45-day payment deadline, the surcharges sought by Baylor are not permitted under the Plans at issue. EPS’s argument in this regard is based on evidence and testimony that were not before the court. Moreover, Baylor fails to provide any explanation why it believes this finding by the arbitrator subtracts from, or modifies the HSA. Without more information, the court cannot conclude that the arbitrator exceeded his authority. The court therefore overrules Baylor’s objections regarding this finding by the arbitrator.
Mem. Op. and Order 11 (emphasis added) (citations omitted). Baylor asserts that, contrary to the court’s order, its Memorandum Brief explained in detail how the arbitrator exceeded his authority with respect to his findings and conclusions. Baylor contends that pages 11 through 23 of its Memorandum Brief set forth the basis for each of its assertions that Findings of Fact Numbers 5-14, 24, 27, 28, 29, and Conclusions of Law Numbers 1 and 7 constitute a violation of the arbitrator’s powers under Section 7.5 of the Hospital Agreement. Pis.’ Mot. 4.
Baylor also takes issue with the following excerpts from the court’s order, and in particular the italicized language:
For the first time in its reply brief, Baylor maintained that these findings and conclusions by the arbitrator “materially supplement[ ], disregard[ ], and/or modif[y] multiple sections of the Hospital Agreement, the TPA Agreement, and the Amendment thereto. ” Baylor further asserted that these modifications “drastically alter the relative duties and obligations of Baylor, EPS, and HealthSmart.” Id. Baylor listed four reasons why it believes the arbitrator’s findings and conclusions subtracts from or otherwise modifies these agreements in violation of section 7.5. While these four specific arguments asserted by Baylor were not raised in its Application to Vacate the Arbitration Award, they are limited to Findings of Fact Nos. 5-lk, 2k, 25, 27, 28, 29, and Conclusion of Law Nos. 1 and 7 and the ground for vacateur asserted in Baylor’s Application. Thus, the court considers each of the four arguments asserted for the first time in Baylor’s reply brief, but only if doing so will not prejudice EPS, who did not have the opportunity to respond to these specific arguments. See Weber v. Merrill Lynch Pierce Fenner & Smith, Inc.,455 F.Supp.2d 545 , 550-51 (N.D.Tex.2006).
Mem. Op. and Order 7-8 (emphasis added) (citations omitted).
Baylor contends that the arbitrator’s Findings of Fact Nos. 24 and 25 “[s]uperimpos[e] a requirement on Baylor to advise EPS of payment deadlines, despite the fact that this is contrary to the terms of the Amendment to TPA Agreement (‘Amendment’) and found nowhere in the Hospital Agreement.”
Findings of Fact No. 24 states: “Baylor’s Agreement with HealthSmart requires Baylor to notify Equitable of any relevant time-frames.” Findings of Fact No. 25 states: “Baylor failed to notifyEquitable of the time-frames in its agreement with HealthSmart which Baylor was required to do.” It is not entirely clear from the record before the court, but these findings by the arbitrator appear to have been made based on his interpretation of the parties’ obligations under section 4 of the HSA, which the court already concluded is ambiguous. Moreover, because EPS did not have the opportunity to respond to this specific argument by Baylor, it would be unfair to EPS for the court to address it even if the record were sufficiently complete. The court therefore declines to address this issue that was raised for the first time in Baylor’s reply. See Weber, 455 F.Supp.2d at 550-51 . For both of these reasons, the court overrules Baylor’s оbjection as to these findings by the arbitrator.
Mem. Op. and Order 10-11 (emphasis added) (citations omitted).
Regarding the first excerpt, Baylor contends that, contrary to the court’s order, it “first presented its in-depth discussion of the reasons supporting vacatur in its Memorandum Brief’ and “[t]he four points made in Baylor’s Reply were simply a summary of the arguments included [on pages 11 through 28] in the Memorandum Brief.” Pis.’ Mot. 4. Regarding the second excerpt, Baylor asserts that “it appears that this Court declined to consider Baylor’s argument regarding why the arbitrator exceeded his authority with respect to Findings of Fact Numbers 24 and 25 on the basis that it would prejudice EPS for not having an opportunity to respond.” Pis.’ Mot. 4. As previously noted, Baylor contends that its Memorandum Brief contained all of its arguments and was filed more than a month before EPS submitted its response to the court and as a result, EPS previously had an opportunity to respond to each of Baylor’s arguments supporting vacatur before the magistrate judge issued her Report.
EPS counters that Baylor implicitly admits in its Motion to Reconsider that it failed to bring its Memorandum Brief, or the arguments and evidence contained in that brief, to the court’s attention when Baylor filed its objections to the magistrate judge’s Report. EPS contends that, to the extent Baylor was relying on the prior arguments contained in its Memorandum Brief, it was responsible for submitting that brief or reiterating the arguments previously made in that brief when objecting to the Report. EPS further contends that Baylor cannot use a motion to reconsider to revive arguments made in its Memorandum Brief or other arguments that it failed to make in objecting to the magistrate judge’s report. For support, EPS cites Gonzalez v. Thaler, No. 4:09-CV-598,
In addition, EPS contends that Baylor’s Motion to Reconsider should be denied because: (1) the award should be confirmed for the reasons previously explained by this court in its March 15, 2012 memorandum opinion and order; (2) the award must be confirmed based on the absence of an arbitration hearing transcript, and in particular, a transcript of the testimony of Baylor’s own witness which negates the arguments raised by Baylor on appeal; and (3) EPS provided additional reasons in its response to Baylor’s Application that support its position that the award should be confirmed. As an example of the latter, EPS points to its prior argument that section 4.4(a) of the Hospital Agreement only provides for the pay
B. Discussion
EPS correctly notes that objections to a magistrate judge’s findings and conclusions under Rule 72(b) must be “specific.” Fed.R.Civ.P. 72(b). In this regard, Rule 72(b) provides, “Within 14 days after being served with a copy of the recommended disposition, a party may serve and file specific written objections to the proposed findings and recommendations.” Id. Regarding the specificity of objections, the Instructions for Service and Notice of Right to Appeal/Object included in the magistrate judge’s February 27, 2012 Report warned: “An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific.” Report 11 (emphasis added). Local Rule 72.2(a) further requires that “[ojbjections filed under Fed.R.Civ.P. 72(b)(2) must be accompanied by a brief that sets forth the party’s contentions of fact and/or law, and argument and authorities.” L.R. 72.2(a).
Here, Baylor filed objections to the Report on March 12, 2012, contending that the magistrate judge erred in determining that confirmation of the award was mandated as a result of its failure to provide a complete record of the arbitration proceedings on appeal. Although the magistrate judge did not reach the merits of the parties’ arguments, Baylor’s objections also included arguments as to why it believed the arbitrator exceeded his authority and requested the court to sustain its objections in this regard and set aside the magistrate judge’s findings and conclusions.
As previously noted, Baylor contends in its Motion to Reconsider that its objections were only intended to summarize the arguments previously made at length in the Memorandum Brief that it submitted in support of its Application. Baylor’s objections, however, state that it “provid[ed] this Court [with] its specific Objections for consideration.” Pis.’ Obj. 4, ¶ 5. Moreover, in its objections, Baylor referenced only its “Application” without referring or citing to any arguments in its Memorandum Brief. Baylor referred to its Memorandum Brief for the first time in the reply brief submitted in support of its objections but it did so only generally and without citation to the Memorandum Brief:
As Baylor discusses at length in its Memorandum Brief, the analysis of the contracts and Award cleаrly demonstrates that the arbitrator added to, subtracted from and modified several material provisions of the parties’ contracts. The modifications are significant as they drastically alter the relative duties and obligations of Baylor, EPS and HealthS-mart.
Reply Br. 5, ¶ 9. According to Baylor’s reply brief, “These modifications, at a minimum, include” the following four examples:
• Disclaiming agency between HealthSmart and EPS under Section 7.5 of the Hospital Agreement, despite the fact that Section 7.5 of the Hospital Agreement only precludes agency relationships made by virtue of its own terms.
• Requiring Baylor to send health care claims directly to EPS to trigger “receipt” for purposes of starting the 45-day payment timeframe, despite the fact that Section 4.4(b) of theHospital Agreement defines “receipt” as when Baylor sends claims to EPS or HealthSmart.
• Superimposing a requirement on Baylor to advise EPS of payment deadlines, despite the fact that this is contrary to the terms of the Amendment to the TPA Agreement ... and found nowhere in the Hospital Agreement....
• Rewriting the definitions of “Covered Services” and “Normal Billed Charges,” despite their clear enunciation in Article I of the Hospital Agreement....
Id. at 5-6 (footnotes omitted and emphasis added). Baylor asserts in its Motion to Reconsider that these examples or points were intended merely to summarize those previously made in its Memorandum Brief; however, Baylor’s Objection cited only to the Appendix submitted in support of the Memorandum Brief. Further, although Baylor’s use of the language “at a minimum” appears to suggest that there may have been other grounds or examples to support its request to vacate the arbitration award, such vague contentions are insufficient to alert the court as to the other grounds relied on by Baylor in support of its objections.
Baylor further contends that because these arguments and an in-depth analysis of these points were included in its Memorandum Brief, the arguments were not asserted for the first time in its reply brief to this court. Baylor therefore contends that EPS would not be prejudiced by the court’s consideration of these matters because it had an opportunity to respond to Baylor’s Memorandum Brief before the magistrate judge entered her findings and conclusions. The court disagrees.
The court is not a mind reader. Further, it is not incumbent upon the court to determine which arguments raised in Baylor’s prior briefing to the magistrate judge correspond to those in its objections, particularly without the benefit of citations. Baylor’s delay in filing its Memorandum Brief almost two weeks after it filed its Application to vacate the arbitration award further obscured the arguments that it now contends are dispositive.
III. Baylor’s Application to Vacate the Arbitration Award
A. Standard Applicable to Review of Magistrate’s Findings and Conclusions
A magistrate judge’s determination regarding a dispositive matter is reviewed de novo if a party timely objects. 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b). A magistrate judge’s determination regarding a nondispositive matter is reviewed under the “clearly erroneous or contrary to law” standard. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a) (“[t]he district judge in the case must ... modify or set aside any part of the order that is clearly erroneous or is contrary to law.”). This highly deferential standard requires the court to affirm the decision of the magistrate judge unless “on the entire evidence [the court] is left with a definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co.,
The clearly erroneous standard applies to the factual components of the magistrate judge’s decision. The district court may not disturb a factual finding of the magistrate judge unless, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. If a magistrate judge’s account of the evidence is plausible in light of the record viewed in its entirety, a district judge may not reverse it. The legal conclusions of the magistrate judge are renewable de novo, and the district judge reverses if the magistrate judge erred in some respect in [his] legal conclusions. [T]he abuse of discretion standard governs review of that vast area of choice that remains to thе [magistrate judge] who has properly applied the law to fact findings that are not clearly erroneous.
Id. at *2 (citations and internal quotations marks omitted).
B. Magistrate’s Determination that HSA Arbitration Provision and TAA Apply
The standard applicable to the court’s review of the arbitrator’s award depends on whether the parties’ arbitration agreement is governed by the Texas Arbitration Act (“TAA”), the Federal Arbitration Act (“FAA”), or both. As noted in the magistrate judge’s Report, the parties dispute whether the TAA, FAA, or both
Neither party specifically objected to the magistrate judge’s determination that the arbitration provision in the HSA and TAA govern this dispute. The court therefore previously accepted, without conducting a detailed analysis, the magistrate’s determination that the HSA and TAA apply to the parties’ dispute and the court’s review of the arbitration award. In accepting the magistrate’s determination as to this issue, the court rejected EPS’s argument that it was not subject to section 7.5 or any of the other arbitration provisions in the HSA and reasoned that EPS had waived the issue by seeking confirmation of the arbitration award that determined its rights and duties as a Payor under the HSA. Upon reconsidering this issue, the court concludes, for the reasons herеin discussed, that the magistrate judge’s determination as to the applicability of the arbitration provision in the HSA and the TAA is not supported by the record or applicable law and that such error is obvious and affects the substantial rights of the parties. See Taita Chem. Co. v. Westlake Styrene, LP,
C. Applicability of HSA Arbitration Provision, TAA, and FAA to Parties’ Dispute
Baylor acknowledges that the HSA defines “Party” or “Parties” as Baylor and HealthSmart, and it is undisputed that EPS is not a signatory to the HSA. Pis.’ Mem. 4. Baylor nevertheless contends that the HSA, including the agreement to arbitrate included in sections 7.1 through 7.6 of the HSA,
Baylor further contends that, because the TAA and HSA’s arbitration provisions apply to the parties’ dispute, the arbitrator’s authority in issuing an award was limited by section 7.5 of the HSA to interpreting the contracts at issue without adding to, subtracting from, or modifying them. Section 7.5 of the HSA states that in rendering a decision or award, arbitrators appointed to resolve disputes “shall not add to, subtract from or otherwise
EPS argues in response that if the three agreements are a single unified contract as Baylor contends, Baylor’s argument regarding the applicability of the HSA’s arbitration provisions fails to account for the fact that the TPA also includes an arbitration provision that is different from that in the HSA. EPS asserts that if the court must choose between the two arbitration provisions, the one in the TPA, which gives the arbitrator broader powers, should apply. EPS contends that if it is going to be bound by one of the two arbitration agreements, it should be bound by the one in the TPA that it saw and signed, not the HSA. EPS also maintains that the HSA was executed by Baylor and HealthSmart before EPS contracted with HealthSmart, and that it was unaware of the HSA or HSA arbitration provision until Baylor filed the underlying arbitration. Because the TPA is governed by Texas law and neither the TPA nor the HSA excludes application of the FAA, EPS argues that the FAA, or both the FAA and TAA apply to the parties’ dispute.
EPS also maintains that the court need not determine whether the parties’ dispute is subject to the arbitration provisions in the HSA or TPA because the parties’ voluntarily elected to arbitrate under an alternative method agreed to by the parties. EPS contends that Baylor initiated the arbitration with the American Arbitration Association (“AAA”) pursuant to the HSA but EPS was unwilling to proceed with arbitration under the. HSA and therefore proposed that the parties proceed instead with a self-administered arbitration. According to EPS, Baylor agreed to forgo arbitration under the HSA as long as EPS agreed to certain conditions. EPS contends that the parties’ correspondence confirms this agreement and that they ultimately proceeded with a self-administered arbitration rather then arbitration under the HSA or the TPA. EPS does not state how this alternative agreement to arbitrate affects the analysis of whether the TAA or FAA applies but asserts that section 7.5 of the HSA does not apply because the parties ultimately “agreed to arbitration terms that differed from those in the HSA.” Def.’s Resp. 15. EPS further asserts that the parties’ alternative agreement to arbitrate is enforceable because the FAA recognizes that agreements to arbitrate can either be set forth in an existing contract or the parties can simply agree to submit an existing dispute to arbitration as Baylor and EPS did here. Id. (citing 9 U.S.C. § 2).
Upon reconsidering this issue, the court agrees with EPS that the arbitration provisions in HSA and TPA do not govern the parties’ agreement to arbitrate because the parties expressly agreed in their written communications to proceed with an alternate form of self-administered arbitration that did not include or retain the terms of the arbitration agreement in the HSA. The court therefore rejects the magistrate judge’s determinations that: (1) the HSA arbitration provision applies to the parties’ dispute, and (2) the TAA alone governs the parties’ arbitration agreement. 1. The Parties’ Arbitration Agreement
The record affirmatively establishes that the parties agreed to forego arbitration
Baylor’s conditions or requirements included: (1) agreement by parties as to whom would serve as the single arbitrator; (2) selection of an arbitrator from the North Texas region; (3) venue in Dallas, Texas; and (4) application of AAA Commercial Rules of Arbitration to the dispute. On June 17, 2010, in response to Baylor’s June 4th letter regarding self-administered arbitration, EPS agreed to the terms proposed by Baylor. Def.’s App. 50. Baylor’s four conditions were apparently satisfied because a December 7, 2010 letter from Baylor to the arbitrator reflects the parties’ agreement to proceed with a “self-administered arbitration” rather than arbitration under the HSA. Id. 65. Nowhere in this letter, the parties’ other communications, or the Agreed Scheduling Order signed by both parties on February 28, 2011, is there any mention of the HSA’s arbitration provisions or the parties’ intent to have the arbitration governed by the HSA, TAA, FAA, or Texas law; nor did the parties express the intent to limit the arbitrator’s authority under section 7.5 of the HSA or any other basis. Id.; see also Def.’s App. 67-69 (Agreed Scheduling Order).
Baylor did not address EPS’s arguments regarding the effect of the parties’ agreement to arbitrate pursuant to terms other than those in the HSA. Evidence presented by EPS, however, of Baylor’s agreement and written statement that it would resort to arbitration under the HSA if its conditions were not met convinces the court that Baylor expressly demonstrated an intent to forgo arbitration under the HSA and proceed instead with the self-administered arbitration based on the parties agreed upon parameters, which did not include section 7.5 of the HSA. See Stinger v. Chase Bank, USA N.A.,
2. The FAA and TAA Govern the Dispute
When an agreement contains a clause that designates Texas law but does not exclude the FAA, the FAA and Texas law, including the TAA, apply concurrent
D. Standard for Judicial Review of Arbitration Awards under the FAA and TAA
Under the FAA and TAA, a reviewing court must confirm an arbitration award unless grounds exist to vacate, modify, or correct its terms. 9 U.S.C. § 9; Tex. Civ. Prac. & Rem.Code § 171.087. Judicial review of an arbitration award is “exceedingly deferential.” Petrofac, Inc. v. DynMcDermott Petrol. Operations Co.,
Baylor contends that the arbitrator exceeded his authority because his legal interpretation of the contracts and factual findings are contrary to the clear language of the HSA. Baylor also challenges a number of the arbitrators factual findings. The FAA provides that an arbitration award may be vacated when “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). Similarly, the TAA. allows the court to vacate an arbitration award when an arbitrator “exceeded [his] powers.” Tex. Civ. Prac. & RermCode § 171.088(a)(3)(A).
In determining whether an arbitrator exceeded his authority as a basis for vacatur under the FAA, the Fifth Circuit applies the essence test. Under the essence test, if the arbitrator’s decision
In reviewing a motion to vacate an arbitration award under the TAA, federal case law dealing with similar FAA grounds for vacatur is instructive. See Las Palmas Med. Ctr. v. Moore,
Once the arbitration award is issued, the court cannot conduct an evidentiary hearing on the merits of the claims advanced by the parties to the arbitration. Legion Ins. Co. v. Insurance Gen. Agency, Inc.,
In Nafta Traders v. Quinn, the Texas Supreme Court explained that because a trial court serves an appellate function when it reviews for reversible error on a motion to vacate an arbitration award, it “must have a sufficient record of the arbitral proceedings, and complaints must have been preserved, all as if the award were a court judgment on appeal.”
For efficiency’s sake, arbitration proceedings are often informal; procedural rules are relaxed, rules of evidence are not followed, and no record is made. These aspects of arbitration, which are key to reducing costs and delay in resolving disputes, must fall casualty to the requirements for full judicial review. The parties can decide for themselves whether the benefits are worth the additional cost and delay, but the only review to which they can agree is the kind of review courts conduct. If error cannot be demonstrated, an award must be presumed correct.
Nafta Traders,
The court in Nafta Traders further explained that unlike the FAA, the TAA “permits parties to agree to expanded review, or to a corresponding limit on the arbitrator’s authority ... but it does not impose such review on every arbitration agreement.” Id. at 98. For expanded or limited review, the parties are not required:
to choose not to be governed by the FAA, since even if it applies ... it does not preempt the parties’ agreement for expanded judicial review. The matter is left to the agreement of the parties. But absent clear agreement, the default under the TAA, and the only course permitted by the FAA, is restricted judicial review.
Id. (emphasis added); compare Hall Street Assocs., L.L.C. v. Mattel, Inc.,
With this understanding of the court’s limited review, it now considers Baylor’s
E. Whether the Arbitrator Exceeded His Authority
1. Conclusion of Law No. 7
a. The Parties’ Contentions
Baylor contends that the arbitrator violated section 7.5 of the HSA and exceeded his authority because, contrary to the arbitrator’s determination in Conclusion of Law No. 7, section 6.3 of the HSA does not disclaim the agency relationship between HealthSmart and EPS. According to Baylor, Conclusion of Law No. 7 is a “blatant modification” of section 6.3 of the HSA. Baylor also contends that Conclusion of Law No. 7 “completely disregards” the “tri-party contract structure” created by section 2.2 of the HSA, paragraph 10 of the TPA, and paragraph 1 of the Amendment. Pis.’ Mem. 11. Conclusion of Law No. 7 states:
Baylor’s Claims are predicated upon the premise that HealthSmart was acting as Equitable’s agent when its Health Service Agreement was executed, but that Agreement in Sec. 6.3 expressly states that HealthSmart, Baylor and Equitable “shall continue to be an independent entities, and no such party is an employee, agent or representative of any other Party by virtue of this Agreement ... nor shall any such Party have any expressed or implied right or authority to assume or create any obligation or responsibility on behalf of or in the name of any other Party by virtue of this Agreement.” Consequently, as a matter of law[,] Baylor’s claims fail.
Pis.’ App. 71 (quoting HSA, § 6.3) (emphasis provided by arbitrator). Baylor contends that section 6.3 applies only to it and HealthSmart, and not EPS. Baylor argues that, contrary to the arbitrator’s conclusion, seсtion 2.2 of the HSA requires HealthSmart to contract with payors like EPS so they are bound to the HSA. Baylor further asserts that paragraph 10 of the TPA “makes brilliantly clear that HealthS-mart is EPS’s agent.” Pis.’ Mem. 12. Finally, Baylor maintains that paragraph 1 of the Amendment confirms that EPS is bound to the HSA and the payment terms included in the HSA.
EPS makes a number of arguments in response. EPS contends that Baylor offers no explanation for its contention that section 6.3 of the HSA applies only to Baylor and HealthSmart as “Parties” to the HSA, whereas section 7.5 of the HSA, which also applies only to “Parties,” is binding on EPS although the HSA defines “Parties” as Baylor and HealthSmart. In other words, EPS contends that Baylor cannot have it both ways either the HSA is binding on EPS as a party to the agreement or it is not. EPS further asserts that a Baylor witness testified at the arbitration hearing that section 6.3 rendered
EPS also asserts that Baylor’s witness admitted during the arbitration hearing that HealthSmart was not EPS’s agent. EPS therefore contends that Baylor should not be allowed to retreat from that prior testimony and admission by its witness by relying on section 2.2 of the HSA, section 10 of the TPA, and paragraph 1 of the Amendment. According to EPS, Baylor’s witness, after being shown section 4.4(a) of the HSA during the arbitration hearing, “admitted that there was no ‘designee’ of EPS that was authоrized to accept Claims on its behalf.” Def.’s Resp. 9. EPS maintains that the witness also indicated that EPS had never received any “Clean Claims” from Baylor pursuant to section 4.4(a) and reluctantly agreed that the 45-day period never began to run on any of the claims at issue. Id. According to EPS, Baylor’s witness “also agreed that meant that EPS had not missed any payment deadlines, and that it was not obligated to pay Baylor for supposedly missing such deadlines on the claims at issue. That admission also meant that EPS had overpaid certain claims.” Id.
EPS contends that the arbitrator’s award in favor of EPS was based on this testimony and other evidence presented at the arbitration hearing. According to EPS, this is but one example of what occurred during the arbitration hearing. EPS therefore contends that any disagreement by Baylor with EPS’s recollection of this testimony or other evidence that was presented at the hearing supports its position that the court cannot review the arbitration award in a meaningfully manner without a record of the arbitration.
Baylor does not dispute or take issue with EPS’s recollection of the events that occurred during the arbitration hearing. Baylor instead contends that “extrinsic evidence is only admissible if the contract is found to be ambiguous,” and “[t]here is nothing in the Award or the pleadings from the arbitration that suggest[]s that the agreements were found ambiguous or the parties asserted such an argument.” Pis.’ Obj. 8, n. 7. Baylor therefore maintains that the court can and should review the arbitrator’s award based solely on the three contracts, which it contends are unambiguous, without resort to extrinsic evidence.
Regarding the contract provisions relied on by Baylor, EPS argues that the warranty by HealthSmart in section 2.2 of the HSA that it will use its “best efforts” to ensure compliance by Payors with the HSA and any payment time frames set forth in that agreement is not sufficient under Texas law to create an “ ‘agency’ relationship or designation between HealthSmart and EPS, let alone the appointment of a ‘designee’ by EPS under Section 4.4(a) of the HSA,” and does nothing more than obligate HealthSmart. Id. 17. EPS further notes that although HealthSmart represented and warranted in section 2.2 “that it has entered into Payor Agreements with Payors for the use of the PPO Network,” no such agreement between HealthSmart and EPS existed “until after Section 2.2 was agreed to by Baylor and HealthSmart.” Id. 18 (quoting Pis.’ App. 3, § 2.2) (emphasis in EPS’s Response).
With regard to the TPA Amendment between EPS and HealthSmart, EPS asserts that like section 2.2 of the HSA, paragraph 1 of the Amendment says nothing about an agency relationship or “designee” and merely states that EPS will comply with “the applicable terms of the Network’s provider agreements, including any established payment timeframes agreed to therein.” Id. 19 (quoting Pis.’ App. 88). EPS notes that paragraph 1 of the Amendment also requires HealthS-mart to make such timeframes available to EPS but it does not expressly or impliedly create an agency relationship between EPS and HealthSmart.
b. Discussion
i. Adequacy of Arbitration Record
The court addresses first EPS’s argument that Baylor’s failure to provide a complete record of the arbitration briefing, testimony, and other evidence precludes review of Conclusion No. 7 of the arbitration award. It is unclear from the record and arbitration award whether the arbitrator in reaching Conclusion No. 7 actually considered the testimony of Baylor’s witness regarding the parties’ understanding and performance of their obligations under on section 4.4 of the HSA. The court nevertheless disagrees that the arbitrator was not permitted to consider such testimony. Because the agreements, when viewed together, do not unambiguously address whether HealthSmart had authority to bind EPS under the circumstances presented, and the agreements contain conflicting language regarding the relationship of Baylor, HealthSmart and EPS and the parties’ respective obligations under the various agreements, the arbitrator had the authority to resolve the conflict and was not nеcessarily confined to the four corners of the contracts as contended by Baylor. See Glover v. IBP, Inc.,
According to EPS, the arbitrator heard testimony on this issue, and a Baylor witness testified that under the HSA, EPS, Baylor, and HealthSmart were independent entities, and not the agents of one another. Baylor acknowledges that the parties presented testimony and documentary evidence during the arbitration hearing, Pis.’ Mem. 2-3, and does not dispute that one of its witnesses testified regarding the agency issue. Baylor’s Arbitration
Baylor did not provide a transcript of the testimony presented during the arbitration hearing regarding the parties’ independent status and HealthSmart’s status as the EPS’s agent for purposes of the HSA. Baylor nevertheless contends that the court can review the arbitrator’s award by analyzing the agreements alone without regard to the witness testimony and evidence that EPS and Baylor presented to the arbitrator on this and other issues. See Pis.’ Reply 7. The court disagrees and concludes that, without a record and transcript of the arbitration hearing and the arbitration testimony referred to in the parties’ briefing, it must presume that the arbitrator’s decision as to this issue is correct. Nafta Traders, Inc.,
Even assuming Baylor is correct that the HSA is unambiguous and the arbitrator lacked authority to render a decision contrary to an unambiguous provision of the HSA, the court should not entertain Baylor’s argument at this juncture of the аdmission of extrinsic evidence when it acknowledges that both parties offered such evidence for the arbitrator’s consideration, and there is no indication that Baylor objected to the arbitrator’s consideration of such evidence. Nafta Traders,
ii. The Arbitrator’s Interpretation of Section 6.3
The court next considers Baylor’s argument that Conclusion of Law No. 7 is a “blatant modification” of section 6.3 of the HSA because section 6.3 does not disclaim the agency relationship between HealthS-mart and EPS. In reviewing the arbitrator’s award and Conclusion No. 7, the issue under the applicable standard is not as Baylor contends, whether the arbitrator accurately interpreted section 6.3 of the HSA or whether the arbitrator’s reasons for concluding as he did regarding the lack of an agency relationship based on section 6.3 are correct. The court instead looks only to the result reached by the arbitrator and determines whether the award, however arrived at, is rationally inferable from the contracts. Anderman/Smith Operating Co.,
When read together, the HSA, TPA, and Amendment are not models of pellucid draftsmanship. Under section 2.2 of the HSA, HealthSmart agreed to use its “best efforts” to ensure that each Payor Agreement obligated the Payors to comply with the HSA. Pis.’ App. 3, ¶2.2. The TPA entered into between HealthSmart and EPS shortly after the HSA was executed, however, does not obligate EPS to comply with the HSA or any provider agreements executed by HealthSmart. See id. 73-82. Similarly, while paragraph 1 of the Amendment to the-TPA between HealthS-mart and EPS states, “HealthSmart shall make available to TPA [EPS] Payment Timeframes for Participating Providers” and obligates EPS to recognize and comply with HealthSmart’s provider contracts, including applicable payment time frames, it does not specifically mention the HSA. Id. 83-86. Regardless, the court deter
Furthermore, although section 10 of the TPA empowers HealthSmart to act as EPS’s “agent to negotiate provider arrangements on its behalf,” other language in the TPA shows that HealthSmart’s authority in this regard was limited to “price negotiation” and “discount arrangements” that are negotiated on an ongoing basis and does not expressly state that HealthS-mart is authorized to bind EPS by contracting on its behalf or for any other purpose. Pis.’ App. 73. Any agency relationship between EPS and HealthSmart for purposes of the HSA that would be enforceable by Baylor is further undermined by paragraphs 8, 9, and 13 of the TPA. Paragraph 9 states with regard to the “Relationship of the Parties”: “The TPA [EPS] and HSPC [HealthSmart] are independent contractors. This Agreement is not intended to create an employer-employee relationship, partnership or joint venture between the TPA and HSPC.... this Agreement shall not be deemed to create any rights or remedies in person who are not parties to this Agreement.” Id. 75, ¶ 9. Paragraph 8 places “Limitations” on HealthSmart’s authority and states: “Unless specifically agreеd in writing to the contrary, HSPC shall have no authority to bind TPA.” Id. ¶ 8. Paragraph 13 also includes the following “Disclaimer”:
Disclaimer — While the duty of HSPC under this Agreement is to provide certain information designed to assist TPA in providing better services to covered individuals, such duty of HSPC in no way affects TPA’s fiduciary responsibility to covered individuals, damages that may result from dispute ... that arise between TPA and any covered individuals, insureds, TPAs, employees and/or their dependents, or with providers, or any other payee or other person in a contractual relationship with TPA.
Id. ¶ 13. Accordingly, the court determines that the HSA, TPA, and Amendment do not support Baylor’s contention that HealthSmart is the agent of EPS for purposes of ensuring EPS’s compliance with the HSA’s payment deadlines and other requirements because none of the contracts, particularly when read together, unambiguously makes HealthSmart the agent of EPS other than for the limited purpose described. The court therefore concludes that the arbitrator’s determination that HealthSmart was not acting as EPS’s agent is rationally inferable from the contracts. Accordingly, the court must defer to the arbitrator’s conclusion in this regard and cannot conclude that he exceeded his authority based on Conclusion No. 7 of the award.
iii. The Arbitrator’s Alleged Disregard of the Parties’ Tri-Party Relationship
The court considers next Baylor’s argument that Conclusion of Law No. 7 disregards the “tri-party contract structure” created by section 2.2 of the HSA, paragraph 10 of the TPA, and paragraph 1 of the Amendment. There is no evidence that the arbitrator declined or refused to consider all three contracts in deciding the parties’ claims, and for the reasons already discussed, the court disagrees that the contracts at issue reflect thе parties’ unambiguous intent to make HealthSmart the agent of EPS other than for the limited purposes discussed. Moreover, the court determines that Baylor’s contention that the arbitrator disregarded the parties’ triparty relationship is in reality an argument as to whether the arbitrator disre
Although the HSA defines “Party” or “Parties” as Baylor and HealthSmart, and EPS was not a signatory to the HSA, Baylor has consistently maintained that the HSA and its terms are binding on EPS because the HSA, TPA, and Amendment constitute a single “unified contract” or “Tri-Party Agreement.” Id. at 2, 4-8. Baylor argued similarly to the arbitrator that Texas and federal courts have recognized similar “tri-party arrangement^]” in the healthcare context and concluded that similar multiple agreements constitute “a single, unified contract.” Pis.’ App. 114, 115-116, n. 1; 128-29. Based on the same reasoning, Baylor contends that it is entitled to enforce the TPA and Amendment against EPS, even though it is not a party or signatory to those agreements, and the TPA and HSA both contain provisions disavowing any third party beneficiary status to nonparties. Pis.’ App. 15, § 6.4; 74, ¶ 9.
To the extent Baylor’s argument in this regard is based on its contention that the arbitrator disregarded applicable law, the court determines that the contention is without merit because the Fifth Circuit and the Supreme Court have held that manifest disregard of the law is no longer a valid basis for vacating an arbitration award. See Hall St.,
The court further notes that Baylor’s arguments as to Conclusion No. 7 are mooted by the court’s determination below that the arbitrator’s conclusion that Baylor was required to send “Clean Claims” for “Covered Services” to EPS to trigger the forty-five day payment deadline under section 4.4(a) of the HSA is rationally inferable from the HSA. Accordingly, Baylor is not entitled to vacatur based on its arguments as to Conclusion No. 7.
2. Conclusion of Law No. 1 and Findings of Fact Nos. 6, 19
Conclusion of Law No. 1 states: “Under Section 4.4(a) of the [HSA], Baylor is required to send each ‘Clean Claim’ of a ‘Covered Service’ to [EPS].” Pis.’ App. 70. Finding of Fact No. 6 states: “Baylor failed to send the eight (8) health care claims to [EPS] as required by Baylor’s [HSA].” Id. 67. Finding of Fact No. 19 states: “Baylor sent all eight (8) claims to HealthSmart instead of to [EPS] as required by its [HSA].” Id. 69.
Baylor contends that these findings and conclusions violate section 7.5 of the HSA
EPS counters that whеn read together, sections 4.4(a) and (b) preclude Baylor from sending claims to HealthSmart and that section 4.4(a) merely permits Baylor to submit claims electronically to HealthS-mart as the PPO or to EPS as the Payor but does not permit Baylor to send claims to EPS through HealthSmart. EPS maintains that the HSA, as drafted by Baylor, and section 4.4(a) could have but do not state that EPS is required to pay within 45-days Clean Claims received from both Baylor as Hospital and HealthSmart as PPO; rather, EPS asserts that section 4.4(a) states only that EPS must pay “Clean Claims” received from Baylor within 45-days.
To the extent sections 4.4(a) and (b) conflict, EPS contends that the arbitrator’s determination regarding section 4.4(a) is controlling and any conflict must be construed against Baylor as the drafter of the HSA and in favor of EPS and the Plans at issue. EPS also asserts that the parties agreed during the arbitration that EPS did not have a designee for purposes of receiving a Clean Claim under section 4.4(a) and Baylor has presented no evidence of such an alleged designation.
Section 4.4(a) of the HSA provides: “Payor [EPS] (or its designee) shall correctly and accurately pay all Clean Claims for Covered Services within forty-five (45) calendar days of receipt of a Clean Claim from Hospital [Baylor].” Pis.’ App. 10, § 4.4(a). Section 4.4(b), on the other hand, states: “For claims sent electronically, the date of claim receipt by PPO [HealthS-mart] or Payor [EPS] shall be deemed to be one (1) day after the date the claim was electronically transmitted by Hospital [Baylor] ... to PPO [HealthSmart] or Payor [EPS].” Id. § 4.4(b).
In light of EPS’s undisputed contention as to Baylor’s witness testimony regarding HSA section 4.4 and the witness’s alleged admission that EPS had not missed any payment deadlines, the court concludes that this issue cannot be reviewed without a record of the arbitration. Even if the court had been presented with a record of the arbitration, it determines that sections 4.4(a) and (b) contain conflicting language as to whether Baylor was entitled to submit Clean Claims to HealthSmart and EPS at its discretion, and, more importantly, whether EPS was required only to pay Clean Claims within 45-days that it received directly from Baylor as opposed to those received from Baylor via HealthS-mart. “To the extent that there is any ambiguity regarding the meaning of these two sections or a conflict between the two, the arbitrator was entitled to resolve it” because the parties bargained for the arbitrator’s interpretation of the HSA, not the court’s interpretation. Glover v. IBP, Inc.,
3. Findings of Fact Nos. 24 and 25
Finding of Fact No. 24 states: “Baylor’s Agreement with HealthSmart requires Baylor to notify [EPS] of any relevant time-frames.” Finding of Fact No. 25 states: “Baylor failed to notify [EPS] of the time-frames in its agreement with HealthSmart which Baylor was required to do.” Pis.’ App. 69.
Baylor contends that these findings by the arbitrator violate section 7.5 because Baylor has no obligation under the HSA to notify EPS of time frames and section 2.2 of the HSA makes clear that it is HealthS-mart’s responsibility to ensure that Payors like EPS comply with the duties and obligations of the HSA. Because the arbitrator concluded that HealthSmart is not the agent of EPS under the HSA, EPS contends that the arbitrator correctly concluded that Baylor was responsible for notifying EPS of relevant time frames.
Finding of Fact No. 24 is based on the arbitrator’s interpretation of the parties’ agreements, whereas Finding of Fact No. 25 is based in part on the arbitrator’s interpretation of the parties’ agreements and in part on evidence as to Baylor’s performance under the agreements, which is not before the court. The court determines that the arbitrator’s conclusion that “Baylor’s Agreement with HealthSmart requires Baylor to notify [EPS] of any relevant time-frames” comports with the arbitrator’s prior determination that section 6.3 precludes the existence of an agency relationship between any of the parties to the agreement. Thus, HealthSmart could not be responsible for notifying EPS of the payment deadline based on any agency relationship between it and EPS. The court further notes that Baylor does not point to any language in the HSA that specifically required HealthSmart to notify EPS of payment time frames.
Moreover, without an arbitration record, the court is unable to conduct a meaningful review of the arbitrator’s purely factual finding, as “Baylor failed to notify [EPS] of the time-frames in its agreement with HealthSmart.” Pis.’ App. 69. Likewise, because Baylor presented evidence to the arbitrator, which is not before .the court, on the issue of who was resрonsible as EPS’s agent for notifying EPS of the payment time frames under the HSA and forwarding claims to EPS that it received from Baylor, the court concludes that a record of this evidence is necessary to review Baylor’s objection to the arbitrator’s. As the party seeking to vacate the arbitration award, Baylor had the burden of coming forward with a complete record that establishes its basis for vacating the award. See Statewide Remodeling, Inc.,
4. Finding of Fact No. 5
Baylor contends that Finding of Fact No. 5 violates section 7.5 because the award rewrites the definition of “Covered Services” and “Normal Billed Charge” and HSA section 4.4(a). Finding of Fact No. 5 states: “Claims of payment for medical services in excess of Baylor’s Normal Billing Rates are not ‘Covered Services’ under Baylor’s Hospital Services Agreement.” Pis.’ App. 67, ¶ 5.
5. Findings of Fact Nos. 7 through 14
Baylor contends that Findings of Fact Nos. 7 through 14 violate section 7.5 because the arbitrator failed to give effect to sections 4.4(a) and 4.4(b). Findings of Fact Nos. 7 through 14 refer specifically to each of the eight claims at issue and, with regard to each, state that EPS did not breach the HSA. These factual findings also set forth the date each claim was received and paid by EPS and state that EPS received each claim from HealthS-mart. Without an arbitration record, the court is unable to conduct a meaningful review of these factual findings by the arbitrator, which could only have been based on evidence presented during the arbitration. Moreover, because the challenged findings are factual in nature, the court questions whether it is appropriate to review Baylor’s objections to the findings on the ground that the arbitrator exceeded his authority. Centex/Vestal v. Friendship West Baptist Church,
6. Findings of Fact Nos. 27 through 29
Baylor contends that Findings of Fact Nos. 27 through 29 violate section 7.5 because the award rewrites section 4.4(b). Finding of Fact No. 27 states: “Baylor and Equitable were operating under the mutually mistaken belief that the 45-day time frame was triggered by receipt of a claim by HealthSmart.” Pis.’ App. 69, ¶ 27. Finding of Fact No. 28 states: “Equitable mistakenly caused the Choctaw nations Plan to pay Baylor an overpayment of $12,788.39 on the Wayla Fields claim.” Id. ¶ 28. Finding of Fact No. 29 similarly states: “Equitable mistakenly caused The City of Durant Plan to overpay Baylor the sum of $2294.50 on the Rayford Phelps claim and the sum of $22,356.28 on the Robert Rogers claim.” Id. ¶ 29. The court concludes that the arbitrator’s determination that “the 45-day time frame was triggered by receipt of a claim by HealthS-mart” draws its essence from and is rationally inferable from section 4.4(a) of the HSA. Further, because section 4.4(a) and 4.4(b) contain conflicting language, the arbitrator had authority, and according to EPS, did hear witness testimony to resolve this ambiguity. As' already noted, this testimony is not before the court. Moreover, if Baylor’s witness admitted, as EPS con
IV. Prejudgment and Post-Award Interest
Baylor contends that EPS is not entitled to prejudgment interest under Texas law because it filed the arbitration, not EPS, and there is no evidence that EPS ever provided Baylor written notice of its claims. EPS counters that it is entitled to prejudgment interest from March 31, 2011, the date EPS filed its answer in the underlying arbitration and sought a refund of the overpayments by EPS to Baylor for certain claims. For support, EPS cites to its Answer to Claimants’ Statement of Claim that was submitted by Baylor in support of its Application. Pis.’ App. 108— 110 (Doc. 9). Pursuant to sections 304.103 and 304.003 of the Texas Finance Code, EPS maintains that, under Texas law, the prejudgment rate is the sаme as the post-judgment rate, which was 5 percent as of March 31,2011.
Prejudgment interest is calculated under state law in diversity cases such as this one. Boston Old Colony Ins. Co. v. Tiner Assocs. Inc.,
The arbitrator’s August 16, 2011 award orders Baylor to pay EPS prejudgment interest at the maximum rate allowed by law. The record demonstrates that EPS filed its refund counterclaim on March 31, 2011. The court therefore concludes that prejudgment interest should be calculated from March 31, 2011, the date EPS filed its сounterclaim in the arbitration, which the court considers comparable to the date that a lawsuit was filed. Further, using a date that is 180 days after the filing would not start the clock for the payment of prejudgment interest until September 27, 2011, which is almost 45 days after the arbitration award was entered and is nonsensical under the circumstances. The
EPS is entitled to post-award interest on $102,114.60, which includes the total amount of damages and prejudgment interest ($38,153.67), attorney’s fees ($55,-811), and costs ($8,149.49) awarded by the arbitrator, to be calculated at the applicable Texas rate of 5 percent per annum from August 16, 2011, the date of the arbitrator’s award, to July 5, 2013, the date judgment will be entered in this case. The total amount of post-award interest on the judgment is therefore $10,106.70. Accordingly, the total amount of the judgment is $112,220.86.
EPS is also entitled to post-judgment interest at the applicable federal rate on the total amount of the judgment entered in this case. With respect to an award of postjudgment interest, federal law applies on “any judgment in a civil case recovered in a district court ... including actions based on diversity of citizenship,” which is the basis for the court’s jurisdiction in this case. Travelers Ins. Co. v. Liljeberg Enters., Inc.,
V. Conclusion
For the reasons herein explained, the court grants Baylor’s Motion to Reconsider, vacates its March 15, 2012 memorandum opinion and order, and issues this amended memorandum opinion and order in its place. The court’s determination in this regard, however, does not affect the outcome of this case or the court’s prior determination that arbitration award should be affirmed. After conducting a de novo review of the pleadings, file, briefing, evidence, and record in this case, and the findings and conclusions of the magistrate judge, the court determines that the findings and conclusions are correct, except for those pertaining to her determination that: (1) the HSA arbitration provision applies to the parties’ dispute, and (2) the TAA alone governs the parties’ arbitration agreement. In all other respects, the magistrate judge’s findings and conclusions are correct. The court therefore accepts in part and rejects in part the findings and conclusions of the magistrate judge as herein set forth. Accordingly, Baylor’s objections are overruled; Plaintiffs Motion to Vacate Arbitration Award (Doc. 2) is denied; Defendant’s Cross-Application to Confirm Arbitration Award (Doc. 15) is granted; and Defendant’s Motion to Unseal the Record (Doc. 14) is denied as moot. The court will enter a judgment by separate document pursuant to Rule 58 of the Federal Rules of Civil Procedure that includes an award of dam
Notes
. Confusion as to when the Memorandum Brief in support of Baylor’s Application should have been filеd stems in part from the FAA’s and TAA’s differing treatment of an application to confirm and vacate an arbitration award. Under the FAA, applications to confirm or vacate an arbitration award are treated as motions, not a pleading initiating an action. 9 U.S.C. § 6 ("Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided by law for the making and hearing of motions."); Alstom Power, Inc. v. S & B Eng’rs & Constructors, No. 3:04-CV-2370-L,
. SeePls.'App. 18-19.
. Baylor argued similarly to the arbitrator that Texas and federal courts have recognized similar "tri-party arrangement[s]” in the healthcare context and concluded that the multiple agreements constitute "a single, unified contract.” Pis.' App. 114-16, ¶ 4, n. 1; 128-29, ¶ 33.
. The amount was reached by adding the following amounts: $38,153.67; $55,811; 8,149.49; and $10,106.70.