Originally from Dispute Resolution Journal

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Whether a healthcare case should be decided in arbitration or in court is a subject of much recent litigation. When a contract contains an arbitration clause, does this mean that the case will be heard by an arbitrator? Not necessarily. In recent litigation, both federal and state courts have reiterated that arbitration is a creature of contract law. As such, courts have examined the facts and circumstances of entry into the contract, as well as the arbitration clause itself, to determine the appropriate forum for adjudication of the dispute. In the past few years, many organizations and individuals involved in healthcare disputes have sought assistance from the court before, after and during the middle of arbitration cases. 

I.    WHEN WILL A COURT COMPEL ARBITRATION 

A court’s decision concerning whether to compel arbitration often turns on the parties’ relationship to the contract containing the arbitration clause. Did the party consent to arbitration by entering into the agreement that contained the arbitration clause? If the party is an assignee, did the assignor sign the agreement to arbitrate? Does the contract evidence the intent of the parties or any intent as to the rights of third party beneficiaries?

In CardioNet Inc., et al. v. Cigna Health Corp.,  medical device providers sued Cigna for its decision to cease providing coverage for services of certain devices. These lawsuits were brought against Cigna directly and derivatively as assignees on behalf of patients (participants in an ERISA plan) who used the services of the device companies. Cigna moved to compel arbitration, based on a contract provision that required arbitration of disputes “regarding the performance or interpretation of the Agreement.” The district court granted the motion to compel arbitration, but the Third Circuit reversed after a review of the facts, finding that neither the direct nor the derivative claims alleged pertained to “the performance or interpretation of the Agreement.” Rather, the direct claims sounded in tort, and the derivative claims arose under ERISA. Moreover, the Court held that, as assignees of the derivative claims, the medical device providers must be treated as non-signatories of the agreement because the assignors did not sign the agreement to arbitrate.