Oxford Health Plans LLC v. Sutter

569 U.S. 564 (2013)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P, a pediatrician, entered into a contract with D, a health insurance company. P agreed to provide medical care to members of D’s network, and D agreed to pay for those services at prescribed rates. P filed suit on behalf of himself and a proposed class of other New Jersey physicians under contract with D. The complaint alleged that D had failed to make full and prompt payment to the doctors, in violation of their agreements and various state laws. D moved to compel arbitration on the following clause in their contract: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.” The state court referred the suit to arbitration. The parties agreed that the arbitrator should decide whether their contract authorized class arbitration, and he determined that it did. The arbiter reasoned that the clause sent to arbitration “the same universal class of disputes” that it barred the parties from bringing “as civil actions” in court. The “intent of the clause” was “to vest in the arbitration process everything that is prohibited from the court process.” He concluded that “on its face, the arbitration clause . . . expresses the parties’ intent that class arbitration can be maintained.” D filed a motion in federal court to vacate the arbitrator’s decision on the ground that he had “exceeded [his] powers” under §10(a)(4) of the FAA. The Court denied the motion, and the Court of Appeals for the Third Circuit affirmed. While the arbitration proceeded, the Supreme Court held in Stolt-Nielsen that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” The parties in Stolt-Nielsen had stipulated that they had never reached an agreement on class arbitration. Relying on §10(a)(4), the court vacated the arbitrator’s decision approving class proceedings because, in the absence of such an agreement, the arbitrators had “simply . . . imposed [their] own view of sound policy.” D asked the arbitrator to reconsider his decision in light of Stolt-Nielsen. The arbitrator held that Stolt-Nielsen had no effect on the case because this agreement authorized class arbitration. The arbiter held that the parties here disputed the meaning of their contract; he had therefore been required “to construe the arbitration clause in the ordinary way to glean the parties’ intent.” He “found that the arbitration clause unambiguously evinced an intention to allow class arbitration.” D’s motion again was denied and affirmed by the Third Circuit. The Court of Appeals first underscored the limited scope of judicial review that §10(a)(4) allows: So long as an arbitrator “makes a good faith attempt” to interpret a contract, “even serious errors of law or fact will not subject his award to vacatur.” The Supreme Court granted certiorari.