Thursday, November 19, 2015

Don't Be the Go-To Guy on ERISA

UCFW & Employers Benefit Trust v. Sutter Health, No. A143399 (D1d5 Oct. 27, 2015)

A union ERISA trust sued a healthcare provider for antitrust violations, alleging that the provider enters anti-competitive agreements with insurance networks that have the effect of driving up the cost of healthcare. The provider moved to compel arbitration, even though the trust isn’t a party to any contract with the network that contains an arbitration clause. The provider argued that the trust was nonetheless bound to arbitrate because (1) a provision in state healthcare law bound the trust to a different agreement between the the provider and the insurance network that had contracted with the trust; (2) the trust was equitably estopped; and (3) the network was the trust’s agent. The trial court denied the motion and the court here affirms.

I don’t do ERISA law, so on the first issue, it will have to suffice to say that after a lengthy discussion, the court held that the provider’s interpretation of the healthcare statutes was wrong: The network was not bound to the provider/network contract. 

As for equitable estoppel, that rule requires plaintiff to arbitrate when, although it is not a party to a contract, its claims are so intertwined with the contract that plaintiff is effectively trying to enforce some of its terms. Because its not fair to let plaintiff pick and chose what parts of the contract to enforce, the arbitration clause can be enforced against plaintiff even though its not a signatory. But that’s not the case here, since the whole point of plaintiffs claim is that the provider/insurance network contract is illegal. Given that allegation, fairness does not require the trust to stand on the contract’s terms and accept arbitration. 

And as to agency, the facts showed that, at best, the trust used some of the insurance network’s processing forms. That hardly made the network an agent of the trust.


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