28 Fla. L. Weekly Supp. 215b

Online Reference: FLWSUPP 2803KIDZ

Arbitration — Arbitrable issues — Insurance — Insurer’s motion to compel arbitration in action brought by medical provider seeking compensation for services provided to insureds after insurer terminated agreement with provider is denied — Court has jurisdiction to determine arbitrability of dispute where parties’ agreement does not include clear and unmistakable evidence of agreement to submit arbitrability question to arbitrator — No merit to insurer’s claim that arbitration clause in terminated agreement requires arbitration of claims notwithstanding fact that dispute arose after termination of agreement and claims were not related to agreement

KIDZ MEDICAL SERVICES, INC., Plaintiff, v. UNITEDHEALTHCARE OF FLORIDA, INC. et al, Defendants. Circuit Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2019-023456-CA-01, Section CA43. May 1, 2020. Michael Hanzman, Judge.

ORDER DENYING DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY CASE

THIS CAUSE came before the Court on Defendants UnitedHealthcare of Florida, Inc. (“United HMO”) and UnitedHealthcare Insurance Company’s (“United PPO”) (collectively, “United” or “Defendants”) Motion to Compel Arbitration and to Stay Case, filed September 30, 2019 (the “Motion”). The Motion was fully briefed, as plaintiff Kidz Medical Services, Inc. (“Kidz Medical”) filed its opposition on October 31, 2019, and United filed a reply on November 14, 2019. The parties appeared for a Case Management Conference on April 13, 2020, at which time the Court set a hearing on the Motion on April 24, 2020, and directed the parties to file supplemental briefs on or before April 17, 2020, on the question of the Court’s authority to determine arbitrability, in light of the recent decision in Doe v. Natt, 2020 WL 1486926 (Fla. 2nd DCA March 25, 2020) [45 Fla. L. Weekly D712a]. The Court received and reviewed the supplemental briefing.

The parties appeared before the Court on April 24, 2020 for the hearing on the Motion. Having considered all of the relevant submissions, having reviewed the Court file, having heard argument of counsel, and being otherwise duly advised in the premises, the Court DENIES the Motion for the reasons set forth in this Order.

RELEVANT BACKGROUND

Kidz Medical filed the Complaint on August 7, 2019. See Complaint. Kidz Medical alleged that it previously had an Agreement with United (the “Agreement”) which governed the reimbursement of claims for medical services provided by Kidz Medical to United’s members. See id. at ?4. Kidz Medical further alleged that United purported to terminate the Agreement, effective August 1, 2018, and, since that time, United has treated the Agreement as terminated and Kidz Medical as an out-of-network provider, with no written agreement. Id. at ?4-5. Kidz Medical alleged that it continues to provide medical services to United’s insureds after the purported termination date,¹ and that United’s payments to Kidz Medical for these out-of-network services were far below the rates of reimbursement that United had routinely and customarily paid it for many years, and were below the “usual and customary provider charges for similar services in the community”, as required by Florida law. Id. at ?28-34.

Kidz Medical asserted claims for breach of section 641.513, Florida Statutes (Count I, against United HMO), 627.64194, Florida Statutes (Count II, against United PPO), Breach of Contract Implied in Fact (against United (Count III)), Unjust Enrichment (against United (Count IV)), Quantum Meruit (against United (Count V)) and Declaratory Judgment (Against United (Count VI). Each claim seeks compensation for services rendered to United insureds after termination of the Agreement. For this reason, each claim accrued after termination, and no claim relates to services provided pursuant to the Agreement. In other words, this is not a case where, for example, the parties continued to perform under the Agreement post termination. It is a case where Plaintiff continued to provide services to United insureds post termination because it was obligated to do so by law, and is statutorily entitled to compensation notwithstanding the absence of an extant contract.

Kidz Medical further alleged that it initiated an arbitration challenging United’s termination of the Agreement, effective August 1, 2018 (the “Arbitration”). Because the Agreement renewed for one-year terms, Kidz Medical contends in the Arbitration that United improperly terminated the Agreement, and that the Agreement should be effective through July 31, 2019. Id. at ?? 6-11. The Arbitration has not concluded, but the results will impact the scope of this litigation: whether Kidz Medical’s claims for services performed after the termination of the Agreement start on August 1, 2018 or August 1, 2019. Id. at ?12. To clarify this point, counsel for Kidz Medical specifically stipulated on the record that Kidz Medical was not challenging United’s termination of the Agreement as of July 31, 2019, and that the only claims that will be adjudicated in this lawsuit are claims for medical services performed after the termination of the Agreement.

In the Motion, United seeks to compel arbitration and to stay this reimbursement dispute based on an arbitration provision in the Agreement that United terminated. The Agreement’s arbitration provision provides:

The parties will work together in good faith to resolve any and all disputes between them (hereinafter referred to as “Disputes”) including but not limited to all questions of arbitrability, the existence, validity, scope or termination of the Agreement or any term thereof.

If the parties are unable to resolve any such Dispute within 60 days following the date one party sent written notice of the Dispute to the other party, and if either party wishes to pursue the Dispute, it shall thereafter be submitted to binding arbitration in accordance with the Commercial Dispute Procedures of the American Arbitration Association, as they may be amended from time to time. . . .

. . . The arbitrator(s) may construe or interpret but shall not vary or ignore the terms of this Agreement and shall be bound by controlling law. . . .

. . . The parties acknowledge that because this Agreement affects interstate commerce the Federal Arbitration Act applies.

See Agreement, Art. VIII. The arbitration provision also includes the following:

. . . This Article VIII governs any dispute between the parties arising before or after execution of this Agreement and shall survive any termination of the Agreement.

Id. Section 10.13 states that “Article VIII . . . will survive the termination of this Agreement.” The Agreement provides that Florida law governs its interpretation. Id. § 10.10.

United contends that, even though it terminated the Agreement and treated it as terminated, the arbitration provision contains a survival clause that requires arbitration of any dispute arising between the parties any time in the future, regardless of whether that dispute has any relationship to the Agreement. According to United, any disputes between the parties arising after the termination of the Agreement must be arbitrated pursuant to Article VIII, including the claims for medical services provided by Kidz Medical after the termination of the Agreement and which United adjudicated on an out-of-network basis. In other words, United contends that the arbitration provision extends in perpetuity and attaches to any future disputes between these parties, regardless of whether such future disputes arise out of, or bear any relation to, the contract containing the arbitration clause.

Kidz Medical opposes the Motion, contending that United failed to meet the applicable legal standards to compel arbitration under the three-part test announced in Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999) [24 Fla. L. Weekly S540a]: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived. Kidz Medical argues that there is no valid agreement to arbitrate reimbursement disputes for claims for medical services provided after the Agreement terminated and that United fails to identify any arbitrable issue because Kidz Medical’s legal claims have no relationship with the Agreement.

III. Analysis

Generally, under both the federal and Florida law, the three fundamental elements that a court must consider when determining whether a dispute is required to be compelled to arbitration are: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived. Seifert, 750 So. 2d at 636; CarePlus Health Plans v. Interamerican Medical Center Group, LLC, 124 So. 3d 968, 971 (Fla. 3d DCA 2013) [38 Fla. L. Weekly D2219c]. Arbitration provisions are contractual in nature and remain a matter of contractual interpretation. Id.; see also Seaboard Coast Line R.R. v. Trailer Train Co., 690 F.2d 1343, 1352 (11th Cir. 1982). The intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration. Seifert, 750 So. 2d at 636. Courts generally favor such provisions and will try to resolve an ambiguity in an arbitration provision in favor of arbitration. Id. However, the “general rule is that where an arbitration agreement exists between the parties, arbitration is required only of those controversies or disputes which the parties have agreed to submit to arbitration.” Id. (quoting Regency Group, Inc. v. McDaniels, 647 So. 2d 192, 193 Fla. 1st DCA 1994).

As a threshold matter, based on the applicable law cited above and supplemental briefing, the Court concludes that it has jurisdiction to determine the arbitrability of this dispute. See, e.g., Natt, 2020 WL 1486926 at 7-8 (finding that it is presumed that parties do not agree to submit questions of arbitrability to arbitrators unless the arbitration agreement includes “clear and unmistakable evidence” of the parties’ asset to submit those questions to the arbitrators rather than the court); accord First Option of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945 (1995) (“If . . . the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently”). In addition, neither party objected to the Court’s authority to determine arbitrability either in their written submissions, supplemental briefing or at oral argument. Indeed, United’s counsel stipulated at the April 24, 2020 hearing that the Court should decide this issue. Hrg. Tr. at 4:16-25 (“On that second issue [who determines arbitrability], that’s a non-issue here, although the jurisprudence and the binding case law says that [sic] for the arbitrator, given our provision, we are, United here in this case, are willing to submit that to Your Honor, that decision, so as to not — to conserve judicial resources. And also, we’re doing that without prejudice with the right to arbitrate.”).

Turning now to the first Seifert factor, United fails to demonstrate that there is a written arbitration agreement applicable to the claims at issue in this action. By United’s own assertion, no written contract exists between the parties that governs this dispute. And, United does not contest that it has treated the Agreement as terminated, and that Kidz Medical’s claims are all for medical services provided after United terminated the Agreement. United nonetheless argues that the arbitration clause survived termination of the Agreement to govern any and all disputes that arise post-termination. United’s position is that the arbitration clause in the Agreement is a roaming covenant untethered to the contract that attaches to any claim, regardless of its time frame or relationship to the Agreement. United’s position borders on frivolous.

Pursuant to well-settled Florida law, plain and unambiguous contract terms must be construed and given effect as they evidence the parties’ intent. State Farm Mut. Auto Ins. Co. v. Pridgen, 498 So. 2d 1245, 1248 (Fla. 1986); Charles Bernard, Ltd. v. Tobias Jewelry Ltd., 751 So. 2d 711, 713 (Fla. 3d DCA 2000) [25 Fla. L. Weekly D402a]; Walgreen Co. v. Habitat Dev. Corp., 655 So. 2d 164, 165 (Fla. 3d DCA 1995) [20 Fla. L. Weekly D1132a]. Further, “it is well settled that a single contractual term must not be read in isolation.” Beach Towing Servs., Inc. v. Sunset Land Assocs., LLC, 278 So. 3d 857, 860 (Fla. 3d DCA 2019) [44 Fla. L. Weekly D2195a]. “Rather, the goal is to arrive at a reasonable interpretation of the entire agreement, and to construe contractual terms ‘in such a manner as to give them a meaning consistent with the apparent object of the parties in entering into the contract.’ ” Id. (quoting Blackhawk Heating & Plumbing Co., Inc. v. Data Lease Fin. Corp., 302 So. 2d 404, 407 (Fla. 1974)).

In examining the Agreement’s plain and unambiguous language, the arbitration clause in Article VIII simply cannot be read to apply to disputes that arise after termination of the Agreement and that are not based upon any breach of the agreement. The first phrase of Article VIII speaks temporally to what disputes are governed by Article VIII — those occurring before and after execution of the Agreement — but the second phrase provides only that Article VIII survives termination, not that arbitrability of any and all disputes — even those arising post-termination and that are not related to the agreement — survive termination, as United argues. What this clause does is make clear that a post termination claim based upon, or related to, the contract remains subject to arbitration notwithstanding the contracts termination. It does not mean that any future dispute between the parties, unrelated to the contract, is arbitrable. Put simply, for a dispute to be arbitrable, it must be a dispute arising out of, or related to, the contract containing the arbitration clause. There are no terms in the Agreement that govern or even reference claims arising post-termination that are unrelated to the contract itself, much less a provision that makes unrelated claims arbitrable in perpetuity.² The first Seifert factor therefore is not satisfied.

For this same reason, the second Seifert factor — whether an arbitrable issue exists — likewise is not satisfied. To meet this standard, there must be a significant relationship between the claim and the agreement containing the arbitration clause. Id. at 637-38. The Florida Supreme Court expounded on the requirement of a “significant relationship” or “nexus” in Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013) [38 Fla. L. Weekly S67a] as follows:

A “significant relationship” between a claim and an arbitration provision does not necessarily exist merely because the parties in the dispute have a contractual relationship. Rather, a significant relationship is described to exist between an arbitration provision and a claim if there is a “contractual nexus” between the claim and the contract. A contractual nexus exists between a claim and a contract if the claim presents circumstances in which the resolution of the disputed issue requires either reference to, or construction of, a portion of the contract.

108 3d at 593.

Here, there is absolutely no relationship between the claims and the Agreement, let alone a significant relationship.³ United identified no provision of the Agreement that applies to Kidz Medical’s rendition of post-termination services or United’s reimbursement of those post-termination services. The arbitration clause again is not a roaming covenant that attaches to any claim whatsoever that the parties may have for eternity, untethered to the contract or having nothing to do with the contract. Seifert, 750 So. 2d at 636; see CarePlus, 124 So. 3d at 973 (affirming the trial court’s decision that absent any identifiable nexus or significant relationship between the parties’ agreement and the claims at issue, the defendant’s motion to compel arbitration must be denied). As the Third District Court of Appeal explained:

In order to be arbitrable, the claim “must, at a minimum, raise some issue the resolution of which requires reference to or construction of some portion of the contract itself.”

CarePlus, 124 So. 3d at 973 (quoting Seifert, 750 So. 2d at 638).

Because resolution of Kidz Medical’s claims for reimbursement of services rendered post-termination and not pursuant to the contract does not require reference to or construction of any portion of the Agreement, they have no significant relationship or nexus to the Agreement at all and, for that reason, are not within the scope of the arbitration clause. Again, the bottom line here is that for a dispute to fall within the scope of an arbitration clause contained within a contract, the dispute must arise under, or at least have some nexus to, the contract itself. And this dispute has absolutely nothing to do with the Agreement containing the arbitration clause.

Because neither of the first two Seifert factors is satisfied, the Court need not reach the third factor regarding waiver. The Court notes that Kidz Medical did not contend that United waived any right to arbitrate. Having failed to satisfy at least two Seifert factors, the Motion must be denied.

III. Conclusion

For the foregoing reasons, United’s Motion to Compel Arbitration and to Stay Case is DENIED.

__________________

¹Kidz Medical represents that it continues to provide emergency care to newborns and children of United members pursuant to its obligations under federal and Florida law. See 42 U.S.C. § 1395dd (Emergency Medical Treatment and Active Labor Act (EMTALA)); § 395.1041, Fla. Stat. (Access to Emergency Services and Care). Complaint at ??23, 29.

²The Court invited United to identify any case or authority that supports its position that the arbitration clause in the Agreement extends to disputes that accrue after the termination of the Agreement and which are unrelated to the contract containing the arbitration clause. Unsurprisingly, United cited none.

³Furthermore, the Agreement recognizes that any arbitration must have a significant relationship with the Agreement because it directs that the Arbitrator(s) may construe or interpret but shall not vary or ignore the terms of this Agreement. See Article VIII. Thus, the Agreement clearly does not contemplate arbitration of post-termination disputes that have no relation to the contract.