Pursuant to 5 T H C IR . R. 47.5, the court has determined that thi s opinio n should not * be publishe d an d is not precedent except under the limited circu mstance s set forth in 5 T H C IR . R. 47.5 .4. 

### INTHE UNI TED S TATESCOU RT OFAPPEALS

FORTHE FIFTH CIRCU IT

N o. 09- 30310

C .C .N . M A N A G E D C A R E , IN C

. , P l ai n t i f f - A pp el l ee v. F AY EZ S HAMI EH A

. M

. C. ; S OUT HW ES T ER N L OUI S I ANA H O S P ITA L A S S O C IA T IO N , doi n g bu si n ess as L ak e C h arl es M e m o r i a lHo s p i t a l ; L AKE CHARL ES P HYSI CI AN HO S PI TA L OR GA N I ZATI ON ; EN GLAN D M ASSE CLI N I C; R. DALE B E R N A U E R ; K E V IN G O R IN ; LY N N F O R E T , D efen da n t s - A pp el l an t s

A pp ealf

rom t h e U n i t ed S t ates D i st ri ctC ou rt f ort he W es t er n D i st r i c tof Loui si ana U SD C N o. 2: 06- C V

- 519

B ef ore K IN G , JO L L Y , an d S T E W A R T , C i rcui tJu dg es . P E R C U R I A M: * A p p ell a n ts are h ea l th care pr ov i d ers (P rov i d ers) w h o con tr a cted w i th
a p p e ll e e C C N , a P r e fe r r e d P r o v id e r O r g a n iz a t io n (P P O ). In e x c h a n g e fo rC C N ’s ref erral s t o i n suran ce com pa n i es an d em pl oyers ( P ayors) , t h e P rovi ders agreed t o provi de h eal t h care servi ces t o t h e P ayors at di scoun t ed rates

. Th e P rovi ders United States Court of App eals

Fifth Circuit 

### F I L E D Ma rc h 18, 2010 Cha rl es R. F ulb ru g e II I Clerk Case: 09-30310 Document: 00511055361 Page: 1 Date Filed: 03/18/2010N o. 09- 30310

2 f i r s tf i l e d a n a c t i o n i n s t a t e c o u r t s e e k i n g t o d e c l a r e t h e i r c o n t r a c t s wi t h P P Os
u n e n for ce a b le. T h e a ctio n w a s r e m o v e dto fe d e ra l cou rt a n d t h e p la in tiff P rov i d ers d i sm i sse da n u m b er of de fen d a n ts, i n cl u d i n g C C N

. In this sep a ra te
ac t i o n, CC N s o ugh ta dec l ar at o r y j udg m e ntt hatt he di s c o unt s t ak e n pu r s uant t o i t s c o nt r ac t s w i t h t he Pr o vi de r s a r e v al i d. A f t e rm o nt hs o f

de l ayi n t he proceedi n g, t h e P rovi ders m ove d to c o m pelarbi t rat i on un der t h e m an da t ory provi si on s of

t h e contra cts. Th e courtden i ed thei r m ot i on an d the P rovi ders f i l e d t hi s appe alonc e t he di s t r i c tc o ur t ’ s o r de rb e c am e a f i nalj udg m e nt
. Fo rt he
r e as o ns t hatf

o l l o w , w e a f

f i r m t he di s t r i c tc o ur t ’ s de ni alo f t he m o t i o n. I. W e b e gi n wi t h s o m e b ac kg r o und. I n Janua r y 20 06 , t he Pr o vi de r s f i l e d a decl arator y act i on i n L o u isi an a st ate c ou rtagainstC C N , am on g m an y ot h er de fe nda nt s , i n Sham i e h, e tal

. v . Am e r i c an I nt e rst at eI

ns . Co. , e tal

. (

Am e r i c an In te r s ta te

). T h e P rovi ders sou gh ta decl arator y j u dg m en tt h at t h e P P O netw ork d i scou n ts t a k en byP a yo rs for serv ices re n d ere dbythe P rov i d ers, pu rsu a n t t o CC N ’ s ( and o t he r s ’) PPO ag r e e m e nt s , w e r e une nf o r c e ab l e unde rt he Lo ui s i ana W or ker s C om pensa t i on Law s (W C L) , La. R ev. St at
. § 23: 1031 e ts e q ., a nd Any W illin gP r o v id e rA c t (A W P A), i d. § 40: 2201 etse q . I n Fe br uar y 20 06 , o ne o f t he defen d a n ts re m oved t h e case t o federalcourt , at w h i ch point t h e P rovi ders vol u n t ari l y an d qu i ckl y di sm i ssed C C N an d 11 5 of t h e ot h er defen da n t s. C C N t hen f

i l ed t he i nsta n t a cti on o n M ar c h 28, 2006, s ee ki ng a f ede r al decl arator y j u dg m en tdecl ari n g t h at i t s c on t ract s w ere not sub j ectt o t h e noti ce
r e q u i r e m e n t s o f t h e AW PA , a n dwe r e v a l i da n de n f o r c e a b l e u n d e rt h e W CL

. The
com pl ai n tal so s ou gh tdam ages an d att orneys’fees f or breach of

contr act , based
o n t he a s s e r t i o n t hatt he Pr o vi de r s ’s t at e c o ur tsui ti n A m er ica n In ter sta te
con sti tu ted a b rea ch of th eir a gr ee m en t t o ch a rg e on l y a discou n ted am ou n t t o P a y o r s . Case: 09-30310 Document: 00511055361 Page: 2 Date Filed: 03/18/2010N o. 09- 30310

3 I n A pril2006, w i t houtm ent i oni ng t he arbi t r at i on c l ause , t he now fede r al de fe nda nt Pr o vi de r s m o ve d t o di s m i s s o r s t ay pr o c e e di ngs ba s e d o n t w o pe ndi ng st at e c our tc as es an d th e pendi ng appealof a f ede r alc as e c onc er ni ng s i m i l ar is s u e s , L ib e r ty Mu tu a l In s . Co . v . G u n d e rs o n , 20 06 W L 36 77 00 (W

. D

. La. )

. The di st ri ct court gran t ed a stay based on t h e Li be r ty Mut ualapp eal

. A f t er another pa n elof

t h i s c ou rtdi sm i ssed t h at appea lf or l ack of

j u ri sdi ct i on , t h e di st ri ct
c our tl i f t ed t he s t ay o n D ec em ber21, 2006. C C N f i l ed a m ot i on f

ors um m ar y j udgm enton M ay 3, 2007. O n M ay 31, 200 7, the P rovi ders fi l ed a m ot i on to c om pelarbi t rat i on . O n Ju l y 20, t h e di st ri ct
c ou rt d en i ed th e P rov i d ers’ m oti on on th e grou n d th a t th ey h a d w a ive dth e ir ri gh ts t o a rb i tration

. T h e cou rt si m u l tan eo u sly gra n ted su m m a ryj u d gm en t t o C C N on it s decl arator y j u dg m en tcl ai m s, l eaving on l y t h e breach of contr act cl a im s, w h i ch C C N l aterm oved t o di sm i ss. O n F ebru ary 2, 200 9, t h e di st ri ct
c our tgr ant ed CC N ’ s m oti on t o di sm i ss , r ender i ng t he c our t ’ s Jul y 20, 2007, ord er fi n a lan d ap p ea l a b l e. P rov i d ers a p p ea lon l y t h e den i a l of t h eir m oti on to
c o m pe la rbi t r at i o n. II. W e r e v i e w de no vo t h e di st ri ctcourt ’ s l egal concl u si on tha tt h e P rovi ders
w ai ved arbi t ra tion, bu trevi ew un derl yi n g fact u alf i n di n gs f

or c l ear err or. S u b w ay E q u ip m en t L ea singCo rp . v . F o rte , 1 6 9 F .3d 3 2 4 , 3 2 6 (5t h C ir. 1 9 9 9 ). Spe c i f i c al l y, w he t he ra pa r t y s ubs t an t i al l y i nvo ke d t he j udi c i alpr o c e s s a nd
w het hert her e w as pr ej udi c e a r e bot h fac t ualf i ndi ngs t hatw e r evi ew f orc l ear e r r o r . R e

p ub l i cIns . Co

. v . PAICO Re c e i v a b le s , LLC , 383 F

. 3d 341 , 346 ( 5th C i r. 2 0 0 4 ). Ther e i s , o f c o ur s e , a s t r o ng pr e s um pt i o n i n fav o ro f a rbi t r at i o n a nd “ any d ou b ts .
. . s h o u l d be reso lve d i n fa vo r of arb i tration

. ” Mo s e s H. Co n eMe m ’l Ho s p. v . Me r c ur

y Cons t r . Cor

p. , 460 U

. S. 1, 24- 25 ( 1983)

. B ut , “ [ w ] aiverw i l lbe f ound w hen t he par t y s ee ki ng arbi t r a ti on s ubst ant i al l y i nvokes t he j udi c i al Case: 09-30310 Document: 00511055361 Page: 3 Date Filed: 03/18/2010N o. 09- 30310

Nicholas note s two exception s to its generalrule and allows th at other exceptions may 1 exist. However, the enu merate d exceptions b oth involve situation s inwhich the partyinitiates liti gationth at is not incon sistentwithanintentto arb itrate (suing “ s ol el y to obtain a thre shol d declarationas to whether avali d arbitration agreement existed,” or suing “toob tain inj unctive relief pen ding arbitration.”). Here, the Providers did not me ntion arb itrationinthe state court. 4 p r o c e s s to th e d etrim en t or prej u d i ce of the oth er p a rty.” Subway , 169 F. 3d at 326 ( quot i ng Mi l ler B rew i ng Co. v. F ortW ort h D i st ri b. Co. , 7 8 1 F

. 2d 494, 497 ( 5t h Ci r . 1 98 6) )

. Fur t he r m o r e , “ t he a c to f a pl ai nt i f

f f i l i ng s ui tw i t ho uta s s e r t i ng a n a rb itr a tio n c la u s e c o n s tit u te s s u b s ta n tia l in v o c a tio n o f th e ju d ic ia l p r o c e s s .” 1 Ni cholas v. K

BR , I n c. , 5 6 5 F .3 d 9 0 4 , 9 8 0 (5 th C ir

. 2 0 0 9 ). H o w e v e r , “a p a r tyo n ly in v o k e s th e ju d ic ia l p r o c e s s to th e e x te n t itlit i g a t e s a s p e c ific cla im it
su b seq u en tl y se ek s to arb i trate.” Subway , 1 6 9 F .3 da t 3 2 8
. F i n a l l y, th e n on -m ov i n g p a rty op p osin g a rb i tration m u st com e forw a rd to dem on st rat e t h at i tw as prej u di ced by the m ovi n g pa rt y’ s su bstanti ali n vocati on of t h e j u di ci alprocess , an d “[ p]r ej u di ce i n t h e contextof arbi t rat i on w ai ver ref ers to d elay , ex p en se, a n d da m a ge to a p a rty’ s l eg a lpo sit i on . ” Ni c ho las , 565 F. 3d at 910. P reju d i ce is m ore ea sily d em on strate dw h en the m ov i n g p a rty se ek i n g to
a rb itr a te “e n g a g e s in p r e tr ia l a c tiv ityin c o n s is te n t w ith a n in te n t t o a rb itr a te ,” th u s fa ilin gto “p u t[] a p a r t y o n n o t ic e th a t a rb itr a tio n m a yb e fo r th c o m in g .” Pri ce v. D rexe lB u rnh am L am bert, I n c. , 7 9 1 F .2 d1 1 5 6 , 1 1 6 1 (5 th C ir . 1 9 8 6 ). O n a p p e a l, th e P r o v id e r s a r g u e th a t t h e s ta te co u r t s u it, Am e r i c an In ter sta te , di d no ti nvo lve t he sa m e cl ai m s as t ho s e ra i s e d byCC N i n t he i ns t ant act i on , w h i ch the P rovi ders are now seeki n g t o arbi t ra te. E ach party has a di f ferent c h aract eri za tion o f t h e st ate c ou rtl i t i gati on , bu tt h e di st ri ctcourt f ound, and w e a gr ee , t hati ti nvolved t he s am e c l ai m s as t hos e i n t he f ede r al
ac t i o n. Bot h a c t i o ns i nvo lve d t he sam e c o nt r ac t s b e t w e e n CC N a nd t he P rovi ders, an d bot h i n vol ved t h e qu est i on of w h et h er t h e di scoun t s t ak en un der t ho s e c o nt r a c t s we r e i n v i o l a t i o n o f t he AW PA a ndt he W CL. Case: 09-30310 Document: 00511055361 Page: 4 Date Filed: 03/18/2010N o. 09- 30310

5 T h eref ore, t h e P rovi ders’act i on s i n t h e st ate court sui tm u stbe consi dered
w h en de te rm i n i n g w h et h er t h ey sub st an t i al l y i n vok ed the j u di ci alprocess regardi n g t h e cl ai m s i n t h e inst an ta ct i on . W e con cl u de that t h e P rovi ders’act
o f f i l i ng s ui ti n A m eri can I n t ers t ate c o ns t i t u t ed as ubs t ant i ali nvo c at i o n o f t he ju d ic ia l p r o c e s s . Se eNi c ho las , 5 65 F

. 3d a t9 80. O u r c on cl u si on i s s t rengthen ed b y th e P rov i d ers’co n ti n u ed d elayin th e fede ra lcou rt before f i l i n g th e m oti on to
com pelarbi t rat i on : t h ey a tte m p t ed d i sm i ssal , obtai n ed a stay, an d w ai t ed f or C C N ’ s s u m m ary j u dg m en tm ot i on , al lover a p eri od of fourt een m on t h s, bef ore
s e e ki ng arbi t r at i o n. The r e c an be no qu est i o n t hatt he y de m o ns t r at e d a “d is in c lin a tio n ” t o a rb itr a te th e s e cla im s . S e eMille r, 781 F. 2d at497
. Fur t he r , w e ag r e e w i t h t he di s t r i c t c o ur tt hatCC N w as pr ej udi c e d b y t he Provi der s’i nvoc at i on o f t he j udi c i alpr oc es s. I n st at e c our t , C C N s pent$58, 000 coord in ati n g t h e rem oval t o federalcourt
. E ven i f t h i s w ou l d n otha ve been
s u f f i c i e n to n i t s o w n ( C C N d i d n o tr e mo v e t h e s t a t e c o u r tc a s e i t s e l f a n ds e e ms to h a v e b e e n r e q u ir e d to d o v e r ylitt le in s ta te co u r t b e fo r e b e in gv o lu n ta r ily di sm i ssed as a defen da n tup on rem oval) , C C N ’ s prej u di ce i n t h e federalact i on i s m ore su b stan ti a l ; i t ha s s p e n t $1 1 0 , 0 0 0 i n i n i ti a ti n g th e su i t, resp on d i n g to t h e P rovi ders’m ot i on to d ism i ss or s t ay, an d f i l i n g a m ot i on f

or s u m m ary j u d gm en t. F u rth er, C C N ’ s l eg a lpo sit i on h a s ch a n ge dcon sider a b l y b eca u se it s
m ot i on forsum m ar y j udgm enton t he m er i t s of i t s fede r aldec l ar at or y ac t i on w as
s u c c e s s fu l; it w o u ld lik e lyh a v e to re litig a te th e s a m e is s u e s in a rb itr a tio n . S ee Ni c ho las , 5 6 5 F .3 d a t 9 1 1 (“K B R w o u ld b e p r eju d ic e d b y h a v in g to re -litig a te in t he a rbi t r at i o n f

o r um t he ER I SA [ pr e e m pt i on ] i s s ue a l r e ad y de c i de d b y t he di st ri ct court i n i t s favor”)

. T h eref ore, t h e di st ri ct court’ s f i n di n g o f p reju d i ce
w as no tc l e ar l y e r r o ne o us . Bec aus e t he Pr o vi de r s s u bs t ant i al l y i nvo ke d t he j u d i ci a lpr oce ss to C C N ’ s p reju d i ce, w e a gr ee tha t t h eyw a ive dthe i r ri gh t t o arbi t rat e t h ese c l ai m s and consequ en t l y t h e di st ri ct court’ s den i al of arbi t rat i on i s Case: 09-30310 Document: 00511055361 Page: 5 Date Filed: 03/18/2010N o. 09- 30310

6 AF F I RMED. Case: 09-30310 Document: 00511055361 Page: 6 Date Filed: 03/18/2010